By IE&M Research
The government has relaxed the rules for angel tax exemption for startups. Entities incorporated before the current cut-off date of April 2016 are eligible for the benefit, provided the total funds raised is not more than Rs10 crore. However, the April 2016 cut-off date for eligibility for 100 per cent deduction of the profits and gains from income of startups for three years remains unchanged. “With the introduction of amendments through this notification, startups are likely to have easy access to funding, which, in turn, will ensure ease in starting of new businesses, promote start-up eco-system, encourage entrepreneurship leading to more job creation and economic growth in the country.
The government has also given proper legal sanctity to the Inter Ministerial Board (IMB) to consider applications of startups for claiming tax incentives, which has also been made more broad-based. Under the new rules, applications for certification of startups under Section 56 and Section 80 IAC of the Act will be submitted through an online portal to DIPP. The applications will be considered by IMB for certification.The government’s decision on relaxing the guidelines for angel tax exemption (under Section 56) would come as a relief for many out of the 18 startups that have received income tax notices for non-payment of tax. Even if an income tax assessment has been opened in case of a start-up, the IMB certification can be used for exemption of Section 56.
