Budget 2024: Nirmala Sitharaman removes angel tax to boost startup ecosystem

In her Budget speech on Tuesday, July 23, Finance Minister Nirmala Sitharaman announced removing angel tax for all classes of investors in startups.

The step is taken to boost the startup ecosystem in the country.

Sitharaman also announced various changes to tax rates for e-commerce players and certain financial instruments in the context of long-term capital gains.

"First of all, to bolster the Indian start-up eco-system, boost the entrepreneurial spirit, and support innovation, I propose to abolish the so-called angel tax for all classes of investors," said Financial Minister.

She further said, "Large-scale clusters for vegetable production will be developed closer to major consumption centers. We will promote Farmer-Producer Organisations, cooperatives, and start-ups for vegetable supply chains including for collection, storage, and marketing.

Commenting on this, Subir Sinha, managing director of startuphr.consulting said, "The Finance Minister in a bid to strengthen the startup ecosystem and foster innovation across the country has abolished angel tax which clearly shows the government's commitment to nurture startups and make India a hub for startups."

Sitharaman also proposed to thoroughly simplify the I-T provisions for reopening and reassessment to reduce uncertainty and disputes.

"An assessment hereinafter can be reopened beyond three years from the end of the assessment year only if the escaped income is Rs 50 lakh or more, up to a maximum period of five years from the end of the assessment year.

"Even in search cases, a time limit of six years before the year of search, as against the existing time limit of ten years, is proposed. This will reduce tax uncertainty and disputes," she said.

Further, she said long-term gains on financial and non-financial assets will attract a tax rate of 12.5 per cent while the TDS rate will be reduced to 0.1 per cent from one per cent for e-commerce operators.

With agency inputs