As for the third category of notices, which were served on start-ups not recognised by DPIIT and are concerned with multiple sections of the law including angel tax, the AO will proceed only after a nod from supervisory officer, the CBDT said.
In what would bring clarity to the start-ups that have been served with notices by the income-tax department under the so-called angel tax provision, the Central Board of Direct Taxes on Thursday said the department would ‘summarily accept’ contention of start-ups recognised by the Department for Promotion of Industry and Internal Trade (DPIIT), if the notices pertained only to the angel tax section.
The angel tax, under Section 56(2)(viib) of the Income Tax Act, 1961, is typically an impost on the extra capital raised by an unlisted firm through the issue of shares over and above their fair market value . According to the Act, the excess capital so raised is treated as income and taxed accordingly. While the section is primarily aimed at curbing money laundering, it had troubled start-ups and their investors.
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Further, the Board said that those DPIIT-recognised start-ups which have received notices related to multiple issues including the angel tax, the issue of applicability of angel tax will not be pursued during the assessment proceedings. The assessing officer (AO) will conduct inquiries and verification into other issues only after obtaining approval of the supervisory officer.
As for the third category of notices, which were served on start-ups not recognised by DPIIT and are concerned with multiple sections of the law including angel tax, the AO will proceed only after a nod from supervisory officer, the CBDT said.
Source: Financial Express
