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
This story is from the {{IssueName}} edition of {{MagazineName}}.
Start your 7-day Magzter GOLD free trial to access thousands of curated premium stories, and 9,000+ magazines and newspapers.
Already a subscriber ? Sign In
This story is from the {{IssueName}} edition of {{MagazineName}}.
Start your 7-day Magzter GOLD free trial to access thousands of curated premium stories, and 9,000+ magazines and newspapers.
Already a subscriber? Sign In
"Moving to cloud helped us grow❞
What was the problem you were grappling with?
She's Got Time
MORE WOMEN ARE BECOMING WATCH CONNOISSEURS, SEEKING OUT BOTH JEWELLED AND TECHNICAL WATCHES FOR THEIR STYLE AND CRAFTSMANSHIP
RISING STAR
PARUL GULATI IS a name that's been steadily gaining prominence in the Indian entertainment industry after she appeared on season 2 of Shark Tank in 2023. She has become a multifaceted personality who effortlessly transitions between acting and entrepreneurship.
Building on a Legacy
WHEN ZAHABIYA KHORAKIWALA stepped into her role as Managing Director of Wockhardt Hospitals over a decade ago, she confronted formidable challenges that have since turned into achievements.
LEADER IN INNOVATION
AS FEDEX'S PRESIDENT (Middle East, Indian subcontinent and Africa), Kami Viswanathan has a lot on her plate.
WAITING IN THE WINGS
Here are those who missed out as they have not yet completed a year in office; they'll be strong contenders in 2025
A DECENT PROPOSAL
IN TODAY'S WORLD OF TRYING TO CREATE AN EQUITABLE SPACE, BOTH MEN AND WOMEN CONTRIBUTE TO THEIR HOUSEHOLDS. WOMEN ARE ENCOURAGED TO HAVE THEIR OWN SAVINGS POOL AND INVESTMENT ROUTINE. GIVEN THIS, HOW SHOULD FUTURE BRIDES APPROACH FINANCIAL PLANNING?
Women and the STEM Bias
EMPOWERING WOMEN IN STEM WILL NOT ONLY BENEFIT INDIVIDUALS, BUT ALSO STRENGTHEN THE ENTIRE INDUSTRY, DRIVING INNOVATION AND PROGRESS.
ROCKET WOMEN
WOMEN IN INDIA ARE NOT ONLY VENTURING INTO SPACE BUT ARE ALSO STARTING TO SPEARHEAD THE COUNTRY'S EFFORTS IN THE GLOBAL SPACE RACE.
ONE STEP FORWARD
THE NUMBER OF WOMEN INDEPENDENT DIRECTORS IS GROWING STEADILY, BUT IT'S A LONG WAY FROM GENDER PARITY. MUCH MORE NEEDS TO BE DONE TO BREAK THE GLASS CEILING IN BOARDROOMS.