Skip to main content

Individual angels may get tax relief too

By
Individual angels may get tax relief too
The government is considering exempting investments made by individuals in certain startups from the so-called angel tax to provide a level playing field with other angel investors and to nudge high net worth individuals to back innovation.The Department of Industrial Policy & Promotion is working with the finance ministry on the details of the proposed exemption.
The department has held several meetings with angel investor networks and startups to finalise the new framework. “We felt that investments by individuals who may not be part of the angel network also deserve to get the tax benefit since they are also playing a role in building the startup ecosystem in the country,” a senior government official told ET.
Angel tax of about 30% is levied on the amount that exceeds the fair market value of shares issued by unlisted companies, which is treated as income from other sources. However, the levy has startups concerned over the possibility of discouraging investments and leaving them open to harassment by income tax officials.
Introduced in the Finance Act of 2012 by the then FM Pranab Mukherjee, the angel tax was aimed at curbing money laundering through the purchase of shares at a high premium. Startups incorporated after 2016 and recognised under the Startup India policy are already spared the angel tax. The government had been working on framing a policy to exempt startups receiving up to Rs 10 crore in angel investment and those set up before 2016 from the tax, ET had reported earlier.
The department has recognised 7,578 startups so far and has provided funding support to 75 of them. However, several startups have received notices to pay angel tax amid ambiguity over how to assess the fair value of shares, a grey area that’s acknowledged by the Startup India Action Plan, a government initiative introduced in January 2016 to accelerate the spread of startups in the country.
“In the context of startups, where the idea is at a conceptualisation or development stage, it is often difficult to determine the fair market value of such shares. In majority of the cases, FMV is also significantly lower than the value at which the capital investment is made,” the Startup India Action Plan stated.Earlier this month, the country’s apex direct taxes body provided some relief to startups that were asked to pay angel tax. “No coercive measure to recover the outstanding demand would be taken,” the Central Board of Direct Taxes told its officials in a letter.
The Business Standard, New Delhi, 27th February 2018

Comments

Post a Comment

Popular posts from this blog

Govt’s gamble on GST cuts: What do the bond and currency markets signal?

By
  It’s not just humans who suffer from cognitive biases; markets do too. Interestingly, different financial markets exhibit distinct biases, each interpreting events through its own prism of prejudice. Take the recent announcements on GST reforms: equity markets have chosen to view them through the lens of growth, while bond and currency markets are focusing on potential macroeconomic risks—fiscal pressures and current account challenges. So, which lens captures the true pulse?Equity markets may be right in expecting GST reforms to revive consumption, which has remained lacklustre for a while. But the key question remains—will this revival come at the cost of broader macro stability?It is well known that consumption stocks have rallied since the GST rationalisation announcement. But what about bond markets? What signals are they sending since this rejig was announced from the ramparts of the Red Fort?The signs aren't encouraging. Bond prices have slumped and yields have surged sinc...
Post a Comment
Read more

Luxury carmakers urge clarity on GST rates to boost festive season sales

By
  A clear picture regarding new GST rates at the earliest will help the overall auto industry, including the luxury car segment, to regain momentum in the ongoing quarter, which generally sees enhanced sales on account of the festive season.The high-powered GST Council, chaired by Finance Minister Nirmala Sitharaman, will meet on September 3-4 to discuss moving to a two-slab taxation.In an interaction with PTI, BMW Group India President and CEO Hardeep Singh Brar said the recent speculation about the change in GST rates has caused uncertainty in the minds of consumers.Consumer interest and demand is strong, but they (prospective buyers) have adopted a wait-and-watch approach, and this delayed decision-making is impacting new vehicle sales at a certain level, he noted."Expediting clarity on GST rates is essential to get back to speed and ensure the auto sector's contribution to economic growth during this quarter is robust," Brar stated.He also hoped that the sustainable p...
Post a Comment
Read more

Sebi proposes tighter norms for green bond third-party reviewers

By
  Sebi on Friday said it has proposed to tighten the norms to appoint independent third-party reviewers or certifiers for green debt securities to align them with requirements for other ESG-linked bonds.In a draft circular, Sebi said that the current norms for green bonds, introduced in February 2023, lack detailed requirements around reviewer independence, conflict of interest mitigation, and disclosure standards that are now in place for other ESG-linked securities under a June 2025 circular.The regulator's latest proposal seeks public comments on a revised framework that would bring parity by incorporating comprehensive criteria for third-party certifiers of green bonds on non-convertible securities.Under the proposed norms, issuers of green debt securities will need to appoint reviewers who are independent of their management, directors, and key managerial personnel. These reviewers will be remunerated in a way that prevents any conflicts of interest and possess relevant expert...
Post a Comment
Read more