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Informist, Tuesday, Jul 23, 2024

--Revenue secy: Abolition of Angel tax won't lead to money laundering 

--BUDGET: Propose to abolish angel tax for all investor classes 

--Revenue secy:Provisions of income tax act to tackle money-laundering 

NEW DELHI – To give fillip to foreign investments in India, Finance Minister Nirmala Sitharaman today announced the abolition of angel tax for all classes of investors. This will bolster the Indian start-up ecosystem, boost entrepreneurial spirit and support innovation, Sitharaman said while presenting the Budget for 2024-25 (Apr-Mar). 

The Department for Promotion of Industry and Internal Trade had requested the finance ministry to remove the angel tax imposed on foreign investors, Secretary Rajesh Kumar Singh had told the media on Jul 4. 

Angel tax is imposed when unlisted companies issue shares at a premium in excess of the fair market value to non-residents. It was imposed in the Finance Bill 2023 and dampened the mood of foreign investors looking to invest in Indian startups. The angel tax helps in the prevention of money laundering so that investors are not duped while investing in unlisted companies.

Speaking about this, Revenue Secretary Sanjay Malhotra said at the post-Budget press conference that removal of angel tax will not inherently lead to money laundering as other provisions of the Income Tax Act will look into giving protection against it. 

Removal of angel tax is of great benefit for start-ups. The government has been pushing the startup ecosystem, and has introduced the 'Startup India Initiative' under which eligible companies can get recognised as startups by the Department for Promotion of Industry and Internal Trade, to access a host of tax benefits and for easier compliance. Currently, there are 141,212 startups recognised by the department.  End

Reported by Priyasmita Dutta 

Edited by Akul Nishant Akhoury

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