Pursuant to vehement protests from eminent citizens that Assessing Officers are running amok and terrorizing start-ups and angel funds, the CBDT has issued a directive instructing AOs not to take coercive measures to recover outstanding demand until further notice.
Draconian Angel tax torturing startups: It’s killing genuine innovation
@PMOIndia @narendramodi @arunjaitley @sureshpprabhu @sanjeevsanyal Sir this has started again in big https://t.co/hwFttS1aZi intervene urgent https://t.co/a63XKp4sIa
— Mohandas Pai (@TVMohandasPai) December 18, 2018
@narendramodi Sir we need your direct intervention to solve the issue of tax terrorism for Angel Tax. The anger amongst start ups is very worrisome. Pl intervene. All the good work of govt through start up India is being negated! @PMOIndia we do not our innovators to go overseas https://t.co/04L1EzfCgx
— Mohandas Pai (@TVMohandasPai) December 19, 2018
Why is the Modi Govt blundering on the Start-up economy by recklessly introducing a tax on angel investments? This will only drive away investments overseas n starve Indian start ups. @NITIAayog n MoF r failing young entrepreneurs n even killing jobs. @PMOIndia @TVMohandasPai
— Kiran Mazumdar Shaw (@kiranshaw) December 21, 2018
#AngelTax | Tax notices. Uproar. Ministry intervention. Calm. Repeat. That in 5 words is what’s been playing out in the startup world for the last couple of years.
What is it all about?https://t.co/Z8CSHuWWsG
— BloombergQuint (@BloombergQuint) December 25, 2018
Govt has created the 2nd best eco system in the world for Startups. In 2016 Jan,Govt gave a 3 year tax holiday for our Startups.Govt has been extremely prompt in resolving all issues of Startups.On Angel investors immediate action was taken. Pl don’t play politics with Startups. https://t.co/MIqHOPwNF5
— Amitabh Kant (@amitabhk87) December 25, 2018
— EconomicTimes (@EconomicTimes) December 25, 2018
Angel tax fiasco: Given how the ecosystem functions, most start-ups will not qualify as being fairly valued in the eyes of taxman
It scares away investors and prevents entrepreneurs from raising funds
— Business Standard (@bsindia) December 25, 2018
Ministry of Commerce & Industry
DIPP Clarification on IT Notice to Angel Investors/Start-ups
The Department of Industrial Policy & Promotion(DIPP) has taken notice of the news reports regarding issue of notices by Income Tax authorities to Angel Investors/Start-ups.
DIPP in consultation with the Department of Revenue (DoR) has put in place a mechanism since April 2018 to grant exemption from the provisions of Section 56(2)(viib) of the Income Tax Act to genuine investors in recognised start-ups.
DIPP has again taken up this matter of issue of IT notices with the DoR so that there is no harassment of Angel Investors or Start-ups.Government is committed to protecting bona fide investments into start-ups.
Instruction issued by the CBDT reg s. 56(2)(viib)
Government of India
Ministry of Finance
Department of Revenue (CBDT)
North Block, New Delhi,
Dated 24 December, 2018
To, All Principal Chief Commissioners of Income-tax
Subject: – Determination of fair market value of unquoted equity shares of ‘Start Up’ companies under section 56(2)(viib) of the Income-tax Act, 1961 read with Rule 11UA(2) of Income-tax Rules,1962 -reg.
Vide letter of even number dated 06.02.2018 on the above mentioned subject, it was instructed by the CBDT that no coercive measures to recover the outstanding demand would be taken in case of ‘Start Up’, if additions have been made by the Assessing Officer under section 56(2)(viib) of the Income-tax Act, 1961( hereafter ‘Act’) after modifying/rejecting the valuation so furnished under Rule 11UA(2) of the Income-tax Rules, 1962.
2. Representations on similar lines have again been received.
The matter is under consideration of the Board. In view of the same, undersigned is directed to state that no coercive measures to recover the outstanding demand should be taken in the matter till further instructions in this regard.
(Vinay Sheel Gautam)
Under Secretary (ITA-I), CBDT