What is Section 80-IAC?

Section 80-IAC of the Income Tax Act gives eligible DPIIT-recognised startups a 100% deduction on profits for any three consecutive financial years within the first ten years from incorporation, effectively a tax holiday on those years' profits.

Who is eligible for the 80-IAC tax holiday in 2026?

The startup must be DPIIT-recognised, incorporated as a Private Limited Company or LLP on or after 1 April 2016 and before 1 April 2030 (extended in Budget 2025), with turnover not exceeding Rs. 100 crore. Approval is given by an Inter-Ministerial Board.

Has the 80-IAC deadline been extended?

Yes. The Union Budget 2025-26 extended the eligibility window so that startups incorporated before 1 April 2030 can apply for the tax holiday. Applications are reviewed within a 120-day timeline.

Can I choose which years to claim the deduction?

Yes. The 100% deduction can be claimed for any three consecutive financial years within the first ten years of incorporation, so most startups choose profitable years to maximise the benefit.

Startup India / DPIIT

Section 80-IAC Explained: How Delhi Startups Get a 100% Tax Holiday (Extended to 2030)

By CA Neeraj Rohilla, FCAUpdated May 20267 min read

In short

Section 80-IAC gives eligible DPIIT-recognised startups a 100% income-tax deduction on profits for any 3 consecutive years within their first 10 years — effectively a tax holiday. In Budget 2025-26 the government extended eligibility to startups incorporated before 1 April 2030, and applications are now reviewed within 120 days. To qualify you must be a DPIIT-recognised Pvt Ltd or LLP with turnover under Rs. 100 crore. It's one of the biggest financial incentives available to Delhi NCR startups.

For a profitable early-stage company, paying zero income tax for three years is transformational — that's exactly what Section 80-IAC offers eligible startups. Here's how it works in 2026 and how Delhi founders can claim it.

What Section 80-IAC actually does

It allows an eligible startup a 100% deduction on profits and gains from its business for any three consecutive financial years chosen out of the first ten years since incorporation. Because you pick the years, most startups apply the deduction to their most profitable years, maximising the saving and freeing up capital to reinvest in growth.

The 2025 extension — why it matters now

The Union Budget 2025-26 extended the eligibility window: startups incorporated before 1 April 2030 can now apply. The review process was also streamlined, with complete applications assessed within a 120-day timeline. For Delhi founders incorporating today, this means the door to the tax holiday is firmly open.

Eligibility checklist

DPIIT-recognised — you must first hold DPIIT recognition (see our DPIIT recognition guide)
Structure: Private Limited Company or LLP
Incorporation date: on or after 1 April 2016 and before 1 April 2030
Turnover: not exceeding Rs. 100 crore in the relevant financial year
Genuine business: not formed by splitting up or reconstructing an existing business

How to claim it

Get DPIIT recognition

This is the prerequisite. Without it, you can't apply for 80-IAC.

Apply for the exemption

Submit the 80-IAC application with your business plan and financials; it's reviewed by the Inter-Ministerial Board (IMB).

Get IMB approval

Complete applications are reviewed within 120 days. On approval, you can claim the deduction in your chosen years.

Claim in your ITR

Apply the 100% deduction across the three consecutive years you select, supported by clean accounts.

A simple illustration

Say your startup turns profitable in years 4, 5 and 6 after incorporation. By electing those three consecutive years for the 80-IAC deduction, the profits of those years can be fully exempt — capital that stays in the business instead of going to tax. (Other taxes such as MAT/AMT and conditions can apply, so plan the timing with an advisor.)

What a strong application needs

A clear demonstration of innovation, scalability and growth potential
A credible business plan and financial statements
Clean, well-maintained books — see our bookkeeping service

The IMB rejects vague or weak applications, so the write-up matters as much as the numbers. Our Saket team helps Delhi NCR startups secure both DPIIT recognition and the 80-IAC exemption.

This article is general information, not tax advice. Eligibility and conditions are governed by the Income Tax Act and DPIIT notifications and can change.

How Startup Advisory Can Help

Startup Advisory is a CA-led firm in Saket, New Delhi that helps DPIIT-recognised startups across Delhi NCR actually secure the Section 80-IAC tax holiday. The exemption is valuable but the application is where most startups get rejected — we get it approved:

Startup India (DPIIT) recognition plus the full Section 80-IAC exemption application to the inter-ministerial board.
A strong innovation and scalability write-up — the single biggest reason applications succeed or fail.
ITR and tax advisory to choose the right three years and claim the holiday correctly.
A named CA who manages the whole approval, end to end.

Call 9311972982 or book a free consultation to check your 80-IAC eligibility.

Frequently Asked Questions

It gives eligible DPIIT-recognised startups a 100% deduction on profits for any three consecutive years within the first ten years from incorporation — effectively a tax holiday on those years' profits.

A DPIIT-recognised Pvt Ltd or LLP, incorporated on/after 1 April 2016 and before 1 April 2030, with turnover up to Rs. 100 crore. Approval is granted by an Inter-Ministerial Board.

Yes. Budget 2025-26 extended eligibility to startups incorporated before 1 April 2030, with applications reviewed within 120 days.

Yes — any three consecutive years within the first ten from incorporation, so most startups pick their profitable years.

No. DPIIT recognition is only the prerequisite. The 80-IAC deduction requires a separate application to the Inter-Ministerial Board, which assesses the startup's innovation, scalability and financials before approving it.

Possibly. Even when the 80-IAC deduction reduces normal taxable income to nil, Minimum Alternate Tax (MAT) or Alternate Minimum Tax (AMT) on book profits can still apply. A company that has opted for the Section 115BAA regime is exempt from MAT, but it then cannot claim 80-IAC, so the choice needs planning.

The startup's turnover must not exceed Rs. 100 crore in the financial year for which the deduction is claimed. If turnover crosses that threshold, the benefit is not available for that year.

Yes. Both a Private Limited Company and an LLP can claim the Section 80-IAC deduction, provided they are DPIIT-recognised and meet the incorporation-date and turnover conditions.

A complete 80-IAC application is reviewed by the Inter-Ministerial Board within 120 days. A clear innovation write-up and clean financials help avoid follow-up queries that slow things down.

The deduction only helps in profit-making years, and you choose any three consecutive years within the first ten. Early-year losses are handled separately under the normal loss carry-forward rules, so most startups elect their first profitable run of years.

Typically your DPIIT recognition number, the incorporation certificate, audited financial statements and ITRs where applicable, a board resolution, and a concise note on the business, its innovation and growth. Clean books make a noticeable difference to approval.

Yes, and this is a key planning point. A company that opts for the concessional corporate tax regime under Section 115BAA or 115BAB cannot claim the Section 80-IAC deduction. To use the tax holiday, the startup must remain under the normal regime for those years.

About the author: CA Neeraj Rohilla, FCA

Co-Founder & Chartered Accountant, Startup Advisory — Saket, New Delhi

CA Neeraj Rohilla is a Fellow Chartered Accountant (FCA) and a co-founder of Startup Advisory. He leads the firm's work on company registration, Startup India (DPIIT) recognition, income-tax advisory and virtual CFO services for founders across Delhi NCR.

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