Angel Tax Abolished: Relief To Startups To Boost Innovation And Talent

To relief startup ecosystem and boost talent and innovation government of India has removed the angel tax.

Notably, the startup industry had demanded the removal Section 56(2)(viib) of Angel Tax citing this would “greatly aid in capital formation” for the startup sector and would nurture innovation in startup section.

As per Section 56(2)(viib) of the Income Tax Act, startups are required to fulfill several requirements in order to qualify for angel tax exemption. The sector argues that these requirements are onerous and hinder their ability to draw in additional investments.

According to JSA Advocates & Solicitors Partner Raj Ramachandran, the much-awaited change in the Budget 2024 is the elimination of the angel tax.

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“Since introduction, it has created discomfort and confusion for all players alike, and is certainly one change that will be a welcome one for all,” he said.

In latest review of Indian Economy, Finance Minister affirmed that 1.14 lakh startups have created over 12 lakh jobs in India so far.

The government announced new angel tax regulations in September of last year. These regulations include a mechanism for assessing the shares that unlisted firms issue to potential investors.

The new standards did not apply to startups that were registered with the DPIIT. The administration emphasized that more than 80,000 entrepreneurs will profit from the exemption.