Startups in the country which have been slapped with angel tax notices, and were excluded from the recent relaxation in norms may get some relief this week as per industry sources. The relief will depend on the valuation situations and source of funding. The Central Board of Direct Taxes (CBDT) intends to float a notification directing tax officials to accept valuation certificates from startups.
The tax department had questioned investments which were based on valuations in startups while securing funding. As much as 2000 startups in the country were issued notices under sections 56(2)(vii)(b) and 68. The CBDT notification will facilitate startups which have received notices under both sections, said industry sources.
Experts predict that the move will help ease the angel tax controversy situation.
‘’Now that startups can get an angel tax exemption with the DPIIT (Department of Promotion of Industry and Internal Trade) February 19 notification, a fresh CBDT notification asking the tax officers to retrospectively accept the angel tax exemption certificate of startups will be beneficial and hopefully should be the end of angel tax controversy,” says Sachin Taparia, founder and chairman, LocalCircles, a social media platform.
“For the startups that have already received tax notices, the government can come out with a notification which can be applied retrospectively. This will help as the startups can either apply for rectification of the orders already passed or can also use this clarification to get the relief during the appeal proceedings,’’says Amit Maheshwari, partner, Ashok Maheshwary & Associates.
The previous notifications on angel tax referred the amounts as unexplained credit.
