Startups 2019-01-17

Easing The Process of Tax Redemption By Angel Investors To Boost Entrepreneurship

In A Bid To Promote The Startup Culture In The Country, Government Has Eased The Procedure Of Seeking Tax Redemption By Angel Investors

By Content Writer
Easing The Process of Tax Redemption By Angel Investors To Boost Entrepreneurship

There is a growing wave of entrepreneurship and startups in India. Prime Minister’s Narendra Modi’s “Start-up India” initiative was launched to build a strong ecosystem for nurturing innovation and entrepreneurship in the country.  To promote an environment of innovations, employability and entrepreneurship across the country, the government has rolled out many programs and schemes.

One of the most dreaded things for a start-up is the issue of angel tax. Startups have been raising the issue of Angel Tax for years, requesting the government to abolish it.

Now Start-up can have a sigh of relief, as the government has finally eased the procedure for seeking tax redemption on Angel Tax.

The Issue of Angel Tax

Angel tax was introduced with the aim of keeping money laundering in check.  Angel Tax is a 30% tax that is levied on the funding received by startups from an external investor. However, this 30% tax is levied when startups receive angel funding at a valuation higher than its ‘fair market value’ and it’s considered as an income.

However, the major problem troubling both startups and investors is that there is no objective way to measure the “fair market value” of a start-up. Investors pay a premium for the idea and the business potential at the angel funding stage. But, the tax officials seemed to be assessing the value of the startups based on their net asset value at one point.

How To Seek Angel-Tax Exemption

Under the new procedure, startups will have to apply to the Department of Industrial Policy and Promotion (DIPP) with all the necessary documents.

The application of the recognised start-up shall be moved by the department to the Central Board of Direct Taxes (CBDT) with necessary documents. The earlier requirement of start-up to submit the report from merchant banker specifying the fair market value of shares has also been removed. But now, application procedure has been simplified by making application to CBDT through DIPP.

Who Can Seek Angel-Tax Exemption

According to the revised procedure, Startups which are recognised by the DIPP would be eligible to seek exemptions.

Startups, whose aggregate amount of paid-up share capital and share premium does not exceed Rs 10 crore after the proposed issue of shares, are eligible for angel tax exemption 
In addition to this, It is also mandatory that the angel investors must have filed income tax returns of at least Rs 50 lakh for the year preceding the investment year.

Comment
image
image
mobile
address
star franchise india
Survase shubham bandu : 16, Feb 2019 at 10:57 PM
How to work
Related opportunities
  • Oil & Lubricants
    About PureFuel Energy BioDiesel - PureFuel Energy is India’s pioneer company..
    Locations looking for expansion Maharasth
    Establishment year 2019
    Franchising Launch Date 2020
    Investment size
    Space required 20000
    Franchise Outlets -NA-
    Franchise Type -NA-
    Headquater Mumbai Maharasth
  • Quick Service Restaurants
    Sha Sha Shandaar Shawarma is a brand of Sumadhura Shandaar..
    Locations looking for expansion Haryana
    Establishment year 2015
    Franchising Launch Date 2020
    Investment size Rs. 10lac - 20lac
    Space required 70
    Franchise Outlets -NA-
    Franchise Type Unit
    Headquater Faridabad Haryana
  • Pest Control
    Caro Safe GB500 is a Triple Action Formula - Sanitizes..
    Locations looking for expansion Delhi
    Establishment year 2019
    Franchising Launch Date 2020
    Investment size Rs. 2lac - 5lac
    Space required 150
    Franchise Outlets -NA-
    Franchise Type Unit
    Headquater New delhi Delhi
  • GAURI AUTO INDIA PRIVATE LIMITED is among the leading manufacturer..
    Locations looking for expansion Haryana
    Establishment year 2010
    Franchising Launch Date 2014
    Investment size
    Space required 750
    Franchise Outlets -NA-
    Franchise Type -NA-
    Headquater Ballabgarh Haryana
Insta-Subscribe to
The Franchising World
Magazine
tfw-80x109
For hassle free instant subscription, just give your number and email id and our customer care agent will get in touch with you
email
mobile
OR Click here to Subscribe Online
Daily Updates
Submit your email address to receive the latest updates on news & host of opportunities
More Stories

Free Advice - Ask Our Experts

pincode
;
ads ads ads ads