Start-ups and entrepreneurs welcomed Union Finance Minister Nirmala Sitharaman’s announcement on e-verification for angel investments, but were apprehensive over other taxation issues.
T-Hub Chief Executive Officer Ravi Narayan said e-verification would bring about more transparency. “Start-ups will not have any tax scrutiny on raising funds as investors. Their source of funds and investment dealing details will not depend on human interventions any more,” he said. He added that the proposed start-up news channel would encourage youth to embrace entrepreneurship.
Pavan Adipuram, founder and CEO of Chitmonks, pointed out that the e-verification mechanism was yet to be finalised, and described it as a watch-and-watch scenario. He, however, expressed optimism over the proposal to set off losses incurred by the start-ups. “This means if, say in the sixth year a start-up makes profit, the losses of the past five years will not be taxed,” Mr. Adipuram said. Other entrepreneurs such as K.K. Jain from AnyTimeLoan.in rued that GST for Fintech continues to remain at 18%. He also pointed out that there exists a disconnect between taxmen and the methods of start-up valuation. “Income tax officials understand balance sheets. But valuation system does not work that way. It depends on multiple factors like technology, cap ex-investments and market leadership,” Mr. Jain said.
Touching upon the proposed arrangements by the Central Board of Direct Taxes for pending assessment of start-ups, Mr. Jain said a bar on inquiry by assessing officer without the approval of a supervisory officer is akin to a ‘rider’. “It is a breather. But not complete. This is like saying if the order comes from one level (of hierarchy) up, the investigation has to be done.”
