Angel Tax scrapped

The angel tax, introduced through Section 56(2)(viib) of the Income Tax Act in 2012, required private companies to pay tax on the excess amount received for issuing shares beyond their fair market value.

The announcement by Finance Minister Nirmala Sitharaman to abolish the 'angel tax' in the Budget 2024 presentation is a landmark decision that is set to provide significant relief and encouragement to both angel investors and startups.

The removal of the angel tax is expected to unlock a larger flow of investments into startups, as investors will no longer be deterred by the tax implications of their investments.

Domestic investors, including high-net-worth individuals (HNWIs) and family offices, are likely to increase their investment activities in the startup sector, given the removal of the additional tax burden.

With this the startup eco-system and investors are much relieved and predict that this will further boost  system and investors are much relieved and predict that this will further boost both domestic and foreign investments into the ecosystem .
1.    Increased Investment Confidence:
     o    The abolition of the angel tax is expected to restore and boost investor confidence, encouraging more angel investors and venture capitalists to invest in startups without the fear of additional tax implications.

2.    Attraction of Foreign Investment:
     o    The scrapping of the angel tax is also likely to attract more foreign investments into the Indian startup ecosystem, as international investors often viewed the tax as a deterrent.

Finally, the abolition of the 'angel tax' as announced in the Budget 2024 presentation by Finance Minister Nirmala Sitharaman is a transformative step for the Indian startup ecosystem. It not only removes a significant barrier to investment but also sets the stage for accelerated growth, innovation, and economic development. Startups and investors are poised to benefit from this progressive policy change, paving the way for a thriving entrepreneurial landscape in India.