Decoding the intricacies of the Angel Tax Provisions

In the recently presented Union Budget 2023, it has been proposed to expand the applicability of Section 56(2)(viib) of the Income-Tax Act, 1961 (the Act), commonly referred to as Angel Tax Provisions, to the issue of shares by a closely-held company to non-resident investors. Thus, the provisions of Section 56(2)(viib) of the Act are intended to apply to the receipt of consideration from any person, irrespective of their residential status. Expectedly, there has been a lot of discussion on the impact that this change would have on the flow of Foreign Direct Investments in India, the start-up ecosystem, and the investment fraternity in general. In this article, we have delved into the various nuances of these provisions.