Angel Tax

Angel Tax

Union Budget 2024-25 announces the scrapping of angel tax for all investors

  • Refers to the tax that the government imposes on funding raised by unlisted companies, or startups if their valuation exceeds the company’s fair market value (FMV).
    • FMV – Refers to the price set for selling or purchasing an asset in the open market.
    • The excess amount was treated as income and taxed at a rate of 30.9 %.
  • Introduced in – 2012
  • Falls under – Income Tax Act,1961.
  • Purpose – To curb money laundering and prevent tax avoidance.
  • To reduce compliance burden for Startups as it was dealing with prolonged scrutiny and paperwork to justify their valuations, diverting their focus from core business activities.
  • To increase the confidence of both domestic and international angel investors in investing in Indian startups.

Source: The Hindu


Previous Year Question

What does venture capital mean?

[UPSC Civil Services Exam – 2014 Prelims]

(a) A short-term capital provided to industries
(b) A long-term start-up capital provided to new entrepreneurs
(c) Funds provided to industries at times of incurring losses
(d) Funds provided for replacement and renovation of industries

Answer: (b)


Practice Question

Which of the following best reflects the term ‘Angel Tax’ recently in news?

 
 
 
 

Question 1 of 1


Leave a Reply

Your email address will not be published. Required fields are marked *