“Very shortly, we will find out a solution on the basis of the suggestions we have received. We will have to decide which startups are real startups and how they can be exempted from Section 56 (2) of the Income Tax Act,” he said at an Assocham function here on Thursday.
Various startups had raised concerns over the notices sent to them under this section to pay tax on angel investments. The CBDT chief said any startup recognised by the Department for Promotion of Industry and Internal Trade is exempt from Section 56 (2) and the tax notices sent to startups have been stayed.
Last week, officials from the department, along with tax department officials, met startup industry representatives to hear their suggestions.
Section 56 (2) provides that the amount raised by a startup in excess of its fair market value would be deemed income from other sources and taxed at 30%. It’s also been dubbed the angel tax.
LINKING PAN AND AADHAAR
Chandra said the income-tax department has so far issued 420 million permanent account numbers (PAN), of which 230 million have been linked with Aadhaar, the biometric data-based identity number.
“By linking with Aadhaar, we will know whether there are any duplicate PANs or not. And there are certain duplicate PANs… If it is not linked, we may cancel the PAN also,” he said, adding that once Aadhaar is linked with PAN and PAN is linked with bank accounts, the I-T department can find out the spending patterns and other details of assessees.
With Aadhaar, it would be easier to gauge whether the benefits of welfare schemes are reaching those who are eligible for them, said Chandra.
Chandra said that so far this year, 9.5 million new taxpayers have been added.
“It is not absolutely true that if we reduce tax rates, compliance goes up. During this year we have followed the policy of finding non-filers… We have got thirdparty information and we are checking whether persons are filing returns or not, whether adequate income is being shown,” he added.
Chandra said the I-T department is getting information about foreign assets held by people that have not been disclosed in their income tax returns.
Source: Economic Times
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