At a glance
| Deduction | Window | Who approves | Government fee | Our fee |
|---|---|---|---|---|
| 100% of eligible business profits | Any 3 consecutive years out of 10 from incorporation | Inter-Ministerial Board | No government fee | ₹9,999 |
What the startup tax holiday gives you
The tax holiday removes income tax on the profits of your eligible business for three consecutive years. You choose the three years, as long as they fall within the first ten years from incorporation.
The deduction is 100% of the profits and gains derived from the eligible business. It applies to business profits, so other income such as interest on surplus funds needs separate review. It reduces taxable income; it does not refund tax already paid or create a loss.
For a startup that turns profitable in years four to eight, this can mean three years of profits with no regular income tax. The value depends on timing, which is why the choice of years matters as much as the certificate.
Section 80-IAC or section 140: which law applies to which year
The year you claim decides the section. The Income-tax Act, 2025 came into force on 1 April 2026, and section 140 of that Act continues the startup tax holiday.
| Year of claim | Law | Section |
|---|---|---|
| FY 2025-26 (AY 2026-27) and earlier years | Income-tax Act, 1961 | Section 80-IAC |
| Tax Year 2026-27 onwards | Income-tax Act, 2025 | Section 140 |
The core benefit carries over: 100% of profits for three consecutive tax years out of ten, from the year of incorporation. The Income-tax Act, 2025 uses "tax year" in place of "previous year" and "assessment year".
If your chosen window starts in FY 2025-26 and runs into Tax Year 2026-27, it crosses both Acts. We check the transition position for your case before you commit to that window.
Who is eligible
You are eligible if you are a company or an LLP that meets the definition of an eligible start-up and holds a certificate of eligible business from the IMB. Every condition must be met for each year you claim.
The conditions in the law
Section 140 of the Income-tax Act, 2025 sets these conditions:
| Condition | What it means for you |
|---|---|
| Entity | A company or a limited liability partnership |
| Incorporation date | On or after 1 April 2016 and before 1 April 2030 |
| Eligible business | Innovation, development or improvement of products, processes or services, or a scalable business model with high potential for employment generation or wealth creation |
| Not a reorganised business | Not formed by splitting up or reconstructing a business already in existence |
| No reused plant | Not formed by transferring machinery or plant previously used for any purpose to the new business |
| Turnover | The law sets a turnover ceiling for the year of claim. Published sources currently disagree on the figure, so we check it against the law in force before you apply and again for each year you claim |
| Certificate | A certificate of eligible business from the Inter-Ministerial Board of Certification |
| Audit | Accounts of the eligible business for the year of claim audited by an accountant, with the audit report furnished by the specified date |
The Startup India application page also asks that you be DPIIT recognised, which is why recognition comes first.
Who cannot claim it
Some startups can hold DPIIT recognition but cannot claim the tax holiday.
- Registered partnership firms and cooperative societies. They can be recognised as startups under G.S.R. 108(E), but the tax holiday is only for companies and LLPs.
- One person companies and sole proprietorships. A sole proprietorship is not eligible for recognition at all.
- Companies incorporated before 1 April 2016, or on or after 1 April 2030.
- Businesses formed by restructuring an existing business, or by moving used plant and machinery into a new entity.
- Companies that have opted for section 115BAA (the 22% concessional rate under the 1961 Act), because that option does not allow this deduction. More on this below.
If the tax holiday matters to your plan and you have not yet incorporated, set up as a private limited company or an LLP.
DPIIT recognition and the IMB certificate are two different approvals
DPIIT recognition makes you a recognised startup. It does not give you any tax deduction on its own. The tax holiday needs a second approval: the certificate of eligible business from the IMB.
| Point | DPIIT recognition | IMB certificate for the tax holiday |
|---|---|---|
| What it is | Recognition as a startup | Certificate that your business is an "eligible business" |
| Who can get it | Companies, LLPs, registered partnership firms, cooperative societies | Companies and LLPs |
| Where you apply | National Single Window System (nsws.gov.in) | The "80-IAC" application on the Startup India portal, after recognition |
| Government fee | Nil | Nil |
| Our service | Startup India registration | This page |
The IMB looks harder at the business case than DPIIT does. It wants evidence of innovation, scalability, employment and wealth creation, not only a description.
Choosing your three years
Pick the three consecutive years in which you expect the highest taxable profits, inside the ten-year window from incorporation. The window counts from the year of incorporation, not from the year you receive the certificate.
A startup that is still making losses can apply early and choose the years later. The certificate is an eligibility approval; the deduction is claimed year by year in the income-tax return.
Get the certificate before the first year you plan to claim. We then model the likely profit curve, brought-forward losses and MAT or AMT, so the chosen window gives the largest net saving rather than simply the first profitable years.
An example of a claim window
The figures below are illustrative only.
| Detail | Example |
|---|---|
| Incorporated | FY 2021-22 |
| Ten-year window | FY 2021-22 to FY 2030-31 |
| First profitable year | FY 2025-26 |
| Profits expected to peak | FY 2027-28 to FY 2029-30 |
| A better window | FY 2027-28, FY 2028-29 and FY 2029-30 |
| Law for those years | Section 140 of the Income-tax Act, 2025 |
Claiming from the first profitable year would have used the holiday on smaller profits. Waiting two years, in this example, puts the deduction against the larger profits while staying inside the window.
MAT, AMT and the section 115BAA choice
The tax holiday removes regular income tax on eligible profits, but it does not remove minimum tax. For FY 2025-26, a company claiming section 80-IAC still pays Minimum Alternate Tax (MAT) on book profits, and an LLP pays Alternate Minimum Tax (AMT).
Companies
Under the Income-tax Act, 1961, a company pays MAT under section 115JB at 15% of book profit, plus surcharge and cess, when its regular tax is lower. MAT paid can generally be carried forward as a credit against regular tax in later years, within the limits of section 115JAA.
A company can instead opt for the 22% concessional rate under section 115BAA. That option does not allow the section 80-IAC deduction, but the company is not liable to MAT. For some startups the 115BAA route costs less over the ten-year window, especially if profits are modest or MAT credit may never be used.
LLPs
An LLP that claims the deduction is liable to AMT under section 115JC for FY 2025-26. The deduction is added back to compute adjusted total income, and AMT applies on that figure. Model this before assuming the holiday means no tax.
From Tax Year 2026-27 we run the same comparison under the corresponding provisions of the Income-tax Act, 2025 before you lock in a choice.
How to apply for the IMB certificate
You apply online through the "80-IAC" form on the Startup India portal, after logging in with your DPIIT-recognised profile. There is no government fee.
The portal takes the application through five steps: document requirements, recognition and 80-IAC details, the 80-IAC exemption evaluation, broad parameters on innovation, wealth and employment, and final acknowledgement and submission.
Documents the application asks for
The portal lists these documents. Not every item is mandatory, but each one strengthens the case.
- Shareholding details as per the MoA and the current shareholding pattern
- Board resolution for the application
- Income-tax return acknowledgements for up to the last three years, as applicable
- Audited balance sheet and profit and loss statement for up to the last three years, depending on the startup's age
- A Chartered Accountant certificate that the startup was not formed by splitting up or reconstructing an existing business, and a scalability declaration where relevant
- Proof of credit rating from a recognised agency, if you have one (optional)
- Intellectual property filings or grants: patents, copyrights, designs, or journal publications. If the business is built on an invention you have not yet filed, see patent registration
- Awards and recognitions at district, state or national level
- Pitch deck (PDF, up to 5 MB)
- Employee details the form asks for, including total employment, diversity and employment outside metro cities
- Proof of investment received: investor details, term sheets, investment agreements or bank statements
The portal notes that the IMB can cancel a certificate if information in the application is found to be untrue. Accuracy matters more than volume.
Our process
- Eligibility check. We confirm entity type, incorporation date, DPIIT recognition, the reconstruction test and the current turnover condition. If you do not qualify, you hear it before any drafting starts.
- Tax modelling. We map profits, losses and MAT or AMT across the ten-year window and compare the 115BAA route for companies.
- Evidence pack. We tell you exactly which documents to collect, review them and flag gaps such as unaudited years or missing board resolutions.
- Application write-up. We draft the answers on innovation, scalability, employment and wealth creation in plain, verifiable terms, backed by your own numbers.
- Filing. We complete and submit the 80-IAC form on the Startup India portal with you, and share the acknowledgement.
- IMB clarifications. If the IMB asks questions, we draft the replies with you.
- Claim support. Once certified, we set out how and when to claim the deduction in the return for each chosen year.
Fees
Our professional fee for the tax holiday application is ₹9,999. There is no government fee to apply to the IMB.
| Item | Amount |
|---|---|
| Regikart professional fee: eligibility check, tax modelling, application write-up, filing on the Startup India portal and replies to IMB queries | ₹9,999 |
| Government fee: IMB certificate application | No government fee |
| DPIIT recognition, if you do not have it yet | ₹2,499, on our Startup India registration page |
Professional fees exclude GST at 18%. Government fees, where they apply, are paid at actuals to the department and are shown separately. Fees verified on 21 September 2026.
Claiming the deduction in your return
The IMB certificate is not the deduction. You claim it in the income-tax return for each chosen year, with audited accounts for the eligible business.
For FY 2025-26 (AY 2026-27), a company claims section 80-IAC in ITR-6 and an LLP in ITR-5. The return for a company, and for any business whose accounts must be audited, is due by 31 October 2026. Under section 80AC of the 1961 Act, this deduction is not allowed unless the return is filed by the due date, so a late return loses the year.
From Tax Year 2026-27, the claim is made under section 140 of the Income-tax Act, 2025, and the accounts must be audited with the audit report furnished by the specified date. We coordinate with your auditor so the report is ready before the return.
Mistakes that cost startups the deduction
Most lost claims come from sequencing and paperwork, not from the business model.
- Assuming DPIIT recognition is enough. Without the IMB certificate there is no deduction.
- Using the holiday in a low-profit year. Once a year is claimed, the three-year run has started.
- Filing the return late. For FY 2025-26, a return filed after the due date loses the deduction under section 80AC.
- Ignoring MAT or AMT. Budgeting for zero tax and then paying minimum tax is a cash-flow shock.
- Choosing section 115BAA without checking. A company on 115BAA cannot claim this deduction.
- Restructured entities. Moving an existing business or used machinery into a new company can defeat eligibility.
- Relying on old turnover figures. Check the turnover condition for each year you claim, against the law in force for that year.
- An application that overstates the case. The IMB can cancel a certificate if information is untrue.
Why founders use Regikart for the tax holiday
The certificate is only worth what it saves you in tax. We work on both halves: the IMB application and the claim-year decision.
- Reviewed by a CA who works with startups on DPIIT recognition, valuation and FEMA filings.
- Current law. We work with section 80-IAC for FY 2025-26 and section 140 from Tax Year 2026-27, and say which applies to each year.
- One team for the rest of the stack: DPIIT recognition, ESOP scheme drafting, share valuation and FC-GPR filing. An IMB-certified startup can also let employees defer tax on ESOPs for FY 2025-26 under section 192(1C) of the 1961 Act, which we cover on our ESOP page.
- 250+ clients across India, served from Kolkata, Delhi and Bengaluru.