Tax exemption for start-ups on investments up to ₹10 cr – Business Line–14.04.2018

Responding to a long-standing demand from the industry, the government has relaxed the rules for angel tax exemption for start-ups by making entities incorporated before the current cut-off date of April 2016 eligible for the benefit, provided the total funds raised is not more than ₹10 crore.

However, the April 2016 cut-off date for eligibility for 100 per cent deduction of the profits and gains from income of start-ups for three years remains unchanged, Department of Industrial Policy & Promotion (DIPP) Secretary Ramesh Abhishek said.

In a notification dated April 11, 2018, the government has also given proper legal sanctity to the Inter Ministerial Board (IMB) to consider applications of start-ups for claiming tax incentives, which has also been made more broad-based.

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 start-ups that have received income tax notices for non-payment of tax.

The DIPP Secretary explained that 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.

“With the introduction of amendments through this notification, start-ups 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,” an official release stated.

Under the new rules, applications for certification of start-ups 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.

Published on April 12, 2018

via Tax exemption for start-ups on investments up to ₹10 cr – Business Line

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