INTRODUCTION
Form 80 IAC is related to the Indian Income Tax Act and is specifically related to the tax incentives provided for certain businesses and industries in India. Form 80 IAC is typically used by eligible companies to claim a deduction under Section 80 IAC of the Income Tax Act. This section provides a deduction for profits and gains derived from eligible businesses that are engaged in developing, maintaining, and operating a Special Economic Zone (SEZ). SEZs are designated geographical regions that are treated as foreign territories for trade operations and are established to promote exports and boost economic growth.
What is IT section 80 IAC?
The Indian Income Tax Act's introduction of the 80 IAC tax deduction is a significant feature that promotes and supports the expansion of industrial ventures in India. It allows eligible enterprises to deduct a sizeable portion of income from particular industrial activity. However, businesses looking to maximize their tax benefits frequently face difficulties due to the complexity and depth of this rule.
It is crucial for startups with less than Rs 25 cr in revenue to get involved in the development of new products or services. The Income Tax Act's Section 80IAC has a substantial effect on entrepreneurs. The Indian startup environment has greatly benefited from tax advantages.
Startups can now increase their financial investments in their businesses, enabling them to create new goods and services. By offering tax benefits, the government has also influenced investors to make investments in start-ups. Due to the increase in venture capital investments, companies have received much-needed funding as a result of this.
Startups have generally benefited from Section 80IAC, which was passed under the Income Tax Act. It has given the startup ecosystem in India the much-needed boost that will encourage investors to fund the firms.
Eligibility for Form 80 IAC Startup India
1. The Startup must be registered as a limited liability partnership, a partnership business, or a private limited company.
2. Turnover should have been less than INR 100 crore, in any of the prior fiscal years.
3. A business will be classified as a startup for ten years after it was founded.
4. The startup should be attempting to innovate or improve current goods, services, and procedures, and it should have the potential to produce money and jobs. A "Startup" shall not include a company created through the division or rebuilding of an existing business.
FORM 80 IAC (TAX DEDUCTION ELIGIBILITY CERTIFICATE):
Following recognition, a startup may file a request for a tax exemption under Section 80IAC of the Income Tax Act of 1961. A startup may benefit from a tax holiday for three successive fiscal years within the first ten years of incorporation after gaining approval for tax exemption.
Requirements for Form 80 IAC Startup India (Tax Deduction Eligibility Certificate):
1. Memorandum of association (MOA) (for Pvt Ltd) or LLP Deed (for LLP)
2. Board Resolution (if there is any)
3. Annual Accounts & Income Tax returns of the startup mandatory for the last three financial years.
Toolkit for Financial Statements:
Updated financial reports for the last three years or going back to the year of incorporation (Balance Sheet, Profit & Loss Statement, Income Tax Returns).
Note: The profit and loss statement and the balance sheet must be certified by a CA.
Note: Income Tax Returns (ITR) are not required if your firm was formed on or after April 1, 2018. ITR is required for startups founded before that date.
4. Launch Video Link
Instrumental for Video Link
The video should be no longer than two minutes and address the following topics:
1. Describe briefly what your startup does or plans to do
2. Display the functionality of the prototype or proof-of-concept you created.
If your product or service has already been introduced to the market, the amount of traction it has so far gained
5. Pitch deck
Toolkit for Pitchdeck Pitch deck (Maximum 5 slides).
Your pitch deck must have the following:
Information on the goods and services your firm is offering Describe briefly how inventive and/or scalable your startup is. Number of employees at your firm and, if any, the amount of money raised Credentials of the founders/management screenshots/images of your website/product, along with any relevant internet links IMB will provide a tax exemption certificate by taking into account the aforementioned factors.
6. Recognition
1. The process of recognition of an eligible entity as startup shall be as under: —
(i) A Startup shall make an online application over the mobile app or portal set up by the DPIIT.
(ii) The application shall be accompanied by—
(a) A copy of Certificate of Incorporation or Registration, as the case may be, and
(b) A write-up about the nature of business highlighting how it is working towards innovation, development or improvement of products or processes or services, or its scalability in terms of employment generation or wealth creation.
(iii) The DPIIT may, after calling for such documents or information and making such enquires, as It may deem fit, —
(a) Recognize the eligible entity as Startup; or
(b) Reject the application by providing reasons
7. Website link
CONCLUSION
Thus, it is provided that to get tax exemptions the startup company may file for FORM 80 IAC, it provides with tax exemptions for three years to start-ups. Since tax-related forms and regulations can change, I strongly recommend checking the official website of the Income Tax Department of India or consulting a qualified tax professional for the most accurate and current information regarding Form 80 IAC and its details. It is not compulsory for start-ups to file but due to its various benefits most of the start-ups prefer to file for the Form 80 IAC.
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