When a startup issues shares above fair value to resident investors, the excess may be taxed as income in the company’s hands under angel tax rules — unless an exemption applies for eligible DPIIT-recognised startups.
Founder action items
- Obtain DPIIT Startup India recognition where eligible
- File Form 2 for angel tax exemption with supporting declarations
- Maintain valuation report and share allotment documents
- Report share premium correctly in ITR and MCA filings
Pair with DPIIT registration guide, startup compliance checklist, and startup registration desk.
