Innovation and technology can exclusively bring a country development worldwide. In order to encourage innovation, the government usually provides a lot of measures like financial support, subsidies, intellectual protection, supporting R&D and tax incentives for those eligible startups that usually involve innovative new ideas that may generate employment and entrepreneurial ecosystems. An existing company or a heavy background company doesn’t need a push, but a startup may. For supporting those eligible startups in India, one of the principal tax incentives historically available to eligible startups was provided under Section 80-IAC of the Income-tax Act, 1961. The tax holiday operates as a profit-linked deduction available to an eligible start-up, which may claim a 100% deduction of the profits and gains derived from its eligible business for any three consecutive tax years, at its option, out of the ten-year period beginning from the year of incorporation under the Income-tax Act. Nonetheless, there was a huge change in the law in 2026. The Income Tax Act of 1961 was abolished from 1 April 2026 onwards, and its relevant startup deduction is now found in Section 140 of the Income Tax Act 2025. In addition, the Finance Act of 2026 changed the turnover limit in Section 140 to ₹300 crore. At the same time, the Department for Promotion of Industry and Internal Trade (DPIIT), through Notification G.S.R.108(E) dated 4 February 2026 changed the general startup recognition limit to ₹200 crore and introduced a new type of Deep Tech Startup where the limit is ₹300 crore with a recognition period of twenty years. This article discusses the change from Section 80-IAC to Section 140 and evaluates the eligibility criteria, comparing it to the DPIIT criteria as well. The paper also investigates the usability of the tax incentive by discussing the importance of DPIIT recognition, Inter-Ministerial Board certification, and the various guidelines. It is claimed that while the reforms of 2026 significantly update the laws concerning taxation of startups, the gap existing in the formal tax system versus the actual data available on government websites can be a source of confusion. Hence, it is imperative that we increase harmonization of the system, provide updated recommendations, and ease procedures to increase the provision of tax incentives to startups.