Startup tax exemption under Section 56(2) (viib) of the Income Tax Act, 1961
Process for startup income tax exemption under Section 56(2) (viib) of the Income Tax Act, 1961
Eligibility Criteria for claiming tax exemptions
- Should be a private limited company
- Should be a DPIIT recognized startup.
- Startup should not be investing in immovable property, transport vehicles above INR 10 Lakh, Loans and advances, capital contribution to other entities, except in the ordinary course of business.
- Not Investing in specified asset classes
Benefits of Startup registered with DPIIT
- Exemption under Section 56 (2) (viib) of Income Tax Act
- Investments into eligible startups by listed companies with a net worth of more than INR 100 Crore or turnover more than INR 250 Crore shall be exempt under Section 56 (2) (viib) of Income Tax Act
- Consideration of shares received by eligible startups shall be exempt up to an aggregate limit of INR 25 Crore
- Investments into eligible Startups by Accredited Investors, Non-Residents, AIFs (Category I), & listed companies with a net worth more than 100 crores or turnover more than INR 250 Crore, shall be exempt under Section 56(2)(VIIB) of Income Tax Act
Registration Process
- Register your Startup profile on the Startup India Portal.
- Get DPIIT Recognition.
- File application form for claiming Section 56 Exemption
- Confirmation of application from CBDT
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