Govt announces to remove angel tax on startups for all classes of investors

New Delhi: Providing significant relief to startups, the government announced on Tuesday the removal of the angel tax for all classes of investors, aiming to further promote the growth of budding entrepreneurs in the country.

Angel tax refers to the income tax imposed on funding raised by unlisted companies, or startups, when their valuation exceeds the company’s fair market value.

“To bolster the Indian startup ecosystem, boost the entrepreneurial spirit, and support innovation, I propose to abolish the so-called angel tax for all classes of investors,” she declared. Ahead of the Union Budget, the Department for Promotion of Industry and Internal Trade (DPIIT) recommended the removal of this levy on startups.

In September last year, the Income Tax Department notified new angel tax rules that include a mechanism to evaluate the shares issued by unlisted startups to investors.

Over 1.17 lakh startups are registered with the government, making them eligible for incentives under the Startup India initiative.