Angel Tax Exemption limiting Startups investment options

Some angel tax exempted startups have reported that they are unable to now deploy capital in acquiring other startups as the current Section 56(2)viib angel tax exemption rules do not allow startups to invest capital in shares, securities or any other companies. Originally, this condition was added in the angel tax exemption criteria by the Government to differentiate genuine startups from shell companies.

LocalCircles has had an initial discussion with the Government. If you have any suggestions on how this can be modified while ensuring that shell companies do not misuse such a provision removal, please share them.

We look forward to your inputs and will escalate the collective solutions to the Government for consideration! more  

View all 7 comments Below 7 comments
It should exempt the startup having a threshold limit based on turnover/Fixed assets of the Company which will limit the shell companies taking this route more  
Is this the notification you are referring to? more  
or in other words say cant invest in shares. securities unless the other startup is also exempted from section 56(2)viib. A CA will have to examine loopholes. more  
why not say that an angel tax exempted startup is allowed to acquire partial or all outstanding shares of other angel tax exempted startups... more  
MORE EASE OF DOING BUSINESS WITH CLARITY IS NEEDED. more  
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