Income Tax Exemption Notifications
The Inter-Ministerial Board setup by the Department of Industrial Policy and Promotion validates Startups for granting tax-related benefits. The Board consists of the following members:
- Joint Secretary, Department for Promotion of Industry and Internal Trade, Convener
- Representative of the Department of Biotechnology, Member
- Representative of the Department of Science & Technology, Member
The board shall validate startups for the Income Tax Exemption on profits under Section 80-IAC of the Income Tax Act:
A DIPP-recognised startup shall be eligible to apply to the Inter-Ministerial Board for a full deduction on the profits and gains from the business. Provided the following conditions are fulfilled:
- A private limited company or a limited liability partnership,
- Incorporated on or after 1st April 2016 but before 31st March 2023, and
The startup is engaged in the innovation, development, or improvement of products, processes, or services or a scalable business model with a high potential for employment generation or wealth creation.
To apply for Income Tax Exemption on investments above the fair market value received under Section 56 of the Income Tax Act:
A Startup shall be eligible for notification under clause (ii) of the proviso to clause (vii)(b) of sub-section (2) of section 56 of the Act and consequent exemption from the provisions of that clause if it fulfils the following conditions:
- It has been recognised by DPIIT under para 2(iii)(a) or as per any earlier notification on the subject.
- Aggregate amount of paid-up share capital and share premium of the startup after the issue or proposed issue of a share, if any, does not exceed twenty-five crore rupees.
For more details, refer to the Notification.
