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Startup Funding Advisory

Startup Investment Tax Advisory

Structure fundraising with a clear view of documentation, valuation and the tax questions relevant to your transaction.

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Short answer

Angel tax, the tax on share premium above fair market value under Section 56(2)(viib) of the Income-tax Act, was removed for all classes of investors from 1 April 2025 under the Finance (No. 2) Act, 2024. Startups still need a clean valuation, share-issue records and company-law filings when they raise money. Confirm the position on the Income Tax portal for your year.

Last updated 2 November 2026. Rules, fees and forms change, so confirm the current position on the official portal before you act.

A practical approach to Startup Investment Tax Advisory

Startup fundraising involves corporate, regulatory and tax considerations. Rules can evolve, so transaction-specific analysis and clean documentation are important before funds are received.

Primary-source checkpoint

Verify the rule and live process at source.

RegisCorp explains the practical route; the responsible government authority controls the current law, portal, forms, fees and decision. Check these sources before acting on a time-sensitive requirement.

Income Tax DepartmentReturns, e-filing, taxpayer services and portal guidance Income Tax IndiaActs, rules, circulars and departmental resources

How we help

Fundraising-structure and documentation review
Coordination around valuation and tax inputs
Assessment of current regulatory considerations
Clear action list for founders and finance teams

Documents to keep ready

Pitch deck and business plan
Cap table and incorporation documents
Proposed term sheet or investment documents
Valuation and prior funding records, if available

Before and after the change

Point	Earlier position	Current position (verify for your year)
Tax on share premium	Excess premium over fair market value could be taxed as income of the company	The provision no longer applies from 1 April 2025
Who was affected	Mainly resident investors; non-residents were not covered until it was extended	Investor class no longer decides the tax
Startup exemption route	DPIIT recognition and an application process were used to seek relief	No exemption application is needed for this provision
Valuation report	Often needed to defend the issue price	Still useful for company law, FEMA and investor due diligence
Records	Needed to answer assessment queries	Still needed for audits, due diligence and later rounds

What founders should still do

Keep a valuation report for each priced round, issued by a qualified professional.
File the share allotment forms with the ROC within the time allowed.
For foreign investment, follow the FEMA reporting and pricing rules.
Keep board and shareholder resolutions, term sheet and bank proof of funds received.
Check that the premium and share count in your records match the filings.

Why old advice can mislead

Many pages and videos still describe the old exemption process. If you rely on them, you may file unnecessary applications or worry about a tax that no longer applies. The safe approach is to confirm the current Income-tax Act text and the circulars on the official portal before acting.

A clean fundraise checklist

1
Plan the round
Agree the amount, instrument, price and investor with the founders.
2
Value the shares
Get a valuation report where the law or the investor needs it.
3
Approve internally
Pass board and shareholder resolutions and update the articles if needed.
4
Receive funds and allot
Receive money through banking channels, then allot securities and issue certificates.
5
File and record
Complete ROC and FEMA filings and update the registers and cap table.

Common mistakes to avoid

Following outdated angel tax exemption steps and paying for an application that is not needed.
Skipping the valuation report because the tax rule changed.
Missing the ROC and FEMA filings after receiving funds.
Issuing shares before the investor funds are received in the bank account.
Not keeping the investor KYC and agreement set for later due diligence.

Our process

Understand the proposed fundraise

Review entity, cap table and commercial documents

Identify tax and compliance actions

Support a documented closing checklist

Frequently asked questions

Is startup investment tax treatment the same for every fundraise?

No. The facts, investor profile, valuation, instrument and current law all matter.

When should founders seek advice?

Before accepting a term sheet or issuing securities, so actions can be planned in advance.

Can you review our investment documents?

We can review the documents from a compliance and transaction-readiness perspective.

Is angel tax still applicable to startups in 2026?

The Finance (No. 2) Act, 2024 removed the provision from 1 April 2025 for all investor classes. Confirm the current text on the Income Tax portal for your year.

Do I still need DPIIT recognition for fundraising?

It is not needed to avoid angel tax now, but DPIIT recognition can still help with other benefits and with investor confidence.

Is a valuation report still needed?

Often yes. Investors, banks and company-law or FEMA rules can ask for it even where the tax provision no longer applies.

Can old assessments still be raised?

Cases for earlier years can still be under review, so ask a tax professional about any notice you received.

Startup Investment Tax Advisory

A practical approach to Startup Investment Tax Advisory

Verify the rule and live process at source.

How we help

Documents to keep ready

Before and after the change

What founders should still do

Why old advice can mislead

A clean fundraise checklist

Plan the round

Value the shares

Approve internally

Receive funds and allot

File and record