May 15, 2025: In a strong startup tax policy move that’s accelerate India’s startup prowess, the Department for Promotion of Industry and Internal Trade (DPIIT) has approved 187 startups for income tax exemption under a newly streamlined Section 80-IAC of the Income Tax Act. But beyond the numbers, the story lies in what this signals: a shift in how the government now evaluates and supports entrepreneurial ventures.
While headlines often spotlight big funding rounds or unicorn milestones, this lesser-known benefit—a 100% income tax deduction on profits for three out of ten years—offers early-stage startups something just as valuable: breathing space.
Out of the 187 startup tax exemption approvals, 75 were cleared in the 79th Inter-Ministerial Board (IMB) meeting, and 112 during the 80th, held on April 30. This brings the total count of startups granted this tax benefit to over 3,700.
The real game-changer, however, is the revised evaluation framework that DPIIT rolled out earlier this year. Now, applications are reviewed within 120 days, eliminating the red tape that previously slowed decisions for months. The faster processing is not just administrative—it reflects a startup tax exemption policy intent to make support more timely and meaningful.
Fresh Policy, Fast-Track Reviews Give Indian Startups a Leg Up
For founders balancing product development, hiring, and cash flow, the ability to claim full tax relief on profits for three years can make a material difference. It’s not just about savings—it’s about extending runway, reinvesting early gains, and de-risking growth.
Crucially, startups that haven’t been approved are not left in the dark. DPIIT has encouraged them to revisit their submissions, focusing on innovation, scalability, market need, and job creation potential—metrics that align closely with investor criteria as well.
Extended Eligibility: Startup Tax Benefits Expanded, More Time, Wider Reach
In another under-the-radar but significant policy shift, the Union Budget 2025–26 extended the incorporation cut-off date for eligibility. Startups founded before April 1, 2030, now have the chance to apply, broadening the window for future founders.
This subtle tweak could have an outsized impact, especially in tier-2 and tier-3 cities where newer ventures are still in the ideation stage. It signals a longer-term commitment to decentralizing entrepreneurship beyond metro hubs.
Startups in sectors like climate tech, healthtech, agri-innovation, and manufacturing—many of which are pre-revenue for years—stand to benefit most. By reducing early tax burdens, the policy fosters a more experimentation-friendly environment, crucial for breakthrough innovation.
Rather than splashy incentives, the government appears to be focusing on systems that simplify and sustain—quieter reforms for startups in India that may be more effective in the long run.
