Angel tax removal helped reverse flipping, startup funding $155 bln in 2024: DPIIT
DPIIT) said Friday.
“The report we are getting is that startups are returning to India. Angel tax (removal) is one issue that has helped bring some startups,” Bhatia said.
Budget FY25 had abolished the angel tax or Section 56(2) VII B of the Income Tax Act that was introduced in 2012 as an anti-abuse measure aimed at tax avoidance and curbing money laundering through inflated valuations. Under this provision, if a closely held company issues shares at a price exceeding fair market value (FMV), computed in accordance with prescribed methodology, the difference is to be taxed as income from other sources.
Called reverse flipping, many Indian start-ups that initially preferred registering their headquarters abroad are now returning to India due to government's initiatives around ease of doing business.
“The equity market reflecting the impact of reverse flipping. The Ministry of Corporate Affairs has also expedited the process,” said Sanjiv, joint secretary in DPIIT.
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