Exclusive: Government may adopt Fema-like valuation norms for angel tax

India may accept the valuation criterion followed under the foreign exchange management law for the so-called angel tax on investments by overseas investors in startups, to provide clarity and end tax disputes.

The Reserve Bank of India (RBI) administered Foreign Exchange Management Act (FEMA) accepts valuation by a Sebi-registered Category 1 merchant banker using any internationally accepted pricing methodology applied on an arm’s length basis.