Taxing times: Income tax heat on start-ups over unexplained funds

Notices issued to check round-tripping

Several start-ups, including prominent unicorns, have received tax notices on some supposedly unexplained investments in them between FY19 and FY21.

The notices, under Section 68 of the Income-Tax Act, were served across the start-up spectrum — fintech, aggregators, and edtech. They sought an explanation on the nature and source of the investment, people familiar with the matter told Business Standard.

The minimum investment in question is Rs 100 crore. However, the total could not be ascertained.

Section 68 of the Act deals with unexplained funds credited to the books of taxpayers and for those the source is not given. The