The income tax department has noted the concern related to angel tax being levied on startups, basis represnetations made by various stakeholders.
In the recent letter addressed to principal commissioners, the CBDT has advised:
- No coercive action be initiated for recovery of outstanding demands
- Expeditious disposal of appeals by commissioner appeals
While fair market value evaluation continues to be applicable on startups, the above advise would be helpful to offer temporary relief to considerable anxiety over demand recovery process. Further, decisions on appeals pending will also act as guidance for on field assessments.
However the issue of levy of angel tax needs to be looked into to offer a long term solution.
The copy of the letter can be accessed at https://www.incometaxindia.gov.in/Lists/Latest%20News/Attachments/218/Determination-fiar-market-value-unquoted-equity-shares-Start-Up-6-2-2018.pdf