Section 80-IAC

Section 80-IAC is an income tax provision that gives an eligible startup a 100% deduction on profits for three consecutive assessment years, chosen from the first ten years after incorporation. In those years the startup pays zero income tax on its profits — not a deferral, not a credit, a full deduction.

Who it applies to

• DPIIT-recognised startups that have received a separate Inter-Ministerial Board (IMB) approval
• Incorporated between 1 April 2016 and 1 April 2030 (the current extended window)
• Annual turnover not exceeding ₹100 crore in any financial year
• Business involves innovation, development, or deployment of a scalable product or service

What you get

Zero income tax on profits for any three consecutive assessment years of your choice within the first ten from incorporation. At a 25% corporate tax rate, that is a ₹25 lakh saving for every ₹1 crore of taxable profit — per year, for three years. The deduction is claimed in the income tax return under Chapter VI-A.

What most founders miss

DPIIT recognition does not grant 80-IAC automatically. This is the single most common misconception. Recognition is a self-certified process with near-automatic approval. The 80-IAC exemption requires a separate IMB application in which the government evaluates whether your business is genuinely innovative. The IMB can reject the application — and does so for businesses it considers derivative rather than innovative.

Year selection matters strategically. Claiming the deduction in a loss year is worthless. If your startup is profitable from Year 3 to Year 7, claim in those years — not earlier when there is nothing to deduct. The ten-year window is generous precisely so founders can align the claim with actual profitability.

The incorporation date cutoff is strict: 1 April 2016. Companies incorporated before that date do not qualify, regardless of their recognition status or how innovative their product is.

See also

• DPIIT Recognition — the required first step before applying for IMB approval
• 80-IAC vs 80-IC vs 80-IE — which applies to you
• Section 80-IAC explained in full
• Section 80-IAC scheme page