Indian government has abolished the controversial Angel Tax

Decision welcomed by entrepreneurs and investors alike

Angel Tax, formally known as tax on funding received by startups

In a significant move aimed at bolstering the startup ecosystem, the Indian government has abolished the controversial Angel Tax, effective immediately. This decision has been widely welcomed by entrepreneurs and investors alike.

Angel Tax, formally known as the tax on funding received by startups, was introduced in 2012. It mandated that any funding received by a startup from an angel investor, which is over the fair market value of shares, would be treated as income and taxed accordingly. This tax was initially introduced to curb money laundering activities, but it soon became a major hurdle for genuine startups seeking capital.

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Over the years, the Angel Tax had drawn considerable criticism for its ambiguous regulations and its negative impact on the startup environment. Many investors were deterred from funding startups due to the fear of tax implications, stifling innovation and growth in the sector.

The abolition of this tax is expected to provide a significant relief to startups, allowing them to secure funding more easily and focus on innovation and growth. The move aligns with the government’s broader objective of fostering a robust startup ecosystem in India and making the country a global hub for entrepreneurship.

Industry experts have lauded the decision, noting that it will enhance investor confidence and stimulate economic growth. This change is seen as a progressive step that will encourage more domestic and international investments in the Indian startup landscape.

The abolition of Angel Tax marks a new chapter for Indian startups, paving the way for a more vibrant and dynamic entrepreneurial environment.