SME Times News Bureau | 18 Jan, 2019
government has liberalised the norms including doing away with the need for an
inter-ministerial committee's approval for availing angel tax exemption, the
Department of Industrial Policy and Promotion (DIPP) said in a series of tweets
after a notification.
the inter-ministerial board certificate nor a merchant banker certificate is
required for angel tax exemption," DIPP said.
The notification said startups and investors wishing to claim exemption from
angel tax will apply to DIPP, and the Central Board of Direct Taxes (CBDT) may
grant approval and issue the certificate within a period of 45 days.
Angel tax, introduced in 2012, is levied on the difference between the amount
received by a closely held company in lieu of its shares and the fair market
value of the shares. The excess amount is taxed as income from other sources.
The DIPP has also reduced the need for documents limiting it to justification
for valuation of shares, annual accounts of startup, net worth certificate of
investor and income tax returns of both.
Startups whose paid-up share capital, including premium, does not exceed Rs 10
crore will be eligible for this exemption. And, the eligible investor will have
returned income of Rs 50 lakh or more for the previous financial year with net
worth exceeding Rs 2 crore.
"For the startup to be eligible for angel tax exemption, the aggregate
amount of paid up share capital and share premium of the startup after the
proposed issues of shares, should not exceed Rs 10 crore," the DIPP said
in another tweet.
"Additionally, the investor's net worth should exceed Rs 2 crore or the
amount of investment proposed in the startup, whichever is higher, as on the
last date of the financial year preceding the investment year," it added.
Further, the scope of the angel tax exemption will cover all past and future
investments of the startups, and it will also apply to startups that were
incorporated even before 2016.
Since the launch of the Startup India Action Plan on January 16, 2016, 15,113
startups have been recognised under the programme across 492 districts in 29
states and six Union Territories.
"Fostering the startup ecosystem requires ease of doing business and this
has been central to most of our regulatory reforms," government initiative
Startup India said in a tweet.
To date, 20 states have launched their startup policies since the launch in