Five figures. You get the best three-year window, when (if ever) to move to 22%, how much it keeps against switching now, and how much of the holiday minimum alternate tax on book profit eats. Nothing leaves your browser.
| # | Year | Act | Taxable profit ₹ | Book profit ₹ | Status |
|---|
The holiday. A start-up incorporated between 1 April 2016 and 31 March 2030, holding the Inter-Ministerial Board certificate and under ₹100 crore of turnover, may deduct the whole profit of the eligible business for any three consecutive years out of its first ten — section 80-IAC of the 1961 Act up to assessment year 2026-27, section 140 of the Income-tax Act, 2025 after that. Year 1 is the year of incorporation, and there is no form: you claim it in the return of the first holiday year.
The 22% deal. A domestic company may instead be taxed at 22% plus 10% surcharge and 4% cess — 25.168% — on income computed without the holiday. Once exercised the option cannot be withdrawn, and it applies to every later year.
Minimum tax is two different taxes now. Up to assessment year 2026-27 it is 15% of book profit and the excess over normal tax became credit you could use later. From tax year 2026-27 the Finance Act, 2026 made it 14% and final — no new credit at all. So a holiday year no longer costs "tax now, credit later"; it costs 14% of book profit outright.
Old credit has one door left. Credit carried from before 1 April 2026 may be set off only by a company that has opted into 22%, and in any year only up to a quarter of that year's tax. Staying in the old regime means never using it.
Losses come first. The deduction is taken from gross total income after brought-forward business loss and unabsorbed depreciation are set off, and cannot exceed it — so a holiday year eaten by old losses is a year spent for nothing. Confirm with your CA
How you make the option, and it changed this year. For the return for the year ended 31 March 2026 it is Form 10-IC, on or before the due date. From the next year there is no form at all — Rule 136 of the Income-tax Rules, 2026 (notified by G.S.R. 198(E) of 20 March 2026) puts the option in the return itself. The case law that rescued a late Form 10-IC was about a form that will not exist; what replaces it is untested.
| Up to 31 March 2026 (1961 Act) | From 1 April 2026 (2025 Act) | |
|---|---|---|
| The holiday | Section 80-IAC | Section 140 |
| The 22% regime | Section 115BAA | Section 200 |
| Minimum tax | Section 115JB — 15%, credit carried forward | Section 206 — 14%, final, no new credit |
| How you opt in | Form 10-IC | In the return (Rule 136) — no form |
| Return due under | Section 139(1) | Section 263(1) |
It does not decide whether you are eligible, and it does not compute marginal relief, book-profit adjustments, deferred tax or the eight-year expiry of losses — it flags them. It does not model an LLP, a new manufacturing company, or what happens if a condition is broken later. It files nothing and drafts no resolution.
Sections 80-IAC, 115BAA and 115JB of the Income-tax Act, 1961 for years up to assessment year 2026-27; sections 140, 200 and 206 of the Income-tax Act, 2025, as amended by the Finance Act, 2026, thereafter; Rule 136 of the Income-tax Rules, 2026 (G.S.R. 198(E), 20 March 2026); CBDT Circular No. 07/2026 (28 September 2026) for the AY 2026-27 due date. Verified 11 October 2026.
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Type this year's expected profit to start.
| Holiday years | Move to 22% from | 10-year tax | Versus best | Minimum tax in holiday years |
|---|
The order in which old losses are set off, and the cap on the deduction, follow the mechanics of the 1961 Act carried into the 2025 Act — the new section numbers for both were not read for this page. Confirm with your CA