Finance Minister Nirmala Sitharaman made a big announcement for them on Friday, giving a big relief to businessmen and startups. He said that the provision of ‘Angel Tax’ applicable to startups and their investors is withdrawn.
Announcing steps to bring the decaying economy back on track, the Finance Minister said that Section 56 2 (b) of the Income Tax Act will not apply to startups registered under the Department for Promotion of Industry and Internal Trade (DPIIT).
Angel tax was a major issue among entrepreneurs in the startup ecosystem. Although the government had announced some steps to provide relief in this, the startups were not satisfied with this and were demanding complete exemption from tax obligations.
Sitharaman also announced several other measures to Reduce tax obligations and to address the ongoing concerns of tax harassment by tax authorities.
Controversial FPI tax also withdrawn
Sitharaman announced withdrawal of controversial tax surcharge on Foreign Portfolio Investment (FPI) announced in the budget. Nirmala said, ‘Under the Finance Act, 2019, the surcharge charged on long-term and short-term capital gains is withdrawn.’
The government has taken this step when a large amount of foreign funds went out of the Indian capital market in July. The Sensex has lost 3,000 points since the budget. Earlier it reached the highest 40,000 mark of its life.