In less than a month (February 27 onwards) after 127 startups registered withDepartment for Promotion of Industry and Internal Trade (DPIIT) had applied for angel tax exemption through Form-2, around 120 of them have been granted exemption from Section 56(2)viib of the Income-Tax Act, 1961 in an email notification on March 20.
DPIIT had issued notification on February 19 pertaining to the number of years since incorporation, turnover, and amount raised by startups up to Rs 25 crore in angel funding to apply for the exemption.
“With regard to your declaration dated 01/03/2019, furnished in Form 2 in pursuance of para 5 of the notification no. G.S.R.127 (E) dated 19th February 2019 of DPIIT, Ministry of Commerce and Industry read with notification no. S.O.1131 (E) dated 5th March 2019 of Central Board Of Direct Taxes CBDT), it is stated that the provisions of clause (viib) of sub section 2 of Section 56 of the Income-tax Act,1961 (‘Act’) shall not apply to (name of the applicant company) XYZ PAN XYZ DPIIT Recognition number XYZ on the amounts received as consideration for issue of shares subject to the fulfilment of conditions as specified in the notification no. G.S.R.127(E) dated 19th February 2019 of DPIIT and subsequent amendments if any,” read the CBDT’s March 20 email sent to startups and seen by Financial Express Online.
“CBDT has delivered as promised. The revised acknowledgment emails have been sent by CBDT to around 120 startups. This meets the expectation of the startup community,” Sachin Taparia, Founder and Chairman, LocalCircles told Financial Express Online.
With respect to the issue related to lack of seamless sharing of startups’ details received by DPIIT to CBDT, there is also an assurance of a digital information exchange.
“CBDT and DPIIT have given us the assurance that soon they will have an integration for digital information exchange that would exempted startups will be identified in the CBDT system. This will ensure that there is no scrutiny notice generated against these startups in a share premium event. CBDT currently manually extract startup information shared in PDF form by DPIIT,” said Taparia.
DPIIT doesn’t have a digital signature infrastructure yet and hence the details are shared in the PDF form. It will take around a month’s time to solve this, Taparia said.
The email for angel tax exemption follows the acknowledgement email sent by CBDT to 92 startups on March 15 that their Form-2 have been accepted by DPIIT.
Source : Financial Express