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

Vikram's DPIIT-recognised startup, Sahyadri Robotics Private Limited, wants to claim the tax holiday under the startup incentive. Which statement is correct?

For the income-tax holiday, a DPIIT-recognised startup must also obtain certification from the Inter-Ministerial Board, and the benefit applies only for a limited number of years within a prescribed period. Recognition alone does not give an automatic lifetime exemption.

  1. AThe eligible startup must additionally obtain certification from the Inter-Ministerial Board for the income-tax exemption, and the benefit is available for a limited block of years chosen from a prescribed periodCorrect
  2. BDPIIT recognition alone gives an automatic lifetime income-tax exemption
  3. CAny company with losses is automatically exempt without recognition
  4. DThe exemption applies only to partnership firms

Explanation

Income-tax benefits require an eligible startup to get Inter-Ministerial Board certification beyond mere DPIIT recognition. The holiday covers a limited number of consecutive years within a prescribed window, not lifetime. The option on lifetime exemption is wrong because the benefit is time-bound and certification is required.

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