Angel tax was on investments, such inflows should not be taxed: DPIIT Secy

Removal of the Angel tax for startups was a long pending issue as this levy was on investment coming into the country and such overseas inflows should not be taxed, a top government official said.

Secretary in the Department for Promotion of Industry and Internal Trade (DPIIT) Rajesh Kumar Singh said the decision will help in attracting foreign investments, promoting innovation and further strengthening the startup ecosystem of the country, which is the third largest in the world.

"So this was an ease of doing business issue as well as a tax issue. Ultimately, it was a tax not on income but on investments and investments should not get taxed, that is the basic idea," Singh told PTI.

Giving a big relief to startups, the government on Tuesday announced removal of angel tax for all classes of investors.

Angel tax (income tax at the rate of over 30 per cent) refers to the income tax that the government imposes on funding raised by unlisted companies, or startups, if their valuation ...