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Income Tax Update – Amendment in Section 56(2)(viib) for receipt of consideration from any person

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In the Notification No. 30/2023, the CBDT has notified that the consideration received by Companies for share capital exceeding the face value received from any person (whether resident or non resident) shall be exempt from tax. The provisions stipulate that the angel tax exemption provisions shall be applicable to the start up companies which complies with the conditions specified by the DPIIT at Para 4 of DPIIT Notification No. S.O. 1131 (E) dated 5th March 2019.

The Notification reads as follows :-

In exercise of the powers conferred by clause (ii) of the first proviso to clause (viib) of sub-section (2) of section 56 of the Income-tax Act, 1961 (43 of 1961) and in supersession of the notificationof Government of India in the Ministry of Finance, Department of Revenue, Central Board of Direct Taxes published in the Gazette of India, Extraordinary, Part-II,  Section  3,  Sub-section  (ii)  vide  number S.O. 1131(E) dated 5th March 2019, except as respect things done or omitted to be done before such supersession, the Central Government, hereby notifies that the provisions of clause (viib) of sub-section (2) ofsection 56 of the said Act shall not apply to consideration received by a company for issue of shares that  exceeds the face value of such shares, if the said consideration has been received from any person, by a company which fulfills the conditions  specified  in  para  4  of  the  notification  number G.S.R. 127(E), dated the 19th February, 2019 issued by the Ministry of Commerce and Industry in the Department for Promotion of Industry and Internal Trade and published in the Gazette of India, Extraordinary, Part-II, section 3, Sub-Section (i) on 19th February, 2019 and files the declaration referred to in para 5 of the said notification of the Department for Promotion of Industry and Internal Trade.

This notification shall be deemed to have come into force from the 1st day of April 2023.

To view and download the Notification, click here

Notification No. 30/2023

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