The finance minister announced the elimination of the angel tax for all investors during the 2024 budget presentation.
About Angel Tax:
- Angel tax refers to a levy imposed on the excess funds raised by unlisted companies over their Fair Market Value (FMV). It was originally introduced to combat money laundering and prevent tax evasion.
- Purpose: Aimed to deter the generation and use of unaccounted money through share subscriptions at inflated values.
- Origins: Introduced in 2012 under the Finance Act, angel tax is specifically outlined in section 56(2)(viib) of the Income Tax Act, 1961.
- Fair Market Value (FMV): Defined as the price at which an asset would sell under normal conditions in an open market.
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Frequently Asked Questions (FAQs):
What is angel tax and why was it introduced?
Angel tax is a levy on excess funds raised by unlisted companies over their fair market value, aimed at deterring money laundering and tax evasion through inflated share subscriptions.
When was angel tax introduced and where is it outlined?
Angel tax was introduced in 2012 under the Finance Act, specifically outlined in section 56(2)(viib) of the Income Tax Act, 1961.
How is Fair Market Value (FMV) defined?
Fair Market Value (FMV) is defined as the price at which an asset would sell under normal conditions in an open market.