What is Startups?
A Startup is a company or project undertaken by an entrepreneur to seek, develop and validate s scalable business model. In layman’s language we can say startups refer to new businesses that intend to grow large beyond the solo founder and to help the business to grow our union government provides to tax exemptions to eligible startups.
What are the criteria to become an eligible startup?
- The startup has not yet completed a period of ten years from the date of incorporation.
- The startup is a private company or registered as partnership firm or a limited liability partnership.
- The startup has an annual turnover not exceeding Rs. 100 crore for any of the financial year since incorporation.
- The startup is working towards innovation, development or improvement of products or services or if is is a scalable business model with a high potential of employment generation or wealth creation.
- It is not formed by splitting up or reconstructing a business already in existence.
Tax examination available to eligible startups under section 80IAC
An eligible startup will be getting 100% tax rebate on profit for consecutive 3 years out of first 10 years since incorporation provided that annual turnover does not exceed Rs. 25 crores in any financial year.
Update: On 1st Feb, 2022 Honourable Finance Minister Nirmala Sitharaman has stated in her union budget 2022 that the above benefit has been extended to the startups incorporated before 31st March, 2023. Earlier the benefit was available to the startup incorporated between April 1,2016 to 31st March, 2022.
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