Taxmann Taxation of Start-ups & Investors Edition May 2023

Taxmann New Law Relating to Taxation of Start ups & Investors

Taxmann New Law Relating to Taxation of Start ups & Investors

This is a handy book for the taxation of start-ups & investors, including, but not limited to, the following:

• Tax Holiday u/s 80-IAC of the Income-tax Act 1961
• Angel Tax Exemption

All topics related to the taxation of start-ups & investors are discussed in light of the following:

• Department for Promotion of Industry and Internal Trade (DPIIT) Guidelines
• Inter-ministerial Board (IMB) Decisions made in IMB Meetings
• Relevant Legal Provisions
• Case Laws, including the landmark decision of Raw Pressery (P.) Ltd. vs ACIT [2022] 143 taxmann.com 158 (Mumbai-Trib.)

The Present Publication is the 6^th Edition and has been amended by the Finance Act 2023. This book is authored by Taxmann’s Editorial Board with the following noteworthy features:

[Start-up Ready Reckoner]

• Eligibility Ready Reckoner for tax holiday u/s 80-IAC
• Compliance Ready Reckoner for turnover-limit linked compliances/exemptions for the following entities:
• Private Companies
• Limited Liability Partnership
• Traditional/General Partnership Firm
• Tax Benefits available for DPIIT-recognised start-up private limited companies based on their turnover

[Tabular Format of Tax Holiday for Start-ups approved by IMB] in the following cases:

• Grounds of Innovation
• Grounds of Scalability
• Grounds of Employment Generation or Wealth Creation
• Grounds of Improvement in Products

[Detailed Analysis of Finance Act 2023 Amendments] including new provisions regarding taxation & TDS on winnings from online games

[Detailed Analysis with a Specific Focus] on the following topics:

• Revised Guidelines for recognition of start-up
• Process of IMB Certification for a tax holiday
• Options of low tax rate regime u/s 115BAA/115BAB without tax holiday
• Relative tax efficacy of various start-up entity forms, such as:
• Registered Partnership Form
• Limited Liability Partnerships
• Private Limited Companies
• One Person Company as a start-up entity form
• [Case Studies] of acceptance/rejection by IMB of a start-up’s application for a tax holiday
• [FAQs] are given at the start of the book
• [Detailed Analysis of Difference between MSMEs and Start-ups] and benefits available under the MSMED Act, 2006

The detailed contents of the book are as follows:

• What is a start-up?
• Distinction between start-ups and MSMEs
• What is the criteria for recognition of start-ups by DPIIT
• Start-ups eligible for DPIIT – Recognition
• OPC as a start-up entity
• Innovation/scalable business model
• Start-up entities not eligible for DPIIT recognition
• Sole proprietorships – Whether eligible for DPIIT recognition
• Entities formed as a result of amalgamations/mergers/demergers/absorption, whether eligible for DPIIT recognition
• Entities formed as a result of compromise/arrangement – Whether eligible for DPIIT recognition
• Holding & subsidiary companies – Whether eligible for DPIIT recognition
• Joint Ventures – Whether eligible for DPIIT recognition
• Entities incorporated outside India – Whether eligible for DPIIT recognition
• Entities with foreign shareholding/stake – Whether eligible for DPIIT recognition
• Entities formed by splitting up/reconstruction of an existing business – Whether eligible for DPIIT recognition
• Entities incorporated with common director/DP/partner – Whether eligible for DPIIT recognition
• Procedure for DPIIT – Recognition of start-up
• Name change by DPIIT – Recognised start-up entity – Whether permitted
• CIN/LLPIN change by DPIIT – Recognised start-up entity – Whether permitted
• Conversion by a DPIIT – Recognised entity from one form to another – Whether permissible
• Automatically ceasing to be a ‘start-up’ under LSN
• Approvals needed by start-up entities for claiming tax benefits
• Tax efficacy of different start-up entity forms – Firms, LLPs & Pvt. Companies
• Tax holiday to start-ups under Section 80-IAC
• Funding blues of private limited start-up companies
• Exemption from ‘angel tax’ to private limited companies start-ups
• Computation of FMV of shares issued when angel tax exemptions is not applicable
• Conditions for carry forward or set-off of losses of start-up PLC under section 79
• Deferring TDS or tax payment in respect of ESOP income of employees of eligible start-ups
• Tax & TDS on winnings from online games
• Mandatory acceptance of payments through prescribed electronic modes if turnover exceeds INR 50 crores – section 269SU
• Taxation of investors exiting start-ups