In a welcome move for budding businesses, the Indian government has approved 187 start-ups for income tax exemption under the updated rules of Section 80-IAC of the Income Tax Act. This aims to give financial support to start-ups, helping them grow, create jobs, and bring in fresh ideas.
According to a statement from the Commerce Ministry, the decision was taken during the 79th and 80th meetings of the Inter-Ministerial Board (IMB), held on April 30. A total of 75 start-ups were approved in the 79th meeting and 112 in the 80th. So far, over 3,700 start-ups have benefited from this scheme.
WHAT’S THE BENEFIT?
Under this scheme, eligible start-ups can enjoy a 100% income tax break on their profits for any three years of their choice within the first ten years from the time they were set up. The Union Budget 2025–26 has also extended the eligibility period. Now, start-ups registered by April 1, 2030 can apply for this tax relief.
Finance Minister, Nirmala Sitharaman, in her Budget 2025 speech said, “It is proposed to extend the benefit provided under Section 80-IAC to startups for another period of five years, i.e. the benefit will be available to eligible start-ups incorporated before April 1, 2030.”
To qualify, the start-up must be recognised by the Department for Promotion of Industry and Internal Trade (DPIIT). It should be a private limited company or a limited liability partnership and its turnover should not cross Rs 100 crore in any year since incorporation.
The DPIIT has also made the application process easier and quicker. If your application is complete, it will be reviewed within 120 days. Start-ups that didn’t make the cut this time are encouraged to improve their pitch, especially by highlighting their innovation, market potential, scalability, and ability to generate jobs.
SUPPORT BEYOND TAX RELIEF
Earlier, on May 9, the government also announced an update to its Credit Guarantee Scheme for Start-ups (CGSS). It doubled the credit guarantee per borrower from Rs 10 crore to Rs 20 crore. Now, loans up to Rs 10 crore come with 85% guarantee cover, while loans above that get 75%.
This change is aimed at helping start-ups get easier access to funds, whether for day-to-day operations, long-term projects, or product development.
