The Central Board of Direct Taxes (CBDT) will in a week clarify the rules of taxation of startups that will give genuine new age firms relief from taxation of share premium. They say this could be made applicable to those with paid up capital and share premium upto ₹25 crores after the share issue, up from ₹10 crores now. CBDT clarified on Friday night that not all tax demands to startups are issued under section 56 (2) (viib) of the Income Tax Act, the controversial ‘angel tax’ provision. Section 56 (2) (viib) introduced in the Income Tax Act in 2012 subjects share premium that is above the fair valuation of shares to tax treating it as “other income." CBDT had in January simplified the process for startups seeking exemption from angel tax notices by eliminating the need for a certification from an inter-ministerial body.

Source: Mint February 09, 2019 03:45 UTC