The Department of Industrial Policy and Promotion (DIPP) has issued a Notification dated 16th January 2019 to deal with the controversial issue of tax exemption u/s 56(2)(viib) to angel financiers.
The salient features of the exemption are as follows:
(1): After intense deliberation, the government has issued a notification to ease availment of #angeltax exemption.
(2): Neither the Inter-ministerial board certificate nor a merchant banker certificate is required for Angel tax exemption.
(3) For the Startup to be eligible for Angel Tax Exemption, the aggregate amount of paid up share capital and share premium of the Startup after the proposed issues of shares, should not exceed INR 10 Crores.
(4) For the Investor to be eligible for Angel Tax Exemption, she/he should have filed Income tax returns of alteast INR 50 Lakhs for the year preceding the investment year.
(5) Additionally, the investor’s net worth should exceed INR 2 Crores or the amount of investment proposed in the Startup, whichever is higher, as on the last date of the financial year preceding the investment year.
(6) To further the ease of application, Startups are not required to submit investor income and net worth details. Keeping confidentiality of investor tax returns and net worth certificate in mind, the investors can now directly upload these details on the DIPP portal.
(7) Angel tax exemption applications of DIPP recognized startups will be directly evaluated by CBDT going forward.
(8) To ensure quick processing of Angel Tax exemption application, CBDT will evaluate and respond within 45 days of receiving applications from DIPP.
(9) The scope of the Angel tax exemption extends to all past and future investments, and applies for startups incorporated before April 2016 as well.
Angel Tax Relief For Start-Ups
— BTVI Live (@BTVI) January 16, 2019
(1/9): After intense deliberation, the government has issued a notification to ease availment of #angeltax exemption. Refer to the notification for more details : https://t.co/9WpKtmLPTc #StartupIndia
— DIPP India (@DIPPGOI) January 16, 2019