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The Income-tax Act, 2025 came into force on 1 April 2026 (section 1(3)) and repealed the Income-tax Act, 1961, subject to the savings in section 536. For tax years beginning on or after 1 April 2026, the startup tax holiday is section 140: a deduction of 100% of the profits of the eligible business for any three consecutive tax years out of the ten years beginning with the year of incorporation.
Sources: Section 140, Income-tax Act, 2025; Section 536, repeal and savings; Income-tax Act, 2025 (official text, CBDT)
Two approvals, not one
DPIIT recognition is granted by DPIIT under notification G.S.R. 108(E) dated 4 February 2026, which superseded the 2019 notification G.S.R. 127(E). A private limited company, a registered partnership firm, a limited liability partnership, a multi-State cooperative society or a cooperative society can be recognised as a 'Startup' if it is within ten years of incorporation or registration, its turnover has not exceeded ₹200 crore in any financial year, and it is working towards innovation, development or improvement of products, processes or services, or is a scalable business model with high potential for employment generation or wealth creation. For a recognised 'Deep Tech Startup' the limits are twenty years and ₹300 crore.
The tax-holiday certificate is decided by the Inter-Ministerial Board of Certification on a separate Form-1 application. Only a recognised Startup that is a private limited company or an LLP can apply, and the Board may grant the certificate or reject the application with reasons. Recognition makes a company or LLP eligible to apply; it does not mean the certificate will be granted.
Side-by-side comparison
Sources: G.S.R. 108(E), paragraphs 1 to 3 and Form-1; Section 140(16), Income-tax Act, 2025; Startup India: Form 80-IAC (online application)
| DPIIT recognition | Section 140 tax holiday (formerly 80-IAC) | |
|---|---|---|
| Legal basis | DPIIT notification G.S.R. 108(E), 4 February 2026 | Section 140, Income-tax Act, 2025, plus the Inter-Ministerial Board certificate under G.S.R. 108(E) |
| What it gives | Recognition as a 'Startup', the gateway to Startup India benefits and to the tax-holiday application | Deduction of 100% of eligible-business profits for three consecutive tax years out of ten |
| Who decides | DPIIT | Inter-Ministerial Board of Certification (Joint Secretary, DPIIT as Convener, with representatives of DBT and DST) |
| Entity types | Private limited company, registered partnership firm, LLP, multi-State or other cooperative society | Company or LLP only |
| Age and turnover | Within 10 years; turnover up to ₹200 crore in every financial year (Deep Tech: 20 years, ₹300 crore) | Incorporated on or after 1 April 2016 and before 1 April 2030; turnover up to ₹300 crore in the claim year |
| Application | Portal application with incorporation or registration certificate and a write-up on innovation or scalability | Form-1 with constitution documents, audited accounts (if applicable) and evidence of innovation, employment and wealth creation; the portal also asks for a pitch deck and video |
| Statutory time limit for a decision | None stated in G.S.R. 108(E) | None stated in G.S.R. 108(E) |
| Automatic? | No: DPIIT may recognise or reject with reasons | No: the Board may grant or reject with reasons, even for a recognised Startup |
Why the confusion happens
Both steps run through the same Startup India portal and both are described in the same DPIIT notification, so they are easy to treat as one. In law they are separate: recognition is a DPIIT decision on the Startup definition, while the tax holiday needs the Board's certificate and then has to satisfy every condition of section 140, including the turnover limit, the audit requirement in section 140(8) and the formation conditions in section 140(3).
The entity rules also differ. A registered partnership firm can be recognised as a Startup, but only a company or an LLP can be an 'eligible start-up' for section 140.
Sources: Section 140(3), (8) and (16), Income-tax Act, 2025; G.S.R. 108(E)
Should you apply for the tax-holiday certificate right away?
Not necessarily. Section 140 is a deduction from the profits of the eligible business, so it has no value in a year without taxable profit. Because the start-up can choose any three consecutive tax years within the first ten (section 140(2)), many founders get DPIIT recognition first and plan the certificate application around the years in which they expect to be profitable.
Keep the outer limits in mind: incorporation must be before 1 April 2030, the turnover limit is tested for each claim year, and the accounts for each claim year must be audited and the report furnished by the section 63 specified date.
Frequently asked questions
If I have DPIIT recognition, am I automatically income-tax exempt?
No. Recognition alone does not give the tax holiday. A company or LLP must separately obtain the Inter-Ministerial Board's certificate of eligible business and meet every condition of section 140 of the Income-tax Act, 2025.
Can I apply for the tax-holiday certificate without DPIIT recognition?
No. Under paragraph 3 of G.S.R. 108(E), the Form-1 application is made by a Startup, that is, an entity already recognised by DPIIT, that is a private limited company or an LLP.
How long does the certificate take?
G.S.R. 108(E) does not prescribe a time limit for the Board's decision, so there is no guaranteed turnaround. Treat it as a separate step and apply once your documents are ready.
Does the tax holiday exempt all types of tax?
No. Section 140 is a deduction of 100% of the profits of the eligible business for three consecutive tax years out of ten, in computing total income under the Income-tax Act, 2025. It does not affect GST or other taxes.
Has the DPIIT turnover limit changed?
Yes. G.S.R. 108(E) of 4 February 2026 sets the recognition limit at ₹200 crore in any financial year (₹300 crore for a Deep Tech Startup). Separately, section 140 of the Income-tax Act, 2025 sets a ₹300 crore turnover limit for the tax year of the claim.
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