Exemption for the startup from section 68 of Income Tax is not possible as it deals every taxpayer and the changes, if made, will affect individuals and other firms of the country, said Akhilesh Ranjan, member, Central Board of Direct Taxes (CBDT).
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"It has nothing to do with startups. It is to do with every taxpayer, every assesse who claims to have received some money as an unsecured loan or as an equity investment," Ranjan said.
Giving major relief to budding entrepreneurs, the government on Tuesday relaxed the definition of startups, and allowed them to avail full angel tax concession on investments worth up to Rs 25 crore.
Union minister Suresh Prabhu said that a notification regarding simplifying the process for startups to get exemptions on investments under section 56(2)(viib) of Income Tax Act will be issued on Tuesday by the Department for Promotion of Industry and Internal Trade (DPIIT).
However, the government hasn't made any clarification on the contentious issue of section 68 of the Income Tax Act, which deals with "unexplained fund receipts". Under this section, the government had earlier taken action against some startups.
