India’s Startup Ecosystem Gets Major Boost: 187 Startups Approved for Tax Exemption

Under the revised Section 80-IAC, eligible startups are allowed a 100% income tax deduction on their profits for any three consecutive years within a ten-year window from the date of incorporation.

In a significant move to fuel the growth of India’s startup ecosystem, the Department for Promotion of Industry and Internal Trade (DPIIT) has approved a new set of 187 startups for income tax exemptions under the revamped Section 80-IAC of the Income Tax Act. This comes as part of the government’s ongoing efforts to encourage innovation, entrepreneurship, and the generation of employment across the country. The approvals were granted during the 80th meeting of the Inter-Ministerial Board (IMB) held on April 30, 2025, a decision that is expected to provide much-needed financial relief to emerging businesses.

Key Features of the Tax Exemption Scheme

Under the revised Section 80-IAC, eligible startups are allowed a 100% income tax deduction on their profits for any three consecutive years within a ten-year window from the date of incorporation. This exemption is designed to provide young, innovative businesses with a financial cushion during their critical formative years. By reducing their tax burden, the scheme allows startups to focus more on scaling their operations, innovating, and creating jobs, thus contributing to India's economic growth and self-reliance.

This exemption scheme applies to a wide range of sectors, including technology, healthcare, e-commerce, and green energy, among others, offering relief to businesses across various domains. It is an important step toward ensuring that Indian startups remain competitive in the global market while nurturing local talent and ideas.

The Latest Approvals and Growing Impact

The latest round of approvals saw 112 startups being cleared during the 80th IMB meeting, following 75 startups that were approved in the previous, 79th meeting. As of now, over 3,700 startups have benefited from this tax exemption scheme since its introduction. These exemptions not only reduce the financial burden but also incentivize innovation in areas critical for the country’s progress.

The ongoing support from the government underlines the importance of startups in driving job creation, economic diversification, and technological advancements. These businesses are seen as critical engines of growth in the evolving digital economy, and the government’s backing aligns with its vision to foster a robust startup culture in India.

Government’s Commitment to Innovation and Self-Reliance

The extended tax benefits are a part of the government’s broader push to build a self-reliant and innovation-led India, often referred to as "Atmanirbhar Bharat." This initiative aims to create a strong foundation for homegrown businesses, enabling them to thrive in the competitive global market. The Union Budget 2025-26 included key announcements aimed at nurturing India’s startup ecosystem, including the extension of the eligibility period for the tax exemption scheme.

Startups incorporated before April 1, 2030, are now eligible to apply for benefits under Section 80-IAC, thus offering more time for newer ventures to come on board and take advantage of the scheme. This extension is expected to provide a larger pool of startups with opportunities to benefit from tax exemptions, reducing their early-stage financial challenges.

Streamlined Evaluation Process for Faster Approvals

In line with the government’s efforts to make the process more transparent and efficient, DPIIT has introduced a revised evaluation framework. Now, complete applications are reviewed within a 120-day window, ensuring quicker decisions and a reduction in the delays that previously hampered the growth of startups. The streamlined approach has been widely welcomed by the startup community, as it provides greater clarity and expedites the approval process.

Opportunities for Unapproved Startups

While the latest round of approvals has brought relief to many, those startups that were not approved have been encouraged to reassess their applications. DPIIT has advised applicants to focus on demonstrating key aspects such as technological innovation, market potential, scalability, and contributions to employment and economic growth. By refining their proposals, startups have a chance to reapply in subsequent rounds.

The process encourages entrepreneurs to ensure their business models align with the government’s goals of fostering sustainable economic development, addressing market gaps, and driving technological advancements.

Looking Ahead: India’s Startup Vision

This initiative is part of a larger vision to position India as a global hub for innovation and entrepreneurship. With initiatives like the Startup India campaign, the Indian government is offering various avenues of support to startups, including access to funding, mentorship, and networks. The goal is to ensure that these startups play a central role in India's economic and technological future.

Startups across India have expressed optimism about the tax exemption scheme, viewing it as a game-changer for emerging businesses. By offering tax relief during their critical early years, the government is providing startups with the breathing room they need to innovate, scale, and create jobs. These efforts are expected to help India transition to a future where innovation and entrepreneurship are at the core of its economy.

For more detailed information about the tax exemption process, eligibility criteria, and application details, entrepreneurs and startups can visit the official Startup India portal.