TMI BlogCBDT issues clarification on eligibility of small Start-ups to avail tax holidayX X X X Extracts X X X X X X X X Extracts X X X X ..... CBDT issues clarification on eligibility of small Start-ups to avail tax holiday - News and Press Release Dated:- 22-8-2019 - News - The Central Board of Direct Taxes (CBDT) has clarified today that small start-ups with turnover upto ₹ 25 crore will continue to get the promised tax holiday as specified in Section 80-IAC of the Income Tax Act, 1961 (the Act ), which provides deducti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on for 100 per cent of income of an eligible start-up for 3 years out of 7 years from the year of its incorporation. CBDT further clarified that all the start-ups recognised by DPIIT which fulfilled the conditions specified in the DPIIT notification did not automatically become eligible for deduction under Section 80-IAC of the Act. A start-up has to fulfil the conditions specified i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n Section 80-IAC for claiming this deduction. Therefore, the turnover limit for small start-ups claiming deduction is to be determined by the provisions of Section 80-IAC of the Act and not from the DPIIT notification. CBDT dispelled the confusion created by some media report claiming discrepancy that the I-T law was yet to reflect DPIIT s higher turnover threshold of ₹ 100 cr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ore. CBDT said thatthere was no contradiction in DPIIT s notification dated 19.02.2019 and Section 80-IAC of the I.T. Act, 1961 because in para 3 of the said notification, it has clearly been mentioned that a start-up shall be eligible to apply for the certificate from the Inter-Ministerial Board of Certification for claiming deduction under Section 80-IAC of the Act , only if the start-up ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fulfils the conditions specified in sub-clause (i) and sub-clause (ii) of the Explanation of Section 80-IAC . Therefore, the turnover limit for eligibility for deduction under section 80-IAC of the Act , as per the DPIIT s notification is also ₹ 25 crore. It is further stated that Section 80-IAC contains a detailed definition of the eligible start-up which, interalia, provides ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that a start-up which is engaged in the eligible business shall be eligible for deduction, if (i) it is incorporated on or after 1st April 2016, (ii) its turnover does not exceed ₹ 25 crore in the year of deduction, and (iii) it holds a certificate from the Inter-Ministerial Board of Certification. It was explained that this was the major reason as to why there was a wide differenc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e between the number of start-ups recognised by the DPIIT and the start-ups eligible for deduction under section 80-IAC of the Act. It is pertinent to state that Section 80-IAC was inserted vide Finance Act, 2016 as an exception to the Government s stated policy of phasing out profit-linked deduction for promoting small start-ups during their initial year of operation. Since the intention ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... was to support the small start-ups, the turnover limit of ₹ 25 crore was considered reasonable for granting profit linking deduction. - News - Press release - PIB Tax Management India - taxmanagementindia - taxmanagement - taxmanagementindia.com - TMI - TaxTMI - TMITax ..... X X X X Extracts X X X X X X X X Extracts X X X X
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