Current Context : During the Budget 2024 presentation, Finance Minister Nirmala Sitharaman announced that the government will abolish the ‘angel tax’,for  providing a boost to both angel investors and startups.

ABOUT ANGEL TAX:

• Angel tax (income tax at the rate of over 30%) refers to the income tax that the government imposes on funding raised by unlisted companies, or startups, if their valuation exceeds the company’s fair market value.
• The angel tax, introduced through Section 56(2)(viib) of the Income Tax Act in 2012, required private companies to pay tax on the excess amount received for issuing shares beyond their fair market value.
• This tax applied to investments from both resident and non-resident investors.