80 IAC Tax Exemption is a special benefit under the Income Tax Act, 1961, introduced to promote startups in India under the Startup India Initiative. Section 80-IAC provides eligible startups with a 100% tax holiday for three consecutive years out of the first ten years of incorporation, enabling them to reinvest profits and scale operations without the burden of income tax.

To avail of this exemption, the business must first be recognized as a Startup by the Department for Promotion of Industry and Internal Trade (DPIIT). The entity must be incorporated as a Private Limited Company or Limited Liability Partnership (LLP), and its turnover should not exceed ₹100 crore in any of the previous financial years. Additionally, the startup should be engaged in innovation, development, or improvement of products, processes, or services, or should have a scalable business model with potential for job creation or wealth generation.

The application for tax exemption is made online through the Startup India portal, where the entity must submit documents such as the Incorporation/Registration Certificate, audited financial statements, PAN, and DPIIT recognition certificate. Once approved by the Inter-Ministerial Board (IMB), the startup can claim 100% deduction of profits for the chosen three years within the first ten years.

The benefits of 80-IAC exemption include significant tax savings, improved cash flow, better chances of attracting investors, and higher profitability during the crucial early stages of business. It allows startups to focus on growth, innovation, and scaling without immediate tax pressure.

In conclusion, 80-IAC Tax Exemption is a powerful incentive for startups, offering financial relief and encouraging entrepreneurship while contributing to India’s innovation-driven economic growth.