Bengaluru: Congress President Rahul Gandhi on Monday said that if his party is voted to power in the Lok Sabha elections, it will do away with the angel tax levied on investments in startups, terming it a 'counter' to the philosophy of startups. Angel tax and e-commerce police have been two of the major roadblocks for businesses in the recent past. The incumbent Central government has claimed to have been working on the issues but has been not able to come up with a solution to ease the regulations. While the new Foreign Direct Investment (FDI) rule not going well in the India e-commerce landscape as several leading players are backed by overseas investors, the final decision on these e-commerce heavyweights who received notices from CBDT is yet to be decided. Several startups and investors, despite the government's assurance, still continue to complain about restriction imposed on them.

"Angel tax is counter to the philosophy of startups. We are going to get rid of this tax when we come to power," Gandhi said in this tech hub during an interaction with Bengaluru's entrepreneur community. Angel tax is levied on the premium paid on investments in startups and unlisted firms to curb "laundering" under the Income Tax Act, 1961, as their valuations increase despite stagnant or declining revenues. Currently, startups are levied around 30 per cent Angel Tax on the investments made by overseas investors.

The Congress President interacted with the business community at a tech park on various issues, including jobs, goods and services tax (GST), banking system and medium and small businesses. Gandhi also told entrepreneurs the current form of the GST, implemented by the Narendra Modi-led government, was a "disaster".

"When we wanted to introduce the GST, we were sure it had to be tested. The one introduced by the Modi government is a disaster. It is technically not a GST, it's multiple different taxes," Gandhi remarked. On the banking system, the Congress chief said there was "massive monopoly" in it. "Opening up the banking system to small and medium businesses is fundamental," he said.

Gandhi further held the current govt responsible for not promoting SMEs to create jobs. He also told entrepreneurs that the current form of the GST almost ruining the informal sector.