There are very few eligible startups which are allowed to claim deduction under section 80IAC by ministry.
Hence the startup must use this tax exemption wisely.
Before filling Income Tax return (ITR) and claiming deduction under section 80IAC, the startup must keep following points in mind. Otherwise, it may result in disallowance of deduction and increase in tax liability of your startup and it may affect financial position of your startup.
1. File Form 10CCB certified by Chartered Accountant before one month of Due date of filling of ITR.
2. Books of Accounts should be audited and audit report is submitted before one month of Due date of filling of ITR.
3. Select ‘Yes’ for “whether you are recognized as startup by DPIIT”.
4. Enter your start up recognition number alloted by DPIIT.
5. Select ‘Yes’ for “whether Certificate from Inter Ministerial Board for certification is received?”
6. Enter your certificate number for above point.
7. Select Yes/No for “Whether declaration in Form-2 in accordance with para 5 of DPIIT notification dated 19/02/2019 is filed before filing ITR?”. Form 2 is for Angel Tax benefit u/s 56(2)(viib).
8. The provisions of MAT u/s 115JB is applicable, even if you have claimed deduction under section 80IAC. As of now there is no exemption provided in section 115JB i.e. MAT to companies claiming deduction under section 80IAC.
9. Therefore, even if, a startup is claiming deduction under section 80IAC, it will required to pay tax at the rate 15% (plus surcharge & cess).
10. Hence, it is advised to check your tax liability under MAT before claiming deduction under section 80IAC, as the deduction has to be claimed for 3 continuous years.
However, by looking into the current scenario as our Honorable Prime Minister is promoting startup, it is expected that in coming years there will be exemption for startups under MAT also. As of now there is no such exemption.
Author Bio
R/Sir,
My Firm is LLP incorporated in 2021, Registered as Startup and in MSME ,Making Profit since Then,
We Got certificate Of Eligibility for 801AC from IMB. Sir we need followings Clarifications:—
1) is AMT applicable to us if yes on What Rates of Income Tax..
2) Is AMT Paid is adjustable in our Future Incomes/Taxes.
3) Can we Start taking Benefits of 801ac from this F/Y (23-24)(1st year of Tax holiday from Three years,)as we have already deposited two Instalments of Advance Tax due on June & Sept.2023.
4) if yes of 3 should we stop further paying of Advance Tax due in December 2023 n March 2024.
Regards & Thanks
Respected Sir,
Please reply to my post sent on 5/11/23. time 1.16 pm .I am waiting for your valuable advise.
Thanks & Regards
Saurabh Gupta
MY LLP has got rebate U/S 801ac .recentely
Is MAT/AMT APPLICABLE ..?
Is MAT/AMT Paid is Adjustable against Future Incomes/Income tax…?
For LLP MAT OR AMT Applicable &on What rates of Taxes +SC.. Pls reply on My Email. Thanks Sir
What if i have filled ITR and forgot to file form 10CCB before 1 month of due date of filling ITR? Can i file 10CCB right after the filing of return but before due date of ITR.
If company goes in to New Regime, then also MAT is Applicable ? This is the fifth year and Company has earned profit. In earlier years it has suffered Loss. But, since profit is nominal they want to avail 80IAC in subsequent years . Is it allowed ? The point is to go for new regime to avoid MAT and avail set off of earlier year’s Losses with current year’s profit and Avail deduction u/s 80IAC in subsequent years when they are hopeful to earn more profit since revenue is growing now.
Employee of ab startup availed deferred tax benefit while filing ITR forA. Yr21-22. He left job on 01.06.22.When and how should he pay the deferred tax