0% Tax for Startups for 3 Years: A Big Relief You Shouldn’t Miss!
If you are new startup and have some innovative idea! Government actually lets eligible startups pay 0% income tax for 3 years out of the first 10 years of starting your business.
Yes, you read that right. If you qualify, you can run your startup tax-free for three full years. Sounds amazing, right? Let’s break it down in simple terms.
Under the Startup India scheme, the Indian government gives recognized startups a 100% tax exemption on their profits for any 3 consecutive years within the first 10 years of starting up.
This benefit is provided under Section 80-IAC of the Income Tax Act. It’s meant to help startups grow faster by reducing their financial burden in the initial years.
Who Can Apply for This?
Following are the conditions to get this benefit:
- Your business must be a Private Limited Company or a Limited Liability Partnership (LLP).
You should have registered on or after April 1, 2016 and before April 1, 2026.
- Your business should not have crossed ₹100 crore in turnover in any year since you started.
- Innovation is Key : You should be doing something innovative or creating a product/service that’s solving a problem in a new way — or have a scalable model that can create jobs or grow big.
- DPIIT Recognition: Your startup must be officially recognized by DPIIT (Department for Promotion of Industry and Internal Trade).
No recognition, no exemption.
What Are the Basic Conditions to use this?
🔁 You Get to Choose Your 3 Years : You don’t have to use the tax break in your first 3 years. You can choose any 3 years within the first 10 years after starting — preferably when you’re actually making profits.
📊 Profits Required : This benefit only applies when you’re making a profit. If your startup isn’t profitable yet, no worries — you can claim it later.
📑 Documentation is a Must : You’ll need to submit Form 10-IAC to the Income Tax Department when you claim the benefit.
Also, maintain clean books of accounts as per required Laws , Accountng standards and get recognized by DPIIT first.
🚫 No Old Business in New form of business: If your startup is just a split version of an old business, or you’ve just renamed something that already existed, then you’re not eligible.
Why This Matters: For startups running on tight budgets, this 3-year tax benefit can be a game-changer. It gives you a financial releif , helps you reinvest in growth, and makes your investors happy too.
But you’ve got to plan smart — pick the years when your profits are highest so you can save the most on tax.
📌 Conclusion:
The 0% tax benefit for startups is a great government initiative that more people should know about. It’s not automatic — you have to apply for DPIIT recognition, track your eligibility, and file the right forms.
If you’re building something new and exciting, don’t miss this opportunity. It could save you lakhs in taxes and give your business the boost it needs.
Need help getting DPIIT recognition or filing for this benefit? Please connect with us on admin@ibleboom.com
Avinash Bhatt
Email: Bhattavi93@gmail.com