Start-ups welcome end of 'angel tax', hope relief for already served notice

Sitharaman also said a dedicated cell will be set up under a member of the Central Board of Direct Taxes for addressing issues faced by start-ups

Finance Minister Nirmala Sitharaman on Friday said registered start-ups would be removed from the purview of the “angel tax”. The sector welcomed the move, which has been a long-standing demand, and hoped there would be relief for those start-ups that had already received notices under the provisions of the law. 

According to the Section 56(2)(viib) of the Income-Tax (I-T) Act, the amount raised by a start-up during a funding round which is more than its fair market value would be deemed an income from other sources and taxed at 30 per cent.

Sitharaman said, “To mitigate genuine difficulties of start-ups