The Department of Industrial Policy & Promotion(DIPP) has taken notice of the news reports regarding issue of notices by Income Tax authorities to Angel Investors/Start-ups.

DIPP in consultation with the Department of Revenue (DoR) has put in place a mechanism since April 2018 to grant exemption from the provisions of Section 56(2)(viib) of the Income Tax Act to genuine investors in recognised start-ups.

DIPP has again taken up this matter of issue of IT notices with the DoR so that there is no harassment of Angel Investors or Start-ups.Government is committed to protecting bona fide investments into start-ups.

Exemption for angel investments under Section 56(2)(viib) safeguards genuine start-up funding from IT notices and scrutiny. Clarification states that, since April 2018, an administrative mechanism grants exemption to genuine investments in recognised start-ups from tax treatment that prompted notices; DIPP and the Department of Revenue have reiterated that recognised start-ups and bona fide angel funding qualify for this exemption to avoid harassment by tax authorities.