The Department for Promotion of Industry and Internal Trade (DPIIT) and the Central Board of Direct Taxes (CBDT) soon will come up with a list of startups eligible for angel tax exemption, based on their audited financial statements and income tax returns of the previous year
Angel tax is imposed on the excess share capital raised by an unlisted firm, over and above the fair market value of its shares.
Angel tax impact investment and startup industries whether they are genuine or not.
Recently the government has also decided to raise the limit for tax exemption for startups from 7 years to 10 years and paid-up share capital threshold for tax exemption has been raised from 10 crores to 25 crores.
Startups would have to furnish three types of documents in order to be registered with the government: (i) audited financials for the previous year, (ii) IT returns for the previous year, and (iii) a self-certified declaration.
Firm has to certify it does not intend to deploy the angel investment in real estate holdings, including premium cars of value above ₹10 lakh, precious jewelry, listed or unlisted securities directly or indirectly via equity mutual funds etc.