Section 80-IAC

Section 80-IAC — the law in short

What the courts have decided on section 80-IAC, in one screen. Read this first; open an entry when you need the facts, the reasoning and the source.

• Herald Global Ventures Private Limited v CCIT-1, Ahmedabad High CourtHelps taxpayerValidity unconfirmed
  My start-up's Inter-Ministerial Board certificate for s.80-IAC was refused, so I switched to s.115BAA and filed Form 10-IC 53 days late for AY 2022-23. There is no blanket circular for that year. Can the delay be condoned?
  Yes. The Gujarat High Court quashed the rejection under s.119(2)(b) and directed the competent authority to accept Form 10-IC for AY 2022-23. Where the assessee was otherwise eligible for s.115BAA, refusing to condone a 53-day delay produced a tax liability of Rs. 50,72,890 at the normal rate, and that financial consequence is itself the genuine hardship s.119(2)(b) is designed to relieve.
• Statutory position — s.80-IAC: the start-up deduction, the incorporation cut-off, and the s.80AC bar on a late return CBDT Circulars & InstructionsCuts both ways
  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.
• Statutory position — section 79: which version of the change-in-shareholding bar applies to your year CBDT Circulars & InstructionsCuts both ways
  My closely held company changed hands and the Assessing Officer has knocked out the brought-forward loss under section 79. The section has been rewritten more than once — which text governs my assessment year?
  Four different texts of s.79 have governed the last decade, and the one that applies is the one in force for the assessment year in which the set-off is claimed. The Finance Act 2017 (Act 7 of 2017) substituted s.79 with effect from 1 April 2018 in a clause (a) and clause (b) form; the Finance (No. 2) Act 2019 (Act 23 of 2019) substituted it again with effect from 1 April 2020 into the present sub-section (1), (2) and (3) form; the Finance Act 2021 and the Finance Act 2022 added carve-outs with effect from 1 April 2022; and the Finance Act 2023 (Act 8 of 2023) substituted 'ten' for 'seven' in the start-up proviso with effect from 1 April 2023.
• Statutory position — s.192(1C), s.191(2) and s.156(2): the eligible start-up ESOP deferral, its three triggers, the fourteen-day period, and the fact that it defers the employee's own tax too CBDT Circulars & InstructionsCuts both ways
  My client works for a start-up and has exercised his options. He has no cash and the shares cannot be sold. Is there any deferral, and does it cover his own tax or only his employer's TDS?
  This is stage one — the perquisite on exercise — and yes, there is a deferral, but only where the employer is an eligible start-up referred to in s.80-IAC. It covers BOTH sides. Section 192(1C) defers the employer's obligation to deduct or pay tax on the perquisite, and s.191(2) defers the employee's own obligation to pay income-tax on it directly, in identical terms; s.156(2) defers payment of the tax or interest included in a notice of demand on the same income. In every one of the three, the tax must be paid within FOURTEEN DAYS of the EARLIEST of three events: the expiry of forty-eight months from the end of the relevant assessment year; the date of sale of the specified security or sweat equity share; and the date the employee ceases to be the employee. All three sub-sections apply to income of an assessment year beginning on or after 1 April 2021, and all three were inserted by the Finance Act, 2020, which came into force on 1 April 2020.

Listed strongest first: Supreme Court, then High Court, then Tribunal, then CBDT. Nothing here has yet been read in full by a chartered accountant — open an entry to see where it came from.