Minister addresses concerns

Commerce and Industry Minister, Suresh Prabhu, has cleared a proposal aiming at simplifying the process of exemptions for Start-ups under Section 56 (2) (viib) of Income Tax Act.

The Department for Promotion of Industry and Internal Trade (DPIIT) has issued a gazette notification on this on 19 Feb 2019, said a release from the ministry.

In order to catalyse entrepreneurship by enabling angel investments to innovators across all sections of society and all sectors of economy, a Gazette notification in partial modification of Gazette Notification number G.S.R 364 (E) dated 11 April was issued on 16 Feb 19.

However, concerns were expressed regarding taxation of angel investments and there were issues that needed to be addressed to ensure availability of capital to Start-ups.

The Minister took up these issues with concerned officials and a roundtable was organized on 4 February 2019 under the chairmanship of Secretary DPIIT with Start-ups, angel investors, and other stakeholders with a view to discuss the new measures undertaken by the Department to address the Angel Tax issue and understand the mechanism to deal with it institutionally.

With this notification, the definition of Start-ups will be expanded.

Now an entity will be considered as a Start-ups up to a period of 10 years from the date of incorporation and registration in place of the earlier duration of 7 years.

Similarly, an entity will continue to be recognised as a Start-ups, if its turnover for any of the financial years since incorporation and registration has not exceeded Rs.100 crore in place of Rs.25 crore earlier.

In addition, consideration received by eligible Start-ups for shares issued or proposed to be issued to a listed company having a net worth of Rs.100 crore or turnover of at least Rs.250 crore will also be exempted. fiinews.com