The Central Board of Direct Taxes (CBDT) has given a written assurance to 90 start-ups and registered them registered them for Startup India Action Plan, offering a major relief from the Angel Tax.
According to the Startup India Action Plan, a Department of Industrial Policy and Promotion (DIPP) initiative, the startups had been directed to submit all details pertaining to capital raising and promoters, and if accepted, they get armoured from future tax demands under section 56(2)viib of the Income Tax Act.
The angel tax and the income tax section emphasises on premiums paid by investors while they invest in unlisted companies.
Start-ups are issued with notices under two income tax sections — 56(2)(viib), which deals with valuations (classification of a funding as income or investment), and Section 68, which is about unexplained credit.
Earlier this month, the CBDT had directed its officers across India to evade “coercive measures” against startups that have been notified under the so-called angel tax, in what can be seen as softening of its stance.
