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80-IAC benefit calculator

What the startup tax holiday is actually worth once minimum tax is accounted for — and what you give up to take it.

Eligibility
₹5.20 Lsaved per exempt year
Company, no 80-IAC claim
₹13 L
Company, claiming 80-IAC
₹7.80 L
Across all 3 exempt years
₹15.60 L

Profits are deducted, but MAT under s.115JB applies at 15% of book profit.

₹7.80 L is minimum tax, not savingMAT under s.115JB is still payable during the holiday. It becomes a credit you can set off for up to 15 assessment years — recoverable, but only if you are later profitable enough to use it.

Company under s.115BAA (22%): ₹12.58 L. Effective ≈25.17%. Opting in means surrendering 80-IAC — you cannot have both, and the choice is irrevocable.

An estimate, not tax advice. Surcharge slabs, book-profit adjustments and which profits actually qualify all turn on facts a calculator cannot see. Treat this as orientation and confirm your position with your tax adviser before relying on a number.

Why the exemption is never 100% of your tax

80-IAC deducts eligible profits, but minimum tax survives it — MAT at 15% of book profit for a company, AMT at 18.5% of adjusted total income for an LLP. So the cash saved is the gap between your ordinary tax and that minimum, not the whole bill.

There is also a choice most summaries skip: a company can instead opt into s.115BAA at 22% (≈25.17% all in), but doing so means surrendering 80-IAC permanently — the two cannot be combined and the election is irrevocable. During the three exempt years the holiday is normally the better of the two; afterwards the arithmetic can reverse.

DPIIT recognition does not by itself grant the exemption. A separate application is assessed by the Inter-Ministerial Board, and approval rates are well below application volumes.

Want this assessed properly?Recognition is the easy part; the Inter-Ministerial Board application is where most files fail.
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The three things founders get wrong about 80-IAC

Section 80-IAC is the most valuable statutory benefit available to an Indian startup, and also the most over-sold. Three misreadings account for most of the disappointment.

  • “Three years tax-free.” Minimum tax survives the holiday. A company still pays MAT at 15% of book profit; an LLP still pays AMT at 18.5%. The saving is the gap, not the whole bill.
  • “We’ll take the 22% rate as well.” You cannot. Section 115BAA requires surrendering 80-IAC, and the election cannot be reversed in a later year.
  • “Recognition means we have it.” DPIIT recognition only makes you eligible to apply. The Inter-Ministerial Board decides, and it declines a large share of what it sees.

If you are still choosing an entity form, run the calculator on both. The number to compare is not the headline saving — an LLP’s can look larger because its ordinary rate is higher — but the tax you actually end up paying, which a company’s lower minimum-tax floor makes smaller.

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