No Coercive Measure to Recover the Outstanding Amount of "Angel Tax" would be taken Against the Start-ups: IT Department

Published on 07 Feb 2018 by Tushar

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Image Courtesy: IndianExpress

To protect start-ups from aggressive tax demands, the income tax (I-T) department on Tuesday stayed all recovery proceedings of the so called “angel tax” against start-ups that come under the definition put out by the department of industrial policy and promotion (DIPP).

In a notification issued on Tuesday, the department of revenue has directed assessing officers that “no coercive measure to recover the outstanding demand would be taken” in cases where additions have been made to the income on account of high valuations provided that the start-ups fall within the start-up definition of DIPP.

The tax provision, also called the “angel tax”, is levied on investments made in unlisted firms at valuations considered higher than the fair market valuation. The tax was introduced through the Finance Act, 2012 as an anti-abuse provision as the government sought to stop the practice of issuing of shares in unlisted companies at a high premium.

Source: LiveMint



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