Startups: Accredited investors may get exemption from angel tax
The Department for Promotion of Industry and Internal Trade (DPIIT) is working on the definition, which would be submitted to the finance ministry for approval.
- Funds received by startups from accredited investors may be exempted from angel tax subject to complying with certain net worth criteria, an official said.
- There should be a linkage between investments and investors' net worth and certain income should be there," the official added.
- These accredited investors, which can include trusts, individuals, family member of a startup and unlisted companies, may get exemption from angel tax under Section 56(2)(viib) of Income Tax Act, 1961, beyond the Rs 25 crore limit.
- It is dubbed as angel tax due to its impact on investments made by angel investors in startup ventures.