In order to provide a big relaxation to the entrepreneurs and startups prevailing in the society, Indian finance minister Nirmala Sitharaman has declared that the angel tax will not be charged on the startups and investors. At the time of declaration of the measures to boost the stagnating economy oh the country, Finance minister stated that Section 65(2) of the Income Tax Act will not get applied on the startups registered under the Department of Promotion of Industry and Internal Trade (DPIIT).
The Angel tax emerged as a very crucial issue among the entrepreneurial society and the startup ecosystem. Although the government of India declared some measures earlier but the startups were not able to get satisfied by the old measures and wanted a complete removal of the tax liability.
In the recent times, the government of India is trying hard to ensure benefits to genuine firms only from the exemption from Angel tax and if any startup is found violating the rules or inegible to get exempted from the angel tax and then too is taking benefits from the angel tax removal will have to suffer an angel tax penalty. The most recent update in the scenario is the addition of the rule as per which a penalty of 200 % on startups will be imposed on the startups that are not eligible for the angel tax requirements.
With the latest declaration, the government of India has solved the issue related to the angel tax as the startups don’t need to depend on qualifications.