LTCG tax parity may bring more family offices to the startupland
Family offices of millionaires are likely to increase capital allocation to new-age companies, following the budget proposals to bring parity on long-term capital gains (LTCG) tax across all financial assets and abolish the angel tax.
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Family offices—about 300 now compared with around 45 in 2018 as per a PwC report—have increased their investment activity in startups over the past year and the budget announcements will give a major boost to it, a senior executive at a top family office fund said. Removal of angel tax will also help these investors come in startups at an early stage, industry executives said.
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Offering CollegeCourseWebsiteIndian School of BusinessISB Product ManagementVisitMIT xPROMIT Technology Leadership and InnovationVisitIIT DelhiCertificate Programme in Data Science & Machine LearningVisitIn her budget Tuesday, finance minister Nirmala Sitharaman said LTCG will be levied at a uniform 12.5% for all financial assets—it was 20% previously for the stocks of unlisted companies, which most startups are.
“This would be a significant attraction going forward to invest in private companies … the disparity between listed and unlisted stocks was a hurdle and now a lot more domestic capital is available to back tech companies with sustainable models,” the executive said.
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