Govt approves 187 startups for tax exemption under revamped Section 80-IAC framework

New Delhi: The Department for Promotion of Industry and Internal Trade (DPIIT) has approved 187 startups for income tax exemption under the revamped Section 80-IAC of the Income Tax Act. The move aims to provide crucial fiscal relief to emerging businesses, encouraging innovation and supporting job creation across the country.

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As per a commerce ministry statement, the approvals came during the 79th and 80th meetings of the Inter-Ministerial Board (IMB), with 75 startups cleared in the 79th meeting and 112 in the 80th, held on 30 April. 

With these latest approvals, over 3,700 startups have now benefited from the scheme since its launch.

Under the revised framework, eligible startups can claim a 100% income tax deduction on profits for any three consecutive years within a ten-year period from their date of incorporation. The Union Budget 2025–26 extended the eligibility window, allowing startups incorporated up to 1 April 2030, to avail of this benefit, it said on Thursday.

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To qualify, startups must be recognized by the DPIIT, operate as a private limited company or limited liability partnership, and have an annual turnover not exceeding ₹100 crore in any previous financial year.

The DPIIT has also simplified and sped up the application process, ensuring that complete applications are reviewed within 120 days. Startups that were not approved in this round are encouraged to review and strengthen their applications, focusing on technological innovation, market potential, scalability, and their contribution to employment and economic growth.

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These steps underline the government’s ongoing commitment to nurturing a vibrant, innovation-led startup ecosystem in India.

Earlier on 9 May, the government doubled the guarantee cover under its Credit Guarantee Scheme for Startups (CGSS), raising the limit per borrower from ₹10 crore to ₹20 crore, a move aimed at easing credit access for startups and fueling innovation in priority sectors.

The revised scheme, notified by the DPIIT on Friday, also increases the guarantee cover to 85% for loans up to ₹10 crore and 75% for loans above that threshold. The government is positioning the expanded coverage as a way for startups to secure working capital, term loans, and venture debt, key to sustaining R&D and product development.

As of December 2024, the DPIIT had recognized 157,000 entities as startups. Since the launch of the Startup India initiative on 16 January 2016, these startups have generated over 1.55 million direct jobs, according to a government statement.

Industry experts have welcomed the move. “This will give startups much-needed breathing room to innovate and scale up without the immediate pressure of tax burdens,” said Vinod Kumar, president, India SME Forum. 

“Combined with improved access to credit, these measures create a supportive environment that can help Indian startups compete globally,” said Kumar.