New tax returns: Angel investors get further relief

New tax returns: Angel investors get further relief
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New Delhi, Apr 8: There may be relief from notices for angel investors with the government mandating disclosure of holdings in unlisted companies in tax returns. This data will be matched with filings of startups, which have been asked to disclose the list of investors along with some of their details.
The moves initiated through the tax return forms come after the revenue department got down to clearing the clutter on the issue that had been bothering several investors in startups. With investors getting notices from tax authorities for acquiring shares at a hefty premium in companies, the finance ministry as well as the department for promotion of industry and internal trade allowed more investors to invest in startups without being subjected to questioning in future.
“This is the next step in making life simpler for startups. With the two sets of data in their possession, tax authorities need not approach investors with notices,” explained a senior officer in the tax department.
Tax officials earlier dashed off the notices as they could not easily spot the difference between startups and shell companies, which issue shares at a heavy premium without any significant business. The government also expects that the new filing system will help put curbs on investment in shell companies, which are vehicles used to launder money. In recent months, there has been a clampdown on these companies through the Companies Act as well as by the tax department.
“People may not be willing to disclose their holdings in these companies and these companies too will be monitored for the shareholders that they have,” an official said.
Sources said that the new filing mechanism for startups was part of the government’s strategy to ensure faceless assessment while trying to ensure that there was not undue scrutiny of honest taxpayers.
Similarly, the government has also asked some of the businessmen to disclose the details of the outward supplies made under GST against the GST numbers that they have. An individual can use one PAN to generate multiple GST numbers for registration of several businesses or even register entities across many states, especially the services sector. “The move will only impact larger businesses as entities with turnover up to Rs 40 lakh are exempted from GST,” an official said.