From 135 startups, which were sent angel tax exemption notification till March 29 by the Central Board Of Direct Taxes (CBDT), the number has sharply risen by 115 per cent to 291 startups till April 10, a source with direct knowledge of CBDT’s notification to startups told Financial Express Online.
“317 startups had applied to the Department for Promotion of Industry and Internal Trade (DPIIT) for exemption from Section 56(2) viib of the Income-Tax Act, 1961 till April 10. Out of them, 291 have received exemption notification from the CBDT. The rest 26 had some errors in applications and have been asked for rectification,” said the source.
DPIIT had issued a notification on February 19 pertaining to the number of years since incorporation (up to 10 years), turnover (Rs 100 crore), and amount raised by startups (up to Rs 25 crore) in angel funding to apply for the exemption.
Till March 29, 170 startups had applied for exemption. Before that, on March 20, around 120 startups were sent notification for exemption by the CBDT.
However, “we need more startups to come forward to claim the exemption. The awareness is still not there even as startups don’t know that angel tax has been largely abolished. If they still don’t apply then we will have to see how many startups are actually alive in India,” Sachin Taparia, Founder and Chairman, LocalCircles told Financial Express Online.
Importantly, startups that had received angel tax orders have also started getting respite based on the exemption notification received by them.
With respect to the challenge around a lack of seamless sharing of startups details received by DPIIT to CBDT, there is also an assurance of having a digital information exchange. For the same, CBDT and DPIIT had assured last month of their integration for digital information exchange where exempted startups will be identified in the CBDT system. However, it is still in progress.
“This means that there will be no scrutiny notice sent to startups in a share premium event. CBDT currently manually extract startup information shared in PDF form by DPIIT, said Taparia.