On 19 February 2019, the Department for Promotion of Industry and Internal Trade, Ministry of Commerce and Industry (DPIIT), issued a notification (GSR 127 (E)) (the “Notification”), in supersession GSR 364 (E) dated 11 April 2018.
The salient features of the Notification are as follows:
1. The definition of “startup” has been widened to include any entity:
2. An entity shall cease to be a startup on completion of ten years from incorporation / registration, or when its turnover exceeds one hundred crore rupees, whichever is first.
3. An entity must be recognised as a “startup” by the DPIIT. The procedure for recognition of an entity as a start up in prescribed in the Notification.
4. A startup must obtain a certificate to avail Section 80-IAC of the Income Tax Act. Under Section 80-IAC, a startup may deduct 100% of the profits and gains derived from its business for three consecutive years.
5. Section 4 of the Notification exempts start ups from Section 56 (2) (viib) of the Income Tax Act if it fulfils the following conditions:
6. Section 56 (2) (viib) of the Act provides for tax on income received by a private limited company for issue of shares that exceed the face value of the shares. The same is referred to as “angel tax” in the market as the investment made by angel investors also fell within this bracket, previously.
7. The exemption is not applicable if the aggregate amount of paid up capitl is received from a non-resident of India or a venture capital company or venture capital fund.
Download Pdf
7A, 7th Floor, Tower C, Max House,
Okhla Industrial Area, Phase 3,
New Delhi – 110020
+91 11 23701284/5/7
The rules of the Bar Council of India do not permit advocates to solicit work or advertise in any manner. This website has been created only for informational purposes and is not intended to constitute solicitation, invitation, advertisement or inducement of any sort whatsoever from us or any of our members to solicit any work in any manner. By clicking on 'Agree' below, you acknowledge and confirm the following:
a) there has been no solicitation, invitation, advertisement or inducement of any sort whatsoever from us or any of our members to solicit any work through this website;
b) you are desirous of obtaining further information about us on your own accord and for your use;
c) no information or material provided on this website is to be construed as a legal opinion and use of this website will not create any lawyer-client relationship;
d) while reasonable care has been taken in ensuring the accuracy of the contents of the website, Argus Partners shall not be responsible for the results of any actions taken on the basis of information provided in this website or for any error or omission in the website; and
e) in cases where the user has any legal issues, the user must seek independent legal advice.