Quick Summary
Income Tax Department issues notices to certain startups, including those in Ashneer Grovers portfolio, requesting information about their shareholders and seeking to verify the creditworthiness of those investors. This is done to ensure that the amount of investment made in these startups is in line with the income declared by the investors, as per Section 68 of the Income-tax Act, 1961. Ashneer Grover expressed surprise and concern about this requirement, particularly regarding the requ
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FAQ :
The department is investigating to ensure that the investments made in startups are compliant with tax regulations and that the investors' declared income aligns with the investment amounts, as per Section 68 of the Income-tax Act.
The department is requesting information about the startups' shareholders and seeking to verify the creditworthiness of the investors. In some cases, a request for shareholders' three-year income tax returns has also been made.
Section 68 places the responsibility on the startup (assessee-company) to prove the identity, creditworthiness, and genuineness of the investment transaction by its investors.
The initial burden of providing the necessary details about investors falls on the startup itself, which must furnish this information to the tax authorities.
Verifying investor creditworthiness ensures that investors have the financial capacity to make the investments they claim to have made, preventing potential tax evasion or financial fraud.
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