Angel Investors have been a boon to our start-up industry. These investors have time and again sought out new talents and business ideas and guided them towards success. Our start-up industries’ root more or less stands on Angel investors. However, these investors had to suffer the tax that the government levied on them under Section 56 of the Income Tax Act. This stopped many investors to keep a clear mind on investing start-ups. The good news for the emerging new business ideas from the talent of this country is that this tax has now been scrapped.
The act was made to stop the inflow of black money in the Indian market and to regularize it. But it was backfiring as the investing sentiment has already gone dull and only those start-ups got funding which were coming from big credentials. Now, that the investment is tax-free, more and more investors could vouch for start-ups, giving them hope and faith to carry forward their idea.
Earlier, the Angel investors had to pay up to 30% in tax. This was already an unnecessary thing imposed by the government. According to Sanjay Mehta, an Angel investor, it was somewhat unfair as those venture capital funds who come under SEBI (Securities and Exchange Bureau of India) didn’t have any tax levied on them. Thus, those investors who were not registered under SEBI had to give heavy taxes to the government. The rule says that if an investor’s funding exceeds the fair market value of a start-up, then he is entitled to pay tax to the government. That was a hindrance to the opportunities start-ups could have.
This is a further development under our Prime Minister, Mr. Narender Modi’s campaign of Start-Up India. There are various innovations in this campaign to help the start-ups of India to create new business, jobs and to take the economy to new heights. StartUp India Consultants follows closely all the novelties of this movement and provide services to people who have in themselves to create an enterprise.