What is Angel Tax Notice Handling?
Nexa Consultancy | Startup & Finance Glossary
Receiving a notice from the tax department regarding Angel Tax (Section 56(2)(viib)) can be daunting. It means the officer believes your startup was overvalued. Handling it requires submitting a strong valuation report (from a Merchant Banker) and a detailed justification for your share premium.
Startup Example: A startup receives a notice questioning its ₹10 Crore valuation in its seed round. The founder, with the help of a CA, must respond with documentation proving the valuation was fair based on market standards and future projections.
Our fundraising advisory helps set realistic valuations to minimize this risk.