With the new budget plan has released a few days ago, seems to be that the plan did not make any difference in the world of start-up rather the executives and founders are still busy trying to get through the January policy.
The January policy has made a great impact on the start-up world and currently, the growing start-ups are getting harassed over taxes as a result. Here’s what you need to know about it
What is the policy all about?
In January, the New Year for the world of start-ups started off with the government making recognition by DPIIT a necessity for start-ups to be eligible for concessions for shares that have been issued or are proposed to be issued. Next, the start-ups will then have to seek tax breaks, for which DPIIT will approach the I-T department.
The Centre also decided to scrap the earlier requirement of start-ups to submit a report from a merchant banker specifying the fair market value of shares along with certification by an inter-ministerial board.
Despite several initiatives and repeated assurances, early-stage companies are complaining of harassment by tax authorities – a charge that the government denied in the wake of action against Travelkhana in Bengaluru.
What Really Happened?
Pusphpinder Singh, founder of Travelkhana, to vent his agony over the I-T department tweeted on Friday, “The bank manager said that four I-T inspectors came and forced the bank manager to make DDs (Demand Drafts) from all accounts. The bank manager said that this is commonplace these days.” The company’s accounts have been frozen in relation to the tax demands. The tax department reported that it had recovered ₹36 lakh from the start-up.
The Central Board of Direct Taxes justified in a statement by saying that the action was taken due to unexplained cash deposits received by the company and should not be seen as going back on an earlier assurance.
The statement also denied the submission of any certificate by the assessee or its director from the department for the promotion of industry and internal trade (DPIIT) to show its status as a start-up.
Other founders are also affected
“I was in the meeting on Monday regarding angel tax when I got the scanned copy of tax order demanding over ₹20 lakh. I informed income tax officials instantly and explained the irony of the situation,” said SchoolDiary founder Ashish Chaturvedi. Chaturvedi fears that he might additional notices over two more rounds of capital that he raised for the company if the current tax demand is not withdrawn.
News of fresh notices and actions by the tax department have trapped the start-ups into its chains making entrepreneurs and investors tweeting #ShutDownIndia, prompting authorities to respond.
Hope the tax department immediately looks into this matter and comes to a decision otherwise the start-up world will be in shatters in some time.
