Expressing dissatisfaction over the government's new notification on angel tax, startups are going to present some recommendations to the centre next week through industry bodies such as iSPIRT and LocalCircles.

Their concerns revolve around the increase of threshold income of the investor to Rs 50 lakh for the preceding year and the new rule which will allow Central Board of Direct Taxes (CBDT) to take the decision on tax exemptions for startups.

The government on Wednesday eased the procedure for seeking income tax exemption by startups on investments from angel funds and prescribed a 45-day deadline for a decision on such applications.

The new procedure says that to seek the exemption, a startup will apply, with all the documents, to the Department of Industrial Policy and Promotion (DIPP). The application of the recognised startup shall be moved by the department to the CBDT with necessary documents.

Industry bodies are expected to recommend an increase in the limit for share premium of startups to Rs 25 crore from Rs 10 crore to make it more feasible for investors.

Industry members are als suggested that the restriction on an investor of a minimum income of Rs 50 lakhs and net worth of RS 2 crores be changed to consider either a minimum income of RS 25 lakhs or net worth of Rs 1 crore. Startups said this will help them in raising funding from NRIs, friends and family.

The government notification said that investor should have returned income of Rs 50 lakh or more for the financial year preceding the year of investment; and net worth exceeding Rs 2 crore or the amount of investment made/proposed to be made in the startup, whichever is higher, as on the last date of the financial year preceding the year of investment/proposed investment.

Given the large number of applications expected to be directed to the CBDT, startups want that response be given within 45 days or it should be considered as deemed approval.

Lastly, what has also left the industry wondering is whether a startup that has already received an assessment order be eligible under the new notification. Industry members are also going to ask that such startups be able to seek recourse under this circular during their appeal.

First Published:Jan 18, 2019 5:08 PM IST