CBDT Issues Circulars to Enable Hassle-free Tax Environment for Start-ups
In order to provide hassle-free
tax environment to the Start-ups, a series of announcements have been made by
Union Finance & Corporate Affairs Minister Smt. Nirmala Sitharaman in her
General Budget Speech, 2019, and also on 23rd August 2019. To give effect to
these announcements, the Central Board of Direct Taxes (CBDT) issued various
circulars/clarifications in the matter from time to time. Vide Circular
No.22/2019 dated 30.08.2019, CBDT has consolidated all the
circulars/clarifications issued on this subject for the ease of compliance of
Start-up entities. The present circular inter alia highlights the following:-
Simplification of process of
assessment of Start-ups: Circular No. 16/2019 dated 7th of August, 2019
provided for the simplified procedure of assessment of Start-ups recognized by
DPIIT. The circular covered cases under “limited scrutiny”, cases where
multiple issues including issue of section 56(2)(viib) were involved or cases
where Form No.2 was not filed by the Start-up entity. Detailed process of
obtaining mandatory approval of the supervisory authorities for conducting
enquiry was also laid down by this circular.
Time limit for Completion of
pending assessments of Start-ups: The time limit for completion of pending
assessments was also specified by CBDT. All cases involving “limited scrutiny”
were to be completed preferably by 30th September, 2019 and the other cases of
Start-ups were to be disposed off on priority, preferably by 31st October,
2019.
Procedure for addition made u/s
56(2)(viib) in the past assessment: Vide clarification issued on 9th
August,2019 it was provided that the provisions of section 56(2)(viib) of the
Act would also not be applicable in respect of assessment made before 19th
February, 2019 if a recognised Start-up had filed declaration in Form No. 2. The
timelines for disposal of appeals before CsIT(Appeals) was also specified.
Further, the addition made under section 56(2)(viib) would also not be pressed
in further appeal.
Income-tax demand: It has been
reiterated time and again by CBDT that outstanding income-tax demand relating
to additions made under section 56(2)(viib) would not be pursued and no
communication in respect of outstanding demand would be made with the Start-up
entity. Other income-tax demand of the Start-ups would not be pursued unless the
demand was confirmed by ITAT.
Constitution of Start-up Cell:
Vide order dated 30.08.2019, CBDT has constituted a Start-up Cell under the
aegis of Member(IT&C), CBDT to redress grievances and to address various
tax related issues in the cases of Start-ups. Grievances can also be filed
online at startupcell.cbdt@gov.in.
The Circular No.22/2019 dated 30.08.2019 is available on www.incometaxindia.gov.in.
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