Sec 80-IAC recognized start-up means in Income-tax law:

Sec 80-IAC recognized start-up  means in Income-tax law:

📌 Section 80-IAC – Deduction for Profits of Eligible Start-ups

1. Eligible Start-up Definition (as per Income-tax Act, 1961)

A company or LLP is treated as an eligible start-up if:

  1. Incorporation period: Incorporated between 1st April 2016 and 31st March 2025.

  2. Nature of entity: Must be a Private Limited Company or a LLP (not a partnership firm without LLP structure).

  3. Turnover limit: Turnover should not exceed ₹100 crore in any of the previous years since incorporation.

  4. Innovation criteria: Should be working towards:

    • innovation,

    • development,

    • improvement of products, processes or services, OR

    • a scalable business model with high potential for employment generation or wealth creation.

  5. Recognition: Must be recognized as a start-up by DPIIT (Department for Promotion of Industry and Internal Trade) under its start-up scheme.

2. Tax Benefits under 80-IAC

  • Deduction of 100% of profits for 3 consecutive assessment years out of 10 years from incorporation.

  • Available only if conditions above are satisfied.

  • Deduction is claimed in ITR under Chapter VIA.

3. Link to ESOP Tax Deferral

The Finance Act 2020 allowed employees of such Sec 80-IAC eligible start-ups to defer tax on ESOPs / sweat equity shares (as explained earlier).

So, not every start-up registered with MCA qualifies.
It must have DPIIT recognition and meet 80-IAC conditions.

4. How to Check if a Start-up is 80-IAC Recognized?

  • Visit the DPIIT Start-up India portal → check recognition certificate.

  • The certificate clearly states “Recognized under DPIIT & eligible for benefits under Sec 80-IAC of the Income-tax Act”.

  • Without this, the ESOP deferral benefit is not available.

✅ In short:
A Sec 80-IAC recognized start-up = DPIIT-recognized private company/LLP, incorporated between Apr 2016–Mar 2025, turnover ≤ ₹100 Cr, innovation-based business, and approved for 80-IAC benefits.


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