In a big relief to Indian startups, the Central Board of Direct Taxation (CBDT) has allowed angel tax exemption to those startups which were issued an assessment order prior to 19 February, Economic Times has reported.
This order will thus apply to those startups for whom an assessment order was passed prior to 19 February and additions were made to their incomes.
This CBDT directive thus overrules the Department for Promotion of Industry and Internal Trade (DPIIT) notification which barred startups from availing this exemption if they had already received an assessment order.
After allowing the exemption, the CBDT acknowledged that the DPIIT order was causing hardships to startups.
Earlier, notices were issued to startups under Section 56(2)(vii)(b) of the Income Tax Act which states that if a private company issues shares at a price exceeding their market value, the difference would become taxable.
Entrepreneurs have been strongly opposed to the concept of Angel Tax as they contend they have been unfairly targeted by valuating the share prices in excess of their market value.
An appeal from Swarajya
At Swarajya, we rely on our readers' support through subscriptions to sustain our media platform. Unlike larger conglomerates, we are unable to relentlessly chase advertising money — our model is largely built on your patronage.
Your support has never been more crucial. We work tirelessly to deliver 10-15 high-quality articles daily, ensuring you receive insightful content from 7 AM to 10 PM.
If you believe India's story has to be articulated in a way it has never been done before without shrugging it off, become a patron (or) subscribe now for ₹̶2̶4̶0̶0̶ ₹1999 and get 12 print issues, unlimited digital access for 1 year, a special India that is Bharat T-shirt (Offer ends soon).
We are counting on you!