Page 2 - Angel Tax

Tax dept notifies 'Angel Tax' rules for valuing investments in startups

The income tax department has notified rules for valuation of investments by resident and non-resident investors in startups, thus paving way for implementation of the changes brought in 2023-24 Budget. As per the changes in Rule 11UA of I-T rules, the Central Board of Direct Taxes (CBDT) provides that the valuation of compulsorily convertible preference shares (CCPS) and equity shares issued by unlisted startups can be based on the fair market value. The amended rules also retain the five new valuation methods proposed in the draft rules for consideration received from the non-residents viz., (i) Comparable Company Multiple Method, (ii) Probability Weighted Expected Return Method, (iii) Option Pricing Method, (iv) Milestone Analysis Method, and (v) Replacement Cost Method. The rules comes into effect from September 25. Deloitte India Partner Sumit Singhania said from investors' standpoint, revised rules offer wider range of valuation methodologies to work with, and that ought to m

I-T dept notifies 'Angel Tax' rules for valuing investments in startups

The income tax department has notified rules for valuation of equity and compulsorily convertible preferable shares issued by startups to resident and non-resident investors. As per the changes in Rule 11UA of I-T rules, which comes into effect from September 25, the Central Board of Direct Taxes (CBDT) provides that the valuation of compulsorily convertible preference shares (CCPS) can also be based on the fair market value of unquoted equity shares. The amended rules also retain the five new valuation methods proposed in the draft rules for consideration received from the non-residents viz., (i) Comparable Company Multiple Method, (ii) Probability Weighted Expected Return Method, (iii) Option Pricing Method, (iv) Milestone Analysis Method, and (v) Replacement Cost Method. Nangia & Co LLP Partner Amit Agarwal said the amendments to Rule 11UA of the Indian Income Tax Act bring positive changes by offering taxpayers flexibility through multiple valuation methods, simplifying the ...

Inefficient taxation

Angel tax will affect the flow of FDI

Angel tax: Experts seek 10% safe harbour for convertible preference shares

The I-T department's draft rules on valuation of funding in unlisted startups for calculating 'angel tax' will bridge the gap between the rules outlined in FEMA and the Income Tax, but the 10 per cent safe harbour which is proposed for equity investment should be extended to convertible preference shares, experts said. The Central Board of Direct Taxes (CBDT) on May 26 issued draft rules providing more flexibility for valuation of equity investments made in unlisted startups. For non-resident investors the valuation methods provided under the rules are: book value or net asset value method, valuation by a merchant banker using DCF (discounted cash flow), and valuation at which a venture capital fund/specified fund has invested in a Venture Capital Undertaking (VCU). Additionally, a 10 per cent leeway or safe harbour is provided where investment valuation is 10 per cent more than the valuation determined under above rules. On Friday, the CBDT invited suggestions from stakeholders on

Weekend Bites: Adani casts off Hindenburg curse, and demons in Angel Tax

In which we munch over the week's platter of news and views

21 nations get angel tax exemption. Here’s what this means

Top headlines: Meta layoffs, angel tax exemption, new Parliament & more

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From US to Australia, investors from 21 nations get angel tax exemption

Funding from countries such as Mauritius and Singapore in unlisted start-ups to attract the tax

Investment in start-ups from 21 nations will be exempt from angel tax

The Finance Ministry has notified 21 countries, including the US, UK and France, from where non-resident investment in unlisted Indian startups will not attract angel tax. The list, however, excludes investment from countries like Singapore, Netherlands and Mauritius. The government had in the Budget brought overseas investment in unlisted closely held companies, except DPIIT recognised startups, under the Angel Tax net. Following that, the startup and venture capital industry sought exemption for certain overseas investor classes. The Central Board of Direct Taxes (CBDT) on May 24 notified classes of investors who would not come under the Angel Tax provision. Excluded entities include those registered with Sebi as Category-I FPI, Endowment Funds, Pension Funds and broad-based pooled investment vehicles, which are residents of 21 specified nations, including the US, UK, Australia, Germany and Spain, as per the notification. The other nations mentioned in the notification are Aust

Proposed angel tax norms: Start-ups may get a funding boost, say top VCs

They said the proposed norms aim to expand valuation methodologies and eliminate price differentials between resident and non-resident investors

CBDT widens valuation norms for angel tax to bring clarity, end disputes

Exempts govt entities, banks, insurance firms, FPIs from provision

Angel tax draft rules likely in 10 days; may clear the air on valuation

The development comes in the backdrop of the Union Budget 2023-24 extending the angel tax provisions to transactions involving foreign investors

Government to come up with angel tax rules for start-ups before April 30

Rajeev Chandrasekhar had admitted that the angel tax was an 'aberration' and reforms were under consideration

Let start-ups live

Govt must review angel tax

Finance Bill 2023: Angel tax another hiccup for start-ups amid funding woes

Angel tax another hiccup for Indian startups amid the funding winter

Finance Bill: No respite for startups as Angel Tax effective from Apr 2024

Previously, many stakeholders had suggested the exclusion of investments from foreign companies in startups from the Angel Tax regime

TMS Ep392: Gopinathan's exit, angel tax, Jim Rogers, m-cap to GDP ratio

What does Gopinathan's exit mean for TCS? Is angel tax making India less attractive? What does Jim Rogers think of the global banking crisis? What is the m-cap to GDP ratio? All answers here

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Angel tax relief likely for Sebi-enrolled FPIs; rules expected by April 15

The angel tax is on the amount received as more than fair market value as income in the hands of a company

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

Industry watchers believe that early-stage start-ups will bear most of the brunt, as the segment witnesses comparatively higher deviation in allotted share prices and FMV