Centre eases Angel Tax Exemption Rules
In a move to promote entrepreneurship in the country, the government has liberalised the conditions for startups and investors to shield them from what has been called ‘angel tax’.
The new notification by the Departmental of Industrial Policy and Promotion (“DIPP”) partially modifies the April 11, 2018 notification. The new notification specifies that a startup which has been recognized by the DIPP under the April 11, 2018 notification shall be eligible for approval under Section 56 (2) (viib) of the Income Tax Act, 1961 for the shares already issued or proposed to be issued if (i) the aggregate amount of paid up share capital and share premium does not exceed INR 10,00,00,000/- (Rupees Ten Crore Only) after the proposed issue of shares; and (ii) investor/proposed investor shall have (a) returned income of INR 50,00,000/- (Rupees Fifty Lakhs Only) or more for the financial year preceding the year of investment/proposed investment; and (b) net worth exceeding INR 2,00,00,000/- (Rupess Two Crore Only) or the amount of investment proposed in the startup, whichever is higher, as on the last date of the financial year preceding the year of investment/proposed investment.
To claim the exemption startups and investors need to make an application via DIPP in a prescribed format along with necessary documents. The Central Board of Direct Taxes will then issue certificate of exemption within 45 days of the application. Further, the requirement of providing a valuation report from merchant banker specifying the fair market value of shares has been done away with.
Quick Views:
- The tax under Section 56(2) of the Income Tax Act, 1961 came to be known as ‘angel tax’ because of its impact on angel investments in startups. However, the exemptions are only limited to startups that have been recognized by the DIPP. Therefore, the intended benefit of this notification might be limited to only the startups recognized by the DIPP.
RBI Eases External Commercial Borrowing Norms
In a move aimed at improving the ease of doing business, the Reserve Bank of India (“RBI”) has issued a notification to ease the norms for external commercial borrowing (“ECB”). All companies eligible to receive Foreign Direct Investments along with Port Trusts, Units in Special Economic Zones and others are eligible to raise ECB.
Under this new framework, all eligible borrowers can raise ECB up to USD 750 million or equivalent per financial year under the automatic route. The ECB can be raised under the automatic route and for approval route the borrowers may approach the RBI with an application in prescribed format Form ECB- Annex I through their Authorised Dealer Category I banks approved by the RBI under the Foreign Exchange Management Act, 1999.
Quick Views:
- Done with the intent of improving the ease of doing business, the new move will definitely help businesses grow with the additional sources of capital being available to them. This move can be seen as beneficial to the Indian economy in the long run.
Delhi HC’s Latest Order on Personality Rights
The Delhi High Court, in the case of Rajat Sharma and Anr. v. Ashok Venkatramani and Anr., has issued an injunction against Zee Media from using journalist Rajat Sharma’s name in all its print and electronic advertisements. It further directed the defendants to remove all hoardings across the country which mention Mr. Sharma’s name.
The brief facts of the case are that in order to promote its “anchor-less” news channel Zee Hindustan, Zee Media advertised its show in a way which mentioned famous TV journalists like Arnab Goswami, Anjana Om Kashyap and Rajat Sharma in an unflattering way. The same was objected by Mr. Sharma and he filed a suit for permanent injunction against Zee Media.
The Court relied on the famous Titan Industries Ltd. v M/s Ramkumar Jewellers and Shivaji Rao Gaikwad v. Marsha Productions to hold that personality rights are identity rights of individuals and their name cannot be used without their permissions. The Delhi High Court held the advertisement to be illegal and refrained Zee Media from using Mr. Sharma’s name without his permission.
Quick Views:
- It is an established principle that personality rights emanates from the right to privacy. The right to commercially exploit one’s name, image, voice etc. rests with the person who has acquired the status of a celebrity. In light of this, the decision of the Delhi High Court in this case is a decision that reinstates this position of the law.
Disclaimer: This post has been prepared for informational purposes only. The information/or observations contained in this post does not constitute legal advice and should not be acted upon in any specific situation without seeking proper legal advice from a practicing attorney.