Taxation of Start-ups & Investors by Taxmann

This book is a comprehensive guide that simplifies the complexities of start-up taxation in India. It covers key aspects like the tax holiday under Section 80-IAC, Angel Tax exemptions, revised valuation norms, and detailed processes for securing DPIIT recognition and IMB certification. The book provides practical insights through comparative analyses of various start-up entity forms, including LLPs, private limited companies, and one-person companies, along with ready reckoners on compliance requirements linked to turnover milestones.

It is designed to provide clear, actionable guidance and equip tax professionals, legal advisors, entrepreneurs and investors with the tools to understand the tax obligations and maximise benefits effectively.

The Present Publication is the 7th Edition and has been amended by the Finance (No. 2) Act, 2024. This book is authored by Taxmann's Editorial Board with the following noteworthy features:

• Comprehensive Coverage of Start-up Taxation
• This book provides an extensive analysis of the taxation aspects of start-ups, particularly focusing on the tax holiday under Section 80-IAC of the Income-tax Act, 1961. It covers the eligibility criteria, benefits, and compliance requirements for availing this tax holiday, making it a crucial resource for start-ups looking to optimise their tax liabilities. The detailed analysis of Angel Tax exemptions, including the revised valuation norms and the implications of their abolition, helps start-ups understand the evolving tax environment
• Detailed Examination of DPIIT Recognition and IMB Certification
• The book discusses obtaining recognition from the Department for Promotion of Industry and Internal Trade (DPIIT), which is critical for start-ups to access various tax benefits. It outlines the eligibility criteria, application steps, and everyday challenges. Furthermore, it provides a comprehensive guide on the Inter-ministerial Board (IMB) certification process for start-ups seeking a tax holiday under Section 80-IAC, with detailed explanations of the grounds for certification, such as innovation, scalability, employment generation, product improvement, and wealth creation
• Comparative Analysis of Start-up Entity Forms
• A key feature of the book is its comparative analysis of the tax efficiency of different start-up entity forms, including Registered Partnerships, Limited Liability Partnerships (LLPs), Private Limited Companies, and One Person Companies (OPCs). It examines the advantages and disadvantages of each structure, guiding start-ups in selecting the most tax-efficient form based on their specific needs. This section includes a discussion on the compliance requirements and potential tax benefits associated with each entity type
• Understanding of Low Tax Rate Regimes
• The book covers alternative low tax rate regimes under Sections 115BAA and 115BAB, providing discussions into the conditions and benefits of these regimes. It helps start-ups evaluate whether to opt for these low tax rate regimes or to continue with the tax holiday under Section 80-IAC based on their specific financial and operational circumstances
• Start-up Reckoners and Compliance Tools
• To support start-ups in maintaining compliance, the book includes several handy reckoners that outline compliance requirements linked to turnover milestones. These reckoners serve as quick references, helping entrepreneurs understand the regulatory obligations triggered as their start-up grows. Additionally, the book features an alphabetical reckoner of the eligibility of various business ideas for the tax holiday under Section 80-IAC, making it easier for start-ups to determine their eligibility
• Breakdown of Finance Act Amendments
• The book provides a detailed analysis of recent amendments introduced by the Finance (No. 2) Act, 2024, including the abolition of the Angel Tax and new tax provisions related to winnings from online games. It explains how these changes impact start-ups and investors, guiding adapting tax strategies to align with the new regulations
• Structured Chapter-wise Content for Easy Navigation
• The content is organised into two main sections—Chapters 1 to 21 focus on the DPIIT's recognition of start-ups, covering eligibility, application procedures, and potential challenges. Chapters 22 to 31 address the taxation aspects of start-ups, providing a comprehensive look at various topics, including ESOP taxation, TDS implications, and compliance with digital payment mandates. This structured approach allows readers to understand complex topics with ease, from foundational concepts to advanced issues
• Distinguishing Between Start-ups and MSMEs
• A dedicated section of the book distinguishes start-ups from Micro, Small, and Medium Enterprises (MSMEs), analysing the unique benefits available to each under the MSMED Act, 2006. It provides practical guidance on how start-ups can leverage these differences to maximise their tax and regulatory benefits
• Practical Insights with Real-world Case Studies and FAQs
• The book is enriched with real-world case studies that showcase successful and unsuccessful tax holiday applications by start-ups. These cases provide practical insights into the criteria influencing IMB decisions, helping start-ups understand the factors affecting their certification outcomes. An FAQ section at the beginning addresses common queries, making complex tax concepts accessible and understandable for readers at all levels