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Tax Exemption
for
Startups
- Sec 80ICA of Income Tax Act,1961
CA (Dr) Prithvi Ranjan Parhi
CA Dr Prithvi Ranjan Parhi
Startup Tax Planning
-Sec 80IAC of IT Act,1961
CA Dr Prithvi Ranjan Parhi
Company
LLP
Eligible Startup
Eligible
Business
100% Tax
Deduction
3 consecutive
AYs out of 10
AYs
Conditions :
? Not by Splitting/
Restructuring ~ Exceptions
? Not by transfer of old
P&M ~ Exceptions
Eligible Business:
? Innovation, Development
? Improvement of products /
processes / services
? A scalable business model with a
high potential of employment
generation / wealth creation;
Eligible Start up:
? Company or a LLP
? Incorporated After April 1, 2016
but before April 1, 2025
? Total turnover does not exceed
100 crore rupees
? Certificate of eligible business
100% deduction for 3 Consecutive AYs
? 80-IAC. (1) Where the gross total income of an assessee,
being an eligible start-up, includes any profits and gains
derived from eligible business, there shall, in accordance with
and subject to the provisions of this section, be allowed, in
computing the total income of the assessee, a deduction of
an amount equal to one hundred per cent of the profits and
gains derived from such business for three consecutive
assessment years.
? (2) The deduction specified in sub-section (1) may, at the
option of the assessee, be claimed by him for any three
consecutive assessment years out of ten years beginning from
the year in which the eligible start-up is incorporated.
?100%
deduction
?3/10 AYs
CA Dr Prithvi Ranjan Parhi
Conditions
? (3) This section applies to a start-up which fulfils the following
conditions, namely:—
? (i) it is not formed by splitting up, or the reconstruction, of a
business already in existence:
? Provided that this condition shall not apply in respect of a start-up
which is formed as a result of the re-establishment, reconstruction or
revival by the assessee of the business of any such undertaking as
referred to in section 33B, in the circumstances and within the period
specified in that section;
? (ii) it is not formed by the transfer to a new business of
machinery or plant previously used for any purpose.
? Not by
splitting up/
reconstruction
? Not by
transfer of
machinery or
plant
previously
used
CA Dr Prithvi Ranjan Parhi
Plant & Machinery used outside India
? Explanation 1.—For the purposes of this clause, any machinery
or plant which was used outside India by any person other than
the assessee shall not be regarded as machinery or plant
previously used for any purpose, if all the following conditions
are fulfilled, namely:—
a) such machinery or plant was not, at any time previous to the date of
the installation by the assessee, used in India;
b) such machinery or plant is imported into India;
c) no deduction on account of depreciation in respect of such machinery
or plant has been allowed or is allowable under the provisions of this
Act in computing the total income of any person for any period prior
to the date of the installation of the machinery or plant by the
assessee.
? Not used in
India earlier
? Imported
? No
depreciation
taken
CA Dr Prithvi Ranjan Parhi
Special provision in respect of specified business.
? Explanation 2.—Where in the case of a start-up, any
machinery or plant or any part thereof previously
used for any purpose is transferred to a new
business and the total value of the machinery or
plant or part so transferred does not exceed twenty
per cent of the total value of the machinery or plant
used in the business, then, for the purposes of clause
(ii) of this sub-section, the condition specified
therein shall be deemed to have been complied with.
Used Plant
>
25% of Total
Plant
CA Dr Prithvi Ranjan Parhi
Eligible Business
? (4) The provisions of sub-section (5) and sub-sections (7)
to (11) of section 80-IA shall apply to the start-ups for
the purpose of allowing deductions under sub-section
(1).
? Explanation.—For the purposes of this section,—
? (i) "eligible business" means a business carried out by an
eligible start-up engaged in innovation, development or
improvement of products or processes or services or a
scalable business model with a high potential of
employment generation or wealth creation;
? Innovation,
? Development
? Improvement of
products /
processes /
services
? A scalable
business model
with a high
potential of
employment
generation /
wealth creation;
CA Dr Prithvi Ranjan Parhi
Eligible Startup
? (ii) "eligible start-up" means a company or a limited liability
partnership engaged in eligible business which fulfils the following
conditions, namely:—
a) it is incorporated on or after the 1st day of April, 2016 but
before the 1st day of April, 2025;
b) the total turnover of its business does not exceed one
hundred crore rupees in the previous year relevant to the
assessment year for which deduction under sub-section (1)
is claimed; and
c) it holds a certificate of eligible business from the Inter-
Ministerial Board of Certification as notified in the Official
Gazette by the Central Government;
? (iii) "limited liability partnership" means a partnership referred to in
clause (n) of sub-section (1) of section 2 of the Limited Liability
Partnership Act, 2008 (6 of 2009).
? Company or a
limited liability
? 1st day of April,
2016 but before
the 1st day of
April, 2025
? Total turnover
of its business
does not exceed
100 crore
rupees
? Certificate of
eligible business
CA Dr Prithvi Ranjan Parhi
CA Dr Prithvi Ranjan Parhi
CA Dr Prithvi Ranjan Parhi
Documents/ Info
1. Memorandum of association (for Pvt Ltd) or LLP Deed (for LLP)
2. Board Resolution (if any)
3. Annual Accounts & Income Tax returns of the startup for the last three financial
years. (The Balance Sheet and the Profit and Loss Statement must be CA
Certified)
4. If your startup was incorporated on 1st April 2018 or later, Income Tax Returns
(ITR) is not mandatory. For startups incorporated earlier, ITR is mandatory.
5. Startup Video Link.
6. Pitch deck
? CA. Dr. Prithvi Ranjan Parhi 11
CA Dr Prithvi Ranjan Parhi
CA Dr Prithvi Ranjan Parhi
Thanks
CA (Dr) Prithvi Ranjan Parhi
CA Dr Prithvi Ranjan Parhi

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Income Tax exemption for Start up : Section 80 IAC

  • 1. Tax Exemption for Startups - Sec 80ICA of Income Tax Act,1961 CA (Dr) Prithvi Ranjan Parhi CA Dr Prithvi Ranjan Parhi
  • 2. Startup Tax Planning -Sec 80IAC of IT Act,1961 CA Dr Prithvi Ranjan Parhi Company LLP Eligible Startup Eligible Business 100% Tax Deduction 3 consecutive AYs out of 10 AYs Conditions : ? Not by Splitting/ Restructuring ~ Exceptions ? Not by transfer of old P&M ~ Exceptions Eligible Business: ? Innovation, Development ? Improvement of products / processes / services ? A scalable business model with a high potential of employment generation / wealth creation; Eligible Start up: ? Company or a LLP ? Incorporated After April 1, 2016 but before April 1, 2025 ? Total turnover does not exceed 100 crore rupees ? Certificate of eligible business
  • 3. 100% deduction for 3 Consecutive AYs ? 80-IAC. (1) Where the gross total income of an assessee, being an eligible start-up, includes any profits and gains derived from eligible business, there shall, in accordance with and subject to the provisions of this section, be allowed, in computing the total income of the assessee, a deduction of an amount equal to one hundred per cent of the profits and gains derived from such business for three consecutive assessment years. ? (2) The deduction specified in sub-section (1) may, at the option of the assessee, be claimed by him for any three consecutive assessment years out of ten years beginning from the year in which the eligible start-up is incorporated. ?100% deduction ?3/10 AYs CA Dr Prithvi Ranjan Parhi
  • 4. Conditions ? (3) This section applies to a start-up which fulfils the following conditions, namely:— ? (i) it is not formed by splitting up, or the reconstruction, of a business already in existence: ? Provided that this condition shall not apply in respect of a start-up which is formed as a result of the re-establishment, reconstruction or revival by the assessee of the business of any such undertaking as referred to in section 33B, in the circumstances and within the period specified in that section; ? (ii) it is not formed by the transfer to a new business of machinery or plant previously used for any purpose. ? Not by splitting up/ reconstruction ? Not by transfer of machinery or plant previously used CA Dr Prithvi Ranjan Parhi
  • 5. Plant & Machinery used outside India ? Explanation 1.—For the purposes of this clause, any machinery or plant which was used outside India by any person other than the assessee shall not be regarded as machinery or plant previously used for any purpose, if all the following conditions are fulfilled, namely:— a) such machinery or plant was not, at any time previous to the date of the installation by the assessee, used in India; b) such machinery or plant is imported into India; c) no deduction on account of depreciation in respect of such machinery or plant has been allowed or is allowable under the provisions of this Act in computing the total income of any person for any period prior to the date of the installation of the machinery or plant by the assessee. ? Not used in India earlier ? Imported ? No depreciation taken CA Dr Prithvi Ranjan Parhi
  • 6. Special provision in respect of specified business. ? Explanation 2.—Where in the case of a start-up, any machinery or plant or any part thereof previously used for any purpose is transferred to a new business and the total value of the machinery or plant or part so transferred does not exceed twenty per cent of the total value of the machinery or plant used in the business, then, for the purposes of clause (ii) of this sub-section, the condition specified therein shall be deemed to have been complied with. Used Plant > 25% of Total Plant CA Dr Prithvi Ranjan Parhi
  • 7. Eligible Business ? (4) The provisions of sub-section (5) and sub-sections (7) to (11) of section 80-IA shall apply to the start-ups for the purpose of allowing deductions under sub-section (1). ? Explanation.—For the purposes of this section,— ? (i) "eligible business" means a business carried out by an eligible start-up engaged in innovation, development or improvement of products or processes or services or a scalable business model with a high potential of employment generation or wealth creation; ? Innovation, ? Development ? Improvement of products / processes / services ? A scalable business model with a high potential of employment generation / wealth creation; CA Dr Prithvi Ranjan Parhi
  • 8. Eligible Startup ? (ii) "eligible start-up" means a company or a limited liability partnership engaged in eligible business which fulfils the following conditions, namely:— a) it is incorporated on or after the 1st day of April, 2016 but before the 1st day of April, 2025; b) the total turnover of its business does not exceed one hundred crore rupees in the previous year relevant to the assessment year for which deduction under sub-section (1) is claimed; and c) it holds a certificate of eligible business from the Inter- Ministerial Board of Certification as notified in the Official Gazette by the Central Government; ? (iii) "limited liability partnership" means a partnership referred to in clause (n) of sub-section (1) of section 2 of the Limited Liability Partnership Act, 2008 (6 of 2009). ? Company or a limited liability ? 1st day of April, 2016 but before the 1st day of April, 2025 ? Total turnover of its business does not exceed 100 crore rupees ? Certificate of eligible business CA Dr Prithvi Ranjan Parhi
  • 9. CA Dr Prithvi Ranjan Parhi
  • 10. CA Dr Prithvi Ranjan Parhi
  • 11. Documents/ Info 1. Memorandum of association (for Pvt Ltd) or LLP Deed (for LLP) 2. Board Resolution (if any) 3. Annual Accounts & Income Tax returns of the startup for the last three financial years. (The Balance Sheet and the Profit and Loss Statement must be CA Certified) 4. If your startup was incorporated on 1st April 2018 or later, Income Tax Returns (ITR) is not mandatory. For startups incorporated earlier, ITR is mandatory. 5. Startup Video Link. 6. Pitch deck ? CA. Dr. Prithvi Ranjan Parhi 11
  • 12. CA Dr Prithvi Ranjan Parhi
  • 13. CA Dr Prithvi Ranjan Parhi
  • 14. Thanks CA (Dr) Prithvi Ranjan Parhi CA Dr Prithvi Ranjan Parhi
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