Startup Tax Exemption
The government of India recently created tax exemptions as a way to enhance the startup industry. This means that startups will not be expected to pay taxes. This is meant to promote the spirit of entrepreneurship in the country. This new law is meant to support new businesses to focus on growing their brand rather than struggle with their tax payments. We can help your startup and new business get approved for tax exemption under section 80IAC.
https://www.startupindia.gov.in/content/sih/en/startupgov/startup_recognition_page.html
What is the DPIIT startup tax exemption
The startup tax exemption comes with a condition. This simply means that if startups want to be exempted from paying taxes, they will need to sign on through the Department for Promotion of Industry and Internal Trade (DPIIT). This will qualify them to be called a “startup.” Next, they can then apply to be exempted from paying taxes.
Eligibility for startup tax exemption
- The startup has to be approved by the DPIIT
- Under the MCA acts, the startup should be a registered business entity like an LLP, PLC, etc.
- To get tax benefits, the startup must complete its process of incorporation within the specified time frame provided by the government of India.
- The business operation of the startup must align with the official definition of startup as established by the Indian Government.
- It must not have a total turnover that is above 25 crores.
Required documents needed for India startup tax exemption
- You will need a certificate for startup recognition from the DPIIT
- A business incorporation certificate for your startup
- You will need financial statements like audited financial documents, P&L reports, balance sheets, and so on.
- You will need a startup declaration (a certificate that shows your startup complies with the startup tax exemption u/s 80iac)
- Tax returns from the previous year
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Process for the Indian startup exemption
1. Your startup must be recognized by the DPIIT
- Make sure that you submit your application correctly with the necessary documents
- You will wait for the DPIIT to approve this application
2. Apply for the Indian tax exemption which agrees with the Section 80IAC
- Submit all the requested documents
- Make sure that you have provided all the right information
3. The assessment phase where the authorities examine your application
- Verify that you are qualified for the tax benefits.
- Assess all your submitted documents
4. Your application gets approval and you get a clearance
- The tax authorities will give you a confirmation
5. You will have to comply with the necessary rules to maintain this status
- Be sure to meet all necessary requirements
- Obey all rules
6. Be sure to renew your tax exemption status
- Know when to go for a renewal
- Renew the document at the right time
Startup tax exemption: Benefits
- It allows you to channel all your business proceeds back to the company.
- Allows startups to invest the money into R&D for more innovation
- They can use this money to grow their workforce
- Gives your startup a competitive edge
Get approved for startup tax exemption now
We have many years’ experiences in helping startups get approved for tax exemptions under section 80IAC. Get in touch with us now to start this process.
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Frequently Asked Questions
This is a new business that was formed specifically to sell a product or offer specific services. It cannot be formed from an old company.
A startup is a company that has been in business for less than 10 years. Anything more than 10 years is not called a startup.
The startup should be registered as a partnership, an LLP, or a PLC to be qualified for these benefits. This is a requirement for this programme.
A startup should always maintain a post-incorporation annual turnover that is less than Rs.100 crores. It should never go beyond this balance.
This benefit is available for startups that were registered between April 2016 to March 2022. They are exempted from tax for three years.
This is expected to make daily operations of the business possible. It supports low compliance costs for new businesses to grow quickly.
The cost it takes for startup registration is about INR 5000. It can be more depending on your brand.
This section supports a 100% tax exemption for startups. Providing your startup is registered with the DPIIT.