The purpose of this document is to highlight the
direct tax implications particular to the startup ecosystem.
As on date on which consideration received by the assessee
Following persons shall not be included for calculating the share capital and share premium amount:
* (As per Gazette Notification No. 127 (E) dated 19 February 2019 issued by the DPIIT)
** Specified company – Company whose shares are frequently traded within the meaning of SEBI Regulations AND whose net worth as on 31st March of preceding FY exceeds INR 100 crore Cor turnover for preceding FY exceeds INR 250 crore.
Anytime irrespective of the dates on which shares are issued by the Startup from the date of its incorporation, except for the shares issued in respect of which an addition under section 56(2)(viib) of the Act has been made in an assessment order made under the Act before the date of issue of the notification.
Angel tax exemption is a welcome step given that there was an unnecessary litigation at this front. However, the conditions of specified assets are too rigid, especially the restriction on any startup to make capital contribution in any other entity. In short, it does not allow holding subsidiary structure for a startup. Therefore, any similar existing structure requires a revisit from angel tax perspective.