IF BEAUTY LIES in the eyes of the beholder, does valuation lie in the eyes of the investor? That’s the question startups in India seem to be grappling with thanks to the new angel tax norms that kicked in this fiscal, as these question the very basis of funding for such ventures.
Start-ups, already dealing with a funding winter, are trying to assess the impact of the angel tax norms that the Union Budget 2023-24 extended to non-residents. Despite several exemptions provided by the Central Board of Direct Taxes (CBDT), the start-up community is ill at ease over how to justify valuations as well as the higher compliance burden.
According to the reply to an RTI application filed by BT, only 8,204 start-ups have received exemption from angel tax. In all, 114,000 start-ups are registered with the DPIIT and 10,939 start-ups have applied for exemption from the tax, the reply reveals.
“The angel tax amendments to include non-resident investors have injected material uncertainty into the investment process. A lot more time is being spent to navigate the valuation requirements under the Companies Act, 2013, Foreign Exchange Management Act, 1999, and the Income Tax Act, 1961,” says Siddarth Pai, Founding Partner of 3One4 Capital, and Co-chair of Regulatory Affairs Committee at the Indian Venture and Alternate Capital Association (IVCA). He adds that for the same transaction, there can now be four different valuation reports under these three bodies of law.
WHAT IS ANGEL TAX?
Originally introduced in 2012, angel tax was aimed at curbing shell companies and money laundering
It is levied at a rate of up to 30.6 per cent when an unlisted company issues shares to an investor at a price higher than its fair market value
Esta historia es de la edición January 21, 2024 de Business Today India.
Comience su prueba gratuita de Magzter GOLD de 7 días para acceder a miles de historias premium seleccionadas y a más de 9,000 revistas y periódicos.
Ya eres suscriptor ? Conectar
Esta historia es de la edición January 21, 2024 de Business Today India.
Comience su prueba gratuita de Magzter GOLD de 7 días para acceder a miles de historias premium seleccionadas y a más de 9,000 revistas y periódicos.
Ya eres suscriptor? Conectar
The EV Craze
The country’s growing luxury car market is seeing a shift with environmentally-conscious consumers betting on electric vehicles as a sustainable travel option. Though just 6%, the share of EVs in the luxury segment is rising rapidly
The Storage Boom
Data centres are being built at a frenetic pace in india as companies scramble to meet the ballooning demand from mobile phone users and firms adopting al. Can the country’s energy infrastructure keep up?
India Beckons
Owing to rising incomes in India and overall wealth expansion, luxury brands are wooing the country like never before
The Pearls of The Sea
Caviar, that rare food, is considered the epitome of fine dining. Here is everything that you need to know about it
66.Brand persona should define the core"
I’d say this was a strategic pivot. We had an iconic brand, but had, over time, evolved into diversified lines of businesses that could no longer be represented within the confines of our ‘name’.
Unwind in Style
Here is acomprehensive list of top tech picks that help you unwind by blending perfection in performance with luxury
A Lifelong Affair with Inspiration
In my art journey, the diversity of my acquisitions mirrored the expanding horizons of my understanding of art
Make it Bubbly
Champagne is much more than just a symbol of celebration and success. Know about its nuances beyond the bubbles
Palatial Splendour
Buoyed by renewed demand, sales of the glitzy mansions of the ultra-rich are surging like never before. Real estate majors are looking to capitalise on this by launching luxury offerings in record numbers
Of Beaches and Cream
GianChand Single Malt Whisky