Direct Taxation – Page 2 – Neeraj Bhagat & Co.

April 8, 2020 / Direct Taxation

Capital Gains Tax Relief Likely for Investors Exiting Startups

The government is considering exempting investors from tax on capital gains accrued when they exit a startup, in a bid to attract more funds into the sector.
The Department for Promotion of Industry and Internal Trade (DPIIT) is weighing two alternatives to deliver this incentive — one, a blanket exemption, and two, a conditional exemption based on funds redeployed. The latter would be on lines of the benefits offered to nascent firms in the UK.
After giving investors and entrepreneurs …

April 8, 2020 / Direct Taxation

I-T Proposes New Norms for Taxing MNCs in India

The income tax department Thursday proposed change in the methodology for taxing multinational companies, including digital firms, having permanent establishment in India by giving weightage to factors like domestic sales, employee strength, assets and user base. The CBDT Committee on ‘Profit Attribution to Permanent Establishment (PE) in India’ also said MNCs that are incurring global losses or a global profit margin of less than 2% and have operations in India will be deemed to have made a profit of 2% …

April 8, 2020 / Direct Taxation

Angel Tax Breather: Scheme to Accredit Investors in Works

India is eyeing a new framework for recognising investors so that they won’t be subject to the so-called angel tax provisions on their funding of startups. The Department for Promotion of Industry and Internal Trade (DPIIT) is looking to put in place such a regime so that investors will be able to fund startups without any limit.
“We are examining if a mechanism can be created for accrediting investors,” said a government official aware of the matter, details of which …

April 8, 2020 / Direct Taxation

Over 7,000 cash-starved start-ups may benefit from angel tax relief

A series of changes made to the so-called angel tax by the government could give wing to 7,000 cash-starved start-ups, sources in the Department for Promotion of Industry and Internal Trade (DPIIT) said.
According to industry observers, an investment of around $12 billion might come from 2,000 angel investors and hundreds of smaller backers of start-ups by the end of the year. Of this, about $7 billion will come in the form of corporate investment.
After facing sustained pressure over …

April 8, 2020 / Direct Taxation

Start-up tax exemption procedure simplified; merchant banker valuation report withdrawn

The Government of India introduced ‘Start-up India’ initiative for creating a conducive environment for the start-up companies in India. The CBDT inserted Section 80-IAC in I-T Act vide Finance Act 2016. This provision provides for 100% tax deduction in respect of profits of start-ups which are approved by Department of Industrial Policy and Promotion (DIPP).
The start-ups had been receiving notices from the Dept. for levying tax on proceeds received by them by issuing shares to investors at inflated prices. …

April 8, 2020 / Direct Taxation

No ´angel tax´ likely for start-ups accredited by DIPP

Facing flak from startups, the government may announce modifications to the “angel tax” law in the coming weeks. All startups accredited by the Department of Industrial Policy and Promotion (DIPP) will no longer be asked to pay angel tax, sources involved in the interministerial discussions said. Earlier, the rule said only those startups that had been given such an exemption by a government board would be excused. That is likely to change as the government is planning to exempt “any …

April 8, 2020 / Direct Taxation

2019 in Mind, Govt Moves to Ease Taxpayer Distress

‘End of tax terrorism’ was one of the political planks that had swung urban votes in favour of BJP in 2014. After four years, the government is making sure that the catchphrase does not come back to haunt it in 2019.
A few days ago, the chief of the Central Board of Direct Taxes (CBDT) — the finance ministry arm which serves as the apex body for Income tax (I-T) — directed all principal chief (I-T) commissioners to closely monitor …

April 8, 2020 / Direct Taxation

´PoeM´ firms to be taxed at 40%

Foreign companies whose place of effective control are in India will have to shell out 40 per cent corporation tax against 30 per cent levied on domestic firms.
The Central Board of Direct Taxes has come out with clarifications for place of effective management (PoeM) through a notification for these companies.
Through PoeM, the government taxes companies located outside the country but controlled from India.
It applies to companies having annual turnover of more than Rs. 500 million.

Soon, govt …

April 8, 2020 / Direct Taxation

Ecomm Cos may Need to Prepare for Withholding Tax in 2 Months

India Inc, in particular ecommerce platforms such as Amazon and Flipkart, may need to prepare for withholding tax provisions in two months under the goods and services tax (GST).
The tax deducted at source (TDS) and tax collected at source (TCS) provisions had been put on hold following petitions by industry that this would increase the compliance burden.
But with the GST regime stabilising, these provisions may be imposed from July 1, said a senior government official.
The TDS …