In a significant policy shift aimed at enhancing the startup environment in Bharat, the government has decided to abolish angel tax across all investor groups.
Angel tax is applied to capital raised through the issuance of shares by unlisted companies when their share price exceeds the company’s fair market value. This excess is treated as income and taxed accordingly.
Finance Minister Nirmala Sitharaman stated in her Union Budget 2024 address, “To strengthen the Indian startup ecosystem, foster entrepreneurial spirit, and support innovation, we propose to eliminate the so-called angel tax for every class of investor.”
The Finance Minister also announced modifications to tax rates for e-commerce businesses and certain long-term capital gains. Long-term gains on financial and non-financial assets will now be taxed at 12.5 per cent, while the TDS rate for e-commerce operators will be slashed from 1 per cent to 0.1 per cent.
Updates to New Tax Regime Announced
Additionally, Sitharaman revealed changes to the new tax regime, including an increase in the standard deduction from ₹50,000 to ₹75,000.
The new tax slabs are set as follows:
Income up to ₹3 lakh: Exempt
₹3 lakh to ₹7 lakh: 5 per cent
₹7 lakh to ₹10 lakh: 10 per cent
₹10 lakh to ₹12 lakh: 15 per cent
₹12 lakh to ₹15 lakh: 20 per cent
Over ₹15 lakh: 30 per cent
These revisions could lead to savings of up to ₹17,500 for salaried employees under the new regime. There will be no adjustments to the existing tax slabs.
