Tax Exemption
“Save Smart, Grow Faster with Tax Exemptions.”
Tax Exemption ?
A Tax Exemption means freedom from paying certain taxes on income, profits, or specific transactions as allowed by the government. Instead of paying the full tax amount, individuals, businesses, or startups may get partial or complete relief depending on the rules.
For example, under the Startup India initiative, eligible startups can enjoy a 3-year income tax holiday and other exemptions that reduce their financial burden.
Key Features of a Tax Exemption ?
Income Tax Holiday – Eligible startups can enjoy up to 3 years of tax-free profits, easing the financial burden during the initial growth phase.
Reduced Tax Liability – Businesses and individuals get partial or complete relief on taxable income, helping retain more capital.
Government-Backed Benefits – Exemptions are provided under official schemes like Startup India, ensuring credibility and legal backing.
Encourages Growth & Innovation – By lowering tax pressure, companies can reinvest savings into expansion, R&D, and innovation.
Eligibility Based – Only businesses fulfilling specific government criteria (like DPIIT-recognized startups) can claim the benefit.
Documents Required for Tax Exemption
Startup India Recognition Certificate
Issued by DPIIT (Department for Promotion of Industry and Internal Trade).
Certificate of Incorporation / Registration
Incorporation Certificate (for Private Limited / LLP)
Partnership Registration Certificate (for Partnership Firms)
PAN Card of the Company
Mandatory for all entities applying for exemption.
Financial Statements
Audited Balance Sheet, Profit & Loss Account, and Income Tax Returns (as applicable).
Business Idea & Innovation Proof
Write-up on how the startup is innovative, scalable, and has potential for employment or wealth creation.
Digital Signature Certificate (DSC)
Required for online application and e-filing.
Note:
- Only DPIIT-recognized startups are eligible for tax exemption under Section 80-IAC of the Income Tax Act.