Tax Talks | Here’s why angel tax going to be a game changer for inbound investments

Angel tax, common name for the provisions of Section 56(2)(viib) of the Income Tax Act, 1961, could keep foreign investors on the edge. A recent amendment to the said provision will bring within tax ambit all investments received from foreign investors in Indian closely held companies.

Even though this tax provision is already in force from April 1, 2013, that time, it was introduced to curb use of unaccounted money put in closely held companies. This was at a time when shares were issued by a closely held company at a value higher than the fair market value of shares by resident investors, but investments from non-resident investors were not charged to tax.

Please click here to read the full article by Lalit Kumar and Kumarmanglam Vijay, published in CNBC.