{"id":3470,"date":"2023-02-21T01:55:09","date_gmt":"2023-02-20T20:25:09","guid":{"rendered":"https:\/\/vajiramandravi.com\/current-affairs\/?p=3470"},"modified":"2025-03-26T12:36:26","modified_gmt":"2025-03-26T07:06:26","slug":"what-is-angel-tax","status":"publish","type":"post","link":"https:\/\/vajiramandravi.com\/current-affairs\/what-is-angel-tax\/","title":{"rendered":"What is Angel Tax?"},"content":{"rendered":"<h2>Why in News?<\/h2>\n<ul>\n<li>The <strong>Finance Bill 2023<\/strong> has <strong>proposed some changes<\/strong> that will <strong>remove the exemption for foreign funds and non-resident investors<\/strong>, <strong>who will now have to pay Angel Tax <\/strong>on the difference between capital raised and the fair value of securities sold.<\/li>\n<\/ul>\n<h3>About Angel Tax:<\/h3>\n<ul>\n<li><strong>What is it?<\/strong> It is <strong>levied on the capital raised via the issue of shares by unlisted companies<\/strong> <strong>from an Indian investor<\/strong> if the share <strong>price of issued shares is seen in excess of the fair market value of the company.<\/strong><\/li>\n<li>The <strong>excess funds<\/strong> raised at prices above fair value is <strong>treated as income, on which tax is levied.<\/strong><\/li>\n<li>It <strong>derives its genesis from section 56(2)(viib) of the Income Tax Act, 1961.<\/strong>\u00a0<\/li>\n<li>It was <strong>introduced in 2012<\/strong> to prevent black money laundering through share sales.<\/li>\n<li>The Angel Tax is <strong>levied at a rate of 30.9% on net investments<\/strong> <strong>in excess of the fair market value.\u00a0<\/strong><\/li>\n<li><strong>In 2019<\/strong>, the <strong>Government announced an exemption<\/strong> from the Angel Tax <strong>for startups<\/strong> on fulfillment of <strong>certain conditions<\/strong>. These are,<\/li>\n<li>The <strong>startup<\/strong> should be <strong>recognized by the Department for Promotion of Industry and Internal Trade<\/strong> (DPIIT) as an eligible startup.<\/li>\n<li>The <strong>aggregate amount of paid-up share capital and share premium<\/strong> of the Startup <strong>cannot be more than \u20b925 crores<\/strong>. This amount <strong>does not include the money raised from<\/strong> Non-Resident Indians (<strong>NRIs<\/strong>), <strong>Venture Capital Firms<\/strong>, and <strong>specified companies<\/strong>.<\/li>\n<li>For <strong>angel investors<\/strong>, the <strong>amount of investment<\/strong> that exceeds the fair market value <strong>can be claimed for a 100% tax exemption<\/strong>. However, <strong>the investor must have a net worth of \u20b92 crores <\/strong>or <strong>an income of more than \u20b925 Lakh in the past 3 fiscal years.<\/strong><\/li>\n<li><strong>Eligibility Criteria for Startup Recognition:<\/strong><\/li>\n<li>The Start-up should be <strong>incorporated as a private limited company<\/strong> or <strong>registered as a partnership firm or a limited liability partnership.<\/strong><\/li>\n<li><strong>Turnover should be less than INR 100 Crores<\/strong> in any of the previous fiscal years.<\/li>\n<li>An entity shall be <strong>considered a Start-up up to 10 years from the date of its incorporation.<\/strong><\/li>\n<li>The <strong>Start-up should be working towards innovation\/ improvement of existing products, services<\/strong>, and processes and should have the potential to generate employment\/ create wealth.<\/li>\n<li>An entity formed by <strong>splitting up or reconstruction of an existing business shall not be considered a \u201cStartup\u201d.<\/strong><\/li>\n<\/ul>\n<p>&nbsp;<\/p>\n<hr \/>\n<h3>Q1)\u00a0What is a listed company?<\/h3>\n<p>A company that&#8217;s &#8220;listed&#8221; makes shares of its stock available for purchase on a stock exchange.<\/p>\n<p>The meaning of &#8220;listed&#8221; also implies that a company is &#8220;public&#8221; because its shares are readily available to anyone who wants to buy them<\/p>\n<p><strong>Source:<\/strong>\u00a0<a href=\"https:\/\/www.ndtv.com\/business\/angel-tax-provisions-in-finance-bill-wont-affect-startups-official-3801622\" target=\"_blank\" rel=\"nofollow noopener\"><u>&#8220;Angel Tax&#8221; Provisions In Finance Bill Won&#8217;t Affect Startups: Official<\/u><\/a><\/p>\n","protected":false},"excerpt":{"rendered":"<p>Angel Tax is levied on capital raised by unlisted companies  in excess of the fair market value of the company.<\/p>\n","protected":false},"author":5,"featured_media":3471,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[1],"tags":[],"class_list":{"0":"post-3470","1":"post","2":"type-post","3":"status-publish","4":"format-standard","5":"has-post-thumbnail","7":"category-upsc-prelims-current-affairs","8":"no-featured-image-padding"},"acf":[],"_links":{"self":[{"href":"https:\/\/vajiramandravi.com\/current-affairs\/wp-json\/wp\/v2\/posts\/3470","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/vajiramandravi.com\/current-affairs\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/vajiramandravi.com\/current-affairs\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/vajiramandravi.com\/current-affairs\/wp-json\/wp\/v2\/users\/5"}],"replies":[{"embeddable":true,"href":"https:\/\/vajiramandravi.com\/current-affairs\/wp-json\/wp\/v2\/comments?post=3470"}],"version-history":[{"count":0,"href":"https:\/\/vajiramandravi.com\/current-affairs\/wp-json\/wp\/v2\/posts\/3470\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/vajiramandravi.com\/current-affairs\/wp-json\/wp\/v2\/media\/3471"}],"wp:attachment":[{"href":"https:\/\/vajiramandravi.com\/current-affairs\/wp-json\/wp\/v2\/media?parent=3470"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/vajiramandravi.com\/current-affairs\/wp-json\/wp\/v2\/categories?post=3470"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/vajiramandravi.com\/current-affairs\/wp-json\/wp\/v2\/tags?post=3470"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}