#Budget2019: Indian Start-ups Can Rejoice as Gov Announces Relief from Angel Tax & Income Tax Scrutiny
You're reading Entrepreneur India, an international franchise of Entrepreneur Media.
The Indian start-up ecosystem can breathe a sigh of relief. The entrepreneurs from this community who were rooting for the complete removable of the dreaded ‘Angel Tax’ can rejoice as their voices have been heard to some extent.
The Finance Minister, in the Budget 2019 has talked about start-ups at length and has rolled out some elaborate plans for the ecosystem. Nirmala Sitharaman said that if start-ups submit all the papers and documents, then there will not be any scrutiny from the Income Tax department. Start-ups have been in conflict with the tax authorities over Angel Tax. The tax that is levied over the difference between the market value of shares and the value calculated by start-ups reduces business growth for someone who most requires it.
Sitharam, putting an end to all the concerns said that the “valuation of shares will be beyond scrutiny.”
The announcement of a channel for start-ups on Doordarshan came as a pleasant surprise for one and all, the content of which will be curated around start-ups entirely. The channel will discuss growth strategies for the community along with issues relating to taxes.
Here is what the start-up community has to say.
Bhaskar Majumdar, Managing Partner, Unicorn India Ventures is all for the move. He says, “This Budget has been a good budget for the startup community. FM announced doing away with Angel tax. This has been a long-standing demand of the industry and we welcome this move. ”
The biggest source of comfort, perhaps, has come from the fact that Angel Tax will not be there to haunt start-ups anymore. K Ganesh, Serial Entrepreneur & Partner of GrowthStory says, “The draconian devil tax has been comprehensively addressed including some relief for pending cases that were causing a lot of angst.” He also added that one of the best moves is the delinking of calculation and the justification of share premium since deciding a premium is not an exact science, and it is impossible to justify. He added, “Now, only the identity of the investor and source of income needs to be proven. This is fair and a straight-forward process. Having supervisory approval of the Assessing Officer is welcome as it will reduce arbitrariness and prevent unwanted harassment.” Ganesh also added that “We are moving from ‘Krishi Darshan’ phase to ‘VC darshan’ phase.”Even though entrepreneurs welcome such a move, all eyes are now on the implementation. Prof.Kaustav Majumdar, Head of Startups, Incubation & Acceleration at SPJIMR, "Angel Tax was in the news for some time - the move to bring a structure in it - whereby as long as startups who file requisite declarations will not be subjected to any scrutiny about valuation sounds commendable. Although implementation may not be easy. Another important point I felt is the proposal to have faceless IT Tax Assessment... again implementation will be key."