Budget 2024: Centre abolishes angel tax in a major boost for startup ecosystem

Venture investors hailed the proposed abolition of the decade-old angel tax as “a huge reform” announced by Finance Minister Nirmala Sitharaman in the Union Budget for 2024-25.

First introduced in 2012, by then finance minister Pranab Mukherjee, Section 56 (2) (viib) of the Income Tax Act– known as angel tax– is applicable on any amount received by a privately held company against sale of its shares at a price higher than its fair market value. The differential amount is treated as income and taxed at a rate of around 31%.