Angel tax is the tax at the rate of 30% levied on startups on external investments and entrepreneurs across the country were being served income tax notices on account it. But as a much needed relief, the Central Board of Direct Taxes has increased the exemption limit for startups from earlier Rs. 10 crore to Rs. 25 crore.
Angel tax is the tax payable by unlisted firms on the capital amount raised. The capital herein is raised through the issue of shares whose issue price far exceeds the fair market value of the shares. The angel tax implications came into force in the Union Budget 2012. And, was announced to keep a check on money laundering.
Eligibility: For the eligibility, the total investment including that from angel investors should not exceed Rs. 25 crores. And is rendered as part of the government of India Startup India initiative to boost the sector.
An startup is any institution or entity registered in India not prior to 5 years and has a turnover of not more than Rs. 25 crore in any of the preceding financial years.