Cos see move boosting angel investing
NEW DELHI: The government's move to relax norms for startups will "unshackle angel investing" and unleash the next wave of entrepreneurship in the country, helping India further strengthen its position as a leading "startup nation", according to industry experts.
According to Indian Angel Network co-founder Padmaja Ruparel, the development will "unshackle angel investing and bring in domestic monies for start-ups". "The message the government has given is that India will not only be the world's startup hub but start-ups which can go global, by increasing the turnover from Rs 25 crore to Rs 100 crore. This is a seminal move for angel investing..." she said. "This eliminates a major obstacle for Indian start-ups and if implemented right, could give a significant boost to the Indian start-up ecosystem, as individuals with tax paid income as well as corporates will be able to easily participate in startup investments," LocalCircles founder Sachin Taparia said. Section 56(2)(viib) of the Income Tax Act provides that the amount raised by a start-up in excess of its fair market value would be deemed as income from other sources and would be taxed at 30 per cent. Touted as an antiabuse measure, this section was introduced in 2012. It is dubbed as angel tax due to its impact on investments made by angel investors in start-up ventures."I am absolutely delighted that the government has in effect abolished angel tax for startups... Angel tax had begun to dampen the enthusiasm of angel investors and startups, who had begun migrating abroad," TiE Delhi-NCR Chairman Emeritus Saurabh Srivastava said. He added that the announcement "will unleash the next wave of entrepreneurship, moving India from third place to being the number one start-up nation in the world".