The Tax Publishers

Finance Act, 2023--Angel Tax

Withdrawal of Exemption Available to Non-Residents From Angel Tax By Finance Act, 2023

CA. Nisha Bhandari

Hitherto angel tax as provided under Section 56(2)(viib) was applicable in case of resident investors and hence non-residents were not covered by this provision. In order to plug this loophole and to prevent circulation of unaccounted money the Finance Act, 2023 has amended Section 56(2)(viib) to make the provision applicable in case of non-resident investors as well. The learned author analyses this amendment.

1. What is angel tax

The angel tax was introduced by the Finance Act, 2012 in form of Section 56(2)(viib) to prevent generation and circulation of unaccounted money through share premium received from resident investors in a closely held company in excess of its fair market value.

 Section 56(2)(viib) provides that where a company, not being a company in which the public are substantially interested, receives, in any previous year, from any person being a resident, any consideration for issue of shares that exceeds the face value of such shares, the aggregate consideration received for such shares as exceeds the fair market value of the shares shall be chargeable to income-tax under the head 'Income from other sources'.

SUBSCRIBE TaxPublishers.inSUBSCRIBE FOR FULL CONTENT

TaxPublishers.in

'Kedarnath', 7, Avadh Vihar, Near Nirali Dhani,

Chopasni Road

Jodhpur - 342 008 (Rajasthan) INDIA

Phones : 9785602619 (11 am - 5 pm)

E-Mail : mail@taxpublishers.in / mail.taxpublishers@gmail.com