Government Intending To Give Relief To Startups To Speed Up Their Momentum
In the election year, the government wants to speed up startups growth. For this, it is going to make funding easy for startups with some taxation relief. According to sources, after the involvement of the Prime Minister, the Income Tax Department and the Ministry of Industry are preparing to give startups a great relief on the front of Angel Taxes. With this, startups will get easy access towards investment funding. Startups will be exempted with some conditions in Angel Taxes.
According to sources, it has been agreed after the meeting in the Prime Minister’s Office. The Ministry of IT and Industry are busy finalizing the proposal. There is a meeting with the CBDT chairman and the DIPP secretary.
The definition of a startup is also being reviewed. It has been learned that the scope of tax deducted startups will be increased. Angel tax will not be charged on a fixed amount and won’t be charged on an individual investment. Angel’s tax will be charged on purchasing shares on more than reasonable costs and notice of Angel tax will be sent to startups made before 2016.
What is angel tax?
It means that if someone is investing in startups in the form of equity funds from outside, the government imposes a tax on it. Angel tax is levied on investment of more than Rs 10 Crore. According to sources, the government can reduce the rate of the fuel tax to 20%. Apart from this, the limit of investment amount for Angel tax can be increased from Rs 10 Crore to Rs 20 Crore.
This means that if a mutual fund or any other institutional invests up to Rs 20 Crore in a startup, then it will not have to pay Angel tax. Nimesh Mehta, MD, and CEO of RockMetric Innovation says that there is still a lot of problems in Startup India. Country’s IT companies do not invest here. Foreign companies need to increase investment in startups. The government should simplify the process of import.