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Ministry of Corporate Affairs to review investor premium in startups, says report

Ministry of Corporate Affairs to review investor premium in startups, says report

Ministry of Corporate Affairs to review investor premium in startups, says report
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By CNBC-TV18 Nov 20, 2018 10:04:10 AM IST (Published)

After the Income Tax department, the Ministry of Corporate Affairs (MCA) has become the latest government entity to ask investors about the premium they have paid in startups, a report by The Economic Times said.

After the Income Tax department, the Ministry of Corporate Affairs (MCA) has become the latest government entity to ask investors about the premium they have paid in startups, a report by The Economic Times said.

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The MCA has issued notices to 2,000 startups that have raised money since 2013, said the report.
The ministry is questioning the valuations at which these startups raised funds and focusing on those firms whose valuations have fallen after the initial round of fundraising, the report said citing people with knowledge of the notice and MCA's thinking on the issue.
The IT department had also raised similar concerns two years back and had asked startup companies to pay about 33 percent in tax if their valuations fell after the first round of fundraising, the report said.
 
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