Union Government to set up panel to look into tax issues faced by start-ups
The Union Government has decided to set up an expert committee to look into all the taxation issues being faced by startups and angel investors. The key objective behind the move is the promotion of startups in India.
The Union Government has decided to set up an expert committee to look into all the taxation issues being faced by startups and angel investors. The information was shared by the Central Board of Direct Taxes (CBDT) on December 20, 2018.
The decision was taken at a high-level meeting of Department of Revenue Secretary Ajay Bhushan Pandey, Department of Industrial Policy and Promotion (DIPP) Secretary Ramesh Abhishek, and Central Board of Direct Taxes (CBDT) Chairman Sushil Chandra.
The key objective behind the move is the promotion of startups in India. The CBDT recognises that the Startups are going to bring lot of innovation to the country and therefore, have to be supported in every possible manner.
• The CBDT shared that no coercive action or measures to recover the demands of completed assessment under income tax would be taken against such firms.
• It was decided that the issue of recognition of the startups including the issue of premium among others will be decided on the basis of recommendations of a committee comprising eminent experts drawn from institutions like IITs, IIMs.
• The committee, which will be set up by the DIPP, will primarily look into the grant of tax exemptions and other connected matters.
• It will make recommendations on individual cases of recognised startups.
The decision to set up the expert panel was taken after several startups raised concerns on the taxation of angel funds under Section 56 of the Income Tax Act, which provides for taxation of funds received by an entity.