No fee DPIIT registration is a boon for Start-Ups

DPIIT registered Indian start ups will have the single most advantage in the form of exemption from angel tax. As per Section 56(2)(viib) of Income Tax law in India, the start-ups have to pay capital gain tax on any amount received in excess of fair market value. This has been a stumbling block in ease of doing business of start-up. Recently, new valuation methods have been introduced w.e.f 25th September, 2023, where an assessee has the freedom to choose any of the five methods In addition to the existing DCF and Net Asset Value Method, for valuation of Compulsorily Convertible Preference Shares (CCPS):

a)??? Comparable Company Multiple Method;

b)??? ?Probability Weighted Expected Return Method;

c)??? Option Pricing Method;

d)??? Milestone Analysis Method;

e)??? Replacement Cost Method.

However, the issue of already issued notices for scrutiny assessments, sent in the month of April-May, 2023 were lingering in the minds of many start-ups. Notices were issued under Section 143/147 of IT Act.

A big ?sigh of relief came from a recent CBDT clarification where the field officers have been instructed not to proceed with the scrutiny assessment or accept the submissions of the assessee. This will apply to all cases related to valuation/angel tax of approximately 99,380 DPIIT registered start-ups.

Please note that this relief is available only to the DPIIT registered start-ups and not to other start-ups.

In case you have not registered with DPIIT, please get you entity registered asap. DPIIT does not charge any fees for registration. Documents are also only few.

The application process is simple

1.??? Incorporate the business entity.

2.??? Register with Start-up India Scheme

3.??? ?Apply for DPIIT recognition

4.??? Upload the required documents

Just by getting DPIIT registration, you will be saving on huge time in handling tax notices and get relief from capital gain/angel tax.

In case of any query, concern and clarity, you may like to contact? us for ?DPIIT registration process.

?Abhinarayan Mishra, FCA, FCS

+9910744992; [email protected]