Several start-ups, including prominent unicorns, have received tax notices on some supposedly unexplained investments in them between FY19 and FY21.
The notices, under Section 68 of the Income-Tax Act, were served across the start-up spectrum - fintech, aggregators, and edtech. They sought an explanation on the nature and source of the investment, people familiar with the matter told Business Standard.
The minimum investment in question is 100 crore. However, the total could not be ascertained.
Section 68 of the Act deals with unexplained funds credited to the books of taxpayers and for those the source is not given.
The Section is invoked mainly to know the identity, creditworthiness, and genuineness of the share issuance.
Some of these notices questioned the foreign investors' regional holding, the valuation prescribed, and the purpose of the loan taken by the investors.
Subsidiaries of some multinationals too were queried about the funds they received from their parent firm.
This story is from the May 30, 2023 edition of Business Standard.
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This story is from the May 30, 2023 edition of Business Standard.
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