KOCHI: The scrapping of Angel tax has come as a huge relief for the startup sector, which was fighting to repeal the provision under Section 56 (2) (viib) of the Income Tax that classified investments from external investors as income from other sources and levied a tax of 30%.
S R Nair, a startup mentor, said the decision will go a long way in bolstering the country’s startup ecosystem. “Angel tax was introduced by then Finance Minister Pranab Mukherjee in 2012 and was termed “draconian” by the sector. They had been seeking its abolishment for the past five years.
There was also criticism that the Modi government was not doing anything proactive for the sector, and that Startup India was just a show. The announcement is a means to stem that argument,” said Nair. Devan Chandrashekar, founder of Fuselage Innovations, said, “Now, startups will not lose out on investment that would help them innovate and bring new products.”