CA Vijay R Singh, FCA
Chartered Accountant · ICAI M.No. 153926 · FRN 136869W
Chartered Accountant · ICAI M.No. 153926 · FRN 136869W
Short answerSection 80-IAC is the startup tax holiday: a DPIIT-recognised eligible startup can deduct 100% of its profits for any 3 consecutive financial years out of its first 10. It’s designed to let early-stage startups reinvest profits during their growth years instead of paying tax on them.
How the holiday works
An eligible DPIIT-recognised startup can deduct 100% of its eligible profits for any 3 consecutive financial years chosen within its first 10. The idea is to let an early-stage company keep and reinvest its profits during the years it’s scaling, instead of paying tax on them.
Who it's for, and the catch
You must be an eligible startup — a Pvt Ltd or LLP incorporated within the notified window, turnover under ₹100 crore — and you must get separate Inter-Ministerial Board approval. Recognition alone isn’t enough. Confirm the current incorporation cut-off and conditions per the latest Finance Act.
One thing to plan for
MAT/AMT can still apply during the holiday years, so model your cash tax before assuming zero. Time your 3-year window for your most profitable years. See how to claim it.