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Centre To Form Committee To Resolve Issue Of Angel Tax On Start-Ups: Official

Angel tax is levied on the difference between the amount received by a closely held company in lieu of its shares and the fair market value of shares

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Centre To Form Committee To Resolve Issue Of Angel Tax On Start-Ups: Official

In January, the government liberalised the angel tax norms


The Centre will form a committee to resolve issues within the next 4-5 days concerning the levy of angel tax on start-ups, a senior official said on Monday. This was conveyed by the Department for Promotion of Industry and Internal Trade (DPIIT) Secretary, Ramesh Abhishek, following his meeting here with over 50 entrepreneurs, start-ups and investors who voiced their concerns on angel tax.

"We have got a number of suggestions, so we will form a smaller working group and will try to come out with suggestions and solutions in the next 4-5 days," the secretary told reporters after the meeting.

Angel tax was introduced in 2012 and is levied on the difference between the amount received by a closely held company in lieu of its shares and the fair market value of the shares. The excess amount is taxed as income from other sources.

The issue of tax notices to start-ups got public attention after several start-up founders took to social media following receipt of tax notices.

This led to the government ordering the Income Tax Department, on December 24, not to take coercive measures to recover the outstanding angel tax dues.

In January, the government liberalised the angel tax norms further, including doing away with the need for an inter-ministerial committee approval for availing angel tax exemption.

A report by Local Circles and Indian Private Equity and Venture Capital Association showed that 73 per cent of start-ups, which have raised capital, have received one or more tax notices since their inception.



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