India’s startup ecosystem continues to gain momentum as the Department for Promotion of Industry and Internal Trade (DPIIT) granted income tax exemptions to 187 startups under Section 80-IAC of the Income Tax Act. The government made these approvals during the 79th and 80th Inter-Ministerial Board (IMB) meetings, which took place in April 2025. This round included 75 approvals in the 79th meeting and 112 in the 80th, held on April 30, 2025.
These approvals demonstrate the government’s ongoing commitment to fostering entrepreneurship and supporting innovation-led ventures. With this round, the total number of startups that have received tax exemptions under the scheme crossed 3,700. The rising tally not only marks a key milestone in the Startup India initiative but also highlights the policy consistency that India’s entrepreneurial sector continues to enjoy.
What Section 80-IAC Offers Startups
Section 80-IAC of the Income Tax Act delivers one of the most significant financial benefits available to startups in India. Under this provision, eligible startups can claim a 100% tax deduction on profits for any three consecutive years within a ten-year window from the date of incorporation.
The scheme directly addresses the capital constraints that most early-stage companies face. By exempting income tax during critical formative years, the government allows founders to reinvest profits into innovation, expansion, hiring, and customer acquisition. This provision also strengthens startups’ credibility in the eyes of investors and banks, boosting access to both equity and debt funding.
Startups that meet the eligibility criteria—particularly those recognized by DPIIT and that show demonstrable innovation, scalability, and job creation—can avail themselves of the benefits after a successful evaluation by the Inter-Ministerial Board.
Reforms to Evaluation Framework Drive Efficiency
DPIIT has actively overhauled the evaluation process to make it more transparent and structured. The department introduced a revised evaluation framework that streamlines decision-making and reduces uncertainty. Officials now review each completed application within 120 days, helping startups receive timely decisions without falling into bureaucratic delays.
By implementing clearer guidelines and setting target timelines, DPIIT ensures that startup founders do not waste precious months awaiting clarity. Instead, they can make more confident business plans and financial forecasts, knowing whether they will receive the tax benefit or not.
This new approach fosters greater confidence across the entrepreneurial landscape, especially among early-stage companies that rely heavily on government incentives to scale operations.
Recent Policy Expansion Broadens Access
The recent tax exemption approvals followed an important policy announcement made during the Union Budget 2025–26. The Finance Ministry extended the eligibility window for Section 80-IAC benefits. Startups incorporated on or before April 1, 2030, now qualify for the scheme. This extension, up from the previous cut-off of March 31, 2024, significantly widens the policy’s reach and impact.
This move showcases the government’s long-term vision for nurturing startups. By giving future entrepreneurs a longer runway, policymakers ensure that newer ventures—especially those started by India’s young population—do not miss out on fiscal support.
With more time to qualify, entrepreneurs across Tier II and Tier III cities can now build with confidence. They can incorporate their ventures with the assurance that government incentives will support their early growth phases.
Focus on Innovation, Job Creation, and Market Potential
DPIIT has emphasized the need for quality and impact in startup applications. Startups whose applications did not secure approval in the recent rounds have received feedback to improve their proposals. DPIIT asked these companies to refocus their submissions and pay closer attention to four critical areas:
- Demonstrable Innovation: Applicants must present clear evidence of technological, product-based, or process-oriented innovation. This involves showcasing unique intellectual property, advanced R&D, or original problem-solving models.
- Scalability: Startups must outline clear roadmaps for national or international scale. They should define how they plan to expand distribution, reach new customers, and increase revenue over time.
- Market Opportunity: Ventures should prove that a genuine market demand exists for their product or service. DPIIT looks for business models that solve real pain points, especially in underserved sectors.
- Job Creation: Applications must detail how the startup intends to generate employment. Startups that can add skilled, semi-skilled, and even gig-based roles receive more favor under the job-creation mandate.
By aligning approvals with these focus areas, DPIIT ensures that India’s tax incentives benefit startups that contribute meaningfully to the economy.
The Role of Startup India and Policy Continuity
The tax exemption program under Section 80-IAC operates as part of the broader Startup India initiative, which the government launched in 2016. Since its inception, the initiative has created a robust ecosystem that supports startups through policy advocacy, easier compliance, incubation support, and access to capital.
Under this umbrella, several other schemes complement Section 80-IAC. These include the Fund of Funds for Startups (FFS), the Startup India Seed Fund Scheme (SISFS), and a simplified registration process through the Startup India portal.
By continuing to enhance and promote these schemes, the Indian government signals a strong policy continuity that builds confidence among entrepreneurs and investors. This continuity proves especially critical in an environment where policy volatility can deter long-term planning and capital deployment.
Venture Capital, Global Interest, and Unicorn Growth
India’s startup ecosystem currently ranks among the top three in the world. Over the past few years, it has witnessed record inflows of venture capital. In 2021 and 2022, Indian startups raised over $75 billion collectively, and despite global slowdowns, investor interest remains steady in 2025.
DPIIT’s efforts have helped channel this capital into high-potential areas such as fintech, healthtech, edtech, electric mobility, agritech, and AI-driven platforms. By offering tax relief, the government reduces capital burn for startups and increases return potential for investors—thereby creating a virtuous cycle of funding and innovation.
India has already birthed more than 100 unicorns (startups with valuations over $1 billion), and the government’s supportive stance ensures that more will emerge in the coming years.
Conclusion: A Stronger Ecosystem Rooted in Policy and Performance
By approving 187 startups for tax exemption in a single month and surpassing the 3,700-mark, the government continues to demonstrate its dedication to an innovation-first economic model. DPIIT, through its revised and efficient evaluation framework, has turned what once felt like a bureaucratic formality into a decisive process aligned with national goals.
With a decade-long eligibility window, a focus on impact, and structured reviews, the tax exemption under Section 80-IAC gives India’s entrepreneurs a powerful tool to build, grow, and compete on a global scale.
India isn’t merely creating more startups — it’s building a resilient, self-reliant ecosystem rooted in innovation, job creation, and technological leadership. The latest approvals reflect that vision, and the road ahead appears promising for thousands more ventures waiting to define the future.