The ministry of corporate affairs ( MCA ) became the latest government department after the income tax to question the premium paid by investors in startups after issuing notices to more than 2,000 startups that have raised money since 2013.People with knowledge of the notice and MCA's thinking on the issue said the ministry has questioned the valuations at which these startups raised money and is focusing on companies whose valuations have fallen after the first round of fundraising. The notices were issued in the past 45 days with the ministry asking whether these startups have sought exemptions under any government scheme.The ministry's missive comes two years after the income tax department raised similar questions and demanded that startups pay tax at the rate of 33% if their valuations fell after the first round.ET has reviewed a copy of the notice sent to a startup. "Shares (of the startup) have been issued at high premium. Please justify the same and also explain whether the company is having any exemption (of) being startup etc...." the notice said.Tax experts said valuations of startups depended on several factors, future projections being the main factor. "The valuation of any startup is a subject matter of various underlying assumptions and projections about future profitability. Though valuations are done based on prescribed methodologies, it could always be a subject of debate and dispute," said Vikas Vasal, national leader, tax, Grant Thornton India.The MCA has also asked startups to explain how the share premium was calculated and details of the fund-raising transactions. The ministry did not respond to a query by ET.The MCA notice is a little different from the one issued by the I-T department in 2016. Income tax officials had only questioned investment by angel investors but the MCA has broadened its enquiry into all forms of investment, including venture capital and private equity transactions."In many cases the notices have questioned the high premium, justification for it and details of whether the startups have been registered under the government's startup scheme with DIPP (department of industrial policy and promotion)," said Amit Maheshwari, partner, Ashok Maheshwary & Associates LLP.Tax officials believed then that startups should be valued on the basis of the last round of investment. If last round's valuation is lower than the first round, excess premium - more than the fair value - is deemed to have been paid, some tax officials believe.In many startups, the first round of investment would have been made by an angel investor at valuation of 2X, the second round by a VC at 2X. But a private equity investor could have come in at 1X. The revenue department would calculate the fair value of the startup based on the PE's investment. And tax could be slapped on the investment made by the angel investor.Startups are still fighting the I-T notices in various courts and appellate tribunals. Many have challenged the tax demand at the commissioner of income tax (appeals) and are awaiting a ruling. Those who did not get a favourable ruling at CIT have approached the income tax appellate tribunal (ITAT). In all these cases, the taxmen have stuck to the demand that tax is payable on the premium.Industry trackers say that the valuation of several startups was at a premium but the value had fallen in many cases due to business considerations, intense competition and inability of management to scale up and drive growth.The MCA notices, however, do not talk of any taxation or penalties but merely asks questions about the valuation. Industry experts say that all the regulatory procedures of startups are being held back till the time they respond satisfactorily to the MCA notices, say insiders.