DIPP to hold round table on angel tax row on February 4

BENGALURU: The Department of Industrial Policy and Promotion (DIPP) has called for a round-table meeting on February 4 to discuss concerns on taxation of angel funds raised by startups and others.

The meeting will see the attendance of about 50 people including prominent angel investors, representatives of startups, industry bodies such as IVCA and iSPIRT, the income-tax department and DIPP and the revenue secretary, said people aware of the matter.

The call for talks comes in the wake of concerns triggered by the government’s announcement that tax exemption would apply to only those startups which raise less than Rs 10 crore in share capital. Further, startups which have already received notices from the I-T department were not given any mechanism to resolve their appeals easily.


The agenda of the meeting is to discuss solutions to the angel tax issue submitted by these bodies.

“It’s a good step by the government to show that it is willing to listen to the industry as a reaction to the fact that the relief they announced for startups did not have the desired effect,” said Siddarth Pai, founding partner at 3one4 Capital.

The industry has been asking the government to do away with Section 56 of the I-T Act — as per which an individual is liable to be taxed on the entire sum under ‘other sources’ upon receipt of money from any person, without consideration, exceeding Rs 50,000 – but to no avail.

iSPIRT has sought an exemption on angel tax for startups that have raised up to Rs 10 crore in a single financial year, along with lowering of the threshold to Rs 25 lakh of income or a net worth of Rs 1crore for investors.