Indian Government To Tax Angel Funding

Posted by samzenpus on Sunday March 18, 2012 @09:33AM from the nothing-is-free dept.

kousik writes "The Indian Government proposes to tax Angel Investment as income and is asking start-ups to pay a 30% tax on the funding. From the article: 'Ravi Kiran, co-founder of middle-India advisory Friends of Ambition (FoA) and member of Indian Angel Network told Firstpost: “There seems to certainly have been an error in understanding on the part of the Budget makers. If this is pushed through, it will spell serious trouble for the angel investor and entrepreneurship space. I feel this is an error and should be corrected quickly before it leads to confusion.”'"

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Re:Equity by alexander_686 · 2012-03-18 10:10 · Score: 5, Informative

Equity = Assets - Liabilities
The investors trades cash for shares with the company - So your right there. On the other hand, for the company the new cash, an asset, is coming into the company, This will increase both the asset account and the equity account.
The accounting transactions would be
Credit the cash account in Assets
Debit the Paid In Capital account in Equity.
If the company was issuing new debt - and thus no new equity, the accounting transactions would be:
Credit the cash account in Assets
Debit the Long Term Debt Account in Liabilities.