The government is learnt to have decided to raise the funding limit in start-ups that would be exempted from the so-called angel tax to Rs25 crore from the current Rs10 crore, provided they submit an undertaking \u2014 along with important financial details \u2014 to suggest they are indeed not shell companies and are not used to funnel black money. It has also decided to recognise all companies that are in operation for up to 10 years as start-ups (instead of the current seven years), if they fulfil other criteria on innovation and turnover, sources told FE. Simultaneously, the turnover limit for the start-up tag will be raised to Rs50 crore from Rs25 crore at present. A notification to this effect could be issued any time soon. The government is also favourably considering allowing the tax exemption to all eligible start-ups over the past 10 years (from 2009-10 onward), said one of the sources. \u201cStart-up won\u2019t be served any angel tax notice up to the funding limit of Rs25 crore. This will be in contrast with the extant system where most start-ups got tax notices despite the fact that they raised less than the permissible exemption limit of Rs10 crore,\u201d said the source. As many as 96% of start-ups that have received tax notices have raised below Rs10 crore, according to a survey of 2,396 start-ups (that have been slapped with such notices) by LocalCircles and the Indian Venture Capital Association. The angel tax is typically an impost on the extra capital raised by an unlisted firm through the issue of shares over and above their fair market value. According to Section 56 of the I-T Act, the excess capital so raised is treated as income and taxed accordingly. While the section is aimed at curbing money laundering, it has troubled start-ups and their investors. The start-ups have to get registered with the department for promotion of industry and internal trade (DPIIT) and submit financial details (audited results, PAN, etc) with it, which will then be forwarded to the I-T department. They have to submit the undertaking, stating they are not in businesses \u2014 including real estate, gold and diamond \u2014 that are usually suspected to be used by unscrupulous elements for money laundering. Some 16,000 start-ups are currently registered with the DPIIT. The latest decisions follow a series of meetings between the representatives of start-ups, industry associations and senior officials with the DPIIT and the Central Board of Direct Taxes over a week now. Earlier this week, Sachin Taparia, founder and chairman of LocalCircles, had said just raising the limit to Rs25 crore will help only about 20% of start-ups that have received the angel tax notices, as most start-ups don\u2019t have the wherewithal to go through the rigours of filing relevant details that would satisfy the taxmen. Instead, a comprehensive mechanism must be set up to exempt all start-ups from the angel tax if they submit critical details of their tax returns, monthly expenses and payroll records over the past two years, among others, he had added. In April 2018, the government had said start-ups could apply to an eight-member inter-ministerial board for the tax relief if \u201cthe aggregate amount of paid-up share capital and share premium of the start-up after the proposed issue of shares does not exceed Rs10 crore\u201d. However, taxmen still continued to slap notices, triggering an outcry and forcing the government to act. Over 38% of the start-ups in the country \u2014 39,000 at last count \u2014 have received one or more \u2018angel tax\u2019 notices in 2018, causing critical capital infusion in these firms at the seed stage to go down by 21% year-on-year, iSPIRT, a think-tank for the Indian software products industry, said recently.