Online petition against 'angel tax' by aggrieved startups

A petition has been filed by a group of entrepreneurs from Bangalore which was originally started by Sreejith Moolayil, co-founder & COO of True Elements, a food startup, on Change.org against the 'angel tax' being demanded by the income tax authorities. This has been a practice for the past one year now. The entrepreneurs stated that the petition is on behalf of many hundreds of startups in India which are upset by a series of notices and assessment orders from the I-T department, which denies the spirit of the Startup India movement as they are dangerous to ease of doing business in India. The entrepreneurs in their appeal are seeking support from everyone in the industry to sign the petition so that everybody can focus on business growth and generation of wealth for everyone, without having to continuously worry about random inspections. In their humble request to the finance minister they want him to strongly review Section- 56(2) and Section- 68 of the Income-Tax Act with retrospective effect to help them focus in building their startups. The & lsquo angel tax' was introduced in 2012, but the monitoring and questioning of investors have just started over the past year by the Central Board of Direct Taxes (CBDT). Under this tax, any investment raised from local angel investors above the fair value of a venture as determined by the Board will be taxed as income in the hands of the startup. The applicable tax rate is 30%. However, the government's decision to levy this tax has only led to a reduction in the angel investments in the country as well as reduced the ease of doing business.