Startups are the new epicenter of economic activity in the country, but the tax-man is far from friendly towards them. For a 100 of them have registered in Hong Kong, Singapore and the US to raise capital.
Top sources in North Block, which houses the finance ministry, say consultations have begun over incentives to startups in the form of tax sops to angel investors. The Revenue Department is working towards these making such incentives real. At the Center of this is the capital gains tax, levied on investors; and the tax on employee stock options (ESOPs), where a tax is levied on the income of the employee even before the company – that’s allotted those shares – has generated any revenue or has raised capital.