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- Finance minister has announced that angel tax will not be applicable on startups that are registered with the Department for Promotion of Industry and Internal Trade(DPIIT).
- The move is likely to give a long-demanded angel tax relief to start-ups and exempt them from scrutiny.
- The government has also decided to set up a dedicated cell under Central Board of direct taxes(CBDT) for addressing the problems faced by startups.
- Angel Tax is a 30% tax that is levied on the funding received by startups from an Angel investor.However,this tax is levied when startups receive angel funding at a valuation higher than its ‘fair market value’.It is counted as income to the company and is taxed.
- Further,the angel tax which was aimed at curbing money-laundering has resulted in a large number of genuine start-ups receiving notices from the tax department.
