Start Up Registration and Tax exemptions for Start Ups

Start Up Registration and Tax exemptions for Start Ups

Eligibility Criteria for Startup Recognition:

• The Startup should be incorporated as a private limited company or registered as a partnership firm or a limited liability partnership Turnover should be less than INR 100 Crores in any of the previous financial years. An entity shall be considered as a startup up to 10 years from the date of its incorporation
• The Startup should be working towards innovation/ improvement of existing products, services and processes and should have the potential to generate employment/ create wealth. An entity formed by splitting up or reconsutrctuon of an existing business shall not be considered a "Startup"

Startup India: 80 IAC Tax exemption:

• Post getting recognition a Startup may apply for Tax exemption under section 80 IAC of the Income Tax Act. Post getting clearance for Tax exemption, the Startup can avail tax holiday for 3 consecutive financial years out of its first ten years since incorporation.

Eligibility Criteria for applying to Income Tax exemption (80IAC):

• The entity should be a recognized Startup
• Only Private limited or a Limited Liability Partnership is eligible for Tax exemption under Section 80IAC
• The Startup should have been incorporated after 1st April, 2016

Eligibility Criteria for Tax Exemption under Section 56 of the Income Tax Act:

• The entity should be a DPIIT recognized Startup.
• Aggregate amount of paid up share capital and share premium of the Startup after the proposed issue of share, if any, does not exceed INR 25 Crore.