What is the current scenario of angel tax in India?
You must have come across the term “Angel tax” here and there. The question is “What really is an angel tax?” Let me try and answer this question for you. Angel tax is imposed when a private company raises capitals or funds at a rate higher than its “fair valuation.” The angel tax rate in India is currently pegged at India 30%.
There is an exemption available for this. In February 2019, the Government of India released relaxed norms for a startup in getting angel tax exemption. The new norms say that a business entity can be called a “startup” up to 10 years from the date of incorporation. It used to be 7 years before these new norms. The upper limit and lower limit for turnover of a company so as to qualify for tax benefit is Rs 25 crore to Rs 100 crore.
But all this has not made much impact on entrepreneurs in India. Many startups have already received tax notices.
As for investors, they too are have started to look away because of all the hassle that comes with angel tax rules. This in result, has led to increased problems for startups in their quest to raise much-needed funds through investors.
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