Claiming Deduction under 80IAC

This query is : Resolved

Hafiz (Querist)
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23 February 2024 A Private Limited Company took startup recognition certificate in April 2023 and DIPP number also received.
Company Incorporated in December 2021
Q1:
Now Company wants to avail tax exemption under 80IAC from FY 2023-24 onwards.
What are the further procedures to be followed by Company to avail said deduction?
Whether separate registration required for availing tax exemption other than startup recognition?
If so, what is the time limit for applying the same to take exemption from FY 2023-24.

Q2:
If Company intent to avail registration after two years (ie, from FY 2025-26 onwards), if I apply now for 80IAC tax exemption whether exemption will applicable from FY 2023-24 or Can I take exemption later for any 3 years consecutive years in the 10 years?

Asha Kanta Sharma

Asha Kanta Sharma

(Expert)
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06 July 2024 Let's address your queries regarding availing tax exemption under Section 80IAC for a Private Limited Company that has obtained startup recognition certificate:

**Q1: Procedure to Avail Tax Exemption from FY 2023-24 Onwards**

1. **Further Procedures:**
- After obtaining the startup recognition certificate and DIPP number, the company needs to apply separately for approval under Section 80IAC to the Inter-Ministerial Board (IMB) through the DPIIT (Department for Promotion of Industry and Internal Trade).
- The application typically includes details such as:
- Details of the business activities.
- Declaration regarding satisfying the conditions specified under Section 80IAC.
- Other documents as required by DPIIT, which may include financial statements, business plans, and projections.

2. **Separate Registration Requirement:**
- No separate registration is required beyond the startup recognition certificate and DIPP number. The application for approval under Section 80IAC is submitted to DPIIT.

3. **Time Limit for Application:**
- The application for approval under Section 80IAC should ideally be made as early as possible after obtaining the startup recognition certificate. There isn't a specific deadline mentioned in the law, but it's advisable to apply before the start of the financial year for which you intend to claim the deduction.
- Since you obtained the startup recognition in April 2023, it's recommended to apply for 80IAC approval before the commencement of FY 2023-24 to ensure eligibility for tax exemption from that financial year onwards.

**Q2: Delayed Application for 80IAC**

1. **Applying for Exemption Later:**
- If the company intends to avail the 80IAC tax exemption from FY 2025-26 onwards instead of from FY 2023-24, you can still apply for approval under Section 80IAC now.
- The approval, once granted, allows the company to claim the tax exemption for any 3 consecutive years out of the first 10 years from the year in which it commenced its business.
- For example, if you apply now and receive approval in FY 2023-24, you can choose to claim the exemption for any 3 consecutive years from FY 2025-26 onwards.

2. **Exemption Applicability:**
- The exemption will be applicable based on the approval received from DPIIT. If you receive approval now, you can start claiming the exemption from the financial year as per your choice (either from FY 2023-24 or later, for any 3 consecutive years within the first 10 years of commencement of business).

In summary, it's advisable to apply for approval under Section 80IAC as soon as possible after obtaining the startup recognition certificate. This approval is essential to claim tax exemption under 80IAC from the desired financial year onwards, ensuring compliance with the conditions specified under the Income Tax Act for startups.