Abolition of Angel tax cheers startups

New Delhi: Startup and venture funds on Tuesday cheered the Budget decision on the abolition of Angel tax for all investor classes, terming it a "game-changer" that would remove significant barriers in growth and foster a vibrant and dynamic ecosystem.

Angel tax refers to the tax that the government imposes on funding raised by unlisted companies, or startups if their valuation exceeds the company's fair market value. "To bolster the Indian startup eco-system, boost the entrepreneurial spirit and support innovation, I propose to abolish the so-called angel tax for all classes of investors," Finance Minister Nirmala Sitharaman said in her Budget speech. The angel tax issue has been a thorn on the side of startup founders and investors, and venture capitalists, startups and industry associations have long been batting for its removal.

"The abolition of the 'angel tax' is a game-changer, removing a significant barrier that has long hindered the growth of startups and discouraged investment. This progressive step will undoubtedly foster a more vibrant and dynamic startup ecosystem, encouraging innovation and entrepreneurship across the country," Prateek Jain, Associate Director-Startup and Alliances, Alliance of Digital India Foundation (ADIF) said.