Startup tax holiday certificate (section 140, formerly 80-IAC): process, documents and timing

Section 80-IAC is now section 140 of the Income-tax Act, 2025

The Income-tax Act, 2025 came into force on 1 April 2026 (section 1(3)) and repealed the Income-tax Act, 1961, subject to the savings in section 536. The startup deduction that founders know as 'section 80-IAC' is section 140 of the 2025 Act for tax years beginning on or after 1 April 2026. Proceedings for tax years that began before 1 April 2026 continue to follow the 1961 Act, as section 536 provides.

Section 140 allows an eligible start-up to deduct 100% of the profits and gains derived from its eligible business for three consecutive tax years. At the start-up's option, those three years can be any three consecutive tax years out of the ten years beginning with the year in which it was incorporated.

Sources: Section 140, Income-tax Act, 2025; Section 536, repeal and savings; Income-tax Act, 2025 (official text, CBDT)

Who is an eligible start-up under section 140

Section 140(16)(b) sets three conditions for an 'eligible start-up', in addition to being a company or a limited liability partnership engaged in eligible business:

Source: Section 140(16), Income-tax Act, 2025

• It was incorporated on or after 1 April 2016 but before 1 April 2030.
• The total turnover of its business does not exceed ₹300 crore in the tax year relevant to the year for which the deduction is claimed.
• It holds a certificate of eligible business from the Inter-Ministerial Board of Certification notified by the Central Government.

DPIIT recognition and the tax-holiday certificate are separate decisions

DPIIT's notification G.S.R. 108(E) dated 4 February 2026, which superseded the 2019 notification G.S.R. 127(E), deals with both. Recognition as a 'Startup' is granted or refused by DPIIT on an application made on its portal with the certificate of incorporation or registration and a write-up on how the entity works towards innovation or scalability.

The certificate for the tax holiday is a second, separate application. Under paragraph 3 of the notification, a recognised Startup that is a private limited company or a limited liability partnership applies in Form-1 to the Inter-Ministerial Board of Certification, which may grant the certificate or reject the application with reasons. The notification names the Board's members as the Joint Secretary, DPIIT (Convener), and representatives of the Department of Biotechnology and the Department of Science & Technology.

The notification still refers to section 80-IAC of the Income-tax Act, 1961, with a footnote that the Income-tax Act, 2025 applies from 1 April 2026. A registered partnership firm can be recognised as a Startup by DPIIT, but it is not an 'eligible start-up' for the section 140 deduction, which is limited to companies and LLPs.

Sources: DPIIT notification G.S.R. 108(E), 4 February 2026; Section 140(16)(b), Income-tax Act, 2025

What the application asks for

Form-1 in Appendix-I of G.S.R. 108(E) asks for the startup's name, date and number of incorporation or registration, address and business location, nature of business, contact details, PAN, existing or proposed activities, a copy of the MoA, LLP or partnership deed, board resolution or registration details, annual audited accounts for the last three financial years (if applicable), and supporting documents demonstrating innovation, wealth creation and employment generation.

The notification gives examples of supporting documents: product or service descriptions, IPR filings, user or revenue growth metrics, awards and recognitions, funding details and employment data. The online Form 80-IAC on the Startup India portal also asks for financial statements, a startup video link, a pitch deck (PDF up to 5 MB), the startup's website URL and a self-certification.

Sources: G.S.R. 108(E), Appendix-I (Form-1); Startup India: Form 80-IAC (online application)

• Keep the incorporation documents, PAN and constitution documents ready before starting.
• Prepare audited or CA-certified financial statements for the years the portal asks for.
• Assemble evidence of innovation, scalability, employment and wealth creation: IP filings, product documentation, growth and employment data, funding and awards.
• Prepare the pitch deck and video the portal asks for, and make sure they are consistent with the financial statements.

Timing: what the law fixes and what it does not

G.S.R. 108(E) does not set a time limit within which the Inter-Ministerial Board must decide an application, so no turnaround can be promised. Plan for the certificate as a separate step that may take longer than DPIIT recognition and may involve requests for more information.

What the law does fix is the claim window. The deduction can only be claimed for three consecutive tax years within the ten years beginning with the year of incorporation, the start-up must be incorporated before 1 April 2030, and the turnover limit is tested for the tax year of the claim.

Section 140(8) also requires the accounts of the eligible business for the claim year to be audited by an accountant before the specified date referred to in section 63, with the audit report furnished by that date in the prescribed form. Build that audit deadline into the plan for any year in which the deduction will be claimed.

Sources: Section 140(2) and (8), Income-tax Act, 2025; G.S.R. 108(E), paragraph 3

Conditions that continue after certification

Section 140(3) requires that the start-up is not formed by splitting up or reconstructing an existing business, and not formed by transferring previously used machinery or plant to a new business. Section 140(6) treats the machinery condition as met where the previously used machinery or plant transferred does not exceed 20% of the total value of machinery or plant used in the business.

G.S.R. 108(E) also requires a recognised Startup to deploy its funds primarily towards its core business and, during the period of recognition, not to invest in listed asset classes (for example non-business residential or other real estate, loans and advances, capital contributions, shares and securities, high-value vehicles, aircraft or yachts, jewellery and other luxury assets) unless the notification's exceptions apply. Under paragraph 6, the Board may revoke a certificate obtained on the basis of false information, and a revoked certificate is deemed never to have been issued.

Sources: Section 140(3) and (6), Income-tax Act, 2025; G.S.R. 108(E), paragraphs 4 to 6

If the application is rejected

Under paragraph 3 of G.S.R. 108(E), a rejection must give reasons. Read those reasons against the Form-1 requirements and section 140(16), and fix the substance before applying again, for example the evidence of innovation, scalability, employment or wealth creation, or inconsistencies between the pitch materials and the financial statements.

Source: G.S.R. 108(E), paragraph 3