Over 7,000 cash-starved start-ups may benefit from angel tax relief

Companies News:

A series of changes made to the so-called angel tax by the government could give wing to 7,000 cash-starved start-ups, sources in the Department for Promotion of Industry and Internal Trade (DPIIT) said.

According to industry observers, an investment of around $12 billion might come from 2,000 angel investors and hundreds of smaller backers of start-ups by the end of the year. Of this, about $7 billion will come in the form of corporate investment.

After facing sustained pressure over the past three years from start-ups and venture capital funds over the tax, the government introduced changes in tax norms, giving in to most of the demands raised by the sector.

Providing a wider set of exemptions from the angel tax, the Centre allowed start-ups which have raised capital up to Rs 25 crore to claim tax benefits, as distinct from the earlier Rs 10 crore. It also gave a slew of waivers and a tweak in definition industry demanded.

Expecting big gains: DPIIT

According to officials at the DPIIT, around 6,700 firms of the 16,000 start-ups registered with the nodal agency will benefit from the changes in the angel tax over the next six months.

 “Around 7,000 firms will get immediate benefit. It would be many more over time. Many companies on our list have grown beyond just being start-ups and fall in the tax bracket,” an official from the DPIIT said...Read More