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Government to come up with angel tax rules for start-ups before April 30

Rajeev Chandrasekhar had admitted that the angel tax was an 'aberration' and reforms were under consideration

Angel Tax

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BS Web Team New Delhi

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The Income Tax Department is likely to make announcements to address concerns related to angel tax on start-ups, The Hindu Business Line (HBL) has reported. The government may release a detailed circular in two or three days, the report cited senior officials from the finance ministry.
 
The same official said that the government is considering a two-rate structure for online gaming. However, there is no final clarity on the same, and the decision will be taken in the next meeting of the GST Council, he added.

He said, "Rules are likely to be notified before April 30. Our effort is to address all the concerns."

Earlier, minister of state for electronics and information technology Rajeev Chandrasekhar had admitted that the angel tax was an "aberration" and reforms were under consideration, the report added.

It is important to note that angel tax refers to an income tax levied at the rate of 30.6 per cent. The tax has to be paid when an unlisted company issues shares to an investor at a price that is more than its fair market value. In the past, angel tax was only applicable to resident investors. However, Budget 2023-24 introduced provisions to extend angel tax to non-resident investors from April 1, 2024.

The report cited an unnamed government official who said start-ups recognised by the Department for Promotion of Investment and Internal Trade (DPIIT) would be exempted from the new provisions. Notably, DPIIT recognises more than 98,000 start-ups, and they are eligible for various exemptions.

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First Published: Apr 28 2023 | 11:12 AM IST

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