Indian Government To Tax Angel Funding

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.”'"

Comments

Re:Tax too high and it stops.

[bill_mcgonigle]

This idea stinks.

Not if you're the incumbent the startup is about to compete against. Cui bono.

Re:Selling shares is debt, not income

[whoever57]

It's clear the legislators have zero clue what investment means.

True enough.

When a company receives startup funding, it is in exchange for ownership shares. That makes it borrowing, not income. Shareholder Equity offsets that funding on the balance sheet.

Now you are showing your ignorance. It's not a loan. It's not borrowing.

But the summary doesn't tell the whole story (I know, what a shock!):

There is a Budget proposal to tax at 30 percent any investment received by closely held companies where the aggregate investment exceeds the fair market value of shares.

Most likely, this is aimed at money laundering. The uncertainty caused by this and the possible corruption amonst those who enforce this are likely to stifle angel investment.