New Delhi, Jul 5 (KNN) In a significant development for the Indian start-up ecosystem, the Commerce Ministry has recommended the removal of the controversial angel tax, according to a statement made by Department for Promotion of Industry and Internal Trade (DPIIT) Secretary Rajesh Kumar Singh on July 4.

During a media address, Singh clarified, "We have provided our inputs to the Finance Ministry. However, the final decision rests with them." He also noted that the issue was not raised during pre-budget consultations.

The angel tax, introduced in 2012 as an anti-money laundering measure, has been a point of contention for start-ups and investors alike.

Under this regime, funds raised by start-ups from angel investors at valuations exceeding the fair value of shares are subject to taxation, with the premium treated as income taxable at approximately 31 percent.

The start-up community and venture capital investors have long advocated for the repeal of this tax, pinning their hopes on the current administration to address their concerns.

While the Commerce Ministry's recommendation signals a potential shift in policy, the start-up ecosystem now awaits the Finance Ministry's verdict on this crucial matter.

(KNN Bureau)