Startup India Vision 2024: Income Tax Rebate for Founders who Sell their Properties

Aspiring entrepreneurs often sell their residential properties to support their startup ventures and keep it moving. However, according to Income Tax Act of India, capital gain on transfer of house property results in a tax liability. Seeing this as one of the much needed reforms, the Department for Promotion of Industry and Internal Trade (DPIIT) has proposed relaxation -- as part of 'Startup India Vision 2024' -- in the income tax laws pertaining to sale of residential properties and carrying forward of losses, reported Economic Times citing sources privy to the developments.

There exist a Section 54GB (w.e.f. 1st April, 2013), wherein capital gain on transfer of residential property not to be charged in certain cases that include -- Relief from long-term capital gains tax on transfer of residential property and 2) If sale consideration invested in a manufacturing small or medium enterprise.

DPIIT has recommended amendments in Section 54GB and Section 79 (carry forward and set off of losses in case of certain companies) of the Income Tax Act in order to promote growth of budding entrepreneurs, who face difficulty in raising finances.

Prepared by the DPIIT for the new government, the proposal also includes setting up of 500 new startup incubators and accelerators by 2024, 100 innovation zones in urban local bodies and expanding CSR funding to incubators.

DPIIT also proposed to facilitate setting up of 50,000 new start-ups in the country by 2024 and creating 20 lakh direct and indirect employment opportunities.

Besides, DPIIT also suggested to deploy of entire corpus of Rs 10,000 crore Startup Fund of Funds announced in 2016 and yet to have a clarity on its disbursement after three years or so.

Indians Traded Cryptocurrencies Worth $3.5 Bn; I-T Deptt Sends Notices

A nationwide survey has revealed that, in last 17 months of period, people in India have invested in Bitcoin and other cryptocurrencies worth whopping US $3.5 billion. Seeing this, income tax (I-T) department has sent notices to tens of thousands of such people who have done trading in any of the cryptocurrencies, reported MoneyControl.

Tech-savvy young investors, real estate players and jewellers are among those invested in bitcoin and other virtual currencies, tax officials told Reuters after gathering data from nine cryptocurrency exchanges in Mumbai, Delhi, Bengaluru and Pune.

Despite government's repeated warnings against cryptocurrency investment, people are trading in it at large, so much so that an industry estimated that trading in virtual currencies are adding 200,000 users in India every month.

B.R. Balakrishnan, a director general of investigations at the income tax department in the southern state of Karnataka, said notices were sent following the survey to assess the penetration and patterns of virtual currency trade.

"We cannot turn a blind eye. It would have been disastrous to wait until the final verdict was out on its legality," he told Reuters.

Moreover, it was found that people investing in cryptocurrencies like Bitcoin, Ethereum or Ripple are not accounting this activity at all and are not even reflecting such investment in their tax returns.

Thus, the tax department has asked people dealing in bitcoin and other cryptocurrencies to pay tax on capital gains. They have also asked for details about their total holdings and the source of funds in the tax notice seen by Reuters.

Bitcoin, the world's biggest cryptocurrency, soared more than 1,700 percent last year but later it crashed due China's crackdown through ban on virtual currencies.

Despite of all this, to prevent people in investing in cryptocurrencies, an Indonesian blockchain startup announced recently that by end of this year it will a point-of-sale network so that people in India can do daily transaction using Bitcoin and other cryptocurrencies in offline mode as well.

In February this year, India's leading bitcoin startups -- Zebpay, Unocoin, Coinsecure and Searchtrade, jointly launched Digital Asset and Blockchain Foundation of India (DABFI) for the orderly and transparent growth of virtual currency market.

Thereafter, in November 2017, DABFI had announced its merger with the Internet and Mobile Association of India (IAMAI), the internet industry body now has the mandate to represent Blockchain startups in India. The new merged entity will.now be called as -- IAMAI FinTech Council.

Indians Traded Cryptocurrencies Worth $3.5 Bn; I-T Deptt Sends Notices

A nationwide survey has revealed that, in last 17 months of period, people in India have invested in Bitcoin and other cryptocurrencies worth whopping US $3.5 billion. Seeing this, income tax (I-T) department has sent notices to tens of thousands of such people who have done trading in any of the cryptocurrencies, reported MoneyControl.

Tech-savvy young investors, real estate players and jewellers are among those invested in bitcoin and other virtual currencies, tax officials told Reuters after gathering data from nine cryptocurrency exchanges in Mumbai, Delhi, Bengaluru and Pune.

Despite government's repeated warnings against cryptocurrency investment, people are trading in it at large, so much so that an industry estimated that trading in virtual currencies are adding 200,000 users in India every month.

B.R. Balakrishnan, a director general of investigations at the income tax department in the southern state of Karnataka, said notices were sent following the survey to assess the penetration and patterns of virtual currency trade.

"We cannot turn a blind eye. It would have been disastrous to wait until the final verdict was out on its legality," he told Reuters.

Moreover, it was found that people investing in cryptocurrencies like Bitcoin, Ethereum or Ripple are not accounting this activity at all and are not even reflecting such investment in their tax returns.

Thus, the tax department has asked people dealing in bitcoin and other cryptocurrencies to pay tax on capital gains. They have also asked for details about their total holdings and the source of funds in the tax notice seen by Reuters.

Bitcoin, the world's biggest cryptocurrency, soared more than 1,700 percent last year but later it crashed due China's crackdown through ban on virtual currencies.

Despite of all this, to prevent people in investing in cryptocurrencies, an Indonesian blockchain startup announced recently that by end of this year it will a point-of-sale network so that people in India can do daily transaction using Bitcoin and other cryptocurrencies in offline mode as well.

In February this year, India's leading bitcoin startups -- Zebpay, Unocoin, Coinsecure and Searchtrade, jointly launched Digital Asset and Blockchain Foundation of India (DABFI) for the orderly and transparent growth of virtual currency market.

Thereafter, in November 2017, DABFI had announced its merger with the Internet and Mobile Association of India (IAMAI), the internet industry body now has the mandate to represent Blockchain startups in India. The new merged entity will.now be called as -- IAMAI FinTech Council.

Indian government scraps angel tax for investors funding startups

Investors investing in startups in India will no longer be required to pay an angel tax to the government. Under a recent move made by the government of India to boost the country's entrepreneurship sector and job creation market, it has decided to let go of the so-called 'angel tax' for investors.

Fundings to startups, notified under the PM  Modi announced government-approved plan in January this year, will not have to give tax even if it ends up exceeding the face value.

The existing rules state that any money raised by an unlisted company in India by the means of equity issuance has to be covered under this tax up to the extent that the amount is in excess of the fair market value. This extra money is taxable as "income from other sources" under the Section 56(2) of the Income-Tax Act India and charged the corporate tax rate, adding up to an effective tax of over 30 percent.

The venture capital community has been contesting for the removal of the angel tax for a long time now. According to them, the tax acts as a bug hurdle to their investment activities.

In majority of the cases, the valuation of the startups are way more than the market value as it is calculated on the potential of the idea rather than the startup's immediate worth. In such cases, the startups end up losing out a majority of the money inflow in angel taxes. But, now under the new notification issued by the Central Board of Direct Taxes, the startups would be now exempted from raising fundings from the rigours of Section 56(2)(viib).

Talking about the government's action to do away with the angel tax to a national business newspaper, Amit Maheshwari, partner, Ashok Maheshwary & Associates LLP said, "This has been long awaited and is a very welcome step. The abolition of this so-called 'angel tax' has been a long-standing demand of the industry." However, he wasn't happy with the fact that the Indian tax officers could still question the earlier investments as being overvalued in the view of declining valuations on a global level and in the Indian sub-continent.