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Startups worried over funding prospects and falling valuations could soon have a bigger problem on their hands. The income tax department is discussing a controversial move to levy tax on those startups whose valuations have fallen recently on the grounds that the first premium was more than the firm’s fair value.

Tax officials believe that Section 56 of the Income Tax Act confers on them the power to levy excess consideration, more than the fair value, against issue of shares.

For more information. http://bit.ly/1sMCM3o

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