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Government of India to startups 100% tax-free profits for 3 years Is giving a great opportunity. Section 80-IAC (Now issued as Section 140 under Income Tax Act 2025) DPIIT Recognized Startups in any of their first 10 years 3 consecutive financial years Income tax is not required to be paid on the entire profit.
This scheme is proving to be a real game-changer for new founders, especially those startups which suffer losses in the initial years and grow rapidly later.
Why is this scheme a game-changer for startups?
The first 3-5 years are the most challenging for startups. Huge expenses are incurred on product development, team hiring, marketing, technology and operations. If 25-30% tax is imposed on profits in these years, the cash flow is badly affected.
the government has Startup India By giving this tax holiday under the initiative, startups have been given a chance to breathe. In the February 2025 budget, this scheme was extended till March 31, 2030. By June 2026 more than 2.37 lakh Startups have been DPIIT recognized and among these 3,700+ Startups have availed the benefit of 80-IAC tax exemption.
official portal: Startup India Official Website
Main benefits available under Section 80-IAC
- 100% tax exemption: Zero income tax on entire profit.
- flexible discount:You can choose 3 consecutive years of your choice in a 10 year window.
- cash flow boost: Faster growth is possible by reinvesting the saved tax in the business.
- Promotion of employment and innovation: The objective of the scheme is to support scalable business models.
- Note: This benefit is available only in the old tax regime — This benefit is not available in the new tax regime.
Direct 80-IAC Application Link: Apply for 80-IAC Tax Exemption
Eligibility Criteria – Who is eligible? (Updated 2026 Rules)
| parameters | General startup conditions | Terms of Deep Tech Startup |
|---|---|---|
| Company Type | Private Limited या LLP | Private Limited या LLP |
| Incorporation date | 1 April 2016 to 31 March 2030 | 1 April 2016 to 31 March 2030 |
| Age | less than 10 years | up to 20 years |
| turnover limit | ₹100 crore (for 80-IAC) | ₹300 crore |
| DPIIT Recognition | compulsory | compulsory |
| business model | Innovative, Scalable, Job/Wealth Creation | Based on cutting-edge technology |
Note: After notification GSR 108(E) dated February 4, 2026, the turnover limit has increased to ₹200 crore for general startups, but the limit of ₹100 crore is still applicable for Section 80-IAC tax exemption. Special discounts available for Deep Tech.
Eligibility Guidelines: DPIIT Recognition & 80-IAC Details
Complete process of obtaining DPIIT Recognition
- Create an account on Startup India portal.
- Fill out the Startup Recognition Form.
- Upload Company Incorporation Certificate, PAN, MoA/AoA, Business Idea, Pitch Deck etc.
- Download DPIIT Certificate.
Recognition is completely free And in most cases it is available in 7-15 days.
Direct Recognition Link: Apply for DPIIT Recognition
Application Process for Section 80-IAC Exemption (Step-by-Step)
After getting DPIIT recognition, apply for 80-IAC separately:
- Login to the portal and Form 80-IAC Select.
- Fill in company details, shareholding, financial statements.
- Upload necessary documents.
- Submit to Inter-Ministerial Board (IMB).
Required Documents:
- DPIIT Recognition Certificate
- Shareholding Pattern (latest)
- Audited Balance Sheet and P&L Account (of previous years)
- CA Certificate (Non-Reconstruction, Innovation and New Assets)
- board resolution
- ITR Copies
- Pitch Deck / IPR Details / Funding Proof
- Startup video or presentation (if requested)
The IMB usually gives its decision in 90-120 days. After getting approval, claim exemption while filing ITR.
Application Status Check Link: Track 80-IAC Application
How to do smart planning for 3 years discount? (with examples)
Suppose your startup starts in 2025. You have a 10-year window from FY 2025-26 to FY 2034-35.
Smartest Strategy: If there are losses or low profits in the initial years, then take the discount later. Choose those 3 years when profits grow rapidly (usually 4th to 7th year).
Actual example:
| financial year | Profit (₹ Lakh) | Claim a discount? | Tax Savings (about 25-30%) |
|---|---|---|---|
| 2027-28 | 80 | No | – |
| 2028-29 | 250 | Yes | 62-75 lakhs |
| 2029-30 | 620 | Yes | 1.55-1.86 crore |
| 2030-31 | 950 | Yes | 2.37-2.85 crores |
| Total savings | – | – | 4.5 crore+ |
Current Data and Impact (June 2026 Update)
- DPIIT Recognised Startups: 2,37,492+
- Startups that have availed 80-IAC benefits: 3,700+
- Direct Jobs Created by DPIIT Startups: 23 lakhs+
- Almost 50% of the startups are coming from Tier 2 and Tier 3 cities.
Reference: Startup India Portal and PIB Release (January-June 2026).
Common mistakes and how to avoid them
- Only taking DPIIT Recognition and not applying for 80-IAC.
- Choose the new tax regime.
- Submission of incomplete or incorrect documents (reason for 90% of rejections).
- Making an old business look like a new startup.
- Not applying on time.
Solution: Always take help of a certified CA or tax consultant.
Other important tax and support schemes
- Angel Tax Exemption (Section 56): Tax free on investor funding.
- 80% fee waiver on Patent Filing.
- Startup India Seed Fund Scheme।
- Credit Guarantee Scheme।
- Self-Certification for Compliance।
Take Action Now – Your Next Step
- Apply for DPIIT Recognition today.
- Fill the 80-IAC form as soon as you receive recognition.
- Prepare documents with the help of CA/Tax Expert.
- Apply on time — delay can be costly.
Zero Tax for 3 Years Not just tax savings, but also government support to make your startup fast, strong and scalable.
Update: This information is latest as of June 2026. If there is any change in the rules, check the official website or consult a tax expert.
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Now the question is for you – When is your startup taking advantage of this tax-free golden opportunity?
