APN News

Post budget reaction quote from SUSHANTO MITRA, FOUNDER & CEO, LEAD ANGELS

“At budget time, hope always takes the better of wisdom and for start-ups who live largely on hope, it was one more opportunity to wish. Unlike most other budgets, this time however there is some reason to hope. 

Early stage funding is a critical requirement of start-ups. Angel tax has been a pain point for both investors and start-ups alike. In simple words, it gave the authority to the tax department to question the share premium paid by investors and potentially tax the amount which was above the fair market value as other income at a marginal rate of tax of 25%. With the new provisions, it seems that as long as investors declare their investment and the start-ups also file this in their returns, they will not be subject to scrutiny for the computation of share premium. While details are awaited, this would mean any start-up registered with Startup India and has filed necessary documents will be exempt from angel tax.


Start-up investors globally get exemptions from their investments. This trend is being strengthened by the relaxation/ extension of this scheme whereby investors are allowed to re-invest their capital gains into start-ups and claim exemption of these amounts from tax. It may be noted however that gains from such start-up investments will be however subject to tax. This is a great step and hope it is followed by other measures in future to bring India at par with the rest of the world.

Other measures such as increasing the corpus size for the fund of funds, free payment gateway from MSMEs, setting up on agri-incubators and the tax exemption and subsidy on electric vehicles are also welcome moves. 

All in all, there is nothing negative for start-ups and their investors in this budget. Reason to hope continues.”

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