Sunday, September 24, 2023

CBDT Notifies Countries Exempted From Angel Tax Investment In Startups…

Startups all over the world including India are still struggling with the problem of funding (Startups Funding Winter). Meanwhile, startups in India have received good news on this front. CBDT has released a list of 21 such countries, from where Startup Angel Tax will not be levied on investment in startups.

Exemption on investment in such startups

The 21 countries to which the Central Board of Direct Taxes (CBDT) has given this exemption include countries like America, Britain and France. Angel tax will not be applicable on non-resident investment coming from these countries in Indian startups. This exemption will be available on investment in such startup companies, which are not yet listed in the stock markets. Countries like Singapore, Netherlands and Mauritius have been kept out of this exemption.

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was proposed in the budget

Presenting the budget in February, Finance Minister Nirmala Sitharaman had proposed to bring foreign investment in unlisted companies under the ambit of angel tax. The CBDT issued a notification in this regard on May 24 regarding investors who would not come under the purview of the provisions related to angel tax. Earlier in the budget proposal, investment in startups recognized by DPIIT (DPIIT) was kept out of the purview of angel tax.

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They will get the benefit of exemption

Investors now exempted from angel tax include investors registered with SEBI as Category-I FPIs, Endowment Funds, Pension Funds and Broad Based Pooled Investment Vehicles. According to the notification, apart from the US, UK and France, Australia, Germany, Spain, Austria, Canada, Czech Republic, Belgium, Denmark, Finland, Israel, Italy, Iceland, Japan, South Korea, Russia, Norway, New Zealand and Sweden Are included.

Changes applicable from April 1

This notification of CBDT has become effective from 1 April 2023. This means that such investments before the issuance of the notification will also get this exemption, which have come after April 1, 2023. However, experts are expressing surprise that countries like Singapore, Ireland, Netherlands and Mauritius have not found a place in this notification, from where India has been getting a major share of FDI.

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CBDT has issued this notification regarding exemption from angel tax at a time when startups around the world are facing the problem of shortage in funding, which is being known as funding winter.

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