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Startup tax holiday: 100% deduction for three years

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An eligible startup can claim a 100% deduction of its profits for any three consecutive years out of its first ten years. Known for years as Section 80-IAC, it is now Section 140 of the Income-tax Act, 2025 from 1 April 2026. It needs a separate certificate beyond DPIIT recognition.

Conditions

  • A private limited company or LLP with DPIIT recognition.
  • Incorporated on or after 1 April 2016 and before 1 April 2030.
  • Turnover within the limit set in the Act for the year of claim (₹100 crore under the old Section 80-IAC).
  • A certificate of eligible business from the Inter-Ministerial Board (IMB).
  • Not formed by splitting up or reconstructing an existing business.

Getting the IMB certificate

Apply through the Startup India portal after DPIIT recognition. The board looks for genuine innovation and scalability, so applications usually need a detailed description, traction and supporting documents. Approval rates are much lower than for DPIIT recognition.

Choosing the three years

Since the deduction is for any three consecutive years in ten, pick the years when profit is expected to be highest. Early loss years waste the benefit. Under the old regime, MAT (now a 14% final tax from tax year 2026-27) can still apply on book profits, and the concessional 22% regime does not allow this deduction.

Frequently asked questions

No. You need the separate IMB certificate.

This guide is general information, not legal advice. Government fees and procedures change; confirm current figures before you file.

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