#ShutDownIndia: Harassed over tax, Startups face an uncertain future
Pushpinder Singh, founder of Travelkhana, took to Twitter to vent his agony.
Pushpinder Singh, founder of Travelkhana, took to Twitter to vent his agony over the I-T department freezing the company’s accounts in relation to the tax demands. “The bank manager said that four I-T inspectors came and forced the bank manager to make DDs (demand drafts) from all accounts. The bank manager said that this is commonplace these days,” Singh tweeted on Friday. The tax department said it had recovered Rs 36 lakh from the startup.
In a statement, the Central Board of Direct Taxes said the action was taken due to unexplained cash deposits received by the company and should not be seen as going back on an earlier assurance. “During the assessment proceedings, the assessing officer requested for confirmation of the persons from whom deposits had been received. Wherever confirmations were submitted, the same were accepted by the assessing officer and no addition was made (to the income)… the addition was made only when the taxpayer failed to substantiate the source, resulting in demand of Rs 2.22 crore approximately,” the statement said.
It added that neither the assessee nor its director submitted any certificate from the department for promotion of industry and internal trade (DPIIT) to show its status as a startup, which is a mandatory requirement to avail of tax benefits.
Other founders too are complaining. “I was in the meeting on Monday regarding angel tax when I got the scanned copy of tax order demanding over Rs 20 lakh. I informed income tax officials instantly and explained the irony of the situation,” said SchoolDiary founder Ashish Chaturvedi. If the current tax demand is not withdrawn, Chaturvedi fears he might get additional notices over two more rounds of capital that he raised for the company. After the news of fresh notices and action by the tax department, entrepreneurs and investors started tweeting #ShutDownIndia, prompting authorities to respond.
In January, the government had said a startup will first need to be recognised by DPIIT to be eligible for concessions for shares that have been issued or are proposed to be issued. The startups will then have to seek tax breaks, for which DPIIT will approach the I-T department. It was also decided by the Centre to scrap the earlier requirement of startups to submit a report from a merchant banker specifying the fair market value of shares along with certification by an interministerial board.