80IAC benefits for start-ups: An Overview

1.  What is Sec 80IAC? Section 80IAC allows for a 100% deduction of the profits or gains attributable to the eligible business activity. In other words, if a start‑up earns a profit solely from its qualifying activity, that full profit is deductible from its taxable income.

To claim this relaxation, the start-up must be recognized by DPIIT under the Start-up India scheme.

2.  Eligible business: Business must involve innovation, development, deployment, or commercialization of new products, processes or services, driven by technology or intellectual property.

3.  Benefit for 3 assessment years: The deduction is available for a block of any three consecutive assessment years within a window of 10 years that typically starts from the year of commencement.

4.  Turnover limit: Turnover must not exceed Rs. 100 crore in any previous year for which deduction is claimed (raised from earlier limit of Rs. 25 crore via amendments).

5.  Unutilised amount: As the deduction works as a “write‑off” on the profits of the eligible business activity, any losses or unutilized amounts typically do not get carried forward to subsequent years.

6.  Form 10CCB: To claim deduction under Section 80-IAC Form 10CCB (Audit Report under Section 80-IAC) must be Certified by a Chartered Accountant, electronically filed before the due date of filing return under Section 139(1).

7.  Carry forward of losses: Losses can be carried forward, even if there is a change in shareholding of more than 51%, provided that all the shareholders of the company on the last day of the year in which the loss was incurred continue to hold those shares on the last day of the previous year in which the loss is set off.