127 startups apply for angel tax exemption, wait with bated breath for Income Tax department decision

By: | Published: March 19, 2019 3:15 PM

Out of 127 startups that had applied for angel tax exemption through Form-2, 92 startups have received an acknowledgment email from the CBDT that their forms have been accepted by DPIIT.

Angel tax exemption, Funding limit of Angel tax, DPIIT, I-T Act, money laundering, Narendra Modi The question now is whether the Assessing Officer (AO) will validate this email as exemption for startups from angel tax, said Sachin Taparia, Chairman, LocalCircles.

After February 19 notification from the Central Board of Direct Taxes (CBDT) on angel tax exemption, 127 startups had applied (from February 27 onwards) for the same through Form-2, out of which 92 startups have received an acknowledgment email from the CBDT that their forms have been accepted by DPIIT, LocalCircles Chairman Sachin Taparia told Financial Express Online.

However, startups are yet to get a formal confirmation from the government that they stand exempted from taxation of share premium in excess of their fair market value. “The question now is whether the Assessing Officer (AO) will validate this email as exemption for startups from angel tax,” Taparia told Financial Express Online.

“They told us that as of now there is only this acknowledgement email. While a month’s time might not be enough and the government doesn’t have to tell us exactly how the exemption will be given but there were expectations from startups of seeing response from CBDT,” said Taparia.

“Receipt of Form 2 in CBDT is acknowledged,” read the CBDT’s March 15 email seen by Financial Express Online.

LocalCicles had met CBDT officials last week suggesting to provide an exemption proof detailing that startups had applied for it, the documents have been verified by CBDT and the exemption is now granted.

Among other suggestions made were that startups that have submitted Form-2, their names should be shared with respective Principal Commissioners along with startups’ PAN for granting exemption. “So that when startups goes to AO they have some proof of exemption instead of just an acknowledgment email,” Taparia told.

Moreover, CBDT should mark all startups in its system as ‘startup’ instead of ‘company’ so that, says Taparia “when any startup has a share premium event, you (CBDT) doesn’t generate a notice and AO doesn’t call them etc.”

Ahead of elections, Congress too is trying to woo startup and investor community for their share of votes as its Vice-President Rahul Gandhi on Monday assured startups that Congress would abolish angel tax if they come to power.

Talking to a gathering in Bengaluru, Gandhi said, “I have been informed about the angel tax and angel tax goes counter to the philosophy of startups,” adding that “we are going to get rid of this tax.”

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