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The government may soon find a solution to address the tax concerns of startups, Central Board of Direct Taxes (CBDT) chairman Sushil Chandra said.  “Very shortly, we will find out a solution on the basis of the suggestions we have received. We will have to decide which startups are real startups and how they can be exempted from Section 56 (2) of the Income Tax Act,” he said at an Assocham function here on Thursday.  Various startups had raised concerns over the notices sent to them under this section to pay tax on angel investments. The CBDT chief said any startup recognised by the Department for Promotion of Industry and Internal Trade is exempt from Section 56 (2) and the tax notices sent to startups have been stayed.  Last week, officials from the department, along with tax department officials, met startup industry representatives to hear their suggestions.  Section 56 (2) provides that the amount raised by a startup in excess of its fair market value would be deemed income fro

The Reserve Bank of India said it would intensify its scrutiny of nonbanking finance companies to ensure better compliance and financial strength, but did not indicate an asset-quality review like the one carried out on banks.  NBFCs showed high growth taking advantage of the poor financial health of several public sector banks but the recent default by the group firms of non-bank lender IL&FS raised alarm and called for a reality check. Former chief economic advisor Arvind Subramanian suggested asset quality review (AQR) for these lenders to fully measure the extent of the hidden stress in the system.  “Like Raghu (former governor Raghuram Rajan) did an AQR for the banks, we need to an asset quality review for the NBFCs,” he told ETNow in December.  RBI data showed that NBFCs cumulatively had loans assets worth ?3.42 lakh crore at the end of September with industry accounting for more than half of total credit extended by them, followed by retail, services and agriculture. T

The central bank on Thursday said it is examining the possibility of bringing payment gateway operators under its direct regulatory ambit, a move that industry players said will make the digital payments ecosystem more secure and stable.  “We are considering the feasibility of directly regulating these payment operators…given their growing importance in the payment systems of the country, we deem such a step to be important,” Reserve Bank of India governor Shaktikanta Das said during his monetary policy speech. The RBI said it will soon publish a draft of the regulatory guidelines for stakeholder consultations. Mint Road and New Delhi have been in talks for some time now to come up with a comprehensive regulatory solution for the burgeoning payment systems in the country, which is riding the growth of ecommerce and m-commerce transactions. Meanwhile, issues ranging from the fees that businesses pay for accepting digital payments to grievance redressal for failed transactions and ev

A solution for India’s vexed angel tax may be around the corner, with the industry department setting up a panel comprising startups, angel investors and income tax officials to look into the issue.  Ramesh Abhishek, secretary in the department for promotion of industry and internal trade (DPIIT) who heads the panel, said a solution is expected in the next four-five days.  DPIIT on Monday held consultations with a select group of startups and angel investors at a meeting also attended by officials from the Central Board of Direct Taxes (CBDT).  “We had a round table on the issue of angel tax. We have got a number of suggestions. We will form a smaller working group and try to come with some solution in next four-five days,” Abhishek said after the meeting. India introduced a so-called angel tax in 2012, which counts investments received by startups above their fair market value as taxable income, much to the dismay of angel investors and the startup community.  According to a perso

The government opted to announce a tax rebate on annual income up to ~5 lakh instead of raising the exemption limit as it did not wish to tinker with rate slabs in an interim budget, Union finance minister Piyush Goyal said in an interview to Hindustan Times on Monday.  The emphasis of the budgetary exercise was on maintaining the economic reforms road map set over four-and-a-half years by Prime Minister Narendra Modi and Union minister Arun Jaitley so that India could continue to be the world’s fastest growing major economy, Goyal said. “With all exemptions, a person earning even 75,000 a month will not have to pay any tax – provided they make some investments. If I had given this as an exemption, it would have given rise to a debate whether the interim budget should start tinkering with tax slabs and tax rates. That’s why I have not changed any of those. But, as I said, we are clear that the benefits of formalisation of the economy, the larger tax base, more taxes... has to be sh