Govt To Form A Working Group To Assess Angel Tax Debate
Summary
DPIIT on Monday had organised the roundtable in the capital with the representatives from leading startup-related associations — IVCA, iSPIRT Foundation, NASSCOM, TiE, Indian Angel Network, LocalCircles — and decided to form the guidelines on the subject in the next five days as the final solution. According to a senior government official, DPIIT may scrap Section 56(2) of the Income Tax (I-T) Act, which enables imposition of the levy on angel investments in startups, ET reported. Under Section 56(2), when a closely held company issues shares at a price more than its fair market value, the difference is taxed as income from other sources. On December 24, the Central Board of Direct Taxes (CBDT) had issued a notification stating no coercive action will be taken against the I-T demand-orders raised against startups’ share premiums. In the past, as many startups and it’s representing bodies have made various representation to the Ministry of Commerce and DPIIT to put forward the issue of angel tax with possible long term solutions.