Answer

Startup ecosystem · Tax

80-IAC (now 140), 3-year tax holiday: the step most startups miss

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  1. Facts

    Sec 140, Income-tax Act 2025 (old Sec 80-IAC) gives DPIIT-recognised startups a 100% profit deduction for any 3 consecutive years within the first 10 years of incorporation. Applicable to Pvt Ltd and LLP only. Not available to OPC or sole proprietors.

  2. Provisions and law

    • IT Act 1961, Sec 80-IAC (now 140) | Finance Act 2024 extended to 2030

  3. Analysis

    The critical step most miss: DPIIT recognition is necessary but not sufficient. You must separately apply to the Inter-Ministerial Board (IMB) on the Startup India portal for certification. Without IMB certificate, Sec 140 (old Sec 80-IAC) deduction cannot be claimed even with DPIIT recognition. Strategy: Apply for IMB in Year 2-3. Claim Sec 140 (old Sec 80-IAC) for Years 3, 4, 5 when you're most profitable. Don't waste it on loss-making years.

  4. Conclusion

    Talk to a Savvy for the exact next step on your case.

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Startup tax holiday certificate from the Inter-Ministerial Board, Sec 80-IAC (Sec 140, Income-tax Act 2025)

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