BANKING AFFAIRS

Detailed explanation-1: -It derives its genesis from section 56(2)(viib) of the Income Tax Act, 1961. It was introduced in 2012 to prevent black money laundering through share sales. The Angel Tax is levied at a rate of 30.9% on net investments in excess of the fair market value.

Detailed explanation-2: -The government has proposed an amendment the angel tax provision or section 56(2) (viib) of the Income Tax Act in the budget. The angel tax is levied when an unlisted company issues shares at a price that exceeds the fair market value. The difference is taxed at 20% or more.

Detailed explanation-3: -These funding deals often saw investors paying a premium above the face value or the fair market value of securities, and therefore were taxed as income for the startup. The Angel Tax is being levied on startups at 30.9% on net investments in excess of the fair market value.

Detailed explanation-4: -Angel Tax is levied at a hefty rate of 30.9% on net investments in excess of the fair market value. So for example, if a startup receives 50 crore of investment by issuing 1 lakh shares at Rs. 5000 each to an Indian investor and the fair market value is Rs. 2000 per share i.e Rs.

Detailed explanation-5: -What is the angel tax? The angel tax regime was originally started in 2012 as an anti-abuse measure to prevent money laundering. It mandated that a startup’s fundraise from angel investors could be taxed whenever the funding round happened at a valuation more than the fair value of shares.