A senior government official on Tuesday said that the ‘angel tax’ provision in the Finance Bill will not affect startups in India.
Speaking at the IBVCA Conclave here, Department Secretary Anurag Jain said startups registered with the Department for Promotion of Industry and Internal Trade do not come under its purview.
Addressing the audience at an event organized by the venture capital industry lobby grouping, he said, “Let me state one thing very clearly. This does not affect startups in the least.”
He said there is an “explicit provision” that says startups recognized by DPIIT are out of the purview of the proposal, and added that the startup recognition process is also very simplified where any applicant automatically gets it.
Startups were upset due to the proposed changes in the rules in the Finance Bill by way of amendments to section 56(2) VII B of the Income Tax Act. Foreign investors are also proposed to be included in the taxation net, wherein a startup raising funds from a foreign investor will also be liable to pay income tax if the funds are received above the face value of the shares.
Without specifying, Jain said there are other issues that have been raised by the venture investment community and have been placed before the revenue department for review.
He said that we need to look at how to channelize domestic capital into startups and new age companies.
Changes have already taken place on this front, including allowing long-term pension and insurance funds to invest in alternative investment funds.
He said that by 2047, India would be a developed country and a realistic estimate pegs the size of the economy at USD 30 trillion which could be the second largest in the world.
“Growth will be driven by knowledge, sustainability and innovation,” he said, adding that startups provide the right solutions across all three.
Jain said funding for Indian startups has declined as a result of macroeconomic headwinds following adverse geopolitical events in 2022, stressing that the country is relatively better positioned than others.
(Except for the headline, this story has not been edited by NDTV staff and is published from a syndicated feed.)
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