Big Relief For Startups As CBDT Allows Angel Tax Exemption For Assessment Orders Received Before 19 February

In a big relief to Indian startups, the Central Board of Direct Taxation (CBDT) has allowed angel tax exemption to those startups which were issued an assessment order prior to 19 February, Economic Times has reported.

This order will thus apply to those startups for whom an assessment order was passed prior to 19 February and additions were made to their incomes.

This CBDT directive thus overrules the Department for Promotion of Industry and Internal Trade (DPIIT) notification which barred startups from availing this exemption if they had already received an assessment order.

After allowing the exemption, the CBDT acknowledged that the DPIIT order was causing hardships to startups.

Earlier, notices were issued to startups under Section 56(2)(vii)(b) of the Income Tax Act which states that if a private company issues shares at a price exceeding their market value, the difference would become taxable.

Entrepreneurs have been strongly opposed to the concept of Angel Tax as they contend they have been unfairly targeted by valuating the share prices in excess of their market value.