The tax exemption is meant for small start-ups as the paid up capital and the share premium of the beneficiary start-up cannot exceed Rs10 crores after the share issue. Photo: MintNew Delhi: The Income Tax Department has exempted from tax the investments that small start-ups receive from angel investors above their fair valuation. Matured start-ups issuing shares to angel investors at a price above their fair value will continue to attract tax, explained Amit Maheshwari, partner, Ashok Maheshwary and Associates LLP. Separately, the tax department also notified a change in rules to exclude chartered accountants as eligible valuers for assessing the fair valuation of the enterprise, leaving the task exclusively to merchant banks. Exemption to this rule has been given to start-ups to prevent it from adversely affecting the financing requirement of genuine start-ups.

Source: Mint May 26, 2018 15:56 UTC