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In the start of fresh new year of 2018, government is condering removing tax hurdles for angel investment in startups.

Till now, startups receiving funding from angel investors are being levied Angel Tax -- 30% tax as income from other sources -- which in fact is hurting the Indian startups' funding for last one and half year and even slow down the investment in startups.

The continous complaint from Indian startup ecosystem has now forced Department of Industrial Policy and Promotion (DIPP) to take this tax regime confusion issue with SEBI and reconsider or relax some of the rules that is causing fall in funding of early age startups in India.

In addition, the issue of tax rules has also been taken up with the finance ministry, amid indications that the concerns may be addressed in the Budget at a time when the government is keen to revive investments in the economy and spur job creation.

The above development was first reported in Times of India.

Although, in June 2016, the Central Board of Direct Taxes (CBDT) said capital raised by startups from domestic angel investors will not be taxed as income even if the investment was more than the fair market value of the shares. It however come with a tricky clause that only those startups will be exempted from tax that meet certain conditions laid down by the DIPP, which now makes it mandatory for them to be certified as "startups" to claim an exemption. So far, seven companies have been recommended by the department for tax benefits under the startup policy, while there are at least 150 that are claiming the benefits of the policy.

In September 2016, Minister of state for commerce industry had told media that out of 3,576 startups recognized by DIPP only 67 startups have been given tax exemption (not to be confused with Angel Tax).

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