for all defence aspirants new angel tax rules-NCA ACADEMY

New Angel Tax Rules

The Centre Recently Notified New Rules Pertaining To Angel Tax Which Will Exempt Registered Start-Ups Of A Specified Size From The Taxation.

Key Points

Under The New Rules,Startups Will Be Kept Out Of The Purview Of Anti-Evasion Provision In The Received Beyond The Fair Value Is Taxed At 30%.

Investment Of Up To 25 Crore In An Eligible Company Will Be Exempt From The Angel Tax.

In Addition, Investments Made By A Listed Company Of A Net Worth Of At Least 100 Crore Or A Total Turnover Of At Least 250 Crore Would Also Be Exempt.

Investment Received From Non-Residents And Alternatives Investment Funds-Category I Registered With The Securities And Exchanges Board Of India(SEBI) Will Also Be Eligible For The Exemption.

Eligible Start-Ups Would Be One That Is Registered With The Government ,Has Been Turnover That Has Not Exceeded 100 Crore Over That Period.

In Order To Register With The Government As A Start-Up ,The Company Will Also Have To Make An Online Application To The Department For Promotion Of Industry And Internal Trade(DPIIT).

But Ot Be Classified As One, A Company Needs To Attest To Conditions Such As That It Has Not Invested In Any Land Unrelated To The Business, Vehicles Worth Over 10 Lakh, Or Jewellery.

Alternatives Investment Fund(AIF)

AIF Is Any Privately Cooled Investment Fund In The Form Of A Trust Or A Company Or A Body Corporate Or A Limited Liability Partnership (LLP) Which Are Not Presently Covered By Any Regulation Od SEBI Governing Fund Management Not Coming Under The Direct Regulation Of Any Other Sectoral Regulators In India -IRDA ,PFRDA,RBI.

Hence, In India, AIFs Are Private Funds Which Are Otherwise Not Coming Under The Jurisdiction Of Any Regulatory Agency In India.

Categories Of AIF

Category I Are Those AIFs Which Generally Invests In Start-Ups Or Early Stage Ventures Which The Governments Or Regulators Consider As Socially Or Economically Desirable Venture Capital Funds (Including Angel Funds), SME Funds.

Category II AIFs Do Not Fall In Category I And III And Which Do Not Undertake  Leverage Or Borrowing Other Than To Meet Day-To -Day Operational Requirements And As Permitted In The SEBI (Alternatives Investment Funds)REGULATION,2012.E.G :Real Estate Funds, Private Equity Funds.

Category III AIFs Employ Diverse Or Complex Trading Strategies And May Employ Leverage Including Through Investment In Listed Or Unlisted Derivatives. Eg: Hedge Funds, Private Investment In Public Equity Funds.


Angel Tax Is Applicable To Unlisted Companies That Have Raised Capital Through Sale Of Shares At A Value Above Their As Income And Taxed Accordingly. This Tax Predominantly Affects Start-Ups And The Angel Investments They Attract.

First Proposed In 2012, The Tax Was Justified As An Emergency Measures To Prevent The Laundering Of Illegal Wealth By Means Of Investments In The Shares Of Unlisted Private Companies At Extraordinary Valuations.

Investors Had Also Received Multiple Notices Asking Them To Furnish Details On Their Source Of Income ,Their Bank Account Statements And Other Financial Data.