Giving relief to start-ups facing angel tax issue, the Ministry of Finance on Saturday simplified its assessment process under which action could be taken against such entities only after the approval of a supervisory officer.
In a circular, the Central Board of Direct Taxes (CBDT) said that no verification will be done by an assessing officer if a startup has been recognised by the Department for Promotion of Industry and Internal Trade (DPIIT) and the case is selected under limited scrutiny.
In cases where scrutiny assessments of start-up entities are pending, the CBDT has decided that the contention of the assessee will summarily be accepted whose cases are under 'limited scrutiny' for those entities recognised by the DPIIT.
"In case of start-up compes recognised by the DPIIT which have filed Form No. 2 and whose cases have been selected under scrutiny to examine multiple issues including the issue of Section 56(2)(viib), this issue will not be pursued during the assessment proceedings and inquiry on other issues will be carried out by the assessing officer only after obtaining approval of the supervisory authority," the statement read.
Form 2 deals with the exemption of startups from income tax subject to certain criteria. If a start-up is not recognised by the DPIIT, then an inquiry would be carried out after the approval of a supervisory officer.
( With inputs from ANI )