Several startups have received tax notices from the Income Tax department to explain investments routed through Singapore, a report by Business Standard said on April 16.
The tax department issued notices under Section 68 of the I-T Act to justify the funds received in the last 5 years, the newspaper said citing sources.
The Section 68 of the Income Tax Act, 1961, gives powers to the department to review the unexplained credits in a taxpayer's book.
The report said that the formal show-cause notices are asking for the source, identity and the creditworthiness of the foreign investors.
Moreover, the non-resident Indians are also under the scanner of tax officials for holding bank accounts in Singapore, BS said.
The latest scrutiny has come after the tax department received information under bilateral tax treaties and Automatic Exchange of Information Framework, the report pointed out.
Earlier on April 15, the newspaper had also reported that I-T department is reviewing the tax benefits claimed by Mauritius-based foreign portfolio investors under India- Mauritius treaty.
More than half a dozen Mauritius-based FPIs have received notices from the tax department for their tax residency certificates, the newspaper said citing sources.
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