No Angel Tax for startups registered with DPIIT, says Finance Minister Nirmala Sitharaman
- Finance Minister
Nirmala Sitharamanhas announced that section 56(2) will not be applicable for startups registered with DPITT.
- Currently, there are 24,117
- A separate cell will also be established to address the concerns of the community.
AdvertisementIn another move to boost innovation, Finance Minister Nirmala Sitharaman announced that Section 56(2) will not be applicable for startups registered with Department of Industrial Policy & Promotion (DPITT).
The Finance Ministry’s secretary further explained the angel tax decision saying that the section will continue to target shell companies, but it won’t be applied on registered startups
Currently, there are 24,117 DPIIT recognised startups.
Sitharaman also said that a separate cell will also be established to address the concerns of the community and the separate cell will be housed under Central Board for Direct Taxes.
The proceeds raised by Angel Investors is taxed at 30%, and is nicknamed as angel tax. The section 56(2) had become a huge menace for Indian startups who rallied against the government, asking it to do away with the same.
The Central Board of Direct Taxes had recently announced relief for startups who were served with notices regarding angel tax. So, even if a DPIIT recognised startup which has not filled Form 2 (declaration by a startup for exemption), it will be exempted from angel tax with approval from a supervisor.
During the Union Budget 2019, Sitharaman had also announced a television show for startups alone. This channel will work as a platform for promoting startups, discussing their growth as well as funding and tax planning. This will be run by startups themselves.
The Minister had also said that 80 livelihood business incubators and 20 technology business incubators in 2019-2020 to encourage and develop 75,000 social entrepreneurs in India.
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