CBDT Bails Out Start-Ups & Angel Funds From Tax Terrorism Of AOs

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.

Press Release

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

2 comments on “CBDT Bails Out Start-Ups & Angel Funds From Tax Terrorism Of AOs

    Why only for this. How about implementing law Wome of the Officers in the department are not literate enough about I.T.Law. In Hyderabad officers at International taxation are initiating proceedings against non residents by directly sending notices abroad without finding out about their PE in India even in cases of Individuals. This is nothing but harrasment. They are under the view that if the parent is at Hyderabad it is enough. When questioned in High Court they state they found out last known address in Hyderabad which relate to parents. Such counter is filed which by all means approved by an Higher rank officer of the level of Pr.CIT/Pr.CCIT. Where is the end and who would educate these officers.

  2. vswami says:

    The CBDT’s timely directive deserves to be commended, for more than one reason. Predominant of them all is the need to consider and take a conscious decision as to why at all levy of “Angel Tax”” should not be pursued but scrapped, with due focus on the FRONT END, – .i.e. the GOAL !
    For views expressed strongly in knowledgeable circles, unanimously, against the constitutional propriety of/ rationale behind the levy, for instance, the Article posted on LInkedin @ ” #AngelTax and Why it Matters to Startups in India” , – may be worth looking through, upfront.
    Re-shared on FB @ https://www.facebook.com/swaminathanv3/posts/1982889308454012

3 Pings/Trackbacks for "CBDT Bails Out Start-Ups & Angel Funds From Tax Terrorism Of AOs"
  1. […] here to download CBDT’s office order dated 30th August 2019 See also: CBDT Bails Out Start-Ups & Angel Funds From Tax Terrorism Of AOs See also: CBDT Press Release On ‘Angel Tax Terrorism’ Of […]

  2. […] has been alleged that this was in violation of the CBDT instructions dt 24th December, 2018 pertaining to recovery of dues in Angel Tax cases. On ascertaining the facts it is seen that the […]

  3. […] Click here to download the DIPP Notification on angel tax exemption See also: CBDT Bails Out Start-Ups & Angel Funds From Tax Terrorism Of AOs […]

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