New Delhi: Joining the chorus against ‘angel tax’ notices being sent to startups, Mahindra Group chairman Anand Mahindra today warned that the taxation policy goes against all the tenets of StartUp India and even risks India’s chances of competing with Silicon Valley.
“I have to admit I didn’t know about this but it certainly goes against all the tenets of #StartupIndia It needs immediate attention or else all chances of building a rival to silicon valley in India will be lost," Anand Mahindra said on Twitter.
Snapdeal founder Kunal Bahl said angel tax has to be stopped or it will end up destroying the most promising startup community in the world.
Former Infosys chief financial officer and angel investor Mohandas Pai had raised the issue with commerce and industry minister Suresh Prabhu on the social media platform saying that the “draconian" angel tax is torturing startups and killing genuine innovation.
Prabhu said he has taken up the issue with the finance ministry. Several startups have raised concerns on taxation of angel funds under Section 56 of the Income Tax Act, which provides for taxation of funds received by an entity.
A PTI report quoted an income tax official as saying that notices issued on angel tax to startups may be for those that are not recognised by the department of industrial policy and promotion (DIPP). The government had earlier given relief to startups by allowing them to avail tax concession if total investment including funding from angel investors does not exceed ₹ 10 crore.
As per a notification by the commerce and industry ministry, an angel investor picking up stakes in a startup should have a minimum net worth of ₹ 2 crore or should have an average returned income of over ₹ 25 lakh in the preceding three financial years.