Startups Exempted from Angel tax

The government on February 19 exempted startups from ‘angel tax’ on funds they have raised from investors in the last up to seven years.

Key Info

• The Commerce and Industry Ministry issued a notification to simplify the process for startups to receive tax exemptions under an anti-evasion provision of the Act. This provision, Section 56(2)(vii)(b), deals with taxation of share premiums received in excess of the fair market value.
• The move follows concerns raised by many regarding the taxation of angel investments in the startup ecosystem.