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HomeBusiness'Angel tax aimed at hawala-like deals'

‘Angel tax aimed at hawala-like deals’

MUMBAI: Commerce and industry minister

Piyush Goyal

on Friday said that the

angel tax

was introduced because fly-by-night entities were using this route to inflate value and create capital. The minister said he would like to see more domestic funding for

startups

as

foreign investors

pick up ideas of bright young people and end up owning most of the companies.

Goyal also ruled out

tax relief

for startups that registered overseas and now wanted to return to India. “If someone wants to come back to India, they will have to pay the tax, as discrimination would be very difficult to justify. They (startups) did not go out because of pressure or any reason. They went out for better tax planning. If they pay some tax here, it will help us give some more scholarships to poor children, it will help us make a few houses for the poor, it will help us replace slums with proper housing,” he told newspersons during his visit to the TOI office on Friday.
Goyal dismissed suggestions that govt was at a standstill due to the general elections. Instead, he said, it’s super active in leveraging the foundation laid over the last 10 years to ensure that India is a developed nation by 2047.
The minister said that while he has not been appraised of any recent income tax notices to startups under Section 68 of the Income Tax Act and they were likely linked to the issue of valuation, he would seek an explanation from the department. Goyal said that India had over 100 unicorns – the third-largest number in any country worldwide. “The startup ecosystem is working very smoothly, and govt is supportive through various funds. I wish to see more private sector investment from domestic funds and domestic industry.”

“Our young men and women come up with brilliant ideas. Foreign investors are super savvy. They picked up that idea and almost start owning all our brilliant companies and startups,” said Goyal.
There was a time when fly-by-night companies were being used for Hawala transactions or for creating capital. “They created a company and issued shares at inflated values and created capital. That was the reason that (angel) tax was brought in to ensure

valuation norms

,” said Goyal, who is also in charge of textiles and food and consumer affairs ministries.
He said that the tax had a fallout on startups. “We have to balance the two. If it is totally opened up, the startup issue should be resolved but the other problem will start..,” said Goyal.