Income Tax

Income Tax on Start Ups-No coercive measures to recover outstanding demand – CBDT

Determination of fair market value of unquoted equity shares of ‘Start Up’ companies under section 56(2)(viib) of the  Income-tax  Act,  1961 read  with Rule 11UA(2) of Income-tax Rules, 1962 -reg.

CBDT vide instruction dated 06.02.2018 instructed that no coercive measures to recover the  outstanding demand would be taken in case of ‘Start Up’,  if  additions  have  been  made  by  the Assessing Officer under section 56(2)(viib) of the Income-tax Act, 1961 after modifying / rejecting the valuation so furnished under Rule 11UA(2) of the Income ­ tax Rules, 1962.

Recently, the Department of Industrial Policy & Promotion (DIPP) had taken up the matter of Income Tax Notice to Angel Investors / Start-ups with Department of Revenue.

Today, the CBDT has issued another Instruction addressed to all Principal Chief Commissioners of Income-tax whereby it has been stated that the Board had received Representations on similar lines have again.

As per the instruction, the matter is under consideration of the Board and no coercive measures to recover the outstanding demand should be taken in  the matter till further instructions in this regard.

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