The Government of India’s Department for Promotion of Industry and Internal Trade (DPIIT) has announced that approximately 187 new startups have been approved for a tax holiday lasting three consecutive financial years for the initial ten years following incorporation.
The Government of India has stated that the scheme has benefited nearly 3700 start-ups since its inception, with the benefits made available under the income tax exemption provisions of the revised Section 80-IAC of the Income Tax Act.
This initiative reflects the Centre’s ongoing commitment to developing a dynamic and innovative startup ecosystem in India. The plan is to provide critical fiscal relief to emerging businesses, fostering innovation and job creation across the country.
Piyush Goyal, India’s Minister of Commerce and Industry, commented on the development, stating that startups that benefit from tax breaks will be in a better position to focus on innovation, create job opportunities, and propel the country’s economic growth.
The government’s ongoing support demonstrates its commitment to developing a robust, future-ready startup ecosystem that is consistent with the vision of a self-sufficient and innovative New India.
Out of the total approvals, 75 startups were cleared during the 79th IMB meeting, and 112 were approved during the 80th meeting, bringing the total number of startups granted exemptions since the scheme’s inception to over.
In a significant announcement made during the Union Budget for 2025-26, the government has extended the eligibility period for startups to claim benefits under Section 80-IAC, allowing those incorporated before April 1, 2030, to apply, giving new ventures more time and opportunities to benefit from this financial relief.
Notably, DPIIT’s revised evaluation framework improved the application process, making it more organised and transparent.
Complete applications are now assessed within 120 days, allowing for faster decision-making and fewer procedural delays. Startups that were not approved in the most recent round have been encouraged to reevaluate and improve their applications, with DPIIT advising applicants to focus on technological innovation, market potential, scalability, and a clear contribution to employment and economic growth.
Startup India: Tax Exemption Application Process
After receiving recognition, a startup may apply for tax exemption under Section 80 IAC of the Income Tax Act.
Eligibility Criteria for Income Tax Exemption (Section 80IAC):
- The entity must be a recognized startup.
- Only private limited companies or limited liability partnerships (LLPs) are eligible for tax exemption under Section 80IAC.
- The startup must have been incorporated after April 1, 2016.
Since the launch of this initiative, over 3,700 startups have benefited from the scheme.
Under the revised framework, eligible startups can claim a 100% income tax deduction on profits for any three consecutive years within ten years from their date of incorporation. The Union Budget 2025–26 has extended the eligibility window, allowing startups incorporated until April 1, 2030, to avail themselves of this benefit.
To qualify, startups must be recognized by the Department for Promotion of Industry and Internal Trade (DPIIT), operate as a private limited company or limited liability partnership, and have an annual turnover not exceeding ₹100 crore in any previous financial year.
The DPIIT has also streamlined and expedited the application process, ensuring that complete applications are reviewed within 120 days. Startups that were not approved in this round are encouraged to reassess and enhance their applications, with a focus on technological innovation, market potential, scalability, and their contribution to employment and economic growth.
