PARAGRAPH,WORDS AND MEANING

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Topic Of The Day:-“Timely Review: On Start-Up Tax”

The very idea of an ‘angel tax’ on start-ups must be reconsidered

Start-ups troubled by the so-called angel tax may soon receive some concession from the government. On Monday, the Centre set up a five-member working committee to look into revising the norms of the angel tax imposed on start-ups. The tax, which was first introduced in 2012 tocurb money-laundering through the sale of shares of private unlisted companies at bloated prices, has caused a lot of anguish among start-up investors in the country. Start-up owners have complained that income tax officials have asked many start-ups to cough up money when they try to attract capital into their entities by issuing new shares. For its part, the IT department fears that start-ups may be used as convenient tools to launder illegally acquired money, so a tax on investments beyond a certain threshold is necessary to deter such shady operations. But while theintent of such an angel tax may be justifiable, the arbitrary nature of it means the cost of unintended consequences could be larger than the supposed benefits. In trying to curb money-laundering, Section 56(2)(viib) of the Indian Income Tax Act, 1961 gives income tax officials a free hand to harass even genuine start-ups looking to raise investments for their growth. Under the Act, the IT department is free to arbitrarily decide the fair value of a company’s share and tax start-ups if the price at which their new shares are sold to investors is higher than the fair value of these shares. The broad-brush tax on all investments means an unnecessary cost is imposed on the wider start-up community simply because of the lack of better means at the government’sdisposal to tackle black money.

The committee set up by the government will, among other things, consider raising the threshold beyond which new investments into start-ups will be taxed. It is expected that start-ups withaggregate paid-up share capital and share premium of less than ₹25 crore, against the previous threshold of only ₹10 crore, will not be taxed while attracting new investment. This would definitely make life easier to a certain extent for angel investors and start-ups. But it will not address the real problem with the angel tax, which has to do with the unbridled power that it vests in the hands of the income tax authorities. Investors, foreign or domestic, may become wary of investing in new ideas when they are taxed while risking money on untested ventures. So the government should look to withdraw the angel tax and focus instead on building the capability to better identify and rein in illegal wealth. Otherwise it risks killing the nascent start-up ecosystem in the country.

MEANINGS AND WORDS

1) concession

Meaning : a thing that is granted, especially in response to demands(n).

Synonyms : privilege

Antonyms : denial

Example : “the government was unwilling to make any further concessions”

2) imposed

Meaning : force (an unwelcome decision or ruling) on someone(v).

Synonyms : demand

Antonyms : disorder

Example : “the decision was theirs and was not imposed on them by others”

3) curb

Meaning : a check or restraint on something(n).

Synonyms : ledge

Antonyms : inside

Example : “plans to introduce tougher curbs on insider dealing”

4) anguish

Meaning : severe mental or physical pain or suffering.

Synonyms : agony

Antonyms : delight

Example : “she shut her eyes in anguish

5) deter

Meaning : discourage (someone) from doing something by instilling doubt or fear of the consequences(v).

Synonyms : dampen

Antonyms : advance

Example : “only a health problem would deter him from seeking re-election”

6) intent

Meaning : intention or purpose(n).

Synonyms : decided

Antonyms : indefinite

Example : “with alarm she realized his intent”

7) imposed

Meaning : force (an unwelcome decision or ruling) on someone(v).

Synonyms : appoint

Antonyms : disorder

Example : “the decision was theirs and was not imposed on them by others”

8) disposal

Meaning : the action or process of getting rid of something(n).

Synonyms : clearance

Antonyms : building

Example : “the disposal of radioactive waste”

9) aggregate

Meaning : a whole formed by combining several separate elements(n).

Synonyms : accumulated

Antonyms : uncombined

Example : “the council was an aggregate of three regional assemblies”

10) unbridled

Meaning : uncontrolled; unconstrained(adj).

Synonyms : unchecked

Antonyms : restrained

Example : “a moment of unbridled ambition”

11) rein

Meaning : check or guide (a horse) by pulling on its reins(v).

Synonyms : curb

Antonyms : release

Example : “he reined in his horse and waited”

12) ventures

Meaning : undertake a risky or daring journey or course of action(v).

Synonyms : endeavor

Antonyms : idleness

Example : “she ventured out into the blizzard”

13) demonstrated

Meaning : give a practical exhibition and explanation of (how a machine, skill, or craft works or is performed)(v).

Synonyms : determine

Antonyms : conceal

Example : “computerized design methods will be demonstrated”

14) secured

Meaning : fix or attach (something) firmly so that it cannot be moved or lost(v).

Synonyms : achieve

Antonyms : forfeit

Example : “pins secure the handle to the main body”

15) impromptu

Meaning : done without being planned or rehearsed(adj).

Synonyms : unscripted

Antonyms : deliberate

Example : “an impromptu press conference”

16) evidence

Meaning : the available body of facts or information indicating whether a belief or proposition is true or valid(n).

Synonyms : indication

Antonyms : concealment

Example : “the study finds little evidence of overt discrimination”

17) alleges

Meaning : claim or assert that someone has done something illegal or wrong, typically without proof(v).

Synonyms : declare

Antonyms : deny

Example : “he alleged that he had been assaulted”

18) impression

Meaning : an idea, feeling, or opinion about something or someone, especially one formed without conscious thought or on the basis of little evidence(n).

Synonyms : impact

Antonyms : beginning

Example : “his first impressions of Manchester were very positive”