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541 Startups Get Angel Tax Exemption By CBDT, Says DPIIT’s Ramesh Abhishek

541 Startups Gets Angel Tax Exemption By CBDT, Says DPIIT’s Ramesh Abhishek
SUMMARY

Startup India team is working with these 36 startups to address deficiencies

DPIIT had issued relief from angel tax in February 2019

CBDT and DPIIT worked together to issue these exemptions

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With the new government in place and the Indian startup ecosystem looking with expectation-filled eyes for support, the Department for Promotion of Industry and Internal Trade (DPIIT) has given an update on angel tax exemption.

In a tweet, Ramesh Abhishek, secretary, DPIIT said that 541 startups have been granted angel tax exemption by CBDT so far. However, 36 applications were incomplete and are being worked upon by Startup India team to address deficiencies, Abhishek said.

The update comes in lieu of government notification in February, where DPIIT notified changes in Section 56 (2) (viib) of the Income Tax Act, 1961. The section 56 (2) (vii)(b) of the Income Tax Act says that if a privately held company issues its shares at a price more than its fair market value, the amount received in excess of the fair market value will be taxed as income from other sources.

With the new notification, “All the startups are allowed to receive angel tax exemption regardless of their share premium values given that the aggregate amount of paid-up share capital and share premium of the startup after issue or proposed issue of shares, if any, does not exceed, INR 25 Cr.”

Further, to clarify the procedure for startups which had already received the Income Tax notices, CBDT said that startups which received assessment notices under Section 56(2)(viib) of the Income Tax Act (I-T Act) will be exempt from Angel Tax if they comply with the February 19 notification. By March, 150 startups had applied for exemption from angel tax.

At the time of notification, it was also widely discussed that a few pain points for startups remain the same: Section 68 was yet to be addressed and the certification process for the tax exemption under Section 80-IAC had been left unaddressed.

With NDA in power and being hailed as a supporter of the Indian startup ecosystem, after oath-taking and division of power, how soon these issues get addressed will be vital for government’s Startup India mission.

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Inc42 Daily Brief

Stay Ahead With Daily News & Analysis on India’s Tech & Startup Economy

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