Skip to main content

No Angel Tax on Startups with up to Rs. 10cr Funding

By
 No Angel Tax on Startups with up to Rs. 10cr Funding
Startups incorporated before 2016 that have got up to Rs. 10 crore in angel funding won’t face the so-called angel tax, once changes in the regime are finalised by the Department of Industrial Policy and Promotion (DIPP), which will soon notify the amendment, a senior government official told ET. It will also set up a separate committee for the recognition of such startups so that they get the relief, he said. “We have finalised the conditions which will resolve the issue of pre-2016 startups,” the official said.
This will ease the concerns of about 300 startups that received funding from the Angel Investors Network. ET reported on February 5 that DIPP was working to provide relief to startups incorporated before 2016. Startups incorporated after 2016 and recognised under the Startup India policy are spared this tax. “We will have adequate safeguards that would be taken into account when a startup is examined for recognition,” said the official.
Discussions with Experts, Industry
The angel tax was introduced by then finance minister Pranab Mukherjee in the finance bill of 2012. The measure was aimed at tackling the laundering of money through high premiums on shares. The tax is applicable on the capital raised by unlisted companies in excess of the fair market value of their shares.
The law reasons that this excess amount is akin to “income from other sources” and should be taxed under Section 56 (II) of the Income Tax Act. This route has been prone to misuse for conversion of black money into white. The income tax authorities had issued a number of notices under this provision with some of them being sent to startups.
With the recognition of startups that were floated prior to the launch of the policy, the tax issues faced by these entities is expected to be resolved. DIPP has had extensive discussions with sector experts and the industry before getting ready to finalise the latest framework. The income tax department has also asked assessing officers not to take precipitate action in cases relating to startups.
The Economic Times, New Delhi, 06th February, 2018

Comments

Post a Comment

Popular posts from this blog

Household debt up, but India still lags emerging-market economies: RBI

By
  Although household debt in India is rising, driven by increased borrowing from the financial sector, it remains lower than in other emerging-market economies (EMEs), the Reserve Bank of India (RBI) said in its Financial Stability Report. It added that non-housing retail loans, largely taken for consumption, accounted for 55 per cent of total household debt.As of December 2024, India’s household debt-to-gross domestic product ratio stood at 41.9 per cent. “...Non-housing retail loans, which are mostly used for consumption purposes, formed 54.9 per cent of total household debt as of March 2025 and 25.7 per cent of disposable income as of March 2024. Moreover, the share of these loans has been growing consistently over the years, and their growth has outpaced that of both housing loans and agriculture and business loans,” the RBI said in its report.Housing loans, by contrast, made up 29 per cent of household debt, and their growth has remained steady. However, disaggregated data sho...
Post a Comment
Read more

External spillovers likely to hit India's financial system: RBI report

By
  While India’s growth remains insulated from global headwinds mainly due to buoyant domestic demand, the domestic financial system could, however, be impacted by external spillovers, the Reserve Bank of India (RBI) said in its half yearly Financial Stability Report published on Monday.Furthermore, the rising global trade disputes and intensifying geopolitical hostilities could negatively impact the domestic growth outlook and reduce the demand for bank credit, which has decelerated sharply. “Moreover, it could also lead to increased risk aversion among investors and further corrections in domestic equity markets, which despite the recent correction, remain at the high end of their historical range,” the report said.It noted that there is some build-up of stress, primarily in financial markets, on account of global spillovers, which is reflected in the marginal rise in the financial system stress indicator, an indicator of the stress level in the financial system, compared to its p...
Post a Comment
Read more

Retail inflation cools to a six-year low of 2.82% in May on moderating food prices

By
  New Delhi: Retail inflation in India cooled to its lowest level in over six years in May, helped by a sharp moderation in food prices, according to provisional government data released Thursday.Consumer Price Index (CPI)-based inflation eased to 2.82% year-on-year, down from 3.16% in April and 4.8% in May last year, data from the Ministry of Statistics and Programme Implementation (MoSPI) showed. This marks the fourth consecutive month of sub-4% inflation, the longest such streak in at least five years.The data comes just days after the Reserve Bank of India’s (RBI) Monetary Policy Committee cut the repo rate by 50 basis points to 5.5%, its third straight cut and a cumulative reduction of 100 basis points since the easing cycle began in February. The move signals a possible pivot from inflation control to supporting growth.Food inflation came in at just 0.99% in May, down from 1.78% in April and a sharp decline from 8.69% a year ago.A Mint poll of 15 economists had projected CPI ...
Post a Comment
Read more