Leniency Allowed for Start-ups in Income-tax Scrutiny over Angel Tax
In what is expected to boost investor sentiment, the income Tax (I-T) department has directed its officers to accept the declarations of companies which were tagged as start-ups in the middle of a scrutiny for angel tax.
 
Angel tax refers to I-T payable on capital raised by unlisted firms by issuing shares where the share price is considered in excess of the fair market value.
 
The excess realisation is treated as income and hence, taxable under Section 56 (2) (viib) of the Act. The government had earlier exempted companies tagged as start-ups by the department of promotion of industry and internal trade (DPIIT). 
 
However, many companies, which were yet to be considered start-ups, were under I-T scrutiny. The present clarification makes the rules clear for these companies with regards to angel tax.
 
The tax department issued the circular on Wednesday laying down procedures to be followed by assessing officers in case of start-ups which were recognised by DPIIT in the middle of an I-T scrutiny. Procedures have been also issued for unrecognised start-ups. 
 
"The tax department has issued the procedures to be followed by tax officers. So, if a case is related to a company which was recognised as a start-up later on, the tax officer will not pursue the demand in respect of Section 56(2) (viib) which is Angel Tax," a tax consultant said. 
 
As per the circular, a start-up which has not got DPIIT approval and the case is selected for scrutiny on grounds of applicability of Section 56 (2) (viib) or any other issue, inquiry or verification in such cases shall be carried out by the assessing officer as per due procedure and approval of the supervisory officer. 
 
"Directions of the CBDT (Central Board of Direct Taxes) that the tax officer will have to summarily accept the contentions of the start-up on valuation of its shares shall provide the relief intended to be provided to the start-ups," said Rakesh Nangia, Managing Partner, Nangia Advisors. 
 
"While the recognised start-ups stand relieved, the ones that are yet to receive a nod from the DPIIT may still have to face the inquiry from tax officers and the procedure to be followed by the tax officers in such cases would be crucial to note," he said.
 
The tax department had earlier come out with a set of rules to provide relief to start-ups from tax demands under Section 56 (2) (viib) of the Income Tax Act.
 
The tax department, in its circular on 7th August, said that there have been instances of notices being sent under Section 143(2) /147 by assessing officers to start-up companies before the DPIIT notification since February this year which are currently pending for disposal. 
 
Disclaimer: Information, facts or opinions expressed in this news article are presented as sourced from IANS and do not reflect views of Moneylife and hence Moneylife is not responsible or liable for the same. As a source and news provider, IANS is responsible for accuracy, completeness, suitability and validity of any information in this article.
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    COMMENTS

    Jagdish Lalwani

    4 months ago

    All corrupt mus be afrd of god in skies if they wil go kaal maharaj wil audit all their balance sheets..showin only hevy liablity..n asset disapeared..there wil single windo wth kaall devta holdin all guilty from collar n punishin wth heavy penalty interest 24 pc p.a..and no return to earth..his family wil get notices from sky

    How to e-verify your Income Tax Return -ITR
    After uploading the income tax return (ITR) on the I-T e-filing portal, there is still one additional step remaining. The income tax e-filing process is considered as complete only upon verification by the assessee. The verification might be carried out physically i.e. by post or electronically by following methods:
     
    1. Physical Verification
     
    One needs to take a printout of the ITR-V (Income Tax verification form) that is generated subsequent to uploading the ITR on the Income tax website.
     
    After signing the document, the assessee needs to post the ITR-V to the Income Tax Centralised Processing Centre (CPC) at the following address: CPC, Post Box No – 1, Electronic City Post Office, Bangalore – 560100, Karnataka, India.
     
    It is mandatory that that signed ITR-V is sent to the CPC within 120 days of filing the IT return. Any delay would render the IT return as invalid. It must be remembered that one does not need to send any supporting documents. 
     
    2. E-verification of return via net-banking
     
     
    Another option is to e-verify the ITR by the net-banking route. After filing the returns, the assesse is provided the option to e-verify it through her bank’s net-banking facility. The following is the summary of steps involved:
     
    1. Login to e-filing portal through net banking
     
    2. Under the My Account menu, select generate electronic verification code (EVC)
     
    3. The EVC generated would be sent to the registered email ID and mobile number.
     
    4. One can e-verify the I-T return by using the EVC.
     
    Or
     
     
    2. On the left hand side, there are quick links. Click on e-Verify Return
     
     
    3. On the next page click on e-filing login through net-banking. This will give a list of banks. Select your bank.
     
    4. Login to your bank’s website account and check income tax e-filing tab
     
    5. Select the ‘View Returns/ Forms’ option to see e-filed tax returns
     
    6. Click to view your ITRs that are pending for e-verification
     
    7. Select e-verify
     
    8. Here you need to generate one time passcode (OTP) or EVC through net-banking
     
    9. Enter the OTP or EVC. Once successful, you will get confirmation message
     
    3. E-verification through Bank ATM
     
     
    The Income Tax Department also permits e-verification through Bank ATM. The following are the steps involved:
     
    Upon swiping the debit card at a bank ATM, the option to Generate PIN for e-Filing is available. 
     
    Upon selection, an EVC would be generated and sent to the registered mobile number.
     
    One needs to log in to the Income Tax Department e-filing website and opt for ‘e-verify using Bank ATM.’ 
     
    One would then need to enter the EVC to complete the e-verification
     
    4. E-verification using bank account number
     
     
    To avail this channel, one needs to validate one’s bank account in the profile section in the Income Tax e-filing website. Subsequently, upon selecting ‘verify with bank account number’ option, an OTP will be sent to the registered mobile number (registered with one’s bank). Upon entering the OTP on the e-filing portal, the e-verification is complete. One may opt for refund credit to the same pre-validated bank account.
     
    5. E-verification using demat account
     
     
    To use this route, one needs to validate one’s demat account in the profile section of the Income Tax e-filing website. Subsequently, one needs to click on ‘verify with demat account number’ option. An OTP would be sent to the verified mobile number (registered with one’s demat account), which may be used to e-verify the return.
     
    6. E-verification using Aadhaar OTP
     
     
    This is a very common method of e-verifying one’s Income Tax Return. To exercise this option, one’s Aadhar needs to be mandatorily linked to the PAN.
     
    One needs to opt for ‘e-Verify using Aadhaar OTP’ on the Income Tax online filing portal. The OTP sent to the registered mobile number (Mobile number linked with Aadhar) can be used for completion of the ITR e-verification by submitting the EVC.
     
    Post Verification steps: 
     
    Post verification, one can download the acknowledgement, which may be retained for record purposes. No further action is needed by the assessee.
     
    Assessee filing Paper Return: 
     
    Alternatively, in cases where one is permitted to file a paper return (i.e. not mandatory to file online return), one may sign the IT return as verification and submit the signed return at the jurisdictional IT office. 
     
    Conclusion:
     
    In conclusion, one can exercise any of the above six options to verify one’s Income Tax Return. Verification of the Income Tax return is a mandatory requirement.
     
    Further, the verification process may be completed at any time subsequent to filing the IT return. However, the verification must be completed before the due date of filing the I-T return i.e. 31 August 2019 for individuals.
     
    Additionally, in case of e-verification, there is no requirement to send ITR-V or any document by post. It is recommended to carry out e-verification as the IT return processing would be more prompt compared to other modes.
     
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    COMMENTS

    Prasad

    4 months ago

    Is aadhar mandatory for ITR filing? I thought one could use either PAN or Aadhar for ITR filing.

    Taxation amid slowing economy killing market's 'animal spirit': Ex- RBI governor, Subbarao
    Recently, the former Reserve Bank of India Governor D. Subbarao said the government's attempt to squeeze out RBI reserves is a sign that it is desperate. This "desperation" could well be killing the animal spirit of the financial markets.
     
    Of late the financial markets have bore the brunt of multiple taxes amid an acute slowdown, which has almost killed the investors' risk-taking appetite. The controversial tax-surcharge on super-rich proposed in the Budget caused an outflow of Rs 12,419 crore in the month of July.
     
    According to the NSDL data, this July outflow is one of the worst in the history of Indian financial markets. There has been only four occasions -- all of which came around acute financial distress -- when the Foreign Portfolio Investors (FPIs) pulled out in excess Rs 12,419 crore.
     
    Taxation on long-term capital gains (LTCG) proposed in 2018 Budget, was re-introduced after 14 years which caught the markets by surprise.
     
    Besides, the securities transaction tax (STT) has already caused an increase in trading cost. The Dividend Distribution Tax has also disrupted hampered the sentiments of investors at large.
     
    Further the tax on buyback, a way in which companies pay their shareholders, was introduced at 20 per cent in 2019 Budget, which experts noted, played as another disruption. Buyback offers of over Rs 50,000 crore were announced in the year 2018 alone.
     
    The logic of enforcing more taxes amid an slowing economy is beyond logic of several experts.
     
    To top the local issues the global cues have not been providing any support. The Fed's hawkish remark and the heightened trade war between US and China have roiled the financial markets globally.
     
    Disclaimer: Information, facts or opinions expressed in this news article are presented as sourced from IANS and do not reflect views of Moneylife and hence Moneylife is not responsible or liable for the same. As a source and news provider, IANS is responsible for accuracy, completeness, suitability and validity of any information in this article.
  • User

    COMMENTS

    Ramesh Bajaj

    4 months ago

    All this taxation (literally wanting to tax everything that moves), does not make sense. It is very unreasonable.

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