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 normal income tax only. Companies still pay MAT on book profit and LLPs still pay Alternate Minimum Tax (AMT) — the calculator nets these off. 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 deduction removes normal tax but not the minimum tax: a company still pays MAT on book profit (14% from tax year 2026-27, 15% before) and an LLP still pays AMT at 18.5%. A company on the 22% regime (Section 115BAA) cannot claim 80-IAC at all. So the saving is:

Tax saved = Annual profit × (Tax rate − MAT or AMT rate) × 3 years

Section 80-IAC is the headline benefit, but DPIIT recognition also opens the door to others — such as easier set-off and carry-forward of losses. (The old Section 56(2)(viib) 'angel tax' exemption no longer matters: angel tax does not apply to shares issued from 1 April 2024.) 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.

From tax year 2026-27 (income earned from 1 April 2026) the Income-tax Act 2025 replaces the 1961 Act. This page uses the 1961 section numbers, which still apply to FY 2025-26 and earlier years. For the current year, the same rules sit under these new numbers:

• Section 80-IAC → section 140 of the Income-tax Act 2025
• Section 115BAA → section 200 of the Income-tax Act 2025