Income Tax Dept calls for suggestions on draft rules for valuing startup investment by non-residents

New Delhi, May 27 (KNN) The Income Tax Department on Friday invited comments from stakeholders on rules for valuation methods for non-resident investment in unlisted startups in India.

Two days ago the department had detailed the exempted entities from angel tax provision.

The Central Board of Direct Taxes (CBDT) has issued a draft notification regarding this inviting comments on the draft rule 11UA of Income-tax Rules, 1962 for method of computation of Fair Market Value (FMV) of unquoted equity shares through five different methods under section 56(2)(viib) of Income-tax Act, 1961.

The Board said in a tweet, that suggestions/comments have been invited from stakeholders and general public on the draft rules, which can be sent to ustpl2@nic.in latest by June 5, 2023.

Under the existing norms, only investments by domestic investors or residents in closely held companies were taxed over and above the fair market value, which was referred to as angel tax.

The CBDT has already notified investments from 21 countries, including the US, UK and France as exempt entities from angel tax. 

Countries like Singapore, Netherlands and Mauritius, which constitute the major chunk of foreign direct investment in India, have not been included in the exemption list.   (KNN Bureau)