[vc_row][vc_column][vc_column_text]Update (September 2026): Angel tax no longer applies. Section 56(2)(viib) was omitted by the Finance (No. 2) Act, 2024 with effect from AY 2025-26, and from 1 April 2026 Rule 11UA was replaced by Rule 57 of the Income-tax Rules, 2026. This article is kept for historical reference. For the current rules on valuing shares, and who must sign each report, see our share valuation guide.

Many #startups still grapple with the various nuances of the provision of Income Tax Act (Section 56(2) (viib) to tax the excess premium amount received by the startup over the Fair Market Value of shares.

In Feb 2019, the Indian Government came out with a notification on exempting eligible #startups from the provisions of the section.

In the Union Budget for FY23, the central government proposed to include foreign investors under the ambit of the “Angel tax” that till now applied to Indian residents and funds not registered as Alternative Investment Funds (AIFs).

Here are some #insights on the various provisions related to taxation of excess premium amount.[/vc_column_text][vc_row_inner][vc_column_inner][roof_button button_size="roof-btn-large" button_text="Updated Provisions of Income Tax for “Angel Tax“" button_link="https://finvalresearch.in/wp-content/uploads/2023/02/ANGEL-TAX.pdf" open_link="true" text_color="#ffffff" background_color="rgba(30,115,190,0.72)" bg_hover_color="#03355e" border_color="#000000" icon_alignment="btn-icon-left"][/vc_column_inner][/vc_row_inner][/vc_column][/vc_row]