Govt simplifies mechanism for startups to claim exemption from Angel Tax
Updated: Jan 17, 2019 08:05:50am
Govt simplifies mechanism for startups to claim exemption from Angel Tax
New Delhi, Jan 17 (KNN) After intense deliberation, the government has notified some changes in Section 56 of the Income Tax Act to ease the process for startups dealing with the issue of ‘Angel Tax’.
Latest amendments as notified by Department of Industrial Policy and Promotion (DIPP), provides simpler mechanism for startups to claim exemption from Angel Tax and prescribed a 45 days’ timeline for quick processing of such applications.
To ensure quick processing of Angel Tax exemption application, Central Board of Direct Taxes (CBDT) will evaluate and respond within 45 days of receiving applications from DIPP, tweeted DIPP
For the startups to be eligible for Angel Tax exemption, aggregate amount of paid up share capital and share premium of the startup after the proposed issue of share, if any, does not exceed ten crore rupee, said DIPP notification.
For the Investor to be eligible for Angel Tax Exemption, she/he should have filed Income tax returns of at least INR 50 Lakhs for the year preceding the investment year, it added.
Additionally, the investor’s net worth should exceed INR 2 Crores or the amount of investment proposed in the Startup, whichever is higher, as on the last date of the financial year preceding the investment year.
To further the ease of application, startups are not required to submit investor income and net worth details. Keeping confidentiality of investor tax returns and net worth certificate in mind, the investors can now directly upload these details on the DIPP portal, DIPP tweeted.
Further, the Angel Tax exemption applications of DIPP recognised startup will be transmitted by DIPP to CBDT with the necessary documents for evaluation and CBDT will evaluate and respond within 45 days of receiving applications from DIPP.
Moreover, DIPP tweeted that the scope of the Angel Tax exemption extends to all past and future investments, and applies for startups incorporated before April 2016 as well.