Budget 2019 Speech addressed the issue head-on and promises relief on three fronts including funding from e-verified investors
The mentioned promises have the potential to rid the Indian startup ecosystem of the spectre of “angel tax”
However, only if executed without any additional conditions or caveats
Mr Speaker, Sir, my tax proposals will aim to stimulate growth, incentivise affordable housing, and encourage startups by releasing entrepreneurial spirits. It will also be geared towards promoting the digital economy. I aim to simplify tax administration and bring greater transparency.
– Honourable Finance Minister, July 5th, 2019The Budget 2019 will go down in history for being the first speech to publicly acknowledge the dreaded angel tax or section 56(2)(viib) of the Income Tax Act, 1961. This section, introduced in 2012 by the then UPA government, sought to tax capital raised by private companies and startups as income based on the difference between the fair market value and the issue price of the securities.