The government has proposed to bring foreign investors under the ambit of angel tax. Till now angel tax has been applicable only to Indian residents.
About Angel Tax:
It was introduced in 2012. This tax is levied on capital raised by start-ups from angel investors.
Angel investors are wealthy private investors. These focus on funding small business enterprises in exchange for equity.
Its objective is to prevent generation and use of unaccounted money through purchase of shares of closely held companies.
Investors make this purchase at a higher price than the fair market value of the shares of that company.
Closely Held Company – A company whose majority shares are held by a few individuals.
Source – Economic Times