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DPIIT proposes removal of Angel Tax and inverted duty structure to boost startup growth.
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Angel Tax, imposed on unlisted companies, is seen as a barrier to ease of doing business.
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Industry experts and organizations like CII and Nasscom support the removal of Angel Tax.
The Department for Promotion of Industry and Internal Trade (DPIIT) has recommended the removal of Angel Tax and inverted duty structure in the upcoming Union Budget 2024. This move aims to support the growth of startups in India. Angel Tax, also known as Section 56(2)(viib) of the Income Tax Act, is a contentious tax imposed on unlisted companies when they raise capital through share issuance at a price exceeding the fair market value.
The tax has been a long-standing concern for startups, with many considering it a barrier to ease of doing business. Industry experts and organizations like the Confederation of Indian Industry (CII) and Nasscom have also urged the government to remove Angel Tax. They argue that it would significantly boost capital formation in the country and make the tax landscape for startups more predictable.
The removal of Angel Tax would benefit numerous startups that rely heavily on foreign investments, particularly during their early phases of operation. The government is also considering rationalizing visa regulations for enterprises operating in the 14 sectors covered by the Production Linked Incentive (PLI) scheme. This move aims to attract more investments and boost economic growth.
