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CBDT issues new notice on exemption of Angel tax

CBDT issues new notice on exemption of Angel tax

CBDT issues new notice on exemption of Angel tax
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By Timsy Jaipuria  May 26, 2018 2:12:57 PM IST (Updated)

The Central Board of Direct Taxes (CBDT) has issued fresh notices with regards to ‘angel tax’ exemption on Saturday, in suppression of its June 2016 notification.

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Introduced in the Finance Act of 2012 by the then Finance Minister Pranab Mukherjee, the angel tax was aimed at curbing money laundering through the purchase of shares at a high premium.
CBDT notification issued to the Ministry of Commerce and Department of Industrial Policy and Promotion (DIPP) on April 11, 2018 had specified three key conditions for availing the exemption.
CBDT said the exemptions will be given on an aggregate amount paid up share capital and share premium, after the proposed issue of share does not exceed Rs 10 crore.
The exemption will also be given to the investors who propose to subscribe for start-up's shares and fulfill the prescribed criteria including a report from a merchant banker, specifying the fair market value (FMV) of shares in accordance with the Income Tax Rule 11 UA.
CBDT also said that 'resident persons' investing in start-ups shall not be subjected to taxation under Section 56 (2) (viib).
The board's notification also states that the provisions of Section 56 (2) (viib), shall not apply to consideration received by a company for issue of shares that exceeds the face value of such shares.
CBDT has also amended Rule 11 UA (2)(b), which makes a merchant banker valuation compulsory for the purpose of determining fair market value of unquoted equity shares.
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