Minister of commerce and industry Piyush Goyal stated on Friday that fly-by-night companies were adopting this path to raise cash and inflate value, which is why the angel tax was instituted. The minister expressed his desire for increased local backing for startups, noting that foreign investors often steal the ideas of brilliant young people and wind up controlling the majority of these businesses.
Goyal also disregarded tax breaks for startups that had registered abroad but subsequently desired to return to India. "It would be very difficult to justify discrimination, so if someone wants to return to India, they will have to pay the tax." Startups didn't fail for any reason or due to pressure. They left to make better tax arrangements. During his Friday visit to the TOI headquarters, he told reporters, "If they pay some tax here, it will help us make some houses for the poor, it will help us replace slums with proper housing, and it will help us give some more scholarships to poor children."
Goyal refuted claims that the general elections had brought the government to a standstill. Rather, he asserted, it is actively utilizing the groundwork established in the last ten years to guarantee that India becomes a developed country by 2047.
The minister stated that he will ask the department for an explanation even though he has not been made aware of any recent income tax notifications to startups issued under Section 68 of the Income Tax Act, which were probably related to the valuation issue. According to Goyal, India is home to more than 100 unicorns, which ranks it as the third-largest country globally. "The government provides funding via a variety of channels, and the startup environment is doing extremely well. More private sector investment from local capital and domestic industries is what I would like to see."
"Our young men and women are creative thinkers. International investors are quite astute. They adopted that concept and nearly took over all of our innovative businesses and startups," Goyal said.
Fly-by-night businesses were previously utilized for money raising or Hawala transactions. "They established a business, issued shares at exorbitant prices, and raised money. In order to maintain valuation standards, that is why the (angel)tax was implemented," said Goyal, who is also in charge of the ministries of textiles, food, and consumer affairs. He added that startups were negatively impacted by the tax. "The two must be balanced. The initial issue should be fixed if it is fully opened up, but then the other issue would arise," Goyal stated.
