What Is Angel Tax?
The Section 56 (2) (vii b) in the Income Tax Act is referred to as Angel tax.
- These taxes are imposed on startups.
- During Union Budget 2023, Finance Minister Smt Nirmala Sita Raman proposed to amend the Angel tax.
- Now, the equity amount received by the startups will be subjected to income taxes and not angel taxes.
- Meaning, the entire 50 crores of rupees, that is, the total amount the startup received by selling the shares is subjected to income tax! Earlier, only 30 cores were subjected to taxes.
- Most of the investors of the startups, that is, the share buyers are from foreign countries.
- Already startup investments have been decreasing.
- In 2022, it fell by 33%.
- The new change in Angel Tax is to further affect the startup investment.
