Solution to start-up tax issues soon, assures CBDT chairman

The Chairman of Central Board of Direct Taxes (CBDT), Sushil Chandra said when addressing the audience at an Assocham function that the government may soon find a solution to address the tax concerns of start-ups. According to him, “Very shortly, we will find out a solution on the basis of the suggestions we have received. We will have to decide which startups are real start-ups and how they can be exempted from Section 56 (2) of the Income Tax Act.”

Many start-ups had raised concerns over the notices sent to them under this section to pay tax on angel investments. While, the CBDT chief said that “any start-up recognised by the Department for Promotion of Industry and Internal Trade is exempt from Section 56 (2) and the tax notices sent to startups have been stayed.”

A few days ago, officials from the department along with tax department officials had met startup industry representatives to hear their suggestions. As per Section 56 (2) if the IT Act, the amount raised by a startup in excess of its fair market value would be deemed income from other sources and taxed at 30 per cent, and this tax has dubbed Angel Tax.

Linking Aadhaar and PAN

Chandra also said that “the income-tax department has so far issued 420 million permanent account numbers (PAN), of which 230 million have been linked with Aadhaar, the biometric data-based identity number.” He further added, ‘by linking with Aadhaar, we will know whether there are any duplicate PANs or not. And there are certain duplicate PANs, if it is not linked, we may cancel the PAN also. He also said, that once Aadhaar is linked with PAN and PAN is linked with bank accounts, the I-T department can find out the spending patterns and other details too.”

The officer also said that linking Aadhar with PAN would make it easier to gauge whether the benefits of welfare schemes are reaching those who they are made for and so far this year, 9.5 million new taxpayers have been added.

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