Section 80-IAC Tax Holiday: Eligibility & the IMB Approval Process
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Under Section 80-IAC of the Income Tax Act, an eligible startup can claim a 100% deduction of profits for any 3 consecutive assessment years out of its first 10 years from incorporation. The Finance Act, 2025 extended the incorporation cutoff to startups incorporated on or before 31 March 2030 (effective 1 April 2025), a 5-year extension from the earlier 31 March 2025 cutoff. Any content or advice citing an earlier cutoff date is out of date.
This is one of the most valuable benefits in the Startup India framework, and also one of the most misunderstood — many founders assume that once they have DPIIT recognition, the tax holiday follows automatically. It doesn't. Here's what's actually required.
The Deduction: 100% of Profits, Any 3 of the First 10 Years
The mechanics themselves are unchanged: an eligible startup can claim a 100% deduction of its profits and gains for any 3 consecutive assessment years out of the first 10 years from the date of incorporation. You choose which 3 years to claim, which gives founders flexibility to time the deduction against when the business actually becomes profitable, rather than being forced into a fixed window.
The Current Incorporation Cutoff: 31 March 2030
To be eligible at all, the startup must have been incorporated on or before 31 March 2030. This cutoff was extended by the Finance Act, 2025, from the previous 31 March 2025 date — a 5-year extension confirmed by an official Ministry of Finance statement and corroborated by a Press Information Bureau release referencing the revised Section 80-IAC framework. If you're reading older material anywhere that cites 2025 or earlier as the final incorporation date, treat it as superseded.
DPIIT Startup Recognition is a precondition for Section 80-IAC — but it is not the same thing as 80-IAC approval, and holding DPIIT recognition does not automatically grant you the tax holiday. A separate, mandatory application must be made to the Inter-Ministerial Board (IMB), which substantively evaluates your innovation and scalability claims. Do not assume recognition alone qualifies you to start claiming the deduction.
From the blog
Legal basis
Income Tax Act s.80-IAC — 3-year tax holiday, as amended by Finance Act 2025 (cutoff extended to 31 March 2030)
100% profit deduction for any 3 consecutive years out of the first 10 years from incorporation; the Finance Act 2025 extended the incorporation cutoff from 31 March 2025 to 31 March 2030. Requires a separate Inter-Ministerial Board (IMB) approval beyond DPIIT recognition.
Inter-Ministerial Board (IMB) — definition
The multi-ministry board (DPIIT, DBT, and other ministry representatives) that substantively evaluates and approves the separate Form 80IAC application required for the s.80-IAC tax holiday — distinct from, and downstream of, DPIIT recognition.
80-IAC tax holiday mechanics — DPIIT recognition is a precondition, not a substitute, for IMB approval
Founders commonly assume DPIIT recognition automatically confers the s.80-IAC tax holiday. It does not: a separate Form 80IAC application to the Inter-Ministerial Board, evaluated substantively on innovation/scalability, is required as a second step.
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