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DPIIT Redefines “Accredited Investors” For Angel Tax Exemption

A draft has been prepared by Ministry of Commerce and Industry and the regulatory body is presently seeking views of stakeholders
BY BEx Bureau
BusinessEx
Apr 02, 2019

DPIIT (Department for Promotion of Industry and Internal Trade) is redefining the term accredited investors and in addition, tax incentives can be provided for endowing money in startups, said a government official.

A draft has been prepared by Ministry of Commerce and Industry and the regulatory body is presently seeking views of stakeholders. The list of accredited investors includes individuals, family members of the startup (company owner), trusts and unlisted companies, which will be exempted from angel tax, under the Income Tax Act, section 56 (2) over INR 25 crore, the official told to the Indian daily news, The Economic Times.

Presently, startups are receiving angel tax concession up to a limit of INR 25 crore.

More so, there are three other categories of investors which are exempted from angel tax on the investment over INR 25 crore. These categories of investors are listed companies, non-residents and alternate investments funds category I, as reported by the Indian daily news, The Economic Times.

According to the Income Tax Act, the amount raised by the startup companies in the form of investment, which is in excess of its market value, will be considered as the income from external sources and will be liable for tax at 30 per cent.

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