Tax alleviation for startups effective from 19 February: Income tax branch


New Delhi: The remedy for startups dealing with tax demands for promoting stocks at a top rate to their truthful market price will be effective from 19 February, the Central Board of Direct Taxes (CBDT) said in a notification issued on Tuesday.

The authorities had on 19 February announced exemption for startups from taxation of percentage top rate in excess of honest marketplace price difficulty to riders. That assertion made via the commerce ministry has now been given impact underneath the Income Tax law.

Section fifty six (2) (viib) of the Income Tax Act — which got here to be referred to as the angel tax provision — will now not practice to price range obtained beyond the face price of stocks from a resident if it fulfills the riders detailed in the commerce ministry’s 19 February notification and files a assertion, CBDT stated within the notification. “This notification will be deemed to have come into force retrospectively from the nineteenth February, 2019.”

The trade ministry final month introduced that investments in startups up to ₹25 crore can be exempted from the angel tax provision, up from the present day ₹10 crore. It had also stated startups with income of up to ₹a hundred crore will be eligible for tax remedy. Earlier, the threshold turned into ₹25 crore. According to the new norms, an entity is considered a startup eligible for alleviation for up to 10 years from the date of incorporation, up from the sooner seven years.


The relief is expected to inspire wealthy individuals to invest in startups that get hold of capital at a top rate due to their revolutionary business models even though the valuation isn’t always justified through the physical belongings they hold.

Rakesh Nangia, dealing with accomplice, Nangia Advisors(Andersen Global) stated the CBDT was required to install place the mechanics for claiming advantage given to startups under closing month’s notification issued by using the Department for Promotion of Industry and Internal Trade.

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