INSUBCONTINENT EXCLUSIVE:
Suresh Prabhu said the exemption will apply to start-ups with total investment not exceeding Rs 25 croreA long-drawn dialogue between
troubled start-ups and the government has finally come to a close, with the government announcing a blanket exemption from angel tax for all
start-ups that are recognised by the Department for Promotion of Industry and Internal Trade or DPIIT, the government body which addresses
Suresh Prabhu, Union Minister for Commerce, confirmed TheIndianSubcontinent's reports on the proposed changes in a series of tweets
today.The DPIIT will issue a gazette notification on the changes shortly.The exemption will apply to all start-ups with total investment not
exceeding Rs 25 crore, Mr Prabhu said
The government has also widened the definition of a start-up, announcing that an entity shall be considered a start-up for up to 10 years
from its date of incorporation/registration instead of the existing period of seven years.Moreover, the turnover limit for an entity to be
considered a start-up has been hiked by four times, to Rs 100 crore from Rs 25 crore.These decisions - a long-standing demand of the
start-up and angel network to the government - come on the back of several rounds of meetings and submissions made to the Department for
Promotion of Industry and Internal Trade and the Central Board of Direct Taxes (CBDT).To be exempted from angel tax, start-ups will have to
submit self-certified declaration along with audited financials and income tax returns of the previous year, Mr Prabhu said.The documents
will be validated by the DPIIT and then the CBDT will set up a mechanism through which such recognised start-ups do not get notices for
angel tax, according to sources.The CBDT will also likely issue directive to officers in cases to appeals to consider exemption given to
start-ups, and dispose cases by a deadline.Angel tax was introduced in 2012 and is levied on the difference between the amount received by a
closely held company in lieu of its shares and the fair market value of the shares
The excess amount is taxed as income from other sources.Under the angel tax law, the Income Tax Department has sent several notices and
orders to founders, demanding a 30.1 per cent tax on investments they raised in the previous years.
