CBDT to create special startup cell for tax-related issues
The CBDT on Friday notified creation of a five-member special cell to address the grievances of startups with relation to Angel Tax and other tax-related issues.
An order issued by the Central Board of Direct Taxes (CBDT) said the 'Startup Cell' will be headed by the member (Income Tax and Computerisation) of the Board.
"The cell will work towards the redressal of grievances and mitigate tax-related issues in case of startup entities with respect to the administration of Income Tax Act, 1961," the order, accessed by PTI, said.
Last week, Finance Minister Nirmala Sitharaman had announced the creation of such a cell in the CBDT during a press conference and announced exempting startups from the so-called Angel Tax.
Just this month, CBDT also said that small startups with a turnover of up to Rs 25 crore will continue to get the promised tax holiday, as specified in the Section 80-IAC of the Income Tax Act, 1961, which provides deduction for 100 percent of income of an eligible startup for three years out of seven years from the year of its incorporation.
Earlier this month, the CBDT laid out the procedure for pending angel tax assessment cases.
In a circular, it said that no verification will be done by an assessing officer if a startup has been recognised by the Department for Promotion of Industry and Internal Trade (DPIIT) and the case is selected under limited scrutiny.
Similarly, it said the applicability of angel tax would not be pursued during the assessment proceedings and "inquiry or verification with regard to other issues in such cases shall be carried out by the assessing officer only after obtaining approval of his/her supervisory officer.”
Just last week, the Union Finance Minister Nirmala Sitharaman declared that the dreaded Angel Tax will be withdrawn for startups and the investors into such companies.
The only condition to the above provision being that these startups have to be registered with the Department for Promotion of Industry and Internal Trade (DPIIT).
(Disclaimer: Additional background information has been added to this PTI copy for context)
(Edited by Saheli Sen Gupta)