Income tax exemption under startup scheme
Recognized startups in India may claim a tax holiday under section eighty IAC of the Income Tax Act. This incentive helps startups reinvest profits and scale their business operations.

• Eligible startups can claim exemption for three consecutive years
  
• The exemption applies to hundred percent of profits for selected years
  
• Company must be incorporated as a private limited or LLP
  
• It should be registered with the Department for Promotion of Industry and Internal Trade
  

Exemption on capital gains for investment in startups
Startups and investors can claim capital gains exemptions by reinvesting in eligible instruments. This reduces tax liability and promotes funding for early-stage ventures.

• Section fifty four EE provides exemption for gains reinvested in notified funds
  
• Section fifty four GB allows promoters to reinvest gains into startup equity
  
• Time limits and lock-in periods apply for eligible reinvestments
  
• Only gains from long-term assets are covered under this incentive
  

Tax relief on investments above fair market value
Startups are exempt from angel tax under section fifty six two vii b if approved by authorities. This protects them from taxation on genuine funding rounds.

• DPIIT-recognized startups are eligible for angel tax exemption
  
• Exemption applies to share premium received above market value
  
• Investors and company must meet prescribed conditions
  
• Investment ceiling limits must be adhered to for eligibility
  

Deduction for in house research and development
Startups engaged in innovation and technology development can claim deductions for eligible research expenditures. These benefits encourage technical advancement.

• Section thirty five allows deduction for scientific research expenditure
  
• Salaries, equipment, and consumables used in R and D are deductible
  
• In-house facilities must be approved by prescribed authorities
  
• Additional weighted deductions may apply in specified sectors
  

Carry forward and set off of business losses
Startups are allowed to carry forward losses even with changes in shareholding. This is a relaxation from standard rules under section seventy nine.

• Allowed for startups registered with DPIIT and meeting eligibility norms
  
• Losses can be carried forward for up to eight assessment years
  
• Conditions include continuity of the original business activity
  
• Exemption helps in planning long-term profitability and tax optimization
  

Reduced corporate tax for new manufacturing startups
New manufacturing companies including eligible startups can opt for a lower tax rate. This incentive is offered under section one fifteen BAB of the Income Tax Act.

• Tax rate of fifteen percent is available for new manufacturing startups
  
• Company must be incorporated after first October two thousand nineteen
  
• Manufacturing must commence before a prescribed deadline
  
• No other deductions or exemptions are allowed with this option
  

Tax exemption for incubators and fund contributions
Incubators and specified funds supporting startups also receive tax benefits. These incentives encourage institutional investment and ecosystem development.

• Contributions made to approved incubators are eligible for tax benefits
  
• Alternate Investment Funds registered with SEBI are granted tax pass-through status
  
• Income of incubators approved by government is exempt under certain sections
  
• Startups receiving funding from such incubators are not taxed on such income