New Delhi, Jan 17 (IANS): In a big boost to startups and their investors, the government has liberalised the norms including doing away with the need for an inter-ministerial committee's approval for availing angel tax exemption.

"Neither the inter-ministerial board certificate nor a merchant banker certificate is required for angel tax exemption," the Department of Industrial Policy and Promotion (DIPP) said in a series of tweets after a notification.

As per the notification, startups and investors wishing to claim exemption from angel tax will apply to DIPP, and the Central Board of Direct Taxes (CBDT) may grant approval and issue the certificate within a period of 45 days.

Angel tax, introduced in 2012, is levied on the difference between the amount received by a closely held company in lieu of its shares and the fair market value of the shares. The excess amount is taxed as income from other sources.

Beside removing the need for fair market valuation certificate from merchant banker, the DIPP has reduced the need for documents limiting it to justification for valuation of shares, annual accounts of startup, net worth certificate of investor and income tax returns of both.

Startups whose paid-up share capital, including premium, does not exceed Rs 10 crore will be eligible for this exemption. And, the eligible investor will have returned income of Rs 50 lakh or more for the previous financial year with net worth exceeding Rs 2 crore.

"For the startup to be eligible for angel tax exemption, the aggregate amount of paid up share capital and share premium of the startup after the proposed issues of shares, should not exceed Rs 10 crore," the DIPP said in another tweet.

"Additionally, the investor's net worth should exceed Rs 2 crore or the amount of investment proposed in the startup, whichever is higher, as on the last date of the financial year preceding the investment year," it added.

Further, the scope of the angel tax exemption will cover all past and future investments of the startups, and it will also apply to startups that were incorporated even before 2016.

Since the launch of the Startup India Action Plan on January 16, 2016, 15,113 startups have been recognised under the programme across 492 districts in 29 states and six Union Territories.

"Fostering the startup ecosystem requires ease of doing business and this has been central to most of our regulatory reforms," government initiative Startup India said in a tweet.

To date, 20 states have launched their startup policies since the launch in January 2016.