Startup and venture funds cheered the Budget decision on the abolition of angel tax for all investor classes, terming it a “game-changer” that would remove significant barriers in growth and foster a vibrant and dynamic ecosystem.
Angel tax refers to the tax that the government imposes on funding raised by unlisted companies, or startups if their valuation exceeds the company’s fair market value.
“To bolster the Indian startup eco-system, boost the entrepreneurial spirit and support innovation, I propose to abolish the so-called angel tax for all classes of investors,” Finance Minister Nirmala Sitharaman said in her Budget speech.
The angel tax issue has been a thorn on the side of startup founders and investors, and venture capitalists, startups and industry associations have long been batting for its removal.
“The abolition of the ‘angel tax’ is a game-changer, removing a significant barrier that has long hindered the growth of startups and discouraged investment. This progressive step will undoubtedly foster a more vibrant and dynamic startup ecosystem, encouraging innovation and entrepreneurship across the country,” Prateek Jain, Associate Director-Startup and Alliances, Alliance of Digital India Foundation (ADIF) said.
Shyam Menon, Co-Founder and Partner, Bharat Innovation Fund dubbed the move as “a significant and positive step” towards alleviating a longstanding issue in startup investing.
“For some time, angel tax has been a notable point of friction, creating challenges for investors and startups, alike. By eliminating this tax, the government is addressing a key barrier that has hindered investment in emerging businesses,” Mr. Menon said.
According to the industry, the decision would stimulate an increase in capital inflow, and foster more supportive environment for the formation and growth of startups within the country. — PTI
Aisha Patel is a dedicated Indian correspondent with a deep understanding of the nation’s diverse affairs. With a background in Indian culture, politics, and current events, she provides in-depth analysis and timely reporting on domestic issues within India.
