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Your company must meet the following criteria to be considered eligible for DPIIT startup recognition:-
  • Age of the Company
  • Type of the Entity
  • Annual Turnover
  • Original Entity
  • Innovation and Scalable Business Idea
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IMB Registration for TAX Exemption

An Overview- Tax Benefits for Startups in India

India is the world's third largest startup ecosystem, with 3-4 new businesses being launched every day, making it the fastest expanding startup base. A startup not only realises the entrepreneur's goal, but also employs millions of people and contributes to the nation's progress.

The Government of India has taken steps to increase the ease of doing business and create an enabling and exciting environment for these entrepreneurs by launching Startup India Scheme.

To empower startups, the government provides exemptions under section 80IAC of Income tax Act 1961. The income tax exemptions for startups help them to grow and function well. To avail these facilities, startups are required to get certification from IMB (Inter Ministerial Board).

Mandatory documents/details required for IMB certification for Startups in India

To avail the tax exemptions, Certification from IMB is required. Following documents are required to get IMB Certification :-

  • Certificate of Incorporation
  • Certificate of registration under Startup India Scheme
  • A brief description of business activity of the Startup
  • A letter of funding from angel investors (if any)
  • A support letter from another recognised startup (if available)
  • Any patent file published in the journals (if any)
  • A Recommendation from the Incubators (if any)

Definition of Startup Under Startup india Scheme

Your company must meet the following criteria to be considered eligible for DPIIT startup recognition:-

  • Period of existence and operations should not be exceeding 10 years from the Date of Incorporation
  • Incorporated as a Private Limited Company, a Registered Partnership Firm or a Limited Liability Partnership
  • Should have an annual turnover not exceeding Rs. 100 crore for any of the financial years since its Incorporation
  • Entity should not have been formed by splitting up or reconstructing an already existing business
  • Should work towards development or improvement of a product, process or service and/or have scalable business model with high potential for creation of wealth & employment

Tax Benefits for Startups (IMB Certified)

To avail tax benefits, startups must be certified by the Inter Ministerial Board (IMB). IMB is created by DIPP (Department of Industrial Policy and Promotion) to validate the startups for the tax exemptions..

IMB validates startups to avail the tax exemptions under following two sections of Income Tax Act, 1961

Section 80IAC of Income Tax Act, 1961

A startup may seek for tax exemption under section 80 IAC of the Income Tax Act after receiving recognition. After receiving tax exemption approval, the startup can take advantage of a three-year tax holiday out of the first 10 years of its existence.

Criteria for applying for the 80IAC (Income Tax Exemption):

  • The company should be a well-known startup.
  • Under Section 80IAC, only a private limited company or a limited liability partnership is eligible for a tax exemption.
  • The startup must have been formed after April 1, 2016.

Section 56 of income Tax Act, 1961

A startup may apply for Angel Tax Exemption after receiving recognition.

Section 56 of the Income Tax Act establishes eligibility criteria for tax exemption.

  • The company must be a DPIIT-accredited startup.
  • The Startup's total paid-up share capital and share premium after any proposed share issuance, if any, does not exceed INR 25 crore.

FAQs on IMB certification for the Startups in India

DIPP (The Department of Industrial Policy and Promotion) is responsible for the implementation of developmental and promotional measures for the growth of business sectors.
The definition of startup is mentioned above in a descriptive way.
The Inter-Ministerial Board has following members:
  • Additional Secretary, Department of Industrial Policy and Promotion (DIPP)
  • Representative of Ministry of Corporate Affairs (MCA)
  • Representative of Ministry of Electronics and Information Technology
  • Representative of RBI (Reserve Bank of India)
  • Representative of CBDT (Central Board of Direct Taxes)
Startup initiative helps in promoting entrepreneurship and innovation in the country which helps in creating employment and wealth in the nation.
All the mandatory conditions to avail these benefits are mentioned above.
Whole procedure for getting certification from IMB is mentioned above

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