The Central Board of Direct Taxes (CBDT) on Thursday clarified that small startups with a turnover of Rs 25 crore will be 100 percent tax-free for three years out of seven years from inception.
Those Who Fulfill The Conditions of Section 80 IAC Will Get The Exemption
In the clarification issued by CBDT, it said that startups falling under its purview will get tax exemption under Section 80 IAC of Income Tax Act 1961 as promised. In this, the startup will be 100 percent tax-free for the first three years of income in three years. It said that all startups recognized by DPIIT will not be automatically eligible for this exemption in tax. Startups that meet the conditions of Section 80 IAC of the Income Tax Act can claim exemption only.
Startup Business Limit Will Be Fixed Under Income Tax Law
The CBDT has stated that because of the exemption, the limit of startup’s business will be fixed as per the section of the Income Tax Act and not as per the notification of DP IIT. He said that there is no difference between the notification issued by DPIIT on 19 February 2019 and the limit mentioned in the Income Tax Act. In both, this limit is only 25 crores.
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