Boost to startup as angel tax abolished, entrepreneurs cheer

In a bold move set to ignite India’s startup revolution, Finance Minister Nirmala Sitharaman has scrapped the controversial angel tax in her Union Budget 2024 address.

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This landmark decision not only aims to turbocharge innovation and entrepreneurship but also promises to streamline funding avenues crucial for the country’s burgeoning startup ecosystem.

Angel tax, first introduced in 2012 by former Finance Minister Pranab Mukherjee, was initially intended to curb money laundering through investments in startups and to prevent the proliferation of shell companies. However, over the years, it became a contentious issue, criticised for its adverse impact on genuine startups seeking early-stage funding. The tax levied on investments exceeding the fair market value of shares issued by unlisted companies often deterred angel investors, thereby impeding the growth of startups reliant on such funding.