For an Indian founder, the Section 80-IAC exemption is arguably the single biggest tax lever available in the first three years of business. If you get it right, you pay zero income tax on your profits for three consecutive assessment years out of your first ten.
Who qualifies in 2026
The rules have been sharpened since the original 2016 notification. To be eligible you must:
- Be incorporated as a Private Limited Company or LLP between 1 April 2016 and 31 March 2030
- Have annual turnover under ₹100 Cr in the year you claim the deduction
- Be working on innovation, development, or improvement of products/services (or a scalable business model)
- Be DPIIT-recognised — this is the gating step most founders miss
Step 1 — Get DPIIT recognition
Apply on the Startup India portal. You'll need your Certificate of Incorporation, a short pitch, and a brief write-up on how you are innovative. Turnaround is typically 3–7 working days.
Step 2 — Apply for Section 80-IAC
Once DPIIT-recognised, file Form-1 on the same portal. This goes to the Inter-Ministerial Board (IMB). Approval rate for well-drafted applications is above 60% — but the write-up matters. Vague answers get rejected.
Step 3 — Claim the deduction in your ITR
Once approved, claim under Section 80-IAC in ITR-6. You choose any 3 consecutive years out of your first 10 to apply the exemption — pick the years your profits are highest.
How Liquetax helps
Our Startup India desk has filed 340+ 80-IAC applications with an 82% approval rate. The recipe is a sharp innovation write-up, correct MOA object clause, and a clean cap table. Talk to us if you're stuck.