In Finance bill 2024, government has introduced the abolition of Angel Tax provision under Section 56(2)(viib) of the Income Tax Act, 1961. Earlier Startups raising funding for value more than the Fair market Value of the Company had to pay tax on the additional funding for more than the Fair market Value of the Company at the rate of 30% on such additional investment.
However, abolition of Angel Tax provisions shall have following impacts:
1) More Foreign & domestic funding can be raised by the Startups to boost their business without the fear of Taxation.
2) This provision is going to boost the investments in Startups. Thereby encouraging the Startup Culture in India.
3) Foreign Direct Investments from outside India in Indian Companies shall increase.
The above amendment shall come into impact w.ef 01.04.2024
