Startup Friendly Reforms
The first budget of the new NDA government has been met with cheers from India’s startup ecosystem. The budget addresses key demands from startups, paving the way for increased funding and growth.
Removal of Angel Tax
A major win is the removal of the Angel Tax. Introduced in 2012 to curb money laundering, it became a hurdle for startups raising early-stage capital (angel and seed rounds). The tax scrutinized the difference between investment amount and fair market value, creating uncertainty for investors and startups.
Ending a Long Ordeal
This complete removal of Angel Tax, effective April 1, 2024, is a significant improvement over past attempts to modify the tax. Startups hope for further announcements, including dropping ongoing Angel Tax cases and waiving notices for pre-April 2024 funding rounds.
Parity in Capital Gains Tax
Another major reform is parity in capital gains tax between listed and unlisted securities. Previously, investments in unlisted startups faced a higher tax rate compared to listed stocks. This discouraged domestic investors and favored foreign funding. The budget eliminates this disparity, making startup investments more attractive for all.
Budget Bolsters Startup Ecosystem
These reforms are expected to fuel startup fundraising and incentivize long-term investments. The government aims to position Indian startups at the forefront of economic growth, encouraging private sector participation through these changes.
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