Angel Tax
Summary: The Department for Promotion of Industry and Internal Trade (DPIIT) has proposed eliminating the “angel tax” to facilitate funding for startups and make them more attractive to investors. Introduced in 2012 to prevent money laundering, the angel tax targets money raised above fair market value, particularly from angel investors. Despite an exemption for investments under 10 crore in 2018, the tax has remained a concern for startups. Removing it could benefit over 141,000 DPIIT-registered startups and stimulate angel investments. Current challenges include a dip in fundraising and valuation drops in prominent startups. The decision now awaits potential announcement in the Union Budget.
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