Angel Tax Relief Recommended by CII
Breaking News Lead:
The Confederation of Indian Industry (CII) has recommended scrapping Section 56 2 viib of the Income Tax Act, known as the Angel Tax. This move aims to provide relief to startups and promote investments by angel investors.
Background:
Angel tax is a tax imposed on unlisted companies that receive funding from angel investors. It is calculated as the difference between the fair market value of the company and the amount of investment received. This provision was introduced to prevent money laundering and tax evasion.
CII's Recommendation:
The CII has argued that the angel tax is a deterrent to investments and hinders the growth of startups. They believe that scrapping the provision will encourage innovation and boost the Indian economy.
Fair Market Value Determination:
One of the key issues in angel tax cases is the determination of fair market value. The CII has proposed a mechanism to ensure transparency and fairness in this process, which would help startups avoid unnecessary tax liabilities.
Impact on Startups:
The removal of the angel tax is expected to have a significant positive impact on startups in India. It will provide them with easier access to funding, enabling them to scale up their operations and contribute to economic growth.
Comments