Finance and Commerce Ministry action
Angel or Startup Tax
Section 56 (2) (vii) (b) of the I-T Act states:
“Any consideration received by a company (startup) from a resident, against issue of shares, exceeds the fair market value of such shares, such excess consideration is taxable in the hands of the startup, as an income.”
Any such extra inflow is taxable as “income from other sources” under Section 56(2) of the Income-Tax Act and charged the corporate tax rate, resulting in an effective tax of over 30 percent.
Though the tax was introduced in 2012, it is only now that the Central Board of Direct Taxes (CBDT) is questioning investors.
It is CRITICAL that either Finance Minister direct CBDT to hold off or Ministry of Commerce (who is supposed to be champion for startup india) says all companies recognised by it as startups are exempt from taxes. more
Section 56 (2) (vii) (b) of the I-T Act states:
“Any consideration received by a company (startup) from a resident, against issue of shares, exceeds the fair market value of such shares, such excess consideration is taxable in the hands of the startup, as an income.”
Any such extra inflow is taxable as “income from other sources” under Section 56(2) of the Income-Tax Act and charged the corporate tax rate, resulting in an effective tax of over 30 percent.
Though the tax was introduced in 2012, it is only now that the Central Board of Direct Taxes (CBDT) is questioning investors.
It is CRITICAL that either Finance Minister direct CBDT to hold off or Ministry of Commerce (who is supposed to be champion for startup india) says all companies recognised by it as startups are exempt from taxes. more
Viewed by 552
I am totally amazed on the matter. Start-up issues the shares on premium. First thing is what is the basis of Premium for shares of a Start-up. In my opinion a start-up which fetches premium on the shares should be penalised and not only taxed. Such start-ups should be asked to close down and the promoters should be heavily penalised financially and physically and should be BARRED for life time disallowing them to carry out any business in the country. more
Dec 22
Rules are like that. People who deals with certain activities are suppose to look into the applicable rules and regulations affecting such activities and maintain compliances. Authorities however, can act any time and question the variations. more
Dec 22
