Chartered Accountant · ICAI M.No. 153926 · FRN 136869W
Recognition vs the tax holiday
The 80-IAC tax holiday is a second, separate step — you apply for it after recognition and it must be approved by the IMB.
What recognition gives you straight away
Angel-tax relief on share premium and self-certification under labour and environment laws apply from recognition itself.
Sequencing recognition, 80-IAC and angel tax
It helps to see the three things as a sequence. DPIIT recognition is the gateway — quick, no fee — and by itself it gives you the operational benefits (self-certification, IP rebates, tender access) and, for pre-April-2024 rounds, the angel-tax relief on share premium. The 80-IAC income-tax holiday is a separate, second application to the Inter-Ministerial Board, which assesses genuine innovation and scalability before granting the certificate; only then can you claim the 100%-profit deduction for three of your first ten years. Angel tax, meanwhile, has been abolished for shares issued on or after 1 April 2024, so for new rounds there’s nothing to claim — the relief matters mainly for older rounds. So recognition unlocks the door, but the tax holiday needs its own approval, and you should time the holiday for your profitable years rather than claiming it early at a loss. A common misunderstanding is to assume recognition equals a tax break; it doesn’t. Plan recognition first, then the 80-IAC application when profitability is in sight, keeping your financials and innovation evidence ready for the IMB. Confirm the current conditions per the latest Finance Act.