The startup and angel investor community are continuing to press the government to address the issue of angel tax and have now reached out to the Prime Minister Narendra Modi in the hope of getting some reprieve in the upcoming interim budget 2019.

About 100 startups, represented by industry bodies such as Ispirt are issuing a letter to the PMO (Prime Minister's Office) this week highlighting the issues around angel tax, CNBC-TV 18 has learned.

Startups had earlier written to the revenue department, Department of Industrial Policy and Production (DIPP) and Central Board of Direct Taxes (CBDT) on the issue, after several startups received notices in recent months and were asked to pay as much as 30 percent of their total funding raises as tax.

In their demands to the PMO, they seeking that Section 56 and Section 68 of Income Tax Act not be applicable to startups.

While Section 56 has been the main cause of concern for angel tax, since it considers capital raised above fair market value of shares as income from other sources, startups are also seeking relief from Section 68, which deals with money credited for which the company does not have a satisfactory explanation or has to also offer details on source of income of the investors.

Startups are also seeking that tax benefits announced in 2016 be made retrospective to companies that were formed before.

While the government had issued a notification last year to give exemption to startups, where total funding was not more than Rs 10 crore, it still entailed tedious steps such as getting an approval from an inter-ministerial board, and a certificate of valuation by a merchant banker.

Despite the notification, startup founders said they have been hounded by tax notices and cases continue to linger on. The startup community has been pushing for these issues to be addressed in upcoming interim budget.

Earlier this month, industry bodies such as Nasscom, The IndUS Entrepreneurs (TiE) and others had written to the union finance minister Arun Jaitley as well as the union commerce minister Suresh Prabhu to bring relief to startups from the angel tax.

The Indian Private Equity and Venture Capital Association (IVCA) had also written to CBDT last week asking for exemption to all registered

Last week, Prabhu had acknowledged the issue again and said the ministry was working with the finance ministry in order to find the appropriate solution to angel tax.