Removing angel tax notices will help start-ups in growth: Experts

Topics angel tax | start- ups | CBDT

Representative image

The government's recent decision to give relief to start-ups on assessment of angel tax notices would provide a safeguard to them and promote their growth, according to experts.

Seeking to calm the nerves of start-ups worried about angel tax, the government last week assured that explanation given by them to a tax notice in a limited scrutiny case would be summarily accepted without any questions asked by the taxman.

The Central Board for Direct Taxes' (CBDT) circular with this effect "brings in more safeguard by requiring assessing officers to procure his or her supervisor's consent before starting on any inquiry under the angel tax provision against a start-up company which has not got DPIIT approval," S. Vasudevan, Partner, Lakshmikumaran & Sridharan said.

However, he added that the circular does not specify any minimum rank of the consenting superior officer.

"Also, lack of guidelines as to how the assessing officer or his supervisory officer selects cases for scrutiny may continue to haunt the start-ups," he added.

Amit Maheshwari, Partner, Ashok Maheshwary & Associates LLP said that CBDT's clarification will help start-ups which are facing questioning in their assessments and will also give a clear direction to assessing officers on what to do in such cases.

Naveen Wadhwa, DGM, Taxmann said that the board has also issued a circular to provide relief to start-ups which are undergoing assessment proceedings with respect to angel tax issue.

"The CBDT has directed the assessing officers to accept the contention of start-ups with regards to angel tax issue if start-up is an eligible start-up in view of latest notification of DPIIT," he said.

Nangia Advisors (Andersen Global) Managing Partner Rakesh Nangia said, "Directions of the CBDT that the tax officer will have to summarily accept the contentions of the start-up on valuation of its shares shall provide the relief intended to be provided to the start-ups.



Dear Reader,


Business Standard has always strived hard to provide up-to-date information and commentary on developments that are of interest to you and have wider political and economic implications for the country and the world. Your encouragement and constant feedback on how to improve our offering have only made our resolve and commitment to these ideals stronger. Even during these difficult times arising out of Covid-19, we continue to remain committed to keeping you informed and updated with credible news, authoritative views and incisive commentary on topical issues of relevance.

We, however, have a request.

As we battle the economic impact of the pandemic, we need your support even more, so that we can continue to offer you more quality content. Our subscription model has seen an encouraging response from many of you, who have subscribed to our online content. More subscription to our online content can only help us achieve the goals of offering you even better and more relevant content. We believe in free, fair and credible journalism. Your support through more subscriptions can help us practise the journalism to which we are committed.

Support quality journalism and subscribe to Business Standard.

Digital Editor

Business Standard is now on Telegram.
For insightful reports and views on business, markets, politics and other issues, subscribe to our official Telegram channel