Startups face I-T department heat over funding through Singapore

Showcause notices issued to startups under Section 68 for capital raised over the past five years, demanding documentation on foreign investments

The income-tax (I-T) department has issued showcause notices under Section 68 of the Income-Tax Act to several startups over funds routed through Singapore, seeking explanations for investments received over the past five years, people familiar with the development said. 

The department is questioning the source, identity, and creditworthiness of overseas investors in these transactions, they said.

In addition, the notices are also being served on Non-Resident Indians (NRIs) holding bank accounts in Singapore. “These are not routine inquiries, but formal show-cause notices. Companies are being asked to justify the inflow of capital, even from the past years, by furnishing detailed investor