It was 8.00 am on February 5 and Pushpinder Singh, Co-founder of Travel Khana, was running from pillar to post trying to figure how he would pay his employees their salaries on time. His bank account, which had the required sum, was depleted after the Central Board of Direct Taxes (CBDT) withdrew Rs 33 lakh that it said was due as tax remittance. Worse, another of Travel Khana’s account, with SBI, was frozen. 

“After a few conversations with bank officials, we realised the tax officials had coerced them to share the details, and then freeze the accounts,” Pushpinder told YourStory. 

Travel Khana is not the only one. Siddharth Ahluwalia, Co-founder and CEO of Babygogo, recently received a message that Rs 72 lakh had been deducted from the company account by the CBDT. 

What is more disturbing, say startup founders, is that this occurred just a few days after round table discussion with representations made by Angel and other investors, fund managers, entrepreneurs and the CBDT to help ease the situation with the Department for Promotion of Industry and Internal Trade (DPIIT, formerly DIPP). What’s more, a CBDT circular, distributed in January this year, said no coercive action would be taken against a startup until the regulation on taxing them is clear. 

Since then, investors, founders and mentors have taken to microblogging platform Twitter to highlight the issue of Angel Tax. 

Under heat, tax officials acted quickly, and the CBDT quickly moved to unfreeze Travel Khana’s account. The debit, however, has not yet been reversed.