Section 80-IAC Tax Exemption Calculator

Section 80-IAC of the Income Tax Act lets an eligible startup deduct 100% of its profits from taxable income for three financial years. In effect it's a three-year income-tax holiday designed to let young companies reinvest their early profits instead of paying tax on them.

The deduction is on income tax only. Depending on your tax regime, other levies such as Alternate Minimum Tax (AMT) may still apply — confirm your position with a chartered accountant.

To claim Section 80-IAC, a startup generally needs to meet all of these:

• Recognised by DPIIT as a startup.
• Incorporated as a Private Limited Company or an LLP (a partnership firm or proprietorship does not qualify).
• Total turnover below ₹100 crore in the financial year for which the deduction is claimed.
• Incorporated within the government's eligibility window, which is extended periodically in the Union Budget — check the current cut-off date.
• Working on innovation, development or improvement of products, processes or services, or a scalable business model with potential for employment or wealth creation.

DPIIT recognition alone is not enough. You apply separately to the Inter-Ministerial Board (IMB) for the 80-IAC certificate, and approval is selective.

You can claim the 100% deduction for any three consecutive financial years out of your first ten since incorporation. Because you choose the window, the planning move is to claim the three years in which you expect the highest profit, so the exemption shelters the most income.

The saving is simply your exempt profit multiplied by the tax rate you'd otherwise pay, across three years:

Tax saved = Annual profit × Tax rate × 3 years

Section 80-IAC is the headline benefit, but DPIIT recognition also opens the door to others — including the Section 56(2)(viib) 'angel tax' exemption on share premium, and easier set-off and carry-forward of losses. Treat 80-IAC as one piece of a wider startup tax position and plan it with a CA.

The same DPIIT recognition that qualifies you for the 80-IAC holiday is also a gateway to dozens of government grants and schemes that require it. If you're getting recognised for the tax break, use it to find the funding you now qualify for too.

Browse grants for DPIIT-recognised startups straight from this page — the recognition you need for 80-IAC is the same one many grants ask for.