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Eligibility criteria for income tax exemption under 80IAC:
  • The entity should be a recognized Startup;
  • It should either be incorporated as private limited or registered as a limited liability partnership;
  • Startup should have been incorporated after April 1, 2016;
  • Your business model should be in working state; and
  • Exemption of income tax under section 80-IAC of Income Tax Act stating full deduction for any 3 consecutive years out of 7 years from the year of incorporation of startup on the profits and gains from business.
Eligibility criteria for tax exemption under Section 56:
  • 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, should not exceed INR 25 crore;
  • Product to be introduced by your startup should be problem solving which can serve social welfare; and
  • Exemption of income tax on investments above fair market value received under section 56 of Income Tax Act.

E-commerce startups are not authorized for this scheme; exception is only if they have some innovative part in it.