Angel Tax row: DIPP calls startups, investors for roundtable discussion on Feb 4

In wake of startups protest to the govt limited tax exemption, the Department of Industrial Policy and Promotion (DIPP) has called for a round-table meet in the first week of February.

The govt has invited about 50 people from startups, investors, industry bodies such as IVCA and iSPIRT and Income-Tax department to discuss concerns on tax exemption, according to people aware of the development.

The govt earlier had announced tax exemption to startups, which raise less than Rs 10 crore in share capital. Startups expressed unhappiness over the decision. They are still grappling with notices from the I-T department in absence of solid mechanism on the same.

Apart from this, the meeting agenda is to discuss Angel Tax solutions.

Industry bodies have asked to remove Section 56 of the I-T Act and exemption on Angel Tax noted an ET report.

The Indian PE and IVCA asked CBDT and DIPP to exempt Rs 10 crore to all registered startups. It also suggested excusing HNI investments made through verified funds and VCs from IT notices. iSPIRT sought an exemption on angel tax for startups that have raised up to Rs 10 crore in a single financial year.

Local Circles suggested govt to impose a blanket exemption from Angel Tax based on submissions of documents such as audited financials, monthly payroll data, monthly expenses, TDS and GST returns.

Last week, the CBDT had decided to not press for payments of assessment orders and tax demands until the case has been decided at the first stage of the appeal. It will take no action on past notices issued to startups and investors.

The CBDT board is yet to issue circular in this regard.

Till date, startups have not received much of required reprieve on the ground on Angel tax. They are levied around 30 per cent Angel Tax on investments made by external investors. About 400-500 startups get angel funding every year in India.