Angel tax exemption


  • Department for Promotion of Industry and Internal Trade (DPIIT) and the Central Board of Direct Taxes (CBDT) to compile a list of startups eligible for angel tax exemption, based on their audited financial statements and income tax returns of the previous year.
  • It decided to raise the maximum time limit below which a firm would be deemed eligible for angel tax exemption to 10 years from the earlier seven
  • The paid-up share capital threshold below which startups would be eligible for an exemption has been set at ₹25 crore.
  • In cases where the investment exceeds ₹25 crore, the firms would be eligible for exemption if the angel investors can prove a net worth of ₹2 crore or more in the previous financial year.
  • For investments below ₹25 crore, no questions would be asked.
  • Angel tax is imposed on the excess share capital raised by an unlisted firm, over and above the fair market value of its shares.

Startups would have to furnish three types of documents in order to be registered with the government:

  • audited financials for the previous year,
  • IT returns for the previous year, and
  • a self-certified declaration.

The declaration is to certify that the firm does not have ownership or investments nor plans to deploy the angel investment in real estate holdings of any kind and assets, including premium cars of value above ₹10 lakh, gold and art.


%d bloggers like this: