Relief for startups? Government may waive-off angel tax on MSMEs

Considering the current round of discussions between the Department for Promotion of Industry and Internal Trade (DPIIT), the Central Board of Direct Taxes (CBDT) and various other industry bodies such as NASSCOM, there seems to be some conscious being built upon waiving the angel tax currently levied on the Micro, Small and Medium Size Entreprises (MSMEs). The MSMEs have welcomed this move citing it would help MSMEs to get a level playing field in the pensive competitive business environment.

Speaking on the problems of angle tax Sharan Grandigae, Founder & CEO at Redd Experience Design told Zee Business Online, "The Angel Tax is an anachronistic framework of thinking that neither helps in making our country any easier to do business nor does it foster an environment of innovation. Through these measures, we are penalising the non-culpable majority in order to keep the minority of wrongdoers in check. When we have laws that hold organisations responsible for malpractice, what’s the additional need for registrations and licenses and taxes? A fundamental shift in our permission-led thinking is required today if we are to grow larger as an economy. Start-ups already face enormous odds with 90 per cent of them failing in the first year. But the ones that succeed can potentially benefit society and also generate great sources of revenue, not to mention jobs. We’ve got to make it easier on them.”

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Awaiting the impending decision by the government, Rajiv Talreja, Serial Entrepreneur, Business Coach and International Author states told Zee Business Online in a written statement, "Considering the current round of discussions between the Department for Promotion of Industry and Internal Trade (DPIIT), the Central Board of Direct Taxes (CBDT) and various other industry bodies such as NASSCOM, there seems to be some conscious being built on working out a slab system for the start-up ecosystem. If the Government is able to raise the tax exemption on funding received up to Rs 25 Crore, and startups are able to meet regulations of registrations, GST filing and their ITR filings, then this can turn out to be a game changer, as the Government can set slabs based on the startup size and industry they belong to."

In fact, almost till half a decade ago, start up's and Micro-business owners had to heavily rely on family support, but with the government regulating these policies by taking mutual conscious decisions adds more josh to their various programs such as startup India and digital India. Most importantly, if the angel tax gets exempted it will create a win - win - win situation for the startup ecosystem (as they will be realized as a company of value and not small time family dependent businesses), the investing fraternity (Loans & Equity Investments), and the Govt (Central and IT).