Some 2,000 start-ups that have received tax notices u/s 56(2)(vii)(b) and 68 of the Income tax Act are expected to get some relief this week. The CBDT plans to issue a notification asking tax officers to “accept valuation certificates” submitted by the start-ups. CBDT may also write to principal commissioners of income tax to seek details from the investors where the source of funding seems to be dubious. The income tax department had challenged the valuation norms adopted by these start-ups and sought to tax the capital raised by them in excess of the fair value of the shares issued.
To fast track resolution of the angel tax issue faced by startups, the CBDT has asked social media platform LocalCircles to furnish details including name, and PAN of startups who have pending appeals or notices under the income tax. During the meet, iSPIRT and LocalCircles also made a joint submission to the CBDT to exempt startups, under Section 68 of the I-T Act, from furnishing the bank statements, I-T returns and financial statements of their investors, who are willing to submit the sensitive documents directly to the AO or CIT-Appeals if requested.