Startups write to PM, seek abolition of 'Angel Tax'

Industry think tank iSPIRT has written to Prime Minister Narendra Modi urging the government to abolish tax on angel investments that has "victimised" many startups and poses a "serious threat" to the Start Up India movement.

iSPIRT, representing more than 60 startups in its letter, highlighted that in the last two years, many startups that have raised angel funding in AY2015-16 and 2016-17 have received notices from the Income Tax department under Section 56(2)(viib) of the I-T Act.

It added that the notices primarily question the high share premium at which the shares have been allotted during the angel funding.

"Startups are in distress and many feel victimised mainly due to the subjectivity, cost and arbitrariness involved in the implementation of this anti-evasionary measure which treats every assessee as guilty until proven innocent".

The remedial measures available are not timely or viable for them, the letter noted adding that some startups have even been forced to shutdown ...