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21 countries have been informed by CBDT that angel tax exemption will be available for startup funding

The Central Board of Direct Taxes (CBDT) has notified a list of 21 countries from where transactions of foreign direct investment (FDI) into Indian startups would be exempted from the so-called “angel tax”.

The list includes countries from the European Union, the United States, the United Kingdom, Japan, Switzerland, Australia, South Korea, and Canada.

The countries are the European Union, Serbia, Argentina, Chile, Iceland, Liechtenstein, Norway, Switzerland, Andorra, Bosnia and Herzegovina, Faroe Islands, Israel, Mauritius, Monaco, Montenegro, San Marino, United Arab Emirates, Maldives, Singapore, South Korea, United Kingdom and United States.

The Finance Bill 2019 had provided for exemption of such investments from the provisions of Section 56(2)(viib) of the Income Tax Act, 1961, provided the investments were received from a people resident in a country notified by the Central Government.

The objective of the amendment is to provide a platform for Indian startups to access foreign capital and ensure that adequate funds are raised for their development.