Ramesh Abhishek said that there are 36 other startup applications that couldn't get the exemption as they were "incomplete".
541 startups have been granted exemptions on investments under section 56(2)(viib) of the Income-tax act 1961 aka angel tax by the Central Board of Direct Taxes (CBDT) so far, Ramesh Abhishek, Secretary, Department for Promotion of Industry and Internal Trade tweeted on Monday.
Abhishek said that there are 36 other applications that couldn’t get the exemption as they were “incomplete” while “Startup India team is working with concerned startups to address their deficiencies,” he added.
“If the information filled is not correct or let’s say there is a problem with the signature, CBDT rejects the application and asks startups to reprocess the application,” Sachin Taparia, Founder and Chairman, LocalCircles told Financial Express Online.
The question, however, still remains why the number of startups applying for exemption is very low out of thousands of startups in India. “The possibility might be that the startup is not even aware of it that doesn’t seem to be possible, or there can be a possibility that the startup has not raised angel capital and has secured venture capital right after seed funding. There can also be a possibility that the startup has bootstrapped itself and hence until it raises angel funding there is no need of applying,” said Taparia.
Till April 10, the number of startups getting angel tax exemption stood at 291 startups up from 135 startups that were notified of exemption till March 29, a source with direct knowledge of CBDT’s notification to startups had told Financial Express Online earlier.
Department for Promotion of Industry and Internal Trade in April this year had introduced Startup Vision 2024 document detailing sops for startups and easy regulatory environment.
With respect to reducing compliance burden further, the document had proposed to exempt alternative investment funds’ all investments from angel tax, cut rates for the Goods and Services tax, launch regulatory sandbox for development of fintech products, tax exemption for ESOPs, and tax incentives for startup investments.