In a big boost to venture capitalists and angel investors, the finance minister Nirmala Sitharaman has announced that the government would revoke the ‘so-called’ angel tax on start-ups.
Currently, start-ups have to pay 30.9% tax on funds they have raised if such an amount is higher than its ‘fair value.’ Experts believe that the new move would encourage venture capitalists and angel investors to fund start-ups.
In 2012, the government introduced angel tax to curb tax evasion. This, however, led to disruption in the functioning of investment as the law taxed the investment made at a premium to fair value as ‘income from other sources’, said experts.
Over 2,000 startups that had raised money since 2013 have come under scanner due to angel tax.
Apart from this, the government has announced that it would set up a task force led by CBDT to address issues faced by Indian start-ups.