Repeal angel tax

Rewriting Section 56 (2) to exclude start-ups is difficult

The government is reportedly planning to raise the investment limit for availing income tax concessions by start-ups, and provide a clearer definition. The Department for Promotion of Industry and Internal Trade (DPIIT) has decided to form a working group to resolve the “angel tax” tangle. These are welcome developments as they signal that policymakers are becoming aware of the major issues caused by Section 56(2) of the Income-Tax Act. But while the Central Board of Direct Taxes (CBDT) has decided to go slow on demands under the section, and a mechanism for exemptions has been created, more than 2,000 start-ups