In what could be music to the ears of many Indian startups, the tax authorities will not press ahead with the angel tax demands to the ones who were issued notices, according to a report in the Economic Times. When the startups were slapped with notices to pay up income tax based on the startups’ valuations arrived at by them, there was widespread criticism that the government was making life difficult for entrepreneurs instead of encouraging them.

The government then had a relook at the policy and issued a fresh notification enhancing the threshold limit from Rs 25 crore to Rs 100 crore on February 19. The question before both the tax authorities as well as the assesses was what would be the fate of the large number of demands already raised by the department. There are also cases where assessment proceedings have been initiated.

This is what has now been clarified that in all such cases, only the policy as enunciated in the February 19 notification will apply and the relief would be made available to all of them.

The Department for Promotion of Industry and Internal Trade (DPIIT) and the Central Board of Direct Taxes (CBDT) are the two bodies in the middle of this whole imbroglio and it is reported the two wings of the government have had several discussions among themselves on solving the issue.

The result of these discussions is that the startups which have received the demand notices need to respond with a copy of the policy revision notification dated February 19 and establishing that they do not liable as per the new policy to pay the tax.

And where the assessment proceedings are already underway, there too, at the appellate level, the startups can submit their case alluding to the new policy and get relief.