Frostbite amid funding winter for start-ups: Experts rue angel tax

Amid the ongoing funding winter, start-ups have been thrown another curveball in the Budget 2023-24, which has proposed to extend “angel tax” to non-resident investors. This, experts believe, would deal a debilitating blow to overseas investment in India.

Padmaja Ruparel, co-founder of Indian Angel Network (IAN), India’s largest network of angel investors, considers the move as “taking two steps backward”, saying it will kill the industry of angel investing by non-resident investors. “The government needs to re-look at the move,” she said.

The Finance Bill has proposed an amendment to Section 56(2)(viib) of the Income Tax Act, which relates to angel tax, to include non-resident investors.