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Ahead of the Union Budget, DPIIT has recommended the removal of the contentious angel tax for startups

"Based on consultations with the startup ecosystem we had, we have recommended that in the past as well, we have recommended this time also," said Department for Promotion of Industry and Internal Trade Secretary, Rajesh Singh.

It is pertinent to note that the recommendations of the department are not binding on the government.

The opposition of the tax is not without reason. Introduced in 2012, the Section 56(2) (viib) in the Income Tax Act, 1961 was aimed at keeping shell companies at bay and tightening the noose on circulation of black money.

However, the regime, as per industry stakeholders, failed to distinguish between genuine and fraudulent cases.

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DPIIT Angel Tax startup ecosystem tax exemption Entrepreneurship Indian government support regulatory reform Startup Funding venture capital angel investors tax relaxation business facilitation ease of doing business startup growth Indian economy tax reform Department for Promotion of Industry and Internal Trade.