Last Update: May 20, 2023, 02:35 IST
Angel tax is a commonly used term for the tax levied when shares are issued to an investor at a price higher than their fair market value.
Angel tax is a commonly used term for the tax levied when shares of an unlisted entity are issued to an investor at a price higher than its fair market value.
The Indian government on Friday proposed changes to the tax levied on angel investors in unlisted entities, exempting several categories of foreign investors from such levy.
Investments by central banks in Indian unlisted firms, sovereign wealth funds, entities controlled by the government with direct or indirect ownership of 75% or more will be exempt from so-called “angel tax” provisions, the federal finance ministry said. in a statement.
Angel tax is a commonly used term for the tax levied when shares are issued to an investor at a price higher than their fair market value.
This tax was earlier imposed on Indian resident investors, but was to be extended to non-resident investors from April 1, 2024.
Category-I foreign portfolio investors registered with the Securities and Exchange Board of India, endowment and pension funds, banks and insurance companies incorporated in India, and pooled investment vehicles with more than 50 investors will also be exempted from the provisions.
The government has also expanded the valuation method that can be used to calculate benefits. There are five valuation methods that can be used to value the shares of an unlisted firm.
To ensure parity in investment by both resident and non-resident investors, the shares will be priced with reference to investments by venture capital funds, the statement said.
A 10% variation in the value of the shares has been provided for for foreign exchange fluctuations and variations in economic indicators which may affect the share valuation over multiple rounds of investment.
(This story has not been edited by News18 staff and is published from a syndicated news agency feed – reuters,
