I-T Dept To Come Up With Angel Tax Rules Addressing Start-Ups Concerns Before April 30: Report
The report quoted a senior finance ministry official saying, "Rules are likely to be notified before April 30. Our effort is to address all the concerns."
The Income Tax (I-T) Department is expected to come out with a detailed circular addressing various concerns related to angel tax on start-ups, in the next two-to-three days, according to a report by The Hindu Business Line. The report quoted a senior finance ministry official saying, "Rules are likely to be notified before April 30. Our effort is to address all the concerns."
The official also said that the government is considering a two-rate structure for online gaming. However, there is no final clarity on the same, and the decision will be taken in the next meeting of the GST Council.
The minister of state for electronics and information technology Rajeev Chandrasekhar had, earlier said that the angel tax was an "aberration" and reforms were under consideration, the report noted.
Angel tax refers to the tax levied on the capital raised by unlisted companies through the issuance of shares. The tax was introduced by the government in 2012 as a measure to curb money laundering and illegal funding of start-ups.
Also Read: What Is Angel Tax? How It Is Going To Impact Indian Start-Ups. Read Here
Under the angel tax regime, if the valuation of the shares issued by a start-up exceeds its fair market value, the excess amount is treated as income and is taxed at a rate of 30.6 per cent. This has been a cause of concern for startups and investors, as it has led to many start-ups not raising funds due to the high tax rates. In the past, angel tax was only applicable to resident investors. However, Budget 2023-24 introduced provisions to extend angel tax to non-resident investors from April 1, 2024.
According to a government official start-ups certified by the Department for Promotion of Investment and Internal Trade (DPIIT) would not be subject to the new rules. Notably, DPIIT recognises over 98,000 startups, and these businesses are qualified for a number of exemptions.
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