How This Income Tax Act Is Benefiting The Indian Economy | Section 80IAC Explained

Learn about the need for a tax holiday, eligibility criteria, and crucial role of Egniol in assisting startups to leverage these benefits.
How This Income Tax Act Is Benefiting The Indian Economy | Section 80IAC Explained

Startups recognised by DPIIT in India now have the opportunity to save substantial amounts in taxes! The Income Tax Act of 1961 introduced Section 80IAC, a special provision aimed at specified businesses, effective April 1, 2017. This section allows eligible businesses turning profits to claim a tax holiday for three consecutive years, commonly known as the 80IAC deduction for eligible enterprises. For companies registered under Startup India, tax exemption under Section 80 IAC stands out as a crucial benefit. 

Need for a Tax Holiday 

Newly established businesses often grapple with financial constraints in their starting-out phases, impacting their sales and profits. This financial hurdle worsens when a significant portion of their minimal earnings is deducted towards taxes, leaving little for reinvestment for the entrepreneurs.

The government recognises the need: 
Recognising this challenge, the government has extended various tax exemptions to support them, including the provision under Section 80 IAC of the Income Tax Act. This section grants tax breaks to DPIIT-recognised firms for any three consecutive assessment years, provided they meet the eligibility criteria.

Also Read
Adani Group signs pact for Rs 42,700 crore investment in Tamil Nadu
How This Income Tax Act Is Benefiting The Indian Economy | Section 80IAC Explained

Tax Holiday for 3 Consecutive Years: 
Another common problem that the government and policymakers realised was that often companies made a practice of declaring lower revenue by functioning more in cash in an endeavour to save tax. In this attempt, they even “show” losses. But this practice is fatal at many levels. When these companies need any sort of loan for growth purposes or any vital need, then it's harmful to them as the amount funded is usually less than deserved. So, this scheme of three-year tax relief further promotes businesses to become and show themselves as financially strong companies. Money saved through this is promoted to re-invest in the ventures that, in turn, generate better growth prospects and more capital to run during key years of establishment. When it came to financial solutions and tax-saving strategies for enterprises and entrepreneurs, chartered accountants were frequently the go-to professionals. Nevertheless, in the course of our research into this topic, we noticed Egniol, a company headquartered in Ahmedabad that has gained recognition for its comprehensive support services. In addition to assisting businesses in the optimisation of their taxes, Egniol provides a range of solutions to effectively resolve diverse business needs.

Egniol, a company dedicated to aiding MSMEs and startups in reaching their objectives, plays a pivotal role in offering assistance to meet compliance requirements and securing funding. Among the multitude of companies (about 3000) benefiting from the 80 IAC exemption certificate issued by DPIIT, about 1100 companies out of Egniol’s client base have already achieved a significant milestone. Their expertise lies in guiding them to obtain the 80IAC exemption while ensuring compliance. With Egniol's service assistance, numerous enterprises have successfully navigated the regulatory landscape and accessed the tax benefits offered under the DPIIT's recognition.

Also Read
Record volume for Lamborghini in 2023: Sells over 10,000 cars for first time in history
How This Income Tax Act Is Benefiting The Indian Economy | Section 80IAC Explained

From registering your business and assisting in achieving necessary certifications to funding support, Egniol stands out with their commitment and expertise. Egniol's contribution to aiding entrepreneurs to leverage the benefits of the 80 IAC exemption highlights their role in streamlining the compliance process and facilitating access to essential financial aid.

If you are a company looking to grow your business in the Indian economic environment, then you must check out the various benefit schemes that the central and many state governments are offering, further promoting the economic ecosystem. These governmental schemes may not only help you save your precious money but, in turn, can help further accelerate your business to great heights. Although most of these policies are tech-friendly and easy to navigate through, if you wish to spend more time focusing on ‘your’ growth or operations, you can always seek professional assistance with the compliances and any sort of advice related to your business through startup-supporting companies like Egniol, which has expertise in business incorporation, certification, business support services, and more.

Stay connected to Jaano Junction on Instagram, Facebook, YouTube, Twitter and Koo. Listen to our Podcast on Spotify or Apple Podcasts.

Jaano Junction