BREAKING: Angel Tax Abolished For All Investor Classes, Announces Sitharman

New Delhi: In a significant move aimed at fostering innovation and supporting the start-up ecosystem in India, Finance Minister Nirmala Sitharaman announced on Tuesday that the government will abolish the 'Angel Tax' for all categories of investors.

"I propose to abolish the Angel tax abolished for all classes of investors. Corporate tax rate to be reduced on foreign companies from 40 to 35 per cent...", said Sitharaman. 

The decision was announced as part of the interim budget presented in February, which proposed extending tax incentives for start-ups and investments made by sovereign wealth or pension funds until March 2025.

What is Angel Tax?

The Angel Tax, which has been a point of contention, is a levy imposed on the capital raised by unlisted companies through the issuance of shares to investors. This tax specifically targets the premium paid by investors that exceeds the fair market value of the shares, classifying it as "income from other sources" and taxing it accordingly.

The abolition of this tax is expected to alleviate financial burdens on start-ups and encourage more investment in the sector, ultimately driving growth and innovation across the country.