Minister of commerce and industry and civil aviation Suresh Prabhu said that the Centre will soon find a solution to the problems that startups are facing due to angel tax as he has taken the issue to the Ministry of Finance.
While speaking at the third edition of the National Entrepreneurship Awards, held on January 4 in Delhi, he also added that the government is completely supportive of new entrepreneurs and that efforts are being made to solve regulatory and financing issues for enterprises.
The angel tax issue has become a bane for the Indian startup ecosystem and there was quite an uproar after recent income tax notices and demand orders were issued to startups and angel investors.
Although the angel tax issue has been brewing for a long time, the recent trouble erupted when in November 2018, the Ministry of Corporate Affairs (MCA) sent notices to over 2,000 startups that have raised money since 2013.
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Startup founders and angel investors took their anger to a Twitter campaign which saw participation from ecosystem enablers such as TV Mohandas Pai. Pai said that the “draconian” angel tax will hamper startup innovation in the country.
Some other well-known industrialists such as Mahindra Group chairman Anand Mahindra, Biocon CEO Kiran Mazumdar Shaw, entrepreneur-investors Snapdeal founder Kunal Bahl and Innerchef cofounder Rajesh Sawhney and others also tweeted in support of angel tax exemption.
Representatives from iSPIRT foundation, Swarajya Jagran Manch, and LocalCircles also met Prabhu as well as the joint secretary, Department of Revenue, and filed their submission asking for exemption of angel tax with immediate effect.
The protesters demanded that the government do away with the angel tax law as it would hamper the growth of startups in the country. In response to the protests, Prabhu had earlier tweeted that the government was considering the issue.
Also, in December 2018, the Central Board of Direct Taxes had issued a notice directing that no coercive step would be taken to recover the outstanding amount from the startups until any further development.
However, according to reports, the I-T department currently has no plans to take back the notices it has issued to the startups.