Angel tax abolition set to fuel innovation and spur investment in deep-tech startups: Ashwini Vaishnaw

The abolition of the angel tax for investors is likely to spur investments in deep-tech startups, union minister for electronics and information technology Ashwini Vaishnaw said.

"For deep tech startups, angel tax was a major issue, specifically in regard to determining valuation. With angel tax now being removed, this has now been resolved," Vaishnaw said at a press conference after the presentation of the Union Budget 2024-25, adding that removal of the tax has been a long standing demand of the deep tech start-ups.

Earlier in the day, finance minister Nirmala Sitharaman during the budget speech announced that the government proposed to abolish the angel tax for all classes of investors in order to bolster the start-up ecosystem, boost entrepreneurial spirit in the country, and support innovation.


Further, the rationalisation of customs duty on mobile phones, chargers and other electronic components will help in developing the mobile component ecosystem, Vaishnaw said, adding that the successes witnessed in mobile manufacturing would be repeated in server and laptop manufacturing industries as well.

Sitharaman in the budget announced a basic customs duty reduction from 20% to 15% on printed circuit board assembly, charger and adapter of mobile phones and mobile phones.

She said that India’s mobile phone industry had matured, seeing a three-fold increase in domestic production and nearly a hundred-fold jump in exports over the last six years.

Sitharaman also announced customs duty exemptions for 25 critical minerals and reduction of BCD on two, noting that minerals like lithium, copper, cobalt and rare earth elements are critical for sectors such as high-tech electronics, among others.

Industry body Nasscom welcomed the abolition of the angel tax, saying such a tax does not exist anywhere in the world and that its abolition will boost India’s global innovation and entrepreneurial competitiveness.

“Despite India boasting the world's third-largest start-up ecosystem, the angel tax has been stifling growth by deterring legitimate investments. The government’s announcement to completely abolish the Angel Tax is set to transform the start-up ecosystem,” Nasscom said in a statement.