The ecosystem has cheered at the announcement made by Finance Minister Nirmala Sitharaman to extend the deadline for startups to be incorporated by five years, until April 1, 2030.

Under Section 80-IAC of the Income Tax Act of 1961, startups that have been approved by the Department for Promotion of Industry and Internal Trade (DPIIT) are now able to take advantage of tax benefits.

"We are still committed to helping the Indian startup community. While presenting the Union Budget 2025–26 on Saturday, I propose to extend the period of incorporation by five years to allow the benefit available to startups, which are incorporated before April 1, 2030" she stated.

Sanjiv Singh, joint secretary of DPIIT, described the announcement as a major victory for startups and said it is great news for the startup ecosystem.

Rahul Charkha, a partner at Economic Laws Practice, stated that startups can take advantage of 100% tax exemptions on profits under Section 80-IAC for three of the ten years following the year of incorporation.

In addition to being approved by the DPIIT, startups must have a turnover of no more than 100 crore in any one of the eligible fiscal years in order to qualify for this.

More startups can be eligible for this significant tax benefit, according to Rastogi Chambers Founder Abhishek A. Rastogi, which will improve their cash flow and profitability during their early years.

"Startups become more appealing investment avenues for venture capital and angel investors with extended tax benefits, as higher profitability can now be expected in the early stages,” the speaker stated.

"This additional runway will provide young ventures with a stable policy framework to scale, create jobs, and contribute meaningfully to India's economic growth," stated Ashley Menezes, Partner and Chief Operating Officer (COO) of ChrysCapital.