GIVING a relief to startups, Finance Ministry has simplified the angel-tax assessment process under which any action would be taken against such entities only after approval of a supervisory officer. The Central Board of Direct Taxes (CBDT), in a circular, said that no verification will be done by an assessing officer if a startup has been recognised by the Department for Promotion of Industry and Internal Trade (DPIIT) and the case is selected under limited scrutiny.
In cases where scrutiny assessments of startup entities are pending, the CBDT has decided that the contention of the assessee will be summarily accepted whose cases are under ‘limited scrutiny’ for those entities recognised by DPIIT.
“In case of startup companies recognised by DPIIT which have filed Form No. 2 and whose cases have been selected under scrutiny to examine multiple issues including the issue of section 56(2)(viib), this issue will not be pursued during the assessment proceedings and inquiry on other issues will be carried out by the Assessing Officer only after obtaining approval of the supervisory authority,” an official statement said. Form 2 deals with the exemption of startups from income tax subject to certain criteria. If a startup is not recognised by the Department for Promotion of Industry and Internal Trade, then too the inquiry would be carried out after the approval of a supervisory officer.