Mumbai, Jan 19 (KNN) According to the Co-founder of Indian Angel Network, startups have been facing practical difficulties on the taxation front following the blanket applicability of certain sections.

With a view to review the taxation policies, various startup industry bodies including Indian Angel Network, NASSCOM, Indian Venture Capital Association, (TiE) and Mumbai Angels have appealed to the government that adversely impact the startup ecosystem.

Saurabh Srivastava, prominent venture capitalist, and co-founder of Indian Angel Network told reporters that they have made a representation to the government on January 16 regarding the matter.

Section 56 of the Income Tax Act presently states that money paid by investors for shares in a private Indian company will be subject to 33 per cent tax.

Further, he said that there should be a separate carve out for angel groups in Section 56. Also, benefits for venture capital funds should be made broader.

The industry representatives believe that aggressive tax collection by the IT department will adversely impact India’s flagship Start-up Action Plan, Make in India initiative and its Ease of Business ranking.

The Indian venture capital backed companies topped USD 12 billion (approximately Rs 82,500 crore) across more than 1,220 deals in the past two years, as per the economic survey released for 2015-16. 

While expressing concern Startups urged that short-term capital gains should be 15 per cent for startup investors and the holding period for computing long-term capital gains tax should be one year.

As per their appeal government should also consider eliminating Minimum Alternate Tax for startups, which are DIPP certified. (KNN)