The Indian government has extended the tax benefits for startups under Section 80-IAC of the Income Tax Act, 1961. Previously, only startups incorporated between April 1, 2016, and March 31, 2024, could claim tax deductions under this section. However, with the Finance Bill 2025, this deadline has been extended to March 31, 2030.
This means more startups can now avail tax benefits and reduce their financial burden in the early years. Let’s break down what this means and how your startup can benefit.
What is Section 80-IAC?
Section 80-IAC provides a 100% tax deduction on profits for eligible startups for three consecutive assessment years within the first ten years of incorporation.
This tax exemption helps startups reinvest their earnings and grow their businesses without worrying about income tax in the initial years.
Who Can Claim This Deduction?
To qualify for this tax benefit, a startup must meet the following conditions:
✅ Incorporation Date:
- Must be incorporated between April 1, 2016, and March 31, 2030.
✅ Business Type:
- Should be engaged in innovation, development, or improvement of products, processes, or services.
- Should have a scalable business model with potential for job creation and wealth generation.
✅ Turnover Limit:
- The total turnover should not exceed ₹100 crore in the financial year for which the deduction is claimed.
✅ Certification Requirement:
- Must have a Certificate of Eligible Business from the Inter-Ministerial Board of Certification, issued by the government.
Key Conditions to Keep in Mind
- No Splitting or Reconstruction: The startup should not be formed by splitting up or restructuring an existing business.
- Use of New Machinery: The startup should not use previously used machinery or equipment, with some exceptions for imported machinery.
What Has Changed in the Finance Bill 2025?
The biggest update is the extension of the eligibility period for startups to claim tax benefits:
- Old Deadline: March 31, 2024
- New Deadline: March 31, 2030
This means startups incorporated until March 31, 2030, can now claim tax deductions under Section 80-IAC.
How Does This Benefit Startups?
🚀 More Time to Qualify: Startups now have an additional six years to get incorporated and still avail the tax benefit.
💰 Tax-Free Profits for 3 Years: Eligible startups can save 100% on income tax for three years, improving cash flow and boosting growth.
📈 Encourages Innovation & Job Creation: The extension supports new businesses focused on technology, job creation, and economic growth.
How to Apply for Tax Benefits Under Section 80-IAC?
1️⃣ Register Your Startup as a Private Limited Company or Limited Liability Partnership (LLP).
2️⃣ Ensure your startup meets the eligibility criteria (turnover, business type, certification).
3️⃣ Obtain a Certificate of Eligibility from the Inter-Ministerial Board.
4️⃣ While filing your income tax return, claim the deduction under Section 80-IAC for three years.
Final Thoughts
The extension of Section 80-IAC benefits until 2030 is a big win for Indian startups. If you are planning to start a business, now is the perfect time to take advantage of this tax benefit and grow your company efficiently.
✔️ Make sure your startup is eligible and follows the necessary compliance steps to claim this deduction.
Need expert help? Consult a CA or tax advisor to ensure your startup gets the maximum tax benefits. 🚀
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About the Author
CA Bhuvnesh Kumar Goyal
Fellow Chartered Accountant, LLB, B.com, Forensic Accountant and Fraud Detection Professional
CA Bhunvesh Kumar Goyal, a seasoned Chartered Accountant with 15+ years of experience, specializes in Income Tax, GST, MSME advisory, startups, audits, company registration, and business structuring. He also provides expert guidance on ESG, BRSR, the Companies Act, crypto transactions, and transfer pricing. With a practical approach, he helps businesses stay compliant while optimizing financial and operational efficiency.