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Issue of notification by CBDT to give effect to DIPP notification dated January 16, 2019

The Central Board of Direct Taxes (CBDT) has issued notification no S.O 584(E) dated January 31, 2019 to give effect to  DIPP notification dated January 16, 2019 stating the revised approval mechanism for the purpose of clause (viib) of sub-section (2) of section 56 of the Income Tax Act (commonly referred to as “Angel Tax”).

The modified notification of CBDT states that the provisions of Section 56(2)(viib) of the Income Tax Act shall not apply to “consideration received by a company from an investor for issue of shares that exceeds the face value of such shares, if such issue of shares is approved by CBDT under Para 4 of DIPP notification dated January 16, 2019”.

The notification shall be deemed to have come into force retrospectively from January 16, 2019.

NASSCOM’s policy brief on DIPP notification dated January 16, 2019 is accessible here https://community.nasscom.in/communities/policy-advocacy/government-eases-conditions-to-avail-safe-harbour-from-angel-tax.html`

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