Angel tax notices tie India’s digital startup ecosystem in knots - The Sunday Guardian Live

Angel tax notices tie India’s digital startup ecosystem in knots - The Sunday Guardian Live

  • Angel tax notices tie India’s digital startup ecosystem in knots The major problem with this tax
  • is that it affects both the investor and the seller of a startup; the tax becomes a contingent liability.
  • India’s ever present goliath bureaucratic extraction state system has added a huge new risk for startups—it has sent tax notices to an estimated 80% of angel investors—those investors that put money in a startup up at the very earliest nascent state.
  • This is a different ball game; if the angel tax existed in the USA, you can be sure that Jeff Bezoz would probably have been a delivery boy at best Fair business value refers to the traditional metric of assessing tax and requires a look at sales, profits and margins.
  • The tax becomes a contingent liability, dragging down any profit that the parties can make as the tax value has to be provided for when a transaction takes place, So, for example, if it is a Rs 10 lakh tax liability—and an angel investor is making a Rs 50 lakh profit on a deal


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