The Central Board of Direct Taxes (CBDT) in its Office Order Number F. No. 173/149/2019-ITA-I, dated September 23, 2019 (“Instant Order”), has prescribed timelines for handling the redressal of grievances of startups registered with the Department for Promotion of Industry and Internal Trade (DPIIT).
Background
By its earlier Office Order Number F. No. 173/149/2019-ITA-I, dated August 30, 2019, the CBDT mandated that separate cells are required to be set up, for the redressal of grievances of startups registered with the DPIIT (“Grievance Cell”). This is aimed at ensuring that a dedicated mechanism is put in place, for faster redressal of specific tax-related issues faced by startups. At the regional level, the Principal Chief Commissioner of Income-Tax, will be in charge of setting up these grievance cells and initiating action for the resolution of these grievances.
Directions
In line with the Finance Ministry’s vision to ease the functioning of startups in India, the Instant Order has laid down the following timelines for the redressal of startup grievances.
- For any grievance entertained by the Grievance Cell, a Preliminary Action Taken Report (“Preliminary Report”) shall be prepared and sent to the CBDT within 1 (one) working day of being called upon to do so;
- Subsequent to sending the Preliminary Report, the Grievance Cell shall prepare and send the Final Action Taken Report (“Final Report”) to the CBDT within 3 (three) working days of being called upon by the latter.
Further, the Instant Order has also shed light on the need for the sensitization of officers in-charge at the CBDT in dealing with these grievances, ensuring that the objective of providing reliefs and taking such measures is actually fulfilled. The Instant Order states that “utmost care” is to be taken by the officers in charge, in dealing with startup grievances, distinct from grievances in general.
Quick View
In the past, startups have been exempted from the payment of ‘Angel Tax’, in a bid to ease the functioning of startups. In furtherance of this objective, the CBDT has mandated the setting up of Grievance Cells and has attempted to ensure that the grievance redressal process is conducted in a time-bound manner. However, a point of concern here is that since the timelines are quite short, it may result in multiple incidences of deficient grievance redressal, defeating the purpose of introducing these timelines in the first place. It is yet to be seen whether these timelines are practical in their implementation. Further, the recognition of the need for sensitization of officers is remarkable, placing the growth of startups on the forefront, and striving to prevent income tax assessment from putting the breaks in it. However, in the absence of data regarding the functioning of these Grievance Cells, it remains to be seen how effective this concept is in its implementation.
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.