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Finance Bill 2023: Angel tax another hiccup for start-ups amid funding woes

However, the Finance Ministry said that all concerns raised by stakeholders in implementing this proposal would be addressed

Aryaman Gupta Peerzada Abrar New Delhi/Bengaluru

Valuation markdowns leave start-up boards nervous

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However, the Finance Ministry said all concerns raised by stakeholders in implementing the proposal would be addressed

3 min read Last Updated : Mar 24 2023 | 11:01 PM IST

At a time when the technology sector is witnessing a funding winter, investment firms and start-ups haven’t received any significant relief from the proposed change in the angel tax regime. Experts say that this might create a hindrance to the flow of foreign funding for Indian start-ups.

Various stakeholders have been suggesting excluding investments from foreign companies in start-ups from the angel tax regime. However, as per the list of amendments to the Finance Bill, passed in the Lok Sabha on March 24, there is no change in the original proposal to angel tax. The proposed changes will come into effect for the assessment year 2024-25 or the financial year 2023-2024.

“With the passing of the Finance Bill, 2023 – the applicability of angel tax on foreign investors has been cemented. The only two classes of investors whose investments are exempt from angel tax are SEBI-registered CAT I and II AIFs as well as IFSCA-regi