FM Nirmala Sitharaman Scraps Angel Tax To Empower Indian Startups

Union Finance Minister Nirmala Sitharaman presented her seventh consecutive Budget in Parliament on Tuesday and proposed to abolish the Angel Tax. 

“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,” Sitharaman said.

Angel Tax is the 30% amount of funds received from investors, given to the government as it considers external investors as "income from other sources".

Abolishing the angel tax may help young startups by avoiding additional tax burdens and discouraging investment, which could hinder innovation and growth.

The startup community is praising the abolition of the 'angel tax' for its positive impact on startups and the entrepreneurial ecosystem. Entrepreneurs are welcoming the move, noting its potential to stimulate economic growth.

Reaction:

Finance Minister Sitharaman's move to abolish the Angel tax has been unanimously appreciated across party lines for two consecutive terms.

Congress leader, P Chidambaram, wrote on X, "I was pleased to hear that the FM will abolish the Angel Tax. Congress has pleaded for the abolition for many years and most recently in the Congress Manifesto on page 31."

Ghazal Alagh, Mamaearth's founder, wrote on X, "The 2024-2025 budget marks a significant leap forward for the startup ecosystem, especially with the abolition of the angel tax. Here's what I think about it: --> Removing the angle tax will provide much-needed relief and encourage more investments. --> The focus on digital transformation and AI integration is exciting for the beauty & personal care industry. --> Increased support for technological advancements and the push for digital infrastructure will enable startups to leverage cutting-edge technologies to enhance their products & customer experiences. As an entrepreneur, I find these measures encouraging and believe they will catalyze a new wave of growth and opportunities within the startup ecosystem. I have high hopes from India. #Budget2024"

MBA Chai Waala's founder Prafull Billore wrote on X, "The angel tax for all classes of investors have been abolished. Incredible news for startup folks. #Budget2024"

A user commented, "Finally angel tax abolished! Badhai ho to everyone in the ecosystem"