Angel Tax is Gone – But Startups Still Need Valuation from Registered Valuer!

Great news for Indian startups!

From 1st day of April 2025 , the infamous Angel Tax under Section 56(2)(viib) of the Income-Tax Act is finally abolished — for all types of investors. 👏

For years, this tax made fundraising painful. If a startup raised money at a high valuation, the tax department could question it — and the startup might end up paying tax on the difference! 😵

To justify valuations, startups had to pick from specific methods given under Rule 11UA like:

📊 Discounted Cash Flow (DCF) – based on future projections

📒 Net Asset Value (NAV) – based on company's assets

This process often led to confusion, scrutiny, and litigation. But now — no more!

🟢 What does this change?

Startups no longer need to justify valuations to the tax department under Angel Tax. That's a huge relief. 🙌

🔴 But here's what hasn't changed:

Under the Companies Act, 2013, especially Section 62(1)(c), startups still need to get a valuation done when issuing new shares.

✅ This valuation must be done by a Registered Valuer (not just anyone!)

✅ It's required for transparency and fair treatment of existing shareholders

✅ It's still legally mandatory — even without the Angel Tax!

📌 In short:

🔓 Angel Tax = Gone

📄 Valuation for compliance = Still Needed

So while fundraising gets easier from a tax angle, companies still need to ensure their share valuations are properly backed when issuing shares — especially in private placements, mergers, or ESOPs.

💬 Founders, are you ready for this new chapter?

What do you think this means for early-stage fundraising in India?

Let's talk in the comments 👇

Angel Tax Is Gone —

But Valuation Still Isn't? 🤔

With Angel Tax scrapped from April 2025, should startups still be required to obtain a valuation report from a Registered Valuer when issuing new shares?

🔍 💬 Drop your answer in the comments – Let's hear what YOU think!