DPIIT engages Finance Ministry on Start-up taxation issue

New Delhi, May 18 (KNN) The Department for Promotion of Industry and Internal Trade (DPIIT) has approached the finance ministry with the taxation issue being faced by the start-ups, said DPIIT Secretary Rajesh Kumar Singh.

The public affirmation comes a month after it reported that DPIIT had privately raised the Indian start-ups’ concerns related to angel tax with the Department of Revenue and Economic Affairs.

After the Finance Bill amendments were introduced, there have been raised concerns regarding the calculation method for fair market value under two distinct laws. The Finance Act, 2023, has amended Section 56(2) (viib) of the I-T Act, thereby bringing overseas investment in unlisted closely held companies, except DPIIT-recognised start-ups, under the tax net.

As per reports, the Income Tax department is expected to soon come out with certain draft rules to specify the class of investors and norms of valuation of foreign investment in unlisted companies.

The modification in valuation rules is needed as I-T Act and FEMA provide different methodologies for calculating the FMV of shares of unlisted companies.

On a question related to delay in getting manufacturing licenses to defence units, he said that the defence industry and some other strategic sectors are few segments where license permit raj remains.

State government responses are also often delayed and "our target is to issue DPIIT licenses in five months, but in general it takes more months," he added.

Further talking about PM Gatishakti initiative, Singh said it would become relevant for the private sector in the longer run.

"We intend it to offer to other countries as well but before that, we intend to offer to start providing some access to the private sector as well in the not-so-distant future. It already has about 1,400 layers of data of all kinds," he said.  (KNN Bureau)