Tax Exemption CertificateComplete Guide for Startups & Businesses
Get up to 100% tax exemption for three consecutive years under Section 80IAC. Understand eligibility, required documents and the complete application process for DPIIT-recognized startups.
What is a Tax Exemption Certificate?
A tax exemption certificate is an official document issued by tax authorities, certifying that an entity or individual is eligible for certain tax exemptions. For businesses and startups, this certificate can drastically reduce the amount of tax owed to the government, particularly in the early stages of growth.
In India, one of the most beneficial tax exemption schemes for startups is under Section 80IAC of the Income Tax Act, which allows eligible startups to avail up to 100% tax exemption for three consecutive years within the first ten years of incorporation.
This guide covers everything you need to know about obtaining a tax exemption certificate for your startup or business (PVT Ltd and LLP), including eligibility, application process, benefits and required documents.
- DPIIT-recognized startup — mandatory first step
- Incorporated after 1st April 2016
- PVT Ltd or LLP entity type
- Annual turnover below ₹100 crore
Benefits of the Section 80IAC Tax Exemption
100% Tax Holiday
Complete exemption from income tax on profits for any three consecutive years chosen within the first ten years of incorporation.
No Minimum Alternate Tax (MAT)
Startups recognized under this scheme are also exempt from MAT provisions during the holiday period.
Improves Cash Flow
Tax savings can be reinvested into product development, hiring and scaling — critical in the early growth phase.
Flexible Year Selection
Startups can choose which three consecutive years to apply the exemption within the first decade, allowing strategic financial planning.
Enhanced Investor Confidence
DPIIT recognition required for this certificate signals credibility to VCs, angels and institutional investors.
Stacks with Other Schemes
The tax exemption can be combined with CGTMSE collateral-free loans, SISFS grants and other government support schemes.
Eligibility Criteria for Section 80IAC
To qualify for a tax exemption certificate under Section 80IAC, the following conditions must be fulfilled:
DPIIT Recognition
The startup must be recognized by the Department for Promotion of Industry and Internal Trade (DPIIT). Recognition must be obtained before claiming the exemption.
Incorporation Date
The startup must have been incorporated after 1st April 2016. Businesses incorporated before this date are not eligible under Section 80IAC.
Eligible Entity Types
Only Private Limited Companies (PVT Ltd.) and Limited Liability Partnerships (LLP) are eligible. Partnership firms, sole proprietorships and public companies do not qualify.
Annual Turnover Limit
The business must not exceed ₹100 crore in annual turnover in any financial year since incorporation. Exceeding this limit makes the startup ineligible.
Tax Holiday Period
The exemption covers any three consecutive years within the first ten years from the year of incorporation — not necessarily consecutive from the start.
No Splitting of Business
The startup must not have been formed by splitting up or reconstruction of an existing business. It must be a genuinely new enterprise.
Required Documents
- DPIIT recognition certificate and Certificate of Incorporation
- Memorandum of Association (MOA) or LLP Deed
- Audited financial statements for all years since incorporation
- Income Tax Return (ITR) acknowledgment for relevant assessment years
- Board resolution authorizing the application
- A short video (up to 2 minutes) describing your startup's product, innovation and business model
- Shareholding pattern confirming ≥51% Indian promoter ownership
How to Apply for a Tax Exemption Certificate
Obtain DPIIT Recognition
Register on the Startup India portal and get your DPIIT recognition number — this is mandatory before applying for Section 80IAC.
Prepare Your Documents
Compile MOA/LLP Deed, audited financials, ITR acknowledgments and the startup video as per DPIIT guidelines.
Submit Application
File the application through the Startup India portal. The Inter-Ministerial Board (IMB) reviews applications for eligibility.
IMB Review
The Inter-Ministerial Board evaluates the application based on innovation, scalability and job creation potential.
Certificate Issued
On approval, the IMB issues a certificate of eligibility, after which you can claim the exemption in your Income Tax Return.
Obtain DPIIT Recognition
Register on the Startup India portal and get your DPIIT recognition number — this is mandatory before applying for Section 80IAC.
Prepare Your Documents
Compile MOA/LLP Deed, audited financials, ITR acknowledgments and the startup video as per DPIIT guidelines.
Submit Application
File the application through the Startup India portal. The Inter-Ministerial Board (IMB) reviews applications for eligibility.
Certificate Issued
On approval, the IMB issues a certificate of eligibility, after which you can claim the exemption in your Income Tax Return.
IMB Review
The Inter-Ministerial Board evaluates the application based on innovation, scalability and job creation potential.
Frequently Asked Questions
Need help with DPIIT recognition or Section 80IAC?
Enego handles the complete recognition and tax exemption application — from documentation to submission.