Startup & Business
Angel Tax (Section 56(2)(viib)) — Meaning
Former tax on share premium above fair market value received by unlisted companies — abolished from AY 2025-26.
What is Angel Tax (Section 56(2)(viib))?
Angel tax referred to income tax under Section 56(2)(viib) on the amount an unlisted company received from resident (and, from 2023, non-resident) investors in excess of the fair market value of its shares; the excess was taxed as 'income from other sources'. It hit early-stage startups whose valuations were subjective, with DPIIT-recognised startups exempt. The Finance (No. 2) Act, 2024 abolished angel tax from AY 2025-26, so share premium is no longer taxed under this provision — though valuation reports are still needed under the Companies Act and FEMA pricing rules.
More Startup & Business terms
MCA (Ministry of Corporate Affairs)
India's government ministry administering the Companies Act and registering companies through the MCA portal.
ROC (Registrar of Companies)
Government authority under MCA that registers companies and LLPs and maintains statutory records.
DIN (Director Identification Number)
Unique 8-digit number assigned to every director of a company in India.
DSC (Digital Signature Certificate)
Electronic signature issued by certifying authorities — required for filing company/LLP documents with MCA.
Private Limited Company
A separate legal entity incorporated under the Companies Act 2013 — most common startup structure.
