The government has decided to give angel tax exemption to investors from 21 countries.
The Central Board of Direct Taxes (CBDT) on Wednesday issued a notification saying that certain categories of investors will not come under the purview of the angel tax provision. These categories include SEBI registered Category I Foreign Portfolio Investors, Endowment Funds, Pension Funds and investments from residents of 21 countries. This notification has become effective from April 1, 2023 only. The countries included in the ambit of tax exemption are Canada, Austria, Czech Republic, Belgium, Denmark, Finland, Israel, Italy, Iceland, Japan, Korea, Russia, Norway, New Zealand and, in addition to the US, UK, Australia, Germany and Spain. Sweden is included.
What do experts say
Rakesh Nangia, Chairman, Nangia Andersen India, said that by clearly mentioning tax exempt countries, the government has expressed its intention to attract more investment from countries with strong regulatory mechanisms. Nangia, however, expressed surprise that countries like Singapore, Mauritius and the Netherlands were not included in the list. Large scale foreign investment comes to India from these countries. CBDT may issue valuation guidelines for computing foreign investment made in unlisted startups. Under the current norms, angel tax is levied only on investments by domestic investors in companies with strict ownership controls.