NEW DELHI: India’s tax officials will consider the brand new policy framework for startups that changed into announced on February 19 and not press in advance with showcause notices that have already been issued, providing comfort to organisations caught up inside the angel tax net. Also, cases wherein assessment proceedings were initiated may be resolved in keeping with the brand new policy that has furnished vast remedy from the tax to startups. The Department for Promotion of Industry and Internal Trade (DPIIT) and the Central Board of Direct Taxes (CBDT) have held precise discussions on the difficulty, stated a government legit. Startups will now not be requested to cough up bills on tax demands already raised if they’re within the exemption framework introduced by using the authorities. “The new policy is in location… Tax government will take cognisance of it,” stated the authentic, allaying industry concerns over the trendy adjustments to the startup framework now not reaping benefits those entities in opposition to which movement have been initiated. The legit informed ET that during instances wherein display-cause notices were issued, startups can publish the modern notification to authorities of their response.
Officials have also been directed to no longer press for the deposit of tax dues and take the contemporary changes into consideration. In instances in which evaluation proceedings had been initiated, corporations can publish the brand new notification to appellate our bodies. “Appellate authorities are expected to take those adjustments under consideration,” the respectable said. Section 56 (2) (vii)(b) of the Income Tax Act presents that if a carefully held agency troubles its shares at a rate more than its fair marketplace cost, the quantity acquired in excess of the fair marketplace value will be taxed as income from different resources. This phase, touted as an anti-abuse degree, changed into introduced by using former finance minister Pranab Mukherjee in 2012.
Addressing Startup Concerns A quantity of companies that acquired angel investment were given embroiled on this angel tax, triggering difficulty some of the startup network, which the government has been eager to encourage, seeing it as an engine of increase and activity author. The government sooner or later drew up a special coverage framework and amended it thrice to facilitate startups and address their worries. In the present day spherical, the authorities widened the definition of startups to include entities that have been in operation for up to ten years from the date of incorporation or registration instead of the previous seven years. A company may be a labeled as a startup despite the fact that its turnover for any of the financial years considering that its incorporation hasn’t exceeded Rs one hundred crore in preference to the sooner cap of Rs 25 crore. Investment restriction for exemption from this tax has been raised to Rs 25 crore from Rs 10 crore. Besides, investments by indexed groups with a internet well worth of Rs one hundred crore or turnover of Rs 250 crore in an eligible startup may be exempt from Section 56 (2), past the Rs 25 crore restriction.