Finance Minister Nirmala Sitharaman announced the abolition of the angel tax for all classes of investors during today’s presentation of Budget 2024-25 in the Lok Sabha.

Angel tax is a tax on funds startups receive from angel investors when the investment exceeds the fair market value of the startup’s shares. This tax was introduced in India in 2012, and it aims to prevent money laundering through overvalued investments in unlisted companies. The excess amount over the fair market value is taxed as income.

This can be difficult for startups because early investments are based more on their potential for growth than their current worth. This makes it challenging to defend their valuations, which could result in considerable tax obligations. Their growth may be slowed by this circumstance, which may deter investors.

However, this is a sigh of relief for investors as they were demanding the removal of angel tax to create a favourable environment for startups in the nation.

Also Read: AiDash Unveils AI Centre of Excellence in Bengaluru

The first Modi 3.0 Budget focused on Micro, Small, and Medium Enterprises (MSMEs), startups, and job creation. Finance Minister Nirmala Sitharaman announced that the Mudra loan cap would increase from Rs. 10 lakh to Rs. 20 lakh.

The Mudra initiative aims to fund small businesses in manufacturing, trading, services, and related agricultural activities. The removal of the angel tax and the increased Mudra loan limit are expected to benefit startups significantly.

Be a part of Elets Collaborative Initiatives. Join Us for Upcoming Events and explore business opportunities. Like us on Facebook , connect with us on LinkedIn and follow us on Twitter.

"Exciting news! Elets technomedia is now on WhatsApp Channels Subscribe today by clicking the link and stay updated with the latest insights!" Click here!