Glossary
Section 80-IAC Tax Holiday
An Indian income tax exemption of 100% for any 3 consecutive years out of the first 10 years for DPIIT-recognised eligible startups.
By Amit Tyagi, Fitoor Capital · AletheiaAI Glossary
Definition
Section 80-IAC of the Income Tax Act provides eligible Indian startups with a 100% income tax exemption on profits for any 3 consecutive years out of the first 10 years of operation. It's the single most valuable tax benefit available to Indian startup founders.
Eligibility requires: (a) DPIIT recognition, (b) incorporation between 1 April 2016 and 31 March 2030 (current window), (c) annual turnover under ₹100Cr in the claim years, and (d) approval from the Inter-Ministerial Board (IMB) on the innovation/scalability criterion.
India Context
The IMB application is the harder gate — not every DPIIT-recognised startup gets 80-IAC approval. IMB reviews typically take 8-16 weeks after DPIIT recognition. Approval rates run roughly 60-75% on first application; rejections can be appealed.
Strategic timing: Most startups time their 3 exempt years for when they're first profitable (typically years 4-7). Claiming earlier when you're loss-making wastes the benefit. The 3 consecutive years requirement means you should be confident about profitability for the entire 3-year window before claiming.
Example
A B2B SaaS startup gets DPIIT recognition in year 1 and IMB approval for 80-IAC in year 2. It reaches profitability in year 4 with ₹3Cr profit. Claims 80-IAC for years 4-5-6. Tax savings: ~₹3Cr × 25% × 3 = ₹2.25Cr over the 3-year window.
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