- This tax is aimed at curbing the generation and use of unaccounted money through share premiums. - It primarily impacts funding received by startups, often from angel investors or other domestic investors, where valuations can be subjective and high. - While it's not strictly a capital gains tax on the investment itself, it taxes the 'income' arising from the share premium deemed in excess of FMV.
Which one of the following correctly describes the 'Angel Tax'?
Asked in APSC CCE Prelims Exam 2020 · Topic: Fiscal Policy & Revenue (Taxation System in India: Direct, Indirect taxes, and Tax Reforms (including GST))
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Answer: C. A type of capital gains tax imposed when start- ups receive funding, which is higher than the fair market value of the shares sold
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