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No Tax for Startups in India – Full Guide for FY 2025–26

Introduction

Startups in India are growing fast—but taxes can slow that growth. Thankfully, the government offers a tax holiday for eligible startups. If your business qualifies, you can legally pay zero income tax for 3 years.

In this blog, we’ll explain everything about the Section 80-IAC tax exemption, who qualifies, how to apply, and how Alliance Tax Experts helps you make the most of it.

What is the ‘No Tax for Startups’ Scheme?

The Income Tax Act under Section 80-IAC allows startups that are recognized by DPIIT to claim a 100% income tax exemption on profits for any 3 years out of the first 10 years.

This is a government initiative to promote innovation, create jobs, and support entrepreneurship in India.

Key Benefits of This Scheme

1. 100% Income Tax Exemption

Startups save 25% to 30% tax for 3 years. This helps retain capital for growth.

2. No Angel Tax

DPIIT-recognized startups are now exempt from angel tax on share premiums.

3. Capital Gains Exemption

Investors can save capital gains tax under Section 54GB when they reinvest in eligible startups.

4. Loss Carry Forward

Startups can carry forward business losses even if their shareholding changes.

5. ESOP Tax Relief

Tax on Employee Stock Options is deferred until shares are sold or after 5 years.

Eligibility Criteria for Claiming 80-IAC Exemption

To qualify for the startup tax holiday:

·        The business must be a Private Limited Company or LLP

·        It must be incorporated between 1 April 2016 and 31 March 2030

·        Annual turnover must be less than ₹100 crore

·        It must have DPIIT recognition

·        It must be working on innovation, technology, or improving a product/service

How to Apply for Tax Exemption

Step 1: Get DPIIT Recognition

·        Register on Startup India portal

·        Submit business details and documents

·        On approval, receive DPIIT certificate

Step 2: Apply for 80-IAC Tax Exemption

·        Submit application to the Inter-Ministerial Board (IMB)

·        Attach financials, pitch deck, and innovation proof

·        On approval, claim exemption during ITR filing

Alliance Tax Experts provides end-to-end support for both steps.

Example: Tax Savings for a Startup

If your startup earns ₹40 lakhs in profits:

·        Without exemption: ₹10 lakhs in tax

·        With exemption: ₹0 tax

Total saving: ₹10 lakhs. Over 3 years, this could mean ₹30 lakhs in savings—enough to boost hiring, marketing, or R&D.

How Alliance Tax Experts Can Help You

We assist startups across India with:

·        DPIIT Recognition

·        Tax Exemption Application under Section 80-IAC

·        Startup ITR Filing

·        GST, TDS, ROC Compliance

·        Audit and Tax Planning

·        Financial Projections & Pitch Decks

·        Funding Support

We ensure legal compliance and maximum tax savings—so you can focus on scaling your business.

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Common Mistakes to Avoid

·        Applying without DPIIT recognition

·        Missing the IMB approval step

·        Selecting wrong years for tax exemption

·        Filing with errors that can disqualify you

Client Case Study

One of our clients, a SaaS startup, saved over ₹12 lakhs in 2 years using this exemption. They were unaware of the scheme until we guided them through DPIIT registration and filing. Today, their profits are reinvested into new product development.

Conclusion

This is not just a tax benefit—it’s a business opportunity. If your startup qualifies, you can save big and grow faster. But proper guidance is essential.

Let Alliance Tax Experts help you claim this benefit from start to finish.

·        Free eligibility check

·        Quick documentation

·        100% compliant filing

·        Support for funding and projections

Contact Us

Alliance Tax Experts
santoshpatil@alltaxfin.com
Phone: 9769201316
Website: www.alltaxfin.com

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