Until when must a start-up be incorporated to claim s.80-IAC, and what happens to the claim if the return is filed late?
As the section currently reads, an eligible start-up must be incorporated on or after 1 April 2016 but before 1 April 2030 — the date was substituted for 2025 by Act No. 7 of 2025 with effect from 1 April 2025, which is the extension relied on here. The deduction is one hundred per cent of the profits of the eligible business for three consecutive assessment years, claimable at the assessee's option out of ten years beginning with the year of incorporation, and it is lost entirely if the return is filed after the due date under s.139(1), because s.80AC bars every deduction under the Chapter VI-A heading 'C.—Deductions in respect of certain incomes' in that event.
Decided by the CBDT Circulars & Instructions (Not applicable — statutory text) on 2025-04-01, reported as Section 80-IAC, Income-tax Act 1961, incorporation cut-off substituted by Act No. 7 of 2025 with effect from 1 April 2025; section 80AC as substituted by the Finance Act 2018 with effect from 1 April 2018. It bears on section 80-IAC, section 80AC, section 80A(5), section 80-IA, section 139(1), section 33B of the Income Tax Act 1961, in Deductions & Disallowances and Assessment & Scrutiny matters.
The s.80AC bar is absolute and is the commonest way this deduction is lost — it operates on the date of the return, not on the merits, and s.80-IAC sits squarely under heading C of Chapter VI-A. Section 80A(5) adds a second, independent bar: no deduction under that heading is allowed at all unless the claim is made in the return of income. Beyond timing, three conditions do the work. The start-up must hold a certificate of eligible business from the Inter-Ministerial Board of Certification notified in the Official Gazette; without it there is no deduction however plainly the business qualifies, as Herald Global Ventures Private Limited v CCIT shows, where the Board refused the certificate because a director held majority shareholding in the group. Total turnover in the relevant previous year must not exceed one hundred crore rupees. And the entity must be a company or a limited liability partnership — a firm or a proprietorship is outside the definition. The three-out-of-ten structure is a planning choice and a trap: choose the wrong three years and the benefit is spent against low profits, but the Gujarat High Court has held that the availability of later years is not an answer to hardship caused now.
Binding on the department, not on the assessee or the courts. An assessee may rely on a circular that is beneficial to them.
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Section 80-IAC(1) allows an eligible start-up a deduction of one hundred per cent of the profits and gains derived from an eligible business for three consecutive assessment years, and sub-section (2) allows the assessee to choose any three consecutive assessment years out of ten beginning from the year in which the start-up is incorporated. Sub-section (3) requires that the start-up is not formed by splitting up or reconstruction of a business already in existence, subject to a proviso for re-establishment, reconstruction or revival of an undertaking referred to in s.33B, and that it is not formed by the transfer to a new business of machinery or plant previously used for any purpose, with Explanation 1 for imported plant not previously used in India and Explanation 2 deeming the condition complied with where the value of transferred used plant does not exceed twenty per cent of the total value of machinery or plant used. Sub-section (4) applies s.80-IA(5) and s.80-IA(7) to (11). The Explanation defines 'eligible business' as 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, and defines 'eligible start-up' as a company or a limited liability partnership engaged in eligible business which is incorporated on or after 1 April 2016 but before 1 April 2030, whose total turnover does not exceed one hundred crore rupees in the previous year relevant to the assessment year for which the deduction is claimed, and which holds a certificate of eligible business from the Inter-Ministerial Board of Certification as notified in the Official Gazette by the Central Government. Section 80AC, as substituted with effect from 1 April 2018, provides by clause (ii) that where in computing total income for an assessment year commencing on or after 1 April 2018 any deduction is admissible under any provision of Chapter VI-A under the heading 'C.—Deductions in respect of certain incomes', no such deduction shall be allowed unless the assessee furnishes a return of income for that assessment year on or before the due date specified under s.139(1). Section 80A(5) provides that where the assessee fails to make a claim in his return for any deduction under s.10A, 10AA, 10B, 10BA or under any provision of Chapter VI-A under that heading, no deduction shall be allowed.
Not applicable — statutory position. The operative propositions are: (a) the incorporation window for an eligible start-up is on or after 1 April 2016 and before 1 April 2030 as the section currently reads, the outer date having been substituted for 2025 by Act No. 7 of 2025 with effect from 1 April 2025; (b) the deduction is one hundred per cent for three consecutive assessment years chosen out of ten from the year of incorporation; (c) only a company or a limited liability partnership can be an eligible start-up, turnover must not exceed one hundred crore rupees in the relevant previous year, and an Inter-Ministerial Board certificate of eligible business is a condition of the definition; and (d) a return filed after the s.139(1) due date forfeits the deduction under s.80AC(ii), and a deduction not claimed in the return is barred by s.80A(5).
Not applicable — statutory position.
it is incorporated on or after the 1st day of April, 2016 but before the 1st day of April, 2030;
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Handle my notice → Ask a CA on WhatsAppAs the section currently reads, an eligible start-up must be incorporated on or after 1 April 2016 but before 1 April 2030 — the date was substituted for 2025 by Act No. 7 of 2025 with effect from 1 April 2025, which is the extension relied on here. The deduction is one hundred per cent of the profits of the eligible business for three consecutive assessment years, claimable at the assessee's option out of ten years beginning with the year of incorporation, and it is lost entirely if the return is filed after the due date under s.139(1), because s.80AC bars every deduction under the Chapter VI-A heading 'C.—Deductions in respect of certain incomes' in that event. This was decided by the CBDT Circulars & Instructions (Not applicable — statutory text) and bears on section 80-IAC, section 80AC, section 80A(5), section 80-IA, section 139(1), section 33B of the Income Tax Act 1961. It is reported as Section 80-IAC, Income-tax Act 1961, incorporation cut-off substituted by Act No. 7 of 2025 with effect from 1 April 2025; section 80AC as substituted by the Finance Act 2018 with effect from 1 April 2018. The s.80AC bar is absolute and is the commonest way this deduction is lost — it operates on the date of the return, not on the merits, and s.80-IAC sits squarely under heading C of Chapter VI-A. Section 80A(5) adds a second, independent bar: no deduction under that heading is allowed at all unless the claim is made in the return of income. Beyond timing, three conditions do the work. The start-up must hold a certificate of eligible business from the Inter-Ministerial Board of Certification notified in the Official Gazette; without it there is no deduction however plainly the business qualifies, as Herald Global Ventures Private Limited v CCIT shows, where the Board refused the certificate because a director held majority shareholding in the group. Total turnover in the relevant previous year must not exceed one hundred crore rupees. And the entity must be a company or a limited liability partnership — a firm or a proprietorship is outside the definition. The three-out-of-ten structure is a planning choice and a trap: choose the wrong three years and the benefit is spent against low profits, but the Gujarat High Court has held that the availability of later years is not an answer to hardship caused now. If it applies to you, the first step is this: Check the date of incorporation against the window: on or after 1 April 2016 and before 1 April 2030 on the current text. Take the date from the certificate of incorporation, not from the DPIIT recognition certificate, which is a different and later date.
Section 80-IAC(1) allows an eligible start-up a deduction of one hundred per cent of the profits and gains derived from an eligible business for three consecutive assessment years, and sub-section (2) allows the assessee to choose any three consecutive assessment years out of ten beginning from the year in which the start-up is incorporated. Sub-section (3) requires that the start-up is not formed by splitting up or reconstruction of a business already in existence, subject to a proviso for re-establishment, reconstruction or revival of an undertaking referred to in s.33B, and that it is not formed by the transfer to a new business of machinery or plant previously used for any purpose, with Explanation 1 for imported plant not previously used in India and Explanation 2 deeming the condition complied with where the value of transferred used plant does not exceed twenty per cent of the total value of machinery or plant used. Sub-section (4) applies s.80-IA(5) and s.80-IA(7) to (11). The Explanation defines 'eligible business' as 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, and defines 'eligible start-up' as a company or a limited liability partnership engaged in eligible business which is incorporated on or after 1 April 2016 but before 1 April 2030, whose total turnover does not exceed one hundred crore rupees in the previous year relevant to the assessment year for which the deduction is claimed, and which holds a certificate of eligible business from the Inter-Ministerial Board of Certification as notified in the Official Gazette by the Central Government. Section 80AC, as substituted with effect from 1 April 2018, provides by clause (ii) that where in computing total income for an assessment year commencing on or after 1 April 2018 any deduction is admissible under any provision of Chapter VI-A under the heading 'C.—Deductions in respect of certain incomes', no such deduction shall be allowed unless the assessee furnishes a return of income for that assessment year on or before the due date specified under s.139(1). Section 80A(5) provides that where the assessee fails to make a claim in his return for any deduction under s.10A, 10AA, 10B, 10BA or under any provision of Chapter VI-A under that heading, no deduction shall be allowed. The matter was decided on 2025-04-01 by the CBDT Circulars & Instructions (Not applicable — statutory text). On those facts the CBDT Circulars & Instructions held as follows. Not applicable — statutory position. The operative propositions are: (a) the incorporation window for an eligible start-up is on or after 1 April 2016 and before 1 April 2030 as the section currently reads, the outer date having been substituted for 2025 by Act No. 7 of 2025 with effect from 1 April 2025; (b) the deduction is one hundred per cent for three consecutive assessment years chosen out of ten from the year of incorporation; (c) only a company or a limited liability partnership can be an eligible start-up, turnover must not exceed one hundred crore rupees in the relevant previous year, and an Inter-Ministerial Board certificate of eligible business is a condition of the definition; and (d) a return filed after the s.139(1) due date forfeits the deduction under s.80AC(ii), and a deduction not claimed in the return is barred by s.80A(5).
Not applicable — statutory position. In the words reproduced by the source cited on this page: "it is incorporated on or after the 1st day of April, 2016 but before the 1st day of April, 2030;"
It was decided by the CBDT Circulars & Instructions on 2025-04-01 and is reported as Section 80-IAC, Income-tax Act 1961, incorporation cut-off substituted by Act No. 7 of 2025 with effect from 1 April 2025; section 80AC as substituted by the Finance Act 2018 with effect from 1 April 2018. Binding on the department, not on the assessee or the courts. An assessee may rely on a circular that is beneficial to them. A CBDT circular or instruction binds officers of the department but not the assessee and not the courts. Where a circular helps you, you may hold the department to it. Where it hurts you, it cannot override the Act or a judgment. On section 80-IAC, section 80AC, section 80A(5), section 80-IA, section 139(1), section 33B, the practical question is whether the facts of your own notice match the facts of this case closely enough for the same rule to apply.
It cuts both ways and is cited by both sides. Not applicable — statutory position. The operative propositions are: (a) the incorporation window for an eligible start-up is on or after 1 April 2016 and before 1 April 2030 as the section currently reads, the outer date having been substituted for 2025 by Act No. 7 of 2025 with effect from 1 April 2025; (b) the deduction is one hundred per cent for three consecutive assessment years chosen out of ten from the year of incorporation; (c) only a company or a limited liability partnership can be an eligible start-up, turnover must not exceed one hundred crore rupees in the relevant previous year, and an Inter-Ministerial Board certificate of eligible business is a condition of the definition; and (d) a return filed after the s.139(1) due date forfeits the deduction under s.80AC(ii), and a deduction not claimed in the return is barred by s.80A(5). It arises in Deductions & Disallowances and Assessment & Scrutiny matters, on section 80-IAC, section 80AC, section 80A(5), section 80-IA, section 139(1), section 33B of the Income Tax Act 1961, and was decided by Not applicable — statutory text. Before relying on it, read the source linked on this page and check whether it has since been distinguished, overruled or overtaken by an amendment to the Income Tax Act. In practice the steps that follow from it are these. Obtain the Inter-Ministerial Board certificate of eligible business before planning around the deduction, and treat DPIIT start-up recognition as a separate and insufficient step. Diarise the s.139(1) due date as a hard deadline for every year in which the deduction is claimed; a belated return under s.139(4) forfeits the deduction under s.80AC and no condonation of the delay in filing the return revives it as of right. Make the claim in the return itself, because s.80A(5) independently bars a deduction under heading C that is not claimed there. Test the turnover ceiling of one hundred crore rupees in each previous year for which the deduction is claimed, not only in the first. Where the Board certificate is refused, price the fallback immediately — for a company that usually means s.115BAA, and Form 10-IC must then be filed by the s.139(1) due date.
Still good law. The text of s.80-IAC is taken from the current text of the section, which names Act No. 7 of 2025 as the enactment that substituted the 1 April 2030 cut-off with effect from 1 April 2025. The text of s.80AC is taken from a Karnataka High Court judgment of 13 January 2026 reproducing it, and not from a consolidated text of the Act, because the older consolidations in circulation carry the pre-2018 text. No search for judicial decisions construing s.80-IAC itself has been made; the only decision recorded that touches it, Herald Global Ventures Private Limited v CCIT-1 (Gujarat High Court, 16 March 2026), concerns the consequence of an Inter-Ministerial Board refusal and not the construction of the section. Two things are worth keeping in view for a live claim: the s.80AC bar is absolute on a late return, and s.80A(5) bars a deduction not claimed in the return at all, so the filing discipline decides the claim before its merits are reached. No source could be cited for that finding. Checking whether an authority still stands matters as much as knowing what it held: a decision may be overruled on one point and survive on another, or the provision it interprets may have been amended since. Read the source and the editor's note on this page before relying on it in a reply to an Assessing Officer or in an appeal.
The current text of s.80-IAC carries a footnote recording the incorporation date as substituted for '2025' by Act No. 7 of 2025 with effect from 1 April 2025, and that is the extension relied on here. Two cautions about older copies. A copy of s.80-IAC that still prints the incorporation cut-off as 'before the 1st day of April, 2024' is superseded and must not be used to state the current position. And a copy of s.80AC that is confined to ss.80-IA, 80-IAB, 80-IB, 80-IC, 80-ID and 80-IE is the pre-2018 text, which did not reach s.80-IAC at all; it must not be used either, and it is still in circulation. The current text of s.80AC set out here is taken instead from a judgment reproducing it — the Karnataka High Court in Madhu Souharda Pathina Sahakari v The Income Tax Officer, decided 13 January 2026, which sets out both s.80AC and s.80A(5). The current s.80AC has not been read in a consolidated text of the Act for this entry, so check its precise words before pleading them. The date in the decided_on field, 1 April 2025, is the date from which the substituted incorporation cut-off — 'before the 1st day of April, 2030', Act No. 7 of 2025 — takes effect, and is NOT a decision date; s.80-IAC itself was inserted with effect from 1 April 2017. This library shows the verification state of every entry openly. This entry has not yet been read in full by a chartered accountant. The summary reflects the sources listed on this page. Read the source before you rely on it in a reply to an Assessing Officer or in an appeal before the Commissioner (Appeals) or the Income Tax Appellate Tribunal.
Not applicable — statutory position. The operative propositions are: (a) the incorporation window for an eligible start-up is on or after 1 April 2016 and before 1 April 2030 as the section currently reads, the outer date having been substituted for 2025 by Act No. 7 of 2025 with effect from 1 April 2025; (b) the deduction is one hundred per cent for three consecutive assessment years chosen out of ten from the year of incorporation; (c) only a company or a limited liability partnership can be an eligible start-up, turnover must not exceed one hundred crore rupees in the relevant previous year, and an Inter-Ministerial Board certificate of eligible business is a condition of the definition; and (d) a return filed after the s.139(1) due date forfeits the deduction under s.80AC(ii), and a deduction not claimed in the return is barred by s.80A(5).
TaxSphere, “Statutory position — s.80-IAC: the start-up deduction, the incorporation cut-off, and the s.80AC bar on a late return”, https://taxnotice.vittsphere.com/caselaw/case/statutory-position-80-iac-start-up-deduction-cut-off-and-80ac-bar/ (validity last checked 2026-09-08)
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