Angel Tax

Finance Minister exempted DPIIT registered startups from angel tax

Till June 21, 702 startups were reported to have been exempted from Angel Tax

A DPIIT circular has brought out new concerns on the govt’s angel tax regulations

CBDT consolidates guidelines to clarify startup exemptions for angel tax

Nagaland launches startup portal, plans to launch 100-seater incubation centre

All tax notices will be disposed of within three months from the date of response, says FM

This compiles the list of all the angel tax-related policy changes made in August 2019

The circular will simplify tax processing for DPIIT-recognised startups across the country

The startups have to comply with the rules for by the end of this month

CBDT has constituted Startup Cell with five members

The cell will work towards redressal of grievances

It will try to mitigate tax-related issues in case of startup entities

Govt to constitute a dedicated cell under CBDT to solve tax issues for startups on priority

No tax harassment will take place and no independent inquires, assured the FM

Filing GST to be simplified and GST refunds will be automated, the government said

Angel tax notifications had been issued to more than 2,000 startups last year

Temporary relief measures were announced in Feb following protests by entrepreneurs

Now Section 56(2)(viib) of the Income Tax Act will not apply to DPIIT-registered startups

The latest notification by CBDT takes off from the budget speech by the honourable Finance Minister

The most crucial aspect of this new plan is the dependence on the appearance of section 56(2)(viib) in the scrutiny notices issued by the Assessing Officer

In light of all these measures and many more to come, what use does section 56(2)(viib) have except being a sword of Damocles dangling over the heads of Indian entrepreneurs?

The CBDT has asked officers to accept claims from registered Startups

IT officials will require approval of superiors before investigation

Startups registered during an ongoing tax scrutiny could be spared further investigation

The penalty is aimed at deterring the misuse of angel tax exemption

Lok Sabha has passed the amendment in Finance Bill

The bill will now go to Rajya Sabha for a final go-ahead

The Indian seed stage startup ecosystem saw $1.26 Bn in funding from 2014 to H1 2019

The number of deals plunged by 39.74% in 2018, compared to 2017 before angel tax was introduced

227 angel investors were active in the ecosystem in the first half of 2019

Startup ecosystem unenthused as important points remained unaddressed by the budget

The government’s tax reforms have been welcomed by many startups

Lack of disbursal of funding from Startup India FoF remains a chief concern

Budget 2019 Speech addressed the issue head-on and promises relief on three fronts including funding from e-verified investors

The mentioned promises have the potential to rid the Indian startup ecosystem of the spectre of “angel tax”

However, only if executed without any additional conditions or caveats