Legal Structure
The startup should be incorporated as a private limited company or registered as a partnership firm or a limited liability partnership (LLP).
Registrations
Startup India Fostering Innovation and Growth
Empowering Startups: Your Path to Success. Startup India is an initiative launched by the Government of India to nurture and support budding entrepreneurs and innovative startups across the country. Under the Startup India Action Plan, startups that meet specific criteria are eligible to apply for recognition under the program, unlocking a range of benefits and support mechanisms.
Eligibility Criteria for Startup Recognition
At AXIAFIN, we provide expert DPIIT recognition services in Hyderabad to help your business unlock government benefits, tax exemptions, and funding opportunities.
Tax Exemption under Section 80IAC
Once recognized under Startup India, startups may apply for tax exemption under Section 80IAC of the Income Tax Act. This provision allows eligible startups to enjoy a tax holiday for three consecutive financial years out of their first ten years since incorporation, providing a significant boost to their financial sustainability and growth prospects.
Angel Tax Exemption — Section 56 of the Income Tax Act
Angel Tax Exemption, governed by Section 56 of the Income Tax Act, provides relief to startups recognized by the Department for Promotion of Industry and Internal Trade (DPIIT). This exemption shields startups from hefty tax liabilities, particularly concerning the valuation of shares issued to investors. The startup must be officially recognized by the DPIIT to qualify, and the aggregate amount of paid-up share capital and share premium of the startup, after the proposed share issuance, should not exceed INR 25 Crore. Angel Tax Exemption serves as a crucial lifeline for startups seeking investment. It prevents startups from facing punitive tax burdens on the excess valuation of shares issued to angel investors or through seed funding rounds.
Key Advantages
Eligibility Criteria for Startup Recognition
Turnover Limit
The annual turnover of the startup should not exceed INR 100 Crores in any of the previous financial years.
Age of Startup
An entity can qualify as a startup up to 10 years from the date of its incorporation.
Innovative Approach
The startup should be focused on innovation or improvement of existing products, services, or processes, with the potential to create employment and generate wealth.
Recognition as a Startup
The entity must be officially recognized as a startup under the Startup India program.
Date of Incorporation
The startup should have been incorporated after 1st April 2016, aligning with the commencement of the Startup India initiative.
The Process
How we deliver
01
Eligibility Review
Only private limited companies or limited liability partnerships (LLPs) are eligible for tax exemption under Section 80IAC.
02
Incorporation Date
The startup should have been incorporated after 1st April 2016.
03
DPIIT Recognition
The startup must be recognized by DPIIT.
04
Tax Exemption Application
Apply for tax exemption under Section 80IAC for 3 consecutive financial years.
05
Angel Tax Exemption
Apply for relief under Section 56 - paid-up share capital and share premium not exceeding INR 25 Crore.
Embracing the Startup India Advantage
Take the First Step Toward Growth and Stability with AXIAFIN