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 show-cause notices that have already been issued, providing comfort to organizations caught up in 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 remedies from the tax to startups. The Department for Promotion of Industry and Internal Trade (DPI) and the Central Board of Direct Taxes (CBDT) have held precise discussions on the difficulty, stated a government legit.
Startups will now not be required to cough up bills on tax demands already raised if they’re within the exemption framework introduced by the authorities. “The new policy is in location… The tax government will take cognizance of it,” stated the authentic, allaying industry concerns over the trendy adjustments to the startup framework now not reaping benefits for those entities in opposition to which the movement has been initiated. The legit informed ET that during instances wherein display-cause notices were issued, startups could publish the modern notification to the authorities of their response.
Officials have also been directed to no longer press for the deposit of tax dues and consider the contemporary changes. In instances where evaluation proceedings had been initiated, corporations can publish a brand new notification to 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 states that if a closely held agency issues its shares at a rate more than its fair market value, the quantity acquired more than its fair market value will be taxed as income from other sources. This phase, touted as an anti-abuse measure, changed into introduced by former finance minister Pranab Mukherjee in 2012.
Addressing Startup Concerns A number of companies that acquired angel investment were embroiled in this angel tax, triggering difficulty for some of the startup network, which the government has been eager to encourage, seeing it as an engine of growth and activity. 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 sphere, 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 labeled as a startup, although its turnover for any of the financial years, considering that its incorporation hasn’t exceeded Rs one hundred crores, in preference to the earlier 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 an internet worth of Rs one hundred crores or turnover of Rs 250 crore in an eligible startup may be exempt from Section 56 (2), beyond the Rs 25 crore restriction.
