Govt relaxes norms for startups | Daily Current Affairs 2021

Govt relaxes norms for startups

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Aiming to offer major relief to budding entrepreneurs, the government has relaxed the definition of startups, and allowed them to avail full angel tax concession on investments worth up to Rs 25 crore.

Earlier, a startup was allowed to avail tax concession only if total investment, including funding from angel investors, did not exceed Rs 10 crore.

According to a release, ‘Considerations of shares received by eligible startups for shares issued or proposed to be issued by all investors shall be exempt up to an aggregate limit of Rs 25 crore’. The development assumes significance as several startups have claimed to receive angel tax notices, impacting their businesses. Various startups have raised concerns on notices sent to them under the section 56(2)(viib) of Income Tax Act, 1961, to pay taxes on angel funds received by them. A notification regarding simplifying the process for startups to get exemptions on investments under section 56(2)(viib) of Income Tax Act will be issued by the Department for Promotion of Industry and Internal Trade (DPIIT). To provide these tax concessions, the department has relaxed the definition of startups. Now an entity shall be considered as startup if its turnover for any of the financial year, since its incorporation or registration, has not exceeded Rs 100 crore instead of the existing Rs 25 crore.

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