BENGALURU: Nasscom has said that the government should set up a group comprising officials from the CBDT, MCA, DPIIT, SEBI, RBI and industry to study the impact of 12 years of implementation of the angel tax and suggest the way forward.
In its pre-budget memorandum 2024-25, the Nasscom, which represents the country's technology industry, pointed out various issues in the start-up ecosystem with regard to the angel tax.
"Another important concern with respect to angel tax is the fact that tax officers have the powers to dis-regard the valuation done by a professional valuer. This is because valuation of start-ups is very subjective and is based on future projections," it said.
Also, very few start-ups can avail the exemption from angel tax and even if a start-up avails exemption, it is not useful. "The end-use restrictions for utilising exempted investments are constraining and impact the business of start-ups," it added.
It also recommended to consider enabling direct listing in India of Indian-origin foreign incorporated start-ups which have India as one of their key business markets. Among its other recommendations, Nasscom also said the budget should increase the eligibility threshold for safe harbour provisions to at least Rs 2000 crore.
"Do away with the distinction between IT/ITeS, and R&D in software development and KPO, as these definitions have outlived their utility, and such distinctions are not adopted or able to be followed by companies in practice. Accordingly, reduce the categories of services to account for blended/ integrated service offerings," it added.