Tag: Form 32

Section 80-IAC: Tax Exemption for Startups, Eligibility and Conditions

Posted on by CA Meet Dhrangadhariya

Last updated: 28 August 2026 · Written and reviewed by CA Meet Dhrangadhariya, CSM & Co LLP

Quick summary

  • Section 80-IAC gives an eligible startup a deduction of 100% of its business profits for any 3 consecutive years out of its first 10.
  • The startup must be a company or LLP incorporated on or after 01/04/2016 and before 01/04/2030, with an Inter-Ministerial Board certificate.
  • The turnover cap is ₹100 crore for FY 2025-26 and ₹300 crore from Tax Year 2026-27.
  • From Tax Year 2026-27 it is section 140 of the Income-tax Act, 2025, and the audit report is Form 32. It is not available if a company pays tax at 22% or 15%.

Section 80-IAC lets a certified startup pay no income tax on the profits of its eligible business for three years. It is one of the most useful tax benefits for young companies and LLPs. From Tax Year 2026-27 the provision is section 140 of the Income-tax Act, 2025. For FY 2025-26 (assessment year 2026-27) it is still section 80-IAC of the 1961 Act.

How much and for how long?

The deduction is 100% of the profits and gains derived from the eligible business. The startup can claim it for any three consecutive tax years, chosen by the startup, out of the ten years beginning with the year of incorporation. Choose the three years in which you expect profits.

Who is an eligible startup?

A company or limited liability partnership that:

  • is engaged in an eligible business, meaning innovation, development or improvement of products, processes or services, or a scalable business model with a high potential for employment generation or wealth creation;
  • is incorporated on or after 1 April 2016 and before 1 April 2030;
  • has total business turnover within the limit in the year of the claim: ₹100 crore for FY 2025-26 under the 1961 Act, and ₹300 crore from Tax Year 2026-27 under section 140 (the Finance Act, 2026 raised it); and
  • holds a certificate of eligible business from the Inter-Ministerial Board of Certification (IMBC).

A partnership firm or proprietorship cannot claim it. A private limited company and an LLP can.

Other conditions

  • The startup must not be formed by splitting up or reconstructing a business already in existence.
  • It must not be formed by transferring to the new business machinery or plant previously used for any purpose. Used plant and machinery up to 20% of the total value of machinery in the business does not break this rule, and imported machinery that was never used in India and never claimed depreciation is also not treated as previously used.
  • The eligible business is treated as the only source of income of the startup when working out the profits for the deduction.
  • If goods or services move between the eligible business and another business of the assessee at a price different from market value, the profits are worked out at market value.
  • A business discontinued because of flood, cyclone, earthquake, riot, accidental fire, explosion or enemy action and revived within three years of the end of that year is not treated as a reconstruction.
  • The accounts of the eligible business must be audited and the audit report furnished before the specified date. The report is Form 10CCB up to FY 2025-26 and Form 32 (Rule 66) under the Income-tax Rules, 2026.

Two steps to qualify

  1. DPIIT recognition. Register on the Startup India portal and get recognised as a startup by the Department for Promotion of Industry and Internal Trade (DPIIT, formerly DIPP).
  2. IMBC certificate for tax benefits. Apply separately on the portal for the Inter-Ministerial Board of Certification, choosing the tax exemption option. Keep ready the constitution documents, financial statements, and a pitch deck or video. Recognition alone is not enough for section 80-IAC.

Tax regime

A company can claim section 80-IAC only if it pays tax under the normal provisions. The 22% and 15% regimes (sections 200 and 201 of the 2025 Act) allow only section 146 and section 148 from the deduction chapter, so a startup that takes the 22% rate loses this deduction. An LLP, taxed at the flat rate for LLPs, is not affected by that choice.

Do not forget MAT

Zero tax on profits does not always mean zero tax. A company taxed under the normal provisions can still face minimum alternate tax on its book profit, and the section 80-IAC deduction does not reduce book profit. Check the book profit position before assuming the startup will pay nothing.

Example

A private limited company was incorporated in April 2023 and holds the DPIIT and IMBC certificates. It makes a loss in its first two years and a profit of ₹40,00,000 from its eligible business in the third year. It can choose that year, and the next two, as its three years. In the profit year the deduction is ₹40,00,000, so its taxable business income is nil, subject to MAT.

Frequently asked questions

Who is an eligible startup under section 80-IAC?

A company or LLP engaged in an eligible business, incorporated on or after 01/04/2016 and before 01/04/2030, with turnover within the limit and a certificate of eligible business from the Inter-Ministerial Board of Certification.

How long is the deduction?

100% of profits from the eligible business for any 3 consecutive tax years, chosen by the startup out of the 10 years beginning with the year of incorporation.

What is the turnover limit?

₹100 crore under the 1961 Act (up to FY 2025-26) and ₹300 crore under section 140 of the 2025 Act from Tax Year 2026-27.

Is DPIIT recognition enough?

No. The Act asks for a certificate of eligible business from the Inter-Ministerial Board of Certification, which is a separate step from DPIIT recognition.

Can a company that pays tax at 22% claim it?

No. The 22% and 15% company regimes allow only additional employee cost (section 146) and inter-corporate dividends (section 148) from the deduction chapter.

Official sources

Related reading

Disclaimer

This article is for general informational purposes only and should not be considered professional advice. Please consult a qualified expert for advice tailored to your specific situation. The author and website owner are not liable for any errors or actions based on this content.

Section 80IA: Deduction for Infrastructure and Power Undertakings (Status for Tax Year 2026-27)

Posted on by CA Meet Dhrangadhariya

Last updated: 23 July 2026 · Written and reviewed by CA Meet Dhrangadhariya, CSM & Co LLP

Quick summary

  • Section 80IA gave a 100% profit-linked deduction for 10 years to undertakings in infrastructure, power, telecom and industrial parks.
  • It is now a closed window: infrastructure and power undertakings had to start before 01/04/2017, and the other categories ended earlier.
  • Undertakings already claiming it can continue for their remaining years under section 138 of the Income-tax Act, 2025, calculated as under section 80-IA.
  • It is not available if you are in the new tax regime or pay tax at the 22% or 15% company rates. The audit report is Form 10CCB, and Form 32 from 01/04/2026.

Section 80IA of the 1961 Act gave a 100% deduction of profits for 10 years to undertakings in infrastructure, telecom, industrial parks, and power. It was designed to attract private money into these sectors. The start dates in the section have long passed, so today it matters only for undertakings that started earlier and are still within their 10 year claim.

What changes from Tax Year 2026-27?

The Income-tax Act, 2025 does not re-write section 80-IA. Section 138 simply says that where an assessee is eligible to claim the deduction for a tax year “as if the said Act had not been repealed”, the deduction is allowed, calculated as under section 80-IA and only for the years section 80-IA would have allowed. For FY 2025-26 (assessment year 2026-27) the claim is still made under section 80-IA of the 1961 Act.

Which businesses qualified, and when did they have to start?

Business Had to start Deduction
Infrastructure facility (road, toll road, bridge, rail system, highway project, water supply, irrigation, sanitation, sewerage, solid waste, port, airport, inland waterway) Operation and maintenance on or after 01/04/1995 and before 01/04/2017 100% of profits for 10 consecutive years
Telecom services (basic, cellular, radio paging, satellite, trunking, broadband, internet) 01/04/1995 to 31/03/2005 100% for the first 5 years and 30% for the next 5
Industrial park or SEZ notified by the Central Government 01/04/1997 to 31/03/2006 (industrial parks to 31/03/2011) 100% for 10 consecutive years
Power generation, or generation and distribution 01/04/1993 to 31/03/2017 100% for 10 consecutive years
New transmission or distribution network 01/04/1999 to 31/03/2017 100% for 10 consecutive years, on profits from the new lines only
Substantial renovation and modernisation of an existing network (at least 50% increase in plant and machinery) 01/04/2004 to 31/03/2017 100% for 10 consecutive years
Revival of a power generating plant by a notified Indian company formed before 30/11/2005 Begins generating, transmitting or distributing before 31/03/2011 100% for 10 consecutive years

Which 10 years?

The assessee can choose any 10 consecutive years out of the first 15 years, counted from the year the undertaking starts. For infrastructure facilities that are roads, bridges, rail systems, highway projects, or water supply, irrigation, sanitation, sewerage and solid waste projects, the window is 20 years. Ports, airports and inland waterways keep the 15 year window.

Because of the start-date cut offs, the last possible year of a claim is, at the latest, FY 2035-36 for the 20 year infrastructure category and FY 2030-31 for other infrastructure and power generation. Telecom, SEZ, industrial park and power plant revival claims have run out.

Conditions

  • Infrastructure: the enterprise must be owned by a company registered in India, a consortium of such companies, or a body set up under a Central or State Act. It must have an agreement with the Central or State Government, a local authority or a statutory body to develop, or operate and maintain, a new facility.
  • Telecom and power: the undertaking must not be formed by splitting up or reconstructing an existing business, and must not be formed by transferring used plant or machinery to the new business. Used machinery up to 20% of the total value of machinery does not count against this.
  • Profits: for working out the deduction, the eligible business is treated as the only source of income of the assessee in its first year and in each later year. The deduction cannot exceed the profits of the eligible business.
  • Audit: the accounts of the undertaking must be audited and the audit report furnished in the prescribed form. That is Form 10CCB up to FY 2025-26, and Form 32 (Rule 66) under the Income-tax Rules, 2026 from 01/04/2026.

Which tax regime?

  • An individual, HUF, AOP, BOI or artificial juridical person can claim it only in the old regime. The new regime (section 202 of the 2025 Act) removes it.
  • A company can claim it only if it pays tax under the normal provisions. The 22% and 15% regimes (sections 200 and 201 of the 2025 Act) keep only sections 146 and 148 from the deduction chapter.
  • A co-operative society under the concessional rate (section 203) also cannot claim it.

Why not a “Section 80TTB” or “80IA form”?

Some older write-ups tell industrial park developers to follow “Section 80TTB” and to file an “80IA form”. Both are wrong. Section 80TTB is the senior citizen interest deduction, and there is no form called an 80IA form; the audit report is the form named above.

Frequently asked questions

Can a new infrastructure project claim section 80IA today?

No. The section does not apply to an enterprise that starts developing or operating the infrastructure facility on or after 01/04/2017. Power generation and transmission had to start by 31/03/2017 as well.

How long does the deduction last?

100% of eligible profits for any 10 consecutive years out of the first 15 years (20 years for roads, bridges, rail systems, highway projects and water and sanitation projects), counted from the year the undertaking starts.

What happens from Tax Year 2026-27?

Section 138 of the Income-tax Act, 2025 lets an eligible undertaking keep claiming, with the deduction calculated and limited to the years that section 80-IA would have allowed.

Is it available in the new tax regime?

No. The new regime for individuals and others (section 202) and the 22% and 15% company regimes (sections 200 and 201) bar this deduction.

Which audit report is needed?

Form 10CCB up to FY 2025-26, and Form 32 (Rule 66) under the Income-tax Rules, 2026 from 01/04/2026.

Official sources

Disclaimer

This article is for general informational purposes only and should not be considered professional advice. Please consult a qualified expert for advice tailored to your specific situation. The author and website owner are not liable for any errors or actions based on this content.