Higher LTCG tax spooks start-up investors, founders, ESOP holders

Those earning Rs 2-5 crore will pay effective LTCG of 26%; those earning Rs 5 cr-plus will have to pay LTCG of 28.5%

Even as the government made an effort to bury angel tax, the rise in surcharge on long-term capital gains (LTCG) tax has spooked start-up investors, founders, and stock options holders. 

If they are earning Rs 2-5 crore per annum, the effective LTCG tax rate is 26 per cent; those earning Rs 5 crore-plus will have to pay 28.5 per cent LTCG. This will discourage start-up investors. 

“The most retrograde step Modi Sarkar 2.0 has taken for start-ups is the heavy tax on their potential long-term gains. A bit worried about the future,” tweeted Anand Lunia, managing partner at venture capital