To boost entrepreneurship and support innovative start-ups, the Government of India introduced Section 80-IAC of the Income Tax Act, 1961, under the Start-up India initiative. This section provides eligible start-ups with a 100% tax exemption on profits for three consecutive financial years out of ten, offering substantial financial relief during early business stages.
Objective of Section 80-IAC
The purpose of this tax benefit is to:
Promote growth and sustainability of start-ups
Ease the financial burden on early-stage businesses
Support innovation, job creation, and economic development
Encourage entrepreneurship across India
Exemption Details
Quantum of Exemption: 100% of profits and gains
Period of Claim: 3 consecutive years (selected by the start-up) out of the first 10 years
Type of Income Covered: Profits and gains from eligible business only
Type of Deduction: Deduction is available from Gross Total Income, reducing the taxable income to zero
