Tax Exemption
Tax Exemption – An Overview
Tax Exemption for Startups
Recognized startups under the Startup India initiative can apply for Income Tax Exemption under Section 80-IAC of the Income Tax Act. This provides:
100% tax exemption on profits for 3 consecutive financial years out of the first 10 years.
Applicable only if the startup is incorporated as a Private Limited Company or LLP and is DPIIT-recognized.
The turnover must not exceed ₹100 crores in any financial year.
Tax Exemption for NGOs
Registered NGOs can apply for the following:
Section 12A Registration: Grants income tax exemption on surplus funds or donations received.
Section 80G Registration: Allows donors to claim tax deductions on donations made to the NGO, increasing donor motivation.
Benefits of Tax Exemption
Saves Costs: Startups and NGOs retain more funds for growth or social work.
Encourages Donations & Investments: Donors and investors benefit from tax rebates.
Enhances Credibility: Tax-exempt status builds trust and opens access to government schemes and funding.
Supports Long-term Vision: Organizations can plan for expansion and innovation without excessive tax burdens.
Documents Required
For startups:
DPIIT Certificate
Incorporation Certificate
Financial statements
Business plan or projections
For NGOs:
Trust/Society/Section 8 Incorporation Docs
PAN of the organization
12A/80G application forms
Activity reports
Audited accounts for the last 3 years (for older NGOs)
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