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

Those earning Rs 2-5 crore will pay effective LTCG of 26% and those earning less than Rs 5 crore will have to pay LTCG of 28.5%

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

If they are earning Rs 2-5 crore per annum, which many of them do, the effective LTCG tax rate is 26 per cent (see table); those earning Rs 5 crore+ will have to pay 28.5 per cent LTCG. This will discourage start-up investors and dampen the spirits. 

"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