Taxmann Taxation of Start-ups & Investors – 5th Edition April 2022

This is a handy book for the taxation of start-ups & investors, including, but not limited to the following:

• Tax Holiday u/s 80-IAC of the Income-tax Act 1961
• Angel Tax Exemption

All topics related to the taxation of start-ups & investors are discussed in light of the following:

• Department for Promotion of Industry and Internal Trade (DPIIT) Guidelines
• Inter-ministerial Board (IMB) Decisions made in IMB Meetings
• Relevant Legal Provisions
• Case Laws

The Present Publication is the 5^th Edition, authored by Taxmann’s Editorial Board. This book is updated by the Finance Act 2022, with the following noteworthy features:

• [Start-up Ready Reckoner]
  • Eligibility Ready Reckoner for tax holiday u/s 80-IAC
  • Compliance Ready Reckoner for turnover-limit linked compliances/exemptions for the following entities:
    • Private Companies
    • Limited Liability Partnership
    • Traditional/General Partnership Firm
  • Tax Benefits available for DPIIT recognised start-up private limited companies based on their turnover
• [Tabular Format of Tax Holiday for Start-ups approved by IMB] in the following cases:
  • Grounds of Innovation
  • Grounds of Scalability
  • Grounds of Employment Generation or Wealth Creation
  • Grounds of Improvement in Products
• [Detailed Analysis of Finance Act 2022 Amendments] on discharging additional onus on loans/borrowings credited in books
• [Detailed Analysis with a Specific Focus] on the following topics:
  • Revised Guidelines for recognition of start-up
  • Process of IMB Certification for a tax holiday
  • Options of low tax rate regime u/s 115BAA/115BAB without tax holiday
  • Relative tax efficacy of various start-up entity forms, such as:
    • Registered Partnership Form
    • Limited Liability Partnerships
    • Private Limited Companies
  • One Person Company as a start-up entity form
  • Dispute Resolution Scheme for small/medium taxpayers
  • Taxability of investors and eligibility under section 54GB with practical examples
• [Case Studies] of acceptance/rejection by IMB of a start-up’s application for a tax holiday
• [FAQs] are given at the start of the book
• [Detailed Analysis of Difference between MSMEs and Start-ups] and benefits available under the MSMED Act, 2006

The detailed contents of the book are as follows:

• What are a start-ups
• Distinction between start-ups and MSMEs
• What is the criteria for recognition of start-ups by DPIIT
• Start-ups eligible for DPIIT-Recognition
• OPC as a start-up entity
• Innovation/scalable business model
• Start-up entities not eligible for DPIIT recognition
• Sole proprietorships – whether eligible for DPIIT recognition
• Entities formed as a result of amalgamations/mergers/demergers/absorption whether eligible for DPIIT recognition
• Entities formed as a result of compromise/arrangement – whether eligible for DPIIT recognition
• Holding & subsidiary companies – whether eligible for DPIIT recognition
• Joint Ventures – whether eligible for DPIIT recognition
• Entities incorporated outside India – whether eligible for DPIIT recognition
• Entities with foreign shareholding/stake – whether eligible for DPIIT recognition
• Entities formed by splitting up/reconstruction of an existing business – whether eligible for DPIIT recognition
• Entities incorporate with common director/DP/partner – whether eligible for DPIIT recognition
• Procedure for DPIIT-recognition of start-up
• Name change by DPIIT-recognized start-up entity – whether permitted
• CIN/LLPIN change by DPIIT-recognized start-up entity – whether permitted
• Conversion by a DPIIT-recognized entity from one form to another – whether permissible
• Automatically ceasing to be a ‘start-up’ under LSN
• Approvals needed by start-up entity for claiming tax benefits
• Tax efficacy of different start-up entity forms – firms, LLPs & Pvt. Companies
• Tax holiday to start-ups under Section 80-IAC
• Funding blues of private limited start-up companies
• Tax implication of funding a start-up by investing in it money from the sale of the residential property invested in the start-up – Section 54GB
• Exemption from ‘angel tax’ to private limited companies start-ups
• Computation of FMV of shares issued when angel tax exemptions is not applicable
• Conditions for carry forward or set-off of losses of start-up PLC under section 79
• Deferring TDS or tax payment in respect of ESOP income of employees of eligible start-ups
• Mandatory acceptance of payments through prescribed electronic modes if turnover exceeds INR 50 crores – section 269SU
• Constitution of dispute resolution committee for small and medium taxpayers
• Taxation of investors exiting start-ups
• Tax on reconstitution of firms/LLPs

Details