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CS Executive · Setting Up of Business, Industrial and Labour Laws · Startups and its Registration

Arjun Robotics LLP wants the startup tax holiday. A CA says that the entity type matters. Which entity type is eligible for the Section 80-IAC style profit deduction for startups?

The startup profit deduction is available only to an eligible company or LLP that is recognised as a startup and holds the required certification. Sole proprietorships, HUFs and ordinary partnership firms cannot claim it, even if they are innovative, so Arjun Robotics LLP can.

  1. AA company or an LLP incorporated and recognised as a startupCorrect
  2. BA sole proprietorship recognised by DPIIT
  3. CA registered partnership firm recognised by DPIIT
  4. DAny HUF carrying on innovative business

Explanation

Only a company or LLP can claim the startup deduction, provided it is recognised by DPIIT and holds the required certificate. Partnership firms are eligible for DPIIT recognition as startups, but the deduction is restricted to companies and LLPs, so option C is wrong; sole proprietorships and HUFs are not eligible.

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