New Delhi: Non-resident investments in privately held Indian startups from 21 countries including the US, UK, Germany and France will not attract angel tax, the finance ministry has notified.
However, the list does not include investments from major countries such as Singapore, Netherlands and Mauritius. “It is noteworthy that many popular jurisdictions such as Singapore, Mauritius, Cayman, Netherlands, Cyprus, UAE have not been included in the list of notified countries and therefore investments raised from funds registered in these countries will not be exempt. Singapore, Mauritius, the United Arab Emirates and the Netherlands were part of the top five jurisdictions. foreign direct investment flow in India during 2022. The decision not to exempt funds from these countries will limit the benefits of this notification for Indian startups,” said Vaibhav Gupta, Partner Dhruv Consultant,
The government had expanded the scope of angel tax to include investments by foreign investors in the budget. Startups, already struggling to navigate the funding winter, are seeking exemptions for certain foreign investor classes. Experts had earlier said that startups facing angel tax notices have to pay 25% of the investment as tax and twice the penalty for violating exemption conditions.
Central Board of Direct Taxes ,cbdt) notified on May 24 the classes of investors who would not be covered under the angel tax provision. Excluded entities include those registered with SEBI as Category-I FPIs, endowment funds, pension funds and broad-based investment vehicles that are residents of 21 specified countries, including the US, the UK, Australia, Germany and Spain.
Late last week, the government proposed several changes to the tax levied on angel investors in unlisted entities, including widening the scope of the valuation methodology.
However, the list does not include investments from major countries such as Singapore, Netherlands and Mauritius. “It is noteworthy that many popular jurisdictions such as Singapore, Mauritius, Cayman, Netherlands, Cyprus, UAE have not been included in the list of notified countries and therefore investments raised from funds registered in these countries will not be exempt. Singapore, Mauritius, the United Arab Emirates and the Netherlands were part of the top five jurisdictions. foreign direct investment flow in India during 2022. The decision not to exempt funds from these countries will limit the benefits of this notification for Indian startups,” said Vaibhav Gupta, Partner Dhruv Consultant,
The government had expanded the scope of angel tax to include investments by foreign investors in the budget. Startups, already struggling to navigate the funding winter, are seeking exemptions for certain foreign investor classes. Experts had earlier said that startups facing angel tax notices have to pay 25% of the investment as tax and twice the penalty for violating exemption conditions.
Central Board of Direct Taxes ,cbdt) notified on May 24 the classes of investors who would not be covered under the angel tax provision. Excluded entities include those registered with SEBI as Category-I FPIs, endowment funds, pension funds and broad-based investment vehicles that are residents of 21 specified countries, including the US, the UK, Australia, Germany and Spain.
Late last week, the government proposed several changes to the tax levied on angel investors in unlisted entities, including widening the scope of the valuation methodology.