Government working on administrative mechanism to resolve startups' legacy tax issues: CBDT chief

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Startups should not have any concern related to taxation and the government is putting in place an administrative mechanism to resolve the legacy issues, CBDT chief P C Mody said on Tuesday.

The Central Board of Direct Taxes (CBDT) chairman further said the Budget has also increased the threshold for launching a prosecution, which has been enhanced to Rs 10,000 from Rs 3,000 for ease of compliance of taxpayers.

"Ease of tax compliance would be an integral part of the ease of living... The ease of compliance also talks about the threshold for prosecution. As you would notice, that limit has also been raised from Rs 3,000 to Rs 10,000. And, the compounding guidelines have been made liberal," Mody said.

In the Budget 2019-20, Finance Minister Nirmala Sitharaman proposed to simplify the tax law to reduce genuine hardships being caused to taxpayers which include enhancing threshold of tax for launching prosecution for non-filing of returns and exempting an appropriate class of persons from the anti-abuse provisions of Section 50CA and Section 56 of the Income Tax Act.

"This Budget, there is a clear cut direction to tone up the tax administration and to ensure that taxpayers get the correct environment to discharge their obligations honestly and correctly," Mody said.

The Budget also proposed a number of measures to resolve the problems being faced by startups with regard to their initial funding, called angel tax, their certification, and verification of investors.

Mody said that in future, there should not be any cause for friction or concern in the minds of startups.

"The legacy issues are being dealt with separately. Those are more of administrative nature, we are already working on that. As has been pointed out earlier in the Budget speech that administrative mechanism is being put in place to solve the legacy issues also," Mody said addressing a Ficci event.

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