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Startups to be listed for angel tax exemption
- The Department for Promotion of Industry and Internal Trade (DPIIT) and the Central Board of Direct Taxes (CBDT) soon will come up with a list of startups eligible for angel tax exemption, based on their audited financial statements and income tax returns of the previous year
- Angel tax is imposed on the excess share capital raised by an unlisted firm, over and above the fair market value of its shares.
- Angel tax impact investment and startup industries whether they are genuine or not.
- Recently the government has also decided to raise the limit for tax exemption for startups from 7 years to 10 years and paid-up share capital threshold for tax exemption has been raised from 10 crores to 25 crores.
- Startups would have to furnish three types of documents in order to be registered with the government: (i) audited financials for the previous year, (ii) IT returns for the previous year, and (iii) a self-certified declaration.
- Firm has to certify it does not intend to deploy the angel investment in real estate holdings, including premium cars of value above ₹10 lakh, precious jewelry, listed or unlisted securities directly or indirectly via equity mutual funds etc.
