Starting a new business comes with many challenges, and taxes can be one of them. To support and encourage entrepreneurs, the Indian government offers tax exemptions under Section 80IAC. This blog will help you understand everything about Section 80IAC, including its benefits, eligibility, registration process, and how it helps startups grow.
If you’re a startup founder or planning to start a new venture, read on to learn how this section of the Income Tax Act can reduce your financial burden and boost your business.
What is Section 80IAC?
Section 80IAC is a provision in the Income Tax Act of India designed to promote innovation and entrepreneurship. It allows eligible start-ups to claim a 100% tax exemption on profits for three consecutive years out of their first ten years of incorporation.
This benefit is aimed at helping startups manage their finances better and reinvest profits into business growth.
80 IAC Benefits for Startups
- Tax Savings
Eligible startups can enjoy a full tax exemption on profits for three years. This means your startup can focus on growing the business without worrying about high tax payments. - Improved Cash Flow
By reducing the tax burden, startups can maintain better cash flow, which is essential during the initial stages of business. - Encourages Innovation
Startups working on innovative solutions can utilize these savings to invest in research and development. - Support for Young Businesses
Since startups often struggle with financial stability, Section 80IAC exemption provides much-needed relief during the early years.
Eligibility for Section 80IAC Exemption
Not all startups can claim benefits under Section 80IAC. Here are the eligibility criteria:
- Startup Recognition
Your business must be recognized as a startup by the Department for Promotion of Industry and Internal Trade (DPIIT). - Incorporation Date
The startup should have been incorporated on or after April 1, 2016, but before April 1, 2024. - Turnover Limit
The annual turnover of the startup must not exceed ₹100 crore in any of the financial years since incorporation. - Innovative Business Idea
The startup must be working on an innovative product, process, or service, or improving an existing system, with potential for scalability.
How to Register for Section 80IAC
To claim the benefits under Section 80IAC, your startup needs to follow these steps:
- DPIIT Recognition
- Visit the official Startup India portal.
- Apply for DPIIT recognition by submitting your business details and required documents.
- Apply for Tax Exemption
- Once DPIIT recognition is obtained, log in to the Income Tax Department’s portal.
- Fill out the application form for Section 80IAC registration and attach the DPIIT certificate.
- Await Approval
- The application will be reviewed by the authorities.
- Upon approval, your startup can start claiming the tax exemption.
Common Questions About Section 80IAC
1. Is Section 80C Removed?
No, Section 80C is not removed. It is still applicable and allows taxpayers to claim deductions on various investments and expenses, such as LIC premiums, PPF, and tuition fees. However, it is unrelated to Section 80IAC, which specifically focuses on startups.
2. What Section 80C Covers?
Section 80C provides deductions for individual taxpayers up to ₹1.5 lakh annually for certain investments and expenses. Unlike Section 80IAC, it does not cater to business entities or startups.
Importance of Section 80IAC of Income Tax Act
The Indian government introduced Section 80IAC of Income Tax Act to create a startup-friendly ecosystem in the country. By offering tax benefits, the government aims to:
- Encourage entrepreneurship.
- Support small businesses with limited resources.
- Drive innovation and job creation.
Challenges Start-ups Face Without Tax Exemptions
Startups often operate with limited budgets and struggle with high operational costs. Without the support of tax exemptions like Section 80IAC, they may:
- Face cash flow issues.
- Struggle to reinvest profits into growth.
- Lose competitive advantage due to financial constraints.
How Apkireturn Can Help
At Apkireturn, we understand the complexities of tax laws and startup registrations. Our team of experts provides end-to-end assistance with:
- Section 80IAC Registration
- DPIIT Recognition Application
- Tax Filing and Compliance
- GST Registration and Filing
Whether you’re just starting your business or looking to claim Section 80IAC exemption, Apkireturn ensures a hassle-free process.
Contact us today at +91766 515 6000 to take the first step toward maximizing your startup’s benefits.
Final Thoughts
Section 80IAC is a game-changer for startups in India. By providing significant tax relief, it enables businesses to focus on growth, innovation, and creating value for their customers.
If you’re an entrepreneur, don’t miss the opportunity to claim 80 IAC benefits. Let Apkireturn handle the paperwork while you concentrate on building your dream business.
For expert advice and services, reach out to Apkireturn at +91766 515 6000 today.
