Angel Tax: The Devil In Disguise: A Critical Juxtaposition Of Private Equity & Venture Capital Policies In India And The UK

Rahul Rao, St. Joseph's College of Law, Bengaluru, India

D Tharun Gautam Rao, St. Joseph's College of Law, Bengaluru, India

Sainath M. Gujjar, St. Joseph's College of Law, Bengaluru, India

ABSTRACT:

This paper critically compares Venture Capital taxation in the UK and India. Focusing on the UK’s Enterprise Investment Scheme (EIS), Seed Enterprise Investment Scheme (SEIS), and India's Angel Tax, it delves into the regulatory frameworks, incentives, and their impact on the startup ecosystem. The study highlights the success of the EIS and SEIS in the UK, stimulating investment with robust regulatory measures. Conversely, India's Angel Tax is found to impede entrepreneurial growth, prompting a reassessment of its efficacy.

The paper analyses Angel Tax on a legislative level, aligning it with India’s startup policy. Juxtaposing it with the UK's schemes, the research suggests improvements for India's taxation system. It emphasises the need for India to upgrade its tax policies, align with global standards, and become an attractive destination for global investors. The paper advocates for a balanced model inspired by the UK's success in fostering a dynamic startup ecosystem, emphasising the symbiotic relationship between growth and security. Providing valuable insights, it serves as a comprehensive guide for Indian policymakers in navigating private equity taxation complexities.