Starting up? Did you know that your startup can be eligible for a tax holiday?
Eligibility Criteria for Startup Recognition:
1. The Startup should be incorporated as a private limited company or registered as a partnership firm or a limited liability partnership.
2. Turnover should be less than INR 100 Crores in any of the previous financial years.
3. An entity shall be considered as a startup up to 10 years from the date of its incorporation.
4. The Startup should be working towards innovation/ improvement of existing products, services and processes and should have the potential to generate employment/ create wealth. An entity formed by splitting up or reconstruction of an existing business shall not be considered a ‘Startup’.
80 IAC Tax Exemption
On application of tax exemption under section 80 IAC, your start up can avail a tax holiday for 3 consecutive financial years out of its first ten years since incorporation.
Eligibility Criteria for availing exemption under section 80 IAC
1. The entity should be recognised by DPITT as a Startup.
2. Applicable only to a private limited company or a LLP.
3. The Startup should have been incorporated after 1st April, 2016.
4. The startup is engaged in innovation, development, improvement of products, processes, services or a scalable business model with a high potential of employee generation and wealth creation.
You could also be eligible for an Angel Tax Exemption
Eligibility Criteria for Tax Exemption under Section 56 of the Income Tax Act:
1. The entity should be recognised by DPIIT as a Startup.
2. The aggregate amount of paid up share capital and share premium of the Startup
after the proposed issue of shares, if any, does not exceed Rs. 25 Crore.