How to Apply for 80IAC Registration? Process & Fees

India has rapidly emerged as one of the fastest-growing startup ecosystems in the world. To fuel this growth and encourage innovation, the Government of India has introduced several tax incentives under the Income Tax Act. One of the most significant among them is the benefit available under Section 80-IAC, which allows eligible startups to claim 100% tax exemption on profits for three consecutive years out of the first ten years from their incorporation.

This exemption is a major relief for startups as it allows them to reinvest their profits into innovation, hiring and scaling rather than paying heavy taxes during their formative years. However, to enjoy this benefit, startups must apply for 80-IAC Registration through the Department for Promotion of Industry and Internal Trade (DPIIT) and meet the prescribed eligibility conditions.

This blog explains the eligibility, process, documents, fees and benefits of 80-IAC registration in simple terms.

What is 80-IAC Registration?

Section 80-IAC of the Income Tax Act provides a 100% deduction of profits to startups that are recognized by DPIIT and approved by the Inter-Ministerial Board (IMB).

The deduction can be claimed for any three consecutive financial years within the first ten years of incorporation.

The scheme is designed to:

• Reduce the tax burden on startups.
• Promote innovation and entrepreneurship.
• Support self-sustainability in the early years.

Important Note: DPIIT Recognition alone does not make a startup eligible for the 80-IAC benefit. IMB approval is mandatory to claim this tax exemption.

Eligibility for 80-IAC Registration

Not every startup can apply. The following eligibility criteria must be met:

1. Incorporation Type

• The entity must be incorporated as a Private Limited Company or a Limited Liability Partnership (LLP).
• Partnership Firms can get DPIIT recognition, but they are not eligible for 80-IAC tax exemption.

2. Date of Incorporation

• The startup must be incorporated on or after 1st April 2016.

3. Age of Startup

• The entity should not have completed 10 years from the date of incorporation at the time of application.

4. Turnover Limit

• Annual turnover must not exceed the limit of ₹100 crore in any previous financial year since incorporation.

5. Original Entity

• The startup should not be formed by the splitting up or reconstructing an existing business.

6. Innovation Requirement

• The startup must be working towards the innovation, development or improvement of products/processes/services or have a scalable business model with the high potential for employment generation or wealth creation.

7. Extended Validity

• Startups incorporated up to 31st March 2030 are eligible for 80-IAC benefits (latest government extension).

Process of Applying for 80-IAC Registration

The process is completely online via the Startup India portal (integrated with the National Single Window System). Here’s the step-by-step guide:

Step 1: Incorporation of Entity

Incorporate your business as a Private Limited Company or LLP through the Ministry of Corporate Affairs (MCA).

Step 2: DPIIT Startup Recognition

• Visit the Startup India portal.
• Create a profile and apply for DPIIT recognition by submitting incorporation details.
• Upload required documents such as Incorporation Certificate, PAN, details of directors/partners and a write-up about your business and its innovation.
• Once approved, you will receive a DPIIT Recognition Certificate.

Step 3: Application for 80-IAC Certificate

After DPIIT recognition, log in again and apply for Section 80-IAC Tax Exemption Certificate. You will need to submit:

• Memorandum of Association/LLP Agreement
• Certificate of Incorporation
• PAN Card of the Entity
• DPIIT Recognition Certificate
• Shareholding pattern of the company
• Audited financial statements (if available)
• Declaration confirming no reconstruction/splitting of business
• Proof of innovation or IPR (if applicable)
• Detailed write-up explaining scalability and innovation

Step 4: Review by Inter-Ministerial Board (IMB)

The application is reviewed by the Inter-Ministerial Board (IMB). They may seek clarifications or request additional documents.

Timeline: As per guidelines, the IMB may take up to 120 days (about 17 weeks) to process applications.

Step 5: Grant of 80-IAC Certificate

If the IMB is satisfied, your startup will be granted the 80-IAC Certificate, allowing you to claim a 100% tax deduction for three years.

Fees for 80-IAC Registration

• Government Fee: Nil (application is free of cost).
• Professional/Consultant Fee: May apply depending on the service provider for filing and documentation assistance.

Benefits of 80-IAC Registration

1. 100% Tax Exemption: Claim full tax exemption on profits for three consecutive years.

2. Flexibility in Claiming: Startups can choose any 3 years within the first 10 years, ideally their most profitable years.

3. Reinvestment of Profits: Save funds that can be reinvested in growth and expansion.

4. Competitive Advantage: Reduced tax burden helps startups compete with established players.

5. Improved Valuation: Investors prefer startups with tax exemptions as it improves profitability.

6. Ease of Scaling: Lower financial stress allows startups to focus on innovation and market expansion.

Important Points to Remember

• The exemption is only available for 3 consecutive years within 10 years of incorporation.
• Only startups with IMB approval (not just DPIIT recognition) can claim this exemption.
• Startups must file Income Tax Returns (ITR) and claim a deduction under Section 80-IAC.
• Non-compliance or misuse can lead to cancellation of benefits.
• Startups incorporated up to 31st March 2030 can apply.

Conclusion

80-IAC Registration is a golden opportunity for the eligible startups in India to secure a tax holiday and reinvest profits into their growth journey. The application process is entirely online, free of government fees and can be completed smoothly with the right documentation. With DPIIT recognition and IMB approval, startups can enjoy a 100% tax exemption for three years, giving them the financial cushion to innovate, expand and thrive in the competitive market. For professional help contact CRSPL Business Consultants, our experts will make sure a smooth process for 80 IAC registration.