CBDT startups Angel Tax

Angel Tax: From despair to hope

CBDT startups Angel Tax

Our journey began in 2014 with a dream of bringing nature’s true goodness to your breakfast tables. In 2015 some like-minded ‘Angels’ came together to give us the much-needed runway, and we were flying.

The pace of growth was scorching and so was the burn. By December 2017, our start-up’s bank account was almost empty. Amidst high anxieties of meeting vendor payments and salary disbursement, came dreaded notice to meet the Income-tax assessing officer.

It was only the beginning of our nightmare.

The queries, to put it mildly, were centred on Angel Tax. It seemed that raising angel investment was as close to a heinous crime as I could commit. The way income tax officer spoke to me made me feel as if I am running a shell company where I was converting someone’s black monies to white.

I was furious and angry at the ignorance of the tax department. I thought nation and entire tax bureaucracy was with our PM in #startupindia, but this episode came as a rude awakening.

The only known way to express that anger to me was via twitter. And I did express. I also tagged Union Minister for Finance Arun Jaitley and few media houses. The tweet was purely out of helplessness and frustration. But little did I know that it would connect me with a whole lot of new people including founders, bureaucrats and media folks.

Never in my dream did I think that I would be writing this piece of redemption and hope, fifteen months down the line on this topic.

I realised that like myself all the founders were afraid of openly confronting government in general and bureaucracy in particular.

Almost overnight I was forced to become torchbearer against this apathy. My tweet had garnered 1.5 lakh reach and now in no way I could have hidden anywhere. My family was worried, investors also asked me to go slow but my co-founder, Puru and I knew there was no other way.

We didn’t have Rs 40 Lakhs to pay that tax. The only option left to us was to fight it all out.

The group of founders had some luminaries who had a hang of how bureaucracy functioned in Delhi. They helped us get an audience with relevant officials. The biggest learning for me was government machinery looks at everyone guilty until proven otherwise. Then came the realisation that we can’t change that. The faster we accept it, the easier would be navigation. We saw the reason that babus were reluctant in easing the guidelines because of their `sticking-to-book’ attitude, but they were very open to listening.

We realised that time is an essential commodity while dealing with bureaucracy. We figured out ways to manage multiple notifications starting from Feb 2018 till Jan 2019. Speaking to babus multiple times made us realise that they don’t have a personal vendetta but are simply doing their jobs. They weren’t emotional like us founders about the start-ups they are addressing, but simply doing their day to day routine.

Now the debate on Angel Tax was heating up in the country. Many startup ecosystem leaders were making their opinions heard but through measured and politically correct statements.

We also started getting real-life stories with horrific details pertaining to this subject.

A bankrupt founder wrote to us when he got a notice threatening to attach his personal property. Another founder yelped when he found his bank account frozen and money is taken away by the department. In one outrageous case, an entrepreneur found out that investment made by his mother in the entity was now deemed illegal. Many said that they were moving their companies out of India.

We were prompt in letting the entire ecosystem know about the ensuing prejudices. Media did play its anchor role as being the fourth pillar of democracy. It helped us in making our pain evident to all relevant stakeholders. It rallied behind us with fervour and publications like CNBC, ET Now, Entrackr, TOI etc. came out openly to support the cause.

The culmination was the Angel Tax round table. Finally, the stage was set where all relevant government departments came together to lend an attentive ear to our woes. This gave us hope and also the veil of opaqueness shrouding government functioning was uplifted. We realised that these officials are as eager to help the ecosystem as we are.

A few days back, we got individually addressed mail from the Income tax department. The notification clearly mentions who/how/when a start-up can raise angel investment. Though this hasn’t addressed all our concerns but the ball has been set rolling in the right direction for sure.

The notification further states that we don’t have to worry about angel investment anymore. We just need to worry about how to make India a real startup nation.

I take this opportunity to thank DPIIT & CBDT. A thumbs up is also in order for concerned ministries.

I am back to friends and family for funds because my country and my startup is evolving.

CBDT startups Angel Tax

Angel Tax: From despair to hope

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Below is the bank details:

 
Amount: INR 3,00,000 + GST (TDS to be deducted 2%)
Bank Name: ICICI Bank
Account Type: Current
Account Name: Bareback Media Private Limited
Account Number: 002105023595
IFSC Code: ICIC0000021
 
Kindly make the payment to confirm your seat for Unicorn trip 2.1. For any other queries/concern: pls drop a email on: [email protected] or [email protected]
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