80-IAC Registration – Step-by-Step Tax Exemption Guide for Startups

Secure your 100% tax exemption approval with expert Startup India and DPIIT support. From innovation drafting to IMB clearance — PSR manages your entire 80-IAC registration.

  • 100% Tax-Free Profit for 3 Years
  • DPIIT & IMB Approval Filing
  • Startup Innovation Documentation
  • Professional Compliance Support
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ndia has become one of the most active global startup hubs. From AI-based SaaS platforms and D2C skincare brands to EV manufacturing and robotics innovation, new founders are entering the market every day. But even the most brilliant idea needs breathing space in the beginning — and the biggest pressure founders face is not product launch, not customer acquisition, but tax and compliance cost in the early years.

This is exactly why the Government introduced Section 80-IAC under the Income Tax Act. It allows eligible startups to enjoy 100% income tax exemption for any three consecutive years during their first ten years of existence. Instead of paying lakhs in tax to the government, startups can channel that money into hiring, developing product features, server scaling, research, customer onboarding, or advertising.

If you are building a technology-driven, innovative, IP-based business and aim to expand aggressively in the first five years, 80-IAC is not just a benefit ,  it is fuel for your growth.

Understanding 80-IAC , What It Really Means for Founders

Many founders hear about 80-IAC from investors or accelerator mentors but do not truly understand its long-term value. 80-IAC is a tax holiday specifically designed to support innovation, invention, and technology-based entrepreneurship.

This exemption legally permits a startup to pay zero tax on profits for three selected years, not necessarily the first three. For example, if your business earns stable profits only after year 4, you can choose year 4, 5, and 6 as your exemption block.

In simple terms — you earn profit, reinvest it, and scale quickly without tax deduction.

Major Benefits of 80-IAC for Startup Growth

Complete Tax Freedom for 3 Years

Imagine your startup earns ₹3 crore profit across three years. With exemption:

  • Tax payable without 80-IAC: approx. ₹75–90 lakhs
  • Tax payable with 80-IAC: ₹0

This saved capital becomes development fuel.

Investor Attraction & Funding Confidence

VCs, seed investors, angels, and family offices prefer tax-exempt startups because:

  • profit reinvestment is easier
  • product roadmap execution is faster
  • valuation grows organically
Boost in Innovation & Global Competitiveness

Startups can focus on:

  • patent filing
  • team expansion
  • global distribution
  • R&D enhancement
Strategic Cash-Flow Stability

Cash remains inside the startup. No forced tax drain during early revenue cycles.

Documents Required for Smooth Approval

While startup founders often assume it's a simple filing, 80-IAC approval goes through IMB evaluation, so documents must justify innovation.

Mandatory Set
  • DPIIT Recognition Certificate
  • COI (Incorporation Proof)
  • MOA/AOA or LLP Agreement
  • PAN of Entity
  • Financial Statements (Audited)
  • Shareholding Report
  • Director & Founder Details
Innovation Proof
  • Patent registration / applied acknowledgment
  • Prototype snapshots
  • Technology workflow
  • Research data
  • Software screenshots
  • App architecture
  • UI/UX demo
  • Automation mechanism
  • White paper explaining innovation
Operational Records
  • Revenue model
  • Business plan
  • Market impact document
  • Industry need-gap explanation
  • Customer acquisition strategy
  • Product testing report

Step-By-Step Approval Process

Step 1 – DPIIT Recognition

Startup must hold valid DPIIT recognition under Startup India.

Step 2 – Technology Innovation Dossier

A structured document proving:

  • how your solution differs
  • scalability
  • innovation/IP highlight
  • market need justification
  • product uniqueness
Step 3 – Online Filing for 80-IAC

Application submitted with all attachments, innovation proof, financials, and pitch deck.

Step 4 – Inter-Ministerial Board (IMB) Review

Board examines:

  • technological innovation
  • impact potential
  • originality
  • IP rights
  • scalability
  • product functioning demo
Step 5 – Certificate Issue

Once IMB verifies eligibility, a formal exemption certificate is issued.

Step 6 – Choose Any 3 Exemption Years

You can select:
Year 2-3-4 or
Year 3-4-5 or
Year 5-6-7 as per profitability cycle.

Why 80-IAC Matters in the Indian Startup Stage

Founders often struggle in years 2–4 because:

  • hiring pressures
  • rising CAC
  • tech upgrades
  • positioning costs
  • server management
  • scaling expenses

Government exemption acts as a financial cushion to survive and scale.

This is why accelerators, VC firms, and incubation mentors strongly recommend 80-IAC.

When Should Startups Apply?

Ideal phase:

  • post-prototype
  • post-market validation
  • early revenue flow
  • clear product demand

Avoid applying:

  • when product is not yet functional
  • without documentation support
  • purely trading or reselling entity

Fees & Professional Support

Government Fee:

As per Startup India compliance norms.

PSR Compliance Professional Fee:

Based on:

  • documentation volume
  • business model complexity
  • innovation proof preparation
  • IMB representation

You get guided support from start to certificate issuance.

PSR Compliance - How We Support Your Approval Journey

PSR ensures:

  • DPIIT recognition
  • innovation drafting
  • technical file formatting
  • IMB submission support
  • response handling if queries arise
  • certificate finalization

Our Role:

  • Preparing innovation narrative
  • Structuring tech whitepaper
  • Application filing
  • Follow-up with board
  • Post-clarification response

Frequently Asked Questions

DPIIT-recognized tech or innovation-driven startups.

Three years of complete income tax exemption.

Only those proving innovation & originality.

After DPIIT recognition and product validation.

Yes, from documentation to final approval.