The CBDT said that the Section 80-IAC of the Income Tax Act, 1961, which specify tax holiday, will continue to provide deduction for 100 per cent of income of an eligible startup for three years out of seven years from the year of its launched.
The department further stated, “startup recognised by the Department for Promotion of Industry and Internal Trade (DPIIT) which fulfills the conditions specified in the DPIIT notification does not automatically become eligible for the deduction under Section 80-IAC of the I-T Act. A startup has to fulfill the conditions specified in Section 80-IAC for claiming this deduction. Therefore, the turnover limit for small startups claiming deduction is to be determined by the provisions of Section 80-IAC of the I-T Act and not from the DPIIT notification.”
While, in a circular, the department also said that there will be no verification of a startup if it is recognised by the Department for Promotion of Industry and Internal Trade.
Moreover, if a startup is not recognised by the DPIIT, then too the inquiry would be carried out after the approval of a supervisory officer.