The finance ministry on Tuesday said it may provide some safeguards for angel investments into start-ups, following the Budget proposal to classify such funding as income from other sources.
“We may look into the matter,” R S Gujral, finance secretary, said in response to a query during a post-Budget interaction with members of Ficci. The new clause will apply where a company, in which there is no substantial public interest, receives from a resident a consideration for issue of shares that exceeds the face value of such shares. The industry is worried this clause would badly affect venture capital funding into the country and hit small businesses, trying to scale up.
Meanwhile, Central Board of Direct Taxes Chairman Laxman Das assured non-resident Indians that they need not worry about the proposed changes in the Income-Tax Act, provided they did not have unexplained wealth.
“If any money is found to be of some person’s and then it comes to our knowledge, then if it is legitimately explained he doesn’t have to bother; but if it is unexplained, then we will have to bother and we will bother,” he said.
In the Budget, the finance ministry has proposed to reopen assessment cases of last 16 years in case of overseas assets, against six years at present.