It is simple to claim deductions under the Income Tax Act of 1961 Section 80-IAC. Startups don’t have to pay any government fees to file an uncomplicated online application. More startups are encouraged to take advantage of this tax exemption as a result of the ease with which the compliance procedure can be streamlined.
For each of the three consecutive assessment years, the total of the deductions allowed by Section 80-IAC of the Income-tax Act, 1961 is 100% of the earnings and gains realised by the qualified business.
Since there would be no tax due for that year, there is no need to pay advance tax. This section’s deductions enable entrepreneurs to address the tax burden they often face in their early stages of business. The act eases startup financial strain by lowering taxable income, allowing them to use resources more wisely.
The qualified assessee must apply for the certificate from the Inter-Ministerial Board of Certification to be able to claim the deduction under Section 80-IAC. The procedures for requesting the certificate are as follows:
Step 1: To begin with, you must sign into the Startup India website. You next need to apply for the DPIIT recognition certificate by going through the Startup India registration process step-by-step on the screen.
Step 2: Choose “claim tax exemption” and provide the following information on the form:
Startup name
Nature of business (Limited Liability Partnership) or Private Limited Company)
Address and location
Contact details (PAN, E-mail ID, and phone number of entity)
Incorporation/registration number
Date of incorporation
DIPP number
Step 3: A startup that chooses to take advantage of 80IAC deductions must provide the necessary paperwork in PDF format:
Memorandum of association if PLC
Limited liability partnership deed if LLP
Board Resolution (if any)
Financial statements covering the last three years or every year since the company’s founding
Profit and loss statements and a balance sheet approved by CA
Filed income tax returns from the date of incorporation or for the previous three years
Provide a link to the startup’s video pitch and PDF pitch deck
If a startup additionally possesses an angel tax exemption certificate, it must submit that certificate along with the previously specified documentation.
You must wait for approval after submitting the form for the section 80 IAC tax exemption. The department will review all of the documents and information you submitted as part of the procedure and deliver a suitable result. Because of this, it takes between three and nine months to receive an answer or clearance from the DPIIT.
