back to top
    BusinessIndustry calls for abolishing Angel Tax to boost funding for Indian startups

    Industry calls for abolishing Angel Tax to boost funding for Indian startups

    Date:

    Amidst concerns over declining funding and layoffs at startups, industry bodies have urged the government to remove the controversial Angel Tax provision. The Confederation of Indian Industry (CII) in its pre- recommendations stated that abolishing Section 56(2)(viib) of the Income Tax Act, commonly known as Angel Tax, would significantly increase capital availability for new businesses.

    Angel Tax was introduced in 2012 to curb the use of unaccounted money through investments in unlisted firms at inflated valuations. It levies a 30% tax on the capital raised by startups if their shares are priced above fair market value as determined by tax authorities.

    While DPIIT-registered startups were exempted, the industry argued that valuations factor in future potential rather than current performance. They said taxes on valuation differences discouraged funding at a critical stage. The changes came as an estimated 15,000 employees lost following funding crunch faced by over 100 startups last year.

    A recent law amendment proposed expanding the tax net to include foreign investments too from next fiscal. However, after protests, investments from 21 major countries including the US and UK were kept outside the purview for overseas funding in domestic startups. Key startup hubs like Singapore were left out of the list though.

    With capital injections down over 60% and recruitments on the wane, removing the contentious tax is critical to stimulate job creation and innovation according to industry representatives. While exemptions have provided relief, a permanent solution is needed to ensure a conducive for budding entrepreneurs.

    Northlines
    Northlines
    The Northlines is an independent source on the Web for news, facts and figures relating to Jammu, Kashmir and Ladakh and its neighbourhood.

    Share post:

    Popular

    More like this
    Related

    NITI Aayog Vice Chairperson highlights India’s growing role as a global solutions provider

    India is fast establishing itself as a dominant player...

    Reforms Expected to Streamline Indirect Tax Compliance in Union Budget 2024

    Streamlining Indirect Tax Compliance: What to Expect in Upcoming...

    Finance Minister to Present Highly Anticipated Union Budget 2024 on July 23rd

    All Eyes on Finance Minister as Budget 2024 Around...

    Deepfake Detection Firm Pindrop Secures $100 Million to Expand Product Offerings

    While artificial intelligence tools are incredibly useful, they also...