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Union Minister Piyush Goyal said that the government is continuously supporting the startup environment. The country has grown significantly in this area since the inception of the Startup India initiative.
Government-recognized startups will not be affected by proposed changes in income tax laws regarding the issuance of shares to foreign entities.
Anurag Jain, secretary of the Department for Promotion of Industry and Internal Trade (DPIIT), said companies or startups that are not recognized by DPIIT. They will be covered under the proposed amendments to Section 56 ( 2) of the Income Tax Act.
In section 56 (2) the amount exceeding its fair market value of a startup shall be treated as income from other sources. It will be taxed at 30 per cent. It has been dubbed Angel Tax due to its impact on Angel Investors' investment in startup enterprises. Jain said that those who are not registered with the startup department will come under the revised provisions of the section.
The minister told reporters, "There is no angel tax on startups, lets be clear about that. Sec 56 (ii) used to have two proviso - one was preferential treatment of foreign players. So that preferential treatment has been done away with...Anybody which is a recognised startup by the DPIIT will not attract angel tax if investment is made into that, be it foreign or domestic."
Union Minister Piyush Goyal further said that the government is continuously supporting the startup environment. The country has grown significantly in this area since the inception of the Startup India initiative. I believe that this budget will certainly provide good support and help to the startup environment so that it can flourish in the coming years.
Goyal said that the budget also focused on promoting startups in the agricultural sector and creating agro-entrepreneurs. It will also promote better ideas for cold storage, food processing and value addition in agriculture.
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