• DPIIT has approved 187 startups for income tax exemption under the revamped Section 80-IAC of the Income Tax Act, providing a major boost to India’s startup ecosystem.
• Section 80-IAC offers a 100% tax deduction for three consecutive years, aimed at supporting eligible startups during their formative growth phase.
• This initiative reflects the government's push to promote innovation, job creation, and global competitiveness, reinforcing India’s status as a rising hub for entrepreneurship.

In a major boost to India's startup ecosystem, the Department for Promotion of Industry and Internal Trade (DPIIT) has sanctioned 187 startups for exemption from income tax under the revamped Section 80-IAC of the Income Tax Act. The news was announced on May 15, 2025, reflecting the government's focus on supporting innovation and entrepreneurship in the nation.

Section 80-IAC provides a 100% tax deduction on income. eligible startups for three successive years within. time frame from the date of incorporation. The facility is provided to offer financial respite to startups in their early years so they can reinvest savings in growth and innovation.

In order to claim the Section 80-IAC exemption, the following conditions apply:

Incorporation Date: The entity should be incorporated as a private limited company or limited liability partnership (LLP) after April 1, 2016, and before April 1, 2025. Turnover Limit: Annual turnover should not exceed ?100 crore in any of the previous financial years.

Business Activity: The startup must be involved in product development, product improvement, or process improvement, or possess scalable business models with significant employment or wealth creation potential.

No Prior Business: The organization shall not be established through the division or reorganization of an existing business.

Application Process

• Startups applying for the 80-IAC exemption are required to:
• Get DPIIT Recognition: Register on the Startup India portal and provide documents as needed, such as the Memorandum of Association, board resolutions, financial statements, and a pitch deck.
• Apply for Tax Exemption: Startups can apply for tax exemption upon recognition by submitting other documents like income tax returns, financial statements that have been audited, and a video that highlights the product or service.

Impact on the Startup Ecosystem

The granting of 80-IAC exemption to 187 startups is evidence of the government's initiative in promoting the ecosystem of startups. This exemption not only offers relief in terms of finance but also facilitates innovation and employment generation. The government, by providing such incentives, is trying to establish India as a global startup and entrepreneurship hub.