Save Tax for Your Business: Get 3-Year Tax Exemption in India

Starting a business? Here’s how you can save tax for 3 years, including understanding tax exemption certificates, MSME benefits, the Atmanirbhar Business Zone, and how StartupFlora in Jaipur can make the process seamless.

What Is a Tax Exemption Certificate?

A tax exemption certificate is the approval granted by the Income Tax Department (via an inter-ministerial board) that lets eligible startups avail 100% profit tax exemption for business (three consecutive years) within their first ten years of incorporation, under Section 80-IAC.

How Can You Get Tax Exemption?

Register your business as a Private Limited Company or LLP.
Obtain DPIIT recognition via the Startup India portal or through NSWS (National Single Window System).
Apply for tax exemption under Section 80-IAC:

Use Form-1 and submit documents confirming innovation and business eligibility.
Once approved, you select 3 consecutive financial years (within the first 10 years) to claim full tax exemption.

How MSMEs Can Benefit

MSMEs (Micro, Small, and Medium Enterprises) also enjoy significant tax benefits:

Concessional corporate tax: ~25% for companies with turnover up to ₹400 crore; 15% for new manufacturing units under conditions.
Tax holidays: Some MSMEs can get up to 5 years of exemption, starting from commencement of production; startups get 3 years under 80-IAC.
Additional perks: presumptive taxation, accelerated depreciation, and carry-forward of losses offer further savings.

Why the Government Offers 3-Year Tax Exemptions

This tax break encourages:

Innovation and R&D,
Entrepreneurship and job creation,
Reinvestment of profits into the business,
Attraction of investors by easing early-stage financial stress.

These benefits are a core part of the government’s Startup India policy.

What Is the Atmanirbhar Business Zone?

The Atmanirbhar Business Zone is a focused campaign to support and guide Indian startups.

This campaign aims to:

Provide startup mentorship and business growth guidance,
Offer tools, templates, and legal support,
Help startups become self-reliant in their operations, compliance, and scaling.

It works in synergy with Startup India by giving practical support to early-stage businesses to help them utilize government schemes more effectively.

StartupFlora: Your Jaipur-Based Startup Ally

StartupFlora, based in Jaipur, helps startups navigate the DPIIT tax exemption journey end-to-end:

They assist with DPIIT registration,
Guide you step-by-step through applying for and securing tax exemption certificates,
Offer incubation support and facilitate quicker processing, backed by their largest incubation centers for funding and mentoring.

Example: Company Incorporated in 2022

Let’s illustrate with an example:

Your company is incorporated in 2022 as a Private Limited or LLP.
You immediately apply for DPIIT (Startup India) recognition.
Once recognized, you file for Form-1 under Section 80-IAC.
Upon approval, you select three consecutive years—say, 2023–24, 2024–25, and 2025–26—to enjoy 100% tax exemption on profits.
Ahead of that, you must ensure your turnover remains below ₹100 crore.

StartupFlora can streamline each of these steps—registration, form submission, documentation, and fundraising through their incubation network.

Rough Business Tax Savings Calculation

Let’s assume:

Annual profit: ₹50 lakh
Corporate tax rate: 25%
Cess + surcharge: approximate total tax rate ≈ 27%
Tax saving per year: 27% of ₹50 lakh = ₹13.5 lakh
Over 3 years, that's a total saving of ₹40.5 lakh—a major boost toward reinvestment, hiring, and expansion.

Final Thoughts

Tax exemption certificates under Section 80-IAC are powerful tools—three years of profit exemption fuel growth.
MSMEs get additional concessions and simplified schemes.
The Atmanirbhar Business Zone is a supportive campaign offering real-time guidance to build and scale.
StartupFlora in Jaipur can accelerate your path—from DPIIT registration to tax exemptions and incubation.
For businesses incorporated in 2022, acting now means choosing your tax-free years early and maximizing benefits.