Deepjyoti Pvt. Ltd., a company incorporated on 1st April, 2025, is engaged in the business of developing innovative software solutions. The company is recognized as a start-up by the Department for Promotion of Industry

CS Professional · Goods and Services Tax (GST) and Corporate Tax Planning · PYQS · June 2026
Deepjyoti Pvt. Ltd., a company incorporated on 1st April, 2025, is engaged in the business of developing innovative software solutions. The company is recognized as a start-up by the Department for Promotion of Industry and Internal Trade (DPIIT) under the provisions of the Income-tax Act, 1961. During the Previous Year 2025-26, the company had a total turnover of ₹ 850 Lakh from its start-up business and earned a profit of ₹ 75 lakh before tax. Assume the company has not opted for the provision of section 115BAA or 115BAB. You are required to: Examine whether Deepjyoti Pvt. Ltd. is eligible to claim deduction under Section 80IAC of the Income-tax Act, 1961.

Answer & Explanation:

In the given case, Deepjyoti Pvt. Ltd. is engaged in a recognized start-up business and was incorporated between 1st April, 2016 and 31st March 2030. Company's turnover does not exceed ₹ 100 crore, which meets the prescribed threshold. Accordingly, the company is eligible to claim deduction under Section 80IAC of the Income tax Act, 1961. Section 80IAC provides for a 100% deduction of profits for a start-up for three consecutive assessment years out of ten years beginning from the eligible start-up is incorporated. Therefore, Company can claim deduction of 100% of ₹ 75 lakhs for AY 2026/27.

Topics: Corporate Tax Planning

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