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In a significant clarification aimed at fostering ease of doing business, the Income Tax Department on Friday reiterated that DPIIT-recognised startups are eligible for multiple tax exemptions, and investments made in such companies are not subject to scrutiny, provided certain conditions are fulfil
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FAQ :
Startups recognised by the Department for Promotion of Industry and Internal Trade (DPIIT) that fulfil the conditions laid down in the February 19, 2019 notification and file Form-2 are eligible.
No, provided the startup meets the specified conditions and files the necessary declaration, investments made in such companies are eligible for benefits and are not subject to scrutiny.
The key conditions include DPIIT recognition, compliance with the February 19, 2019 notification, filing of Form-2 declaration, and ensuring investments are within the prescribed limit (e.g., ₹25 crore for angel tax exemption).
Investments made in companies that do not meet the prescribed conditions may be examined by tax authorities as per their risk management strategy.
The government's 2019 notification relaxed the definition of startups to allow full exemption from angel tax on investments up to ₹25 crore.
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