India will provide grandfathering to past investments by non-residents in startups and the proposed changes to the angel tax provision were prospective said Central Board of Direct Taxes (CBDT) chairman Nitin Gupta in an interview to ET. He said past investments will be grandfathered unless there was some incriminating information.
"The provision would apply prospectively," he said.
The government has proposed to amend the so-called angel tax provision or the Section 56(2) (viib) of the income tax act in the budget. The provision states that any premium paid by an investor in excess of the fair market value (FMV) of the shares of an unlisted company is taxable in the hands of the company at a rate of 20% or above.
