The removal of this tax will likely encourage more investments in early-stage startups and increase the growth of innovation.
In a major boost for start-ups, Finance Minister Nirmala Sitharaman on Tuesday abolished angel tax, which is a tax levied on the capital raised by unlisted companies through the issue of shares from Indian investors. This tax is imposed when the share price at which the shares are issued is deemed to be higher than the fair market value of the company.
Essentially, if the income tax department believes that the valuation of a startup is inflated, it can impose a tax on the difference between the perceived fair value and the issue price. This tax rate up until now was a hefty 30.9%. Click here to connect with us on WhatsApp
The Abolishing of the Angel Tax will create a more favorable environment for startup growth and early-stage investments in India.
