OVER 8K STARTUPS HAVE SO FAR BEEN EXEMPT FROM THE ANGEL TAX

As of September 26, 2023, over 10,800 startups recognized by the Department for Promotion of Industry and Internal Trade (DPIIT) have applied for angel tax exemption in India. According to the Department for Promotion of Industry and Internal Trade (DPIIT), in response to an (Right to Information)RTI submitted by Inc42, 8,066 companies recognized by the DPIIT since the 2019 announcement announcing angel tax exemption for startups have received the exemption.

It is important to note that on February 19, 2019, the DPIIT and Central Board of Direct Taxation (CBDT) released a notification stating that "all startups are allowed to receive angel tax exemption regardless of their share premium values given that the aggregate amount of paid-up share capital and share premium of the startup after issue or proposed issue of shares, if any, does not exceed INR 25 Cr."

However, in order to be eligible, startups must submit Form 2 in accordance with DPIIT's Notification No. G.S.R. 127 (E), affirming that they did not invest in assets such as land, buildings, vehicles, or other specific assets, unless they were used for specific business-related activities and costing more than INR 10 lakh.

Remarkably, most startups remained silent on this front. As of June 21, 2019, only 944 startups had applied for angel tax exemption, out of which the CBDT exempted 702 startups under this provision.

The angel tax exemption is a significant relief for startups, as it allows them to attract investments without the burden of paying tax on the excess premium received on their shares. This has been a critical issue for startups in India, and the government's move to simplify the exemption process and raise the threshold for share capital and premium has been welcomed by the startup community. The increased number of startups applying for and receiving this exemption is an encouraging sign for India's burgeoning startup ecosystem, as it fosters a more favorable environment for entrepreneurial growth and innovation.

For More Details Visit: https://inc42.com/buzz/exclusive-over-8k-startups-exempted-from-angel-tax-so-far/