IT Notice: The IT department has sent notices to many small and unicorn startups. Let us know what is the reason behind sending these notices.
Income Tax Notice: There is another bad news for startup companies struggling with lack of funding. The Income Tax Department has started sending notices to startup companies that have received funding of more than Rs 100 crore. According to a report in Business Standard, the IT department has sent notices to several startups and unicorn startup companies due to the funding received between FY 2019 and 2021. It has been asked to give information about the nature and source of its investment.
Information sought under this section
According to Business Standard news, all small and unicorn startups that have received funding of more than Rs 100 crore have received notices from the Income Tax Department. Although the total number of Startup Funding has received the notice of the Income Tax Department, it has not been disclosed yet. The Income Tax Department has sent these notices under section 68 of the Income Tax Act. Through this act, the department asks for information about those funds, the source of which has not been informed. This section is used to get information about funding.
Startup information
It is worth noting that the IT Department has sought information from startup companies about local holdings of foreign investors, valuation and use of money raised from investors in this notice. In view of the increasing trend of round tripping of funds by the department, the IT department has sent a notice to know these details. In view of round tripping, the provisions of Angle Tax have been made applicable to NRIs as well. Being a regulated entity, sovereign wealth funds, pension funds and portfolio investors registered with SEBI are exempted from angel tax.
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