- Tax breaks claims by registered startups will not be verified if eligibility for this concession is the only issue for which their tax returns are picked up for ‘limited scrutiny’
- Assessing officers can verify other claims after getting approval from a superior officer
The Central Board of Direct Taxes (CBDT) has asked its field officers to accept without any verification, in certain cases, the claims of government-registered startups on eligibility for exemption from a rigorous anti-evasion provision.
As per CBDT instructions to field officers, the claims of startups regarding exemption from taxation of the premium they receive on share sale will not be verified if eligibility for this concession is the only issue for which their tax returns are picked up for ‘limited scrutiny.’ The instruction came this week, said a person familiar with the development, who spoke on condition of anonymity.
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The department for promotion of industry and internal trade (DPIIT), which recognizes startups, had in February, announced exemption from taxation of the share premium startups realize in excess of fair market value, subject to riders. That concession was later given effect under Income Tax rules. The latest instruction to field officers is to ensure that genuine startups do not get stuck in red tape and actually benefit from the concession. The move seeks to streamline the assessment and scrutiny of new age enterprises and enhance ease of doing business.
Source: Livemint
