This clarification by the tax department comes after many startups had raised concerns about receiving scrutiny notices for angel tax. Angel tax – which is income tax at the rate of 30.6 per cent – is levied when an unlisted company issues shares to an investor at a price higher than its fair market value. However the Finance Act 2023 proposed to extend angel tax even to non-resident investors from April 1, 2024. Experts said the circular provides much needed clarity with respect to applicability of angel tax on registered start ups and is in the nature of administrative guidance to all field officers. The DPIIT-recognised startups were excluded from the angel tax levy.

Source: Indian Express October 16, 2023 11:30 UTC