The government's recent decision to give relief to start-ups on assessment of angel tax notices would provide a safeguard to them and promote their growth, according to experts. Seeking to calm the nerves of start-ups worried about angel tax, the government last week assured that explanation given by them to a tax notice in a limited scrutiny case would be summarily accepted without any questions asked by the taxman.
The Central Board for Direct Taxes' (CBDT) circular with this effect "brings in more safeguard by requiring assessing officers to procure his or her supervisor's consent before starting on any inquiry under the angel tax provision against a start-up company which has not got DPIIT approval," S. Vasudevan, Partner, Lakshmikumaran & Sridharan said.
However, he added that the circular does not specify any minimum rank of the consenting superior officer.
"Also, lack of guidelines as to how the assessing officer or his supervisory officer selects cases for scrutiny may continue to haunt the start-ups," he added.
Amit Maheshwari, Partner, Ashok Maheshwary & Associates LLP said that CBDT's clarification will help start-ups which are facing questioning in their assessments and will also give a clear direction to assessing officers on what to do in such cases.
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