Let start-ups live

Govt must review angel tax

Business Standard Editorial Comment Mumbai
startups, unicorn, funding, fintech, companies, firms

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The start-up universe is facing challenges because of the funding crunch. The rapid increase in policy interest rates by large central banks, notably the US Federal Reserve, to combat inflation has raised the cost of money. The era of near-free money owing to excessively accommodative monetary policy in the developed world, especially after the pandemic, which pushed up activity in the start-up world significantly, is over. According to one estimate, compared to last year, funding for Indian start-ups declined by about 75 per cent in the first three months of 2023. But the funding winter is not the only problem for Indian start-ups. They can also land in trouble for commanding a premium in the funding market.
As reported by this newspaper on Wednesday, the Income-Tax Department has sent notices to start-ups for raising capital at an “excessive premium” from domestic investors between the assessment years 2018-19 and 2020-21. Under Section 56(2)(viib)

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First Published: Apr 20 2023 | 10:13 PM IST

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