Government To Exempt Angel Tax In An Attempt to Promote Startups - Start-Up Hyderabad
Loading Startup Hyderabad

Government To Exempt Angel Tax In An Attempt to Promote Startups

 8 years ago    

arrows-1229848_1920

Saturday morning brought in good news for the Startup ecosystem, the government has removed the so-called ‘Angel Tax’ for investors providing funding to startups in order to fuel their ambitious plan to boost entrepreneurship and job creation in the country.
Funding to startups, notified under the government-approved plan stated by PM Narendra Modi, will not face tax even if it exceeds the face value.

What are we looking at?

So, resident angel investors, domestic family offices and domestic funds which were not registered as venture capital funds need not worry about the invested amount getting taxed.
Keeping in mind the existing rules, funds raised by an unlisted company through equity issuance are covered under this tax which is in excess of the fair market value.
This extra inflow is taxable as ‘income from other sources’ under section 56(2) of the Income-Tax Act including the corporate tax rates which contributes to over 30% of just taxes. In such cases, startups would lose a good chunk of the inflow to the so-called ‘angel-tax.’

All thanks to the Central Board of Direct Taxes who have issued a notice to this effect, exempting startups raising investments from the spartan of Section 56(2).

“This has been long awaited and is a very welcome step. The abolition of this so-called ‘angel tax’ has been a long-standing demand of the industry,” said Amit Maheshwari, partner, Ashok Maheshwary &Associates LLP. However, earlier investments can still be questioned by tax officers as being overvalued in the light of declining valuations globally and in India, he said.

Comments

comments

It's kinda weird when you have to write about yourself so... Let's do this? I write, photograph & make music. I do not approve monotony while alternative education, sarcasm & backpacking tops my list and I totally dig garage-culture! I was a former journalist at The Times of India and a freelancer for Rolling Stone magazine. You can go ahead and check out my work: www.500px.com/rahuldasproject That's it, I guess?

OUR BLOGGERS

  • Saptarshi Roy Chaudhury

  • Neeha Jayaram

  • Dhivya

  • Saloni Anand

  • Neha Mohsin

  • Soumalya Chakraborty

  • Ruchika Agarwal

  • Ramesh Loganathan

  • Nikita Kiran

  • Ayyappa Nagubandi

  • Ayushi Pandey

  • Harshita Goel

  • Chandra Mouli Koduri

  • Arpita Soma

  • Maddy Anand

  • Ankur Mehta

  • Varun Rastogi

  • Srinivas Aki

  • Monika Guwalani

  • Rahul Das

  • Saritha Keshamoni

  • Nischala Agnihotri

  • Sameeksha Bansal

  • Sreekar Reddy

  • Divya Jyothi

  • Vineel Reddy Pindi

  • Vinita Surana

  • Priyanka Mechineni

  • Sravya Gowrisetty

  • Sruthi Malla

  • Anish Tadimarri

  • Tata Teja

  • Amita Sood

  • Ramya Sayaboni

  • Vana Korrapati

  • Surya Vallae

  • Ambika Asta

  • Madhureema RoyMoulik

  • Gunajit Haloi

  • Bhavitaavya Dharanikota

  • GR Reddy

  • Manoj Surya

  • Shravani Maddirala

  • Ravi Vaka

  • Rituka M

  • Nethrikaa Greeshma

image title here

Some title