Startup & Business
Angel Tax (Section 56(2)(viib))
Tax on share premium received by unlisted companies from investors above fair market value.
Full Definition
Angel tax refers to income tax levied under Section 56(2)(viib) on the amount received by unlisted companies from investors in excess of the Fair Market Value (FMV) of shares. The excess over FMV is treated as 'income from other sources' and taxed at 30%. This disproportionately affected early-stage startups where valuations are subjective. DPIIT-recognised startups are exempt from this provision. Non-DPIIT startups need to get FMV certified by a SEBI-registered merchant banker (for equity) or CA (for preference shares).
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.