Finance Bill, 2025, proposes an amendment to Section 80-IAC of the Income-tax Act, which provides a 100% tax deduction on profits for eligible start-ups for three consecutive years within ten years of incorporation. Currently, the benefit applies to start-ups incorporated between April 1, 2016, and March 31, 2025, provided their turnover does not exceed ₹100 crore and they hold certification from the Inter-Ministerial Board. The proposed amendment extends this benefit by five years, making it available to start-ups incorporated until March 31, 2030. This change will be effective from April 1, 2025.
Budget 2025: Extension of timeline for tax benefits to start-ups
The existing provisions of Section 80-IAC of the Act, inter alia, provide for a deduction of an amount equal to hundred percent of the profits and gains derived from an eligible business by an eligible start-up for three consecutive assessment years out of ten years, beginning from the year of incorporation, at the option of the assessee subject to the condition that ,–
(I) the total turnover of its business does not exceed one hundred crore rupees,
(II) it is holding a certificate of eligible business from the Inter-Ministerial Board of Certification, and
(III) it is incorporated on or after the 1st day of April, 2016 but before the 1st day of April, 2025.
2. It is proposed to amend the above section so as to extend the benefit for another period of five years, i.e. the benefit will be available to eligible start-ups incorporated before 01.04.2030.
3. This amendment will take effect from the 1st day of April 2025.
[Clause 18]
Extract of Relevant Clauses of Finance Bill, 2025
Clause 18 of the Bill seeks to amend section 80-IAC of the Income-tax Act relating to special provision in respect of specified business.
The said section, inter alia, provides for deduction of an amount equal to 100% of the profits and gains derived from an eligible business by an eligible start-up for three consecutive assessment years out of ten years at the option of the assessee subject to the condition that the total turnover of its business does not exceed one hundred crore rupees for an eligible start-up incorporated on or after 1st April, 2016 but before the 1st April, 2025.
It is proposed to amend the said section so as to extend the benefit for another period of five years, i.e. the benefit shall be available to the eligible start-ups incorporated before 1st April, 2030.
This amendment will take effect from 1st April, 2025.
Extract of Relevant Amendment Proposed by Finance Bill, 2025
18. Amendment of section 80-IAC.
In section 80-IAC of the Income-tax Act, in the Explanation, in clause (ii), in sub-clause (a), for the figures “2025”, the figures “2030” shall be substituted.
