Government extends relief to startups, simplifies the process of angel tax assessment

In a major relief to startups, the Narendra Modi government has decided to simplify the angel-tax assessment process under which any action against startups will be taken only after approval of a supervisory officer. In such cases where scrutiny assessments of startup entities are pending, the CBDT has decided that the contention of the assessee will be summarily accepted whose cases are under ‘limited scrutiny’ for those entities recognised by DPIIT. 2 and whose cases have been selected under scrutiny to examine multiple issues including the issue of section 56, this issue will not be pursued during the assessment proceedings and inquiry on other issues will be carried out by the Assessing Officer only after obtaining approval of the supervisory authority,” an official statement said. The Finance Minister had proposed a series of incentives, including a special arrangement for resolution of pending assessments of income tax cases, with a view to encouraging startups.` “To resolve the so-called ‘angel tax’ issue, the startups and their investors who file requisite declarations and provide information in their returns will not be subjected to any kind of scrutiny in respect of valuations of share premiums,” she had said.