The government could also relax the criteria for investors to be eligible for exemption.
A relief for start-ups in the country,as the government of India is considering to raise the funding limit in a start-up that would be exempted from the so-called angel tax to Rs 25 crore from the present Rs 10 crore.
As per the reports,if the start-ups fulfill other criteria on innovation and turnover the department for promotion of industry and internal trade (DPIIT) could also recognise companies that are in operation for up to 10 years as start-ups (instead of the current seven years).
Industry experts are sceptical about the benefits of enhancing the limit of funding to Rs 25 crore from Rs 10 crore.According to a survey of 2,396 start-ups (that have been slapped with such notices) by LocalCircles and the Indian Venture Capital Association 96 per cent of start-ups that have received tax notices have raised below Rs 10 crore.
Challenges continue
In April 2018, the government had informed that start-ups could apply to an eight-member inter-ministerial board for the tax relief if “the aggregate amount of paid-up share capital and share premium of the start-up after the proposed issue of shares does not exceed Rs 10 crore”.
And talking about latest proposal, revenue secretary Ajay Bhushan Pandey said that a special carve-out could be made for relief to start-ups under the relevant section of the I-T Act.
The government could also relax the criteria for investors to be eligible for exemption. The required net worth of such an investor could be brought down to Rs 1 crore from the current Rs 2 crore (as on the last date of the preceding financial year) or the average income should be more than Rs 25 lakh per annum for the preceding three financial years (from the current Rs 50 lakh).
