Angel tax has been the biggest bone of contention for startups as they are subject to it whenever they raise money from friends, family, and venture capitalists.
Moneycontrol News
The exemption limit for angel investors could be raised to Rs 50 crore from the current Rs 25 crore, according to a CNBC-TV18 report.
The government has reportedly discussed various solutions and will try to ensure that genuine startups are not hassled by section 56.
Angel tax has been the biggest bone of contention for startups as they are subject to it whenever they raise money from friends, family, and venture capitalists.
Read | Over 70% startups in India have received angel tax notices: Survey
A startup becomes liable to pay angel tax when it receives an equity infusion in excess of its 'fair valuation'. Tax authorities treat the premium paid by investors as income, taxable at about 31 percent.
Watch: 3 Point Analysis | What is angel tax?
The issue came to light after various startup entrepreneurs reported receiving tax notices on angel investment raised 3-4 years back. They were being asked to provide an explanation for the funding raised and their valuations.
Read: Govt likely to come up with fresh notification on angel tax in a week.
