When was angel tax abolished?

It was abolished by the Finance (No.2) Act 2024 with effect from Assessment Year 2025-26. In practice this means share issues made in FY 2024-25 and later are not subject to angel tax. Saying it was abolished from FY 2025-26 is inaccurate, because the abolition already covers the financial year before that.

Does the abolition apply to share issues made before FY 2024-25?

No. Share issues made in FY 2023-24 or earlier, relating to AY 2024-25 or earlier, remain under the old provision. Those years can still be examined in a pending assessment, a reassessment or an appeal within the applicable time limits. Keep the valuation report, resolutions and any DPIIT exemption records for those rounds.

I have received an angel tax notice for an earlier year. What should I do?

Reply on the merits for that year. The abolition from AY 2025-26 does not by itself answer a notice for an earlier year. The reply should rest on the valuation method used at the time, the supporting documents and any exemption claimed through DPIIT. Share the notice with a CA before the reply date so the file can be assembled.

Do DPIIT startups still need to file Form 2?

No, not for share issues from FY 2024-25 onwards, because there is no angel tax left to be exempted from. If you filed Form 2 for an earlier round, keep the declaration, its acknowledgement and your DPIIT certificate with that round's records, since they support the exemption if that year is examined.

Is there an angel tax under the Income-tax Act, 2025?

No. The Income-tax Act, 2025, which applies from 1 April 2026 for Tax Year 2026-27 onwards, carries no provision that taxes a company on share premium above fair market value. The old section 56(2)(viib) was already abolished from Assessment Year 2025-26 under the 1961 Act.

Did angel tax apply to non-resident investors?

For a short period, yes. Angel tax originally applied to money raised from resident investors, and in 2023 it was extended to money received from non-resident investors. That extension ended with the abolition from Assessment Year 2025-26. Foreign investment is still subject to FEMA pricing rules, which are separate from income tax.

Do startups still need a valuation report to issue shares at a premium?

Usually, yes, but for other laws. Shares issued to a foreign investor need a FEMA fair value certificate. A preferential allotment under the Companies Act needs a registered valuer's report. Investors, auditors and future due diligence will also expect the premium to be supported by a proper valuation.

What valuation is needed to issue shares to a foreign investor?

The issue price must not be less than the fair value worked out by an internationally accepted pricing method on an arm's length basis, under Rule 21 of the FEMA (Non-debt Instruments) Rules, 2019. The valuation must be certified by a Chartered Accountant, a SEBI-registered merchant banker or a practising cost accountant.

Can an investor be taxed if shares are issued below fair value?

Yes. Abolishing angel tax removed the tax on the company, not the provision that taxes a person who receives shares for less than their fair market value. For years up to FY 2025-26 this is section 56(2)(x) of the Income-tax Act, 1961. Check the price against fair value before allotting shares at a discount.

Does DPIIT recognition still give any tax benefit?

Yes, through the tax holiday. Under section 140 of the Income-tax Act, 2025, the old section 80-IAC, an eligible company or LLP incorporated on or after 1 April 2016 and before 1 April 2030 can claim a 100% deduction for any 3 consecutive tax years out of 10, with an Inter-Ministerial Board certificate.

How much does Regikart charge for an angel tax review?

The fee is quoted after a review of your rounds, because the work depends on how many premium rounds you have, whether any notice is open and whether foreign investors are involved. Many startups raising today need only a valuation and an FC-GPR filing. There is no government fee for a legacy review.

Kya ab bhi startups par angel tax lagta hai?

No, not for share issues from FY 2024-25 onwards. Angel tax was abolished from Assessment Year 2025-26 by the Finance (No.2) Act 2024, and the Income-tax Act, 2025 has no such provision. Rounds up to FY 2023-24 can still be examined under the old law, so keep those valuation and allotment records safe.

Angel Tax Exemption

Angel Tax Exemption Angel tax is abolished. Here is what startups still need to check.

Angel tax under section 56(2)(viib) was abolished for all investors from Assessment Year 2025-26, so a share issue made in FY 2024-25 or later needs no angel-tax exemption. What has not gone away is the risk on older rounds, the pricing rules for foreign investors and the valuation the Companies Act requires. This page explains each, so you can close the right gaps before your next round or your next notice. Reviewed by CA Ganpat Khemka. Last updated 21 September 2026.

Talk to our team See process

Qualified CA / CS partnersStarts with a review of your roundsBest for: Startups with premium rounds or old notices

Starting at

Fee on quote

Angel Tax Review

Startups with premium rounds or old notices

Legacy rounds up to FY 2023-24 reviewed

Notice replies and appeals argued on merits

FEMA pricing and Companies Act valuation check

FC-GPR within 30 days of allotment

Timeline

Starts with a review of your rounds

What it is

Angel Tax Review, explained in plain English.

Angel tax was the popular name for section 56(2)(viib) of the Income-tax Act, 1961. When a closely held company issued shares above face value, any amount received above the fair market value of the shares was taxed as the company's income. It was introduced by the Finance Act 2012, extended to money received from non-resident investors in 2023, and abolished for all classes of investors by the Finance (No.2) Act 2024 from Assessment Year 2025-26. The Income-tax Act, 2025 carries no angel-tax provision. Rounds up to FY 2023-24 can still be examined under the old law.

Key terms

The vocabulary you'll see on the portal.

Section 56(2)(viib)

The angel-tax provision: premium above fair market value taxed as the company's income. Abolished from AY 2025-26.

Form 2

The DPIIT declaration that claimed the exemption for earlier years. Not needed for rounds from FY 2024-25 onwards.

FEMA Rule 21

Pricing rule for shares issued to foreign investors: not below fair value certified by a CA, SEBI-registered merchant banker or practising cost accountant.

FC-GPR

RBI reporting of foreign investment on the FIRMS portal within 30 days of allotment.

Section 56(2)(x)

Taxes a person who receives shares for less than their fair market value. Still in force.

Routes & scenarios

Match the situation to the right fix.

Seed round before FY 2024-25, no notice

A recognised startup raised at a premium and filed Form 2 at the time.

Nothing new needs to be filed
Keep the valuation report, Form 2 acknowledgement and allotment records in one folder
The same file answers Series A due diligence questions

Bridge round in FY 2023-24, notice received

A premium round for that year is now questioned.

Reply on the merits for that year, not on the abolition
Defend the valuation method and documents used at the time
Start from the original valuation report and investor records

New round with a foreign investor

Raising now. No angel tax on this round.

FEMA fair value certificate before allotment
Registered valuer's report for preferential allotment
FC-GPR within 30 days of allotment

The process

Angel Tax Review - from kickoff to confirmation.

Review of your rounds

You tell us about your rounds since incorporation. We list which rounds fall before FY 2024-25 and what each needs.

Legacy file

For older premium rounds, we assemble and check the valuation, resolutions and Form 2 records, and flag weak points.

Notice reply

If a notice is open, we draft the reply or appeal on the merits for that year.

Round check

For a new round, we confirm the FEMA floor price, the Companies Act valuation and the investor-side fair value test before allotment.

Filings

We coordinate the valuation reports and the FC-GPR after allotment.

Documents required

What we'll need from you.

Upload via our secure portal. We pre-check every scan before filing - cuts portal rejections by ~90%.

Certificate of incorporation and DPIIT recognition certificate, if any

List of share issues since incorporation, with dates, prices and investor names

Valuation reports used for each premium round

Board and shareholder resolutions for each allotment

Form 2 declaration and acknowledgement, if filed

Income tax notices, assessment orders or appeal papers, if any

For foreign investors: the FEMA valuation certificate and FC-GPR acknowledgements

Current and proposed cap table for a new round

Angel Tax Review FAQ

Common questions, answered.

Still unsure if Angel Tax Review is right for your case? Talk to our team and we will walk you through your specifics.

Still have questions?

Tell us about your case and our team will walk through it and outline next steps.

Talk to our team →

No. Angel tax under section 56(2)(viib) was abolished for all classes of investors by the Finance (No.2) Act 2024 with effect from Assessment Year 2025-26, which covers share issues in FY 2024-25 onwards. The Income-tax Act, 2025, in force from 1 April 2026, has no angel-tax provision. Older rounds can still be examined under the old law.

Ready when you are

Let's get your Angel Tax Review sorted this week.

Our team will get on a call with you, confirm scope and start the work.

Talk to our team Browse Startup Funding

Angel Tax Exemption

Angel Tax Exemption Angel tax is abolished. Here is what startups still need to check.

Talk to our team See process

Qualified CA / CS partnersStarts with a review of your roundsBest for: Startups with premium rounds or old notices

Starting at

Fee on quote

Angel Tax Review

Startups with premium rounds or old notices

Legacy rounds up to FY 2023-24 reviewed

Notice replies and appeals argued on merits

FEMA pricing and Companies Act valuation check

FC-GPR within 30 days of allotment

Timeline

Starts with a review of your rounds

What it is

Angel Tax Review, explained in plain English.

Key terms

The vocabulary you'll see on the portal.

Section 56(2)(viib)

The angel-tax provision: premium above fair market value taxed as the company's income. Abolished from AY 2025-26.

Form 2

The DPIIT declaration that claimed the exemption for earlier years. Not needed for rounds from FY 2024-25 onwards.

FEMA Rule 21

Pricing rule for shares issued to foreign investors: not below fair value certified by a CA, SEBI-registered merchant banker or practising cost accountant.

FC-GPR

RBI reporting of foreign investment on the FIRMS portal within 30 days of allotment.

Section 56(2)(x)

Taxes a person who receives shares for less than their fair market value. Still in force.

Routes & scenarios

Match the situation to the right fix.

Seed round before FY 2024-25, no notice

A recognised startup raised at a premium and filed Form 2 at the time.

Nothing new needs to be filed
Keep the valuation report, Form 2 acknowledgement and allotment records in one folder
The same file answers Series A due diligence questions

Bridge round in FY 2023-24, notice received

A premium round for that year is now questioned.

Reply on the merits for that year, not on the abolition
Defend the valuation method and documents used at the time
Start from the original valuation report and investor records

New round with a foreign investor

Raising now. No angel tax on this round.

FEMA fair value certificate before allotment
Registered valuer's report for preferential allotment
FC-GPR within 30 days of allotment

The process

Angel Tax Review - from kickoff to confirmation.

Review of your rounds

You tell us about your rounds since incorporation. We list which rounds fall before FY 2024-25 and what each needs.

Legacy file

For older premium rounds, we assemble and check the valuation, resolutions and Form 2 records, and flag weak points.

Notice reply

If a notice is open, we draft the reply or appeal on the merits for that year.

Round check

For a new round, we confirm the FEMA floor price, the Companies Act valuation and the investor-side fair value test before allotment.

Filings

We coordinate the valuation reports and the FC-GPR after allotment.

Documents required

What we'll need from you.

Upload via our secure portal. We pre-check every scan before filing - cuts portal rejections by ~90%.

Certificate of incorporation and DPIIT recognition certificate, if any

List of share issues since incorporation, with dates, prices and investor names

Valuation reports used for each premium round

Board and shareholder resolutions for each allotment

Form 2 declaration and acknowledgement, if filed

Income tax notices, assessment orders or appeal papers, if any

For foreign investors: the FEMA valuation certificate and FC-GPR acknowledgements

Current and proposed cap table for a new round

Angel Tax Review FAQ

Common questions, answered.

Still unsure if Angel Tax Review is right for your case? Talk to our team and we will walk you through your specifics.

Still have questions?

Tell us about your case and our team will walk through it and outline next steps.

Talk to our team →

Ready when you are

Let's get your Angel Tax Review sorted this week.

Our team will get on a call with you, confirm scope and start the work.

Talk to our team Browse Startup Funding

Angel Tax Exemption Angel tax is abolished. Here is what startups still need to check.

Angel Tax Review, explained in plain English.

The vocabulary you'll see on the portal.

Match the situation to the right fix.

Seed round before FY 2024-25, no notice

Bridge round in FY 2023-24, notice received

New round with a foreign investor

Angel Tax Review - from kickoff to confirmation.

Review of your rounds

Legacy file

Notice reply

Round check

Filings

What we'll need from you.

Common questions, answered.

Is angel tax still applicable in 2026?

When was angel tax abolished?

Does the abolition apply to share issues made before FY 2024-25?

I have received an angel tax notice for an earlier year. What should I do?

Do DPIIT startups still need to file Form 2?

Let's get your Angel Tax Review sorted this week.

Angel Tax Exemption Angel tax is abolished. Here is what startups still need to check.

Angel Tax Review, explained in plain English.

The vocabulary you'll see on the portal.

Match the situation to the right fix.

Seed round before FY 2024-25, no notice

Bridge round in FY 2023-24, notice received

New round with a foreign investor

Angel Tax Review - from kickoff to confirmation.

Review of your rounds

Legacy file

Notice reply

Round check

Filings

What we'll need from you.

Common questions, answered.

Is angel tax still applicable in 2026?

When was angel tax abolished?

Does the abolition apply to share issues made before FY 2024-25?

I have received an angel tax notice for an earlier year. What should I do?

Do DPIIT startups still need to file Form 2?

Let's get your Angel Tax Review sorted this week.