Angel Tax & Start-Ups in India

  • In News
  • Recently, The Finance Bill, 2023, unveiled by the Finance Minister has proposed to amend the Section of the Income Tax Act which might affect Start-Ups funding in India.

More about the News

  • About:
    • The Finance Bill, 2023 has proposed to amend Section 56(2) VII B of the Income Tax Act.
    • These new age firms, that offer their shares to foreign investors, may have to pay ‘angel tax’, which was earlier only supposed to be paid for investments raised by resident Indian investors.
Angel Tax:Angel tax is a term used to refer to the income tax payable on capital raised by unlisted companies via the issue of shares where the share price is seen in excess of the fair market value of the shares sold. The excess realisation is treated as income and taxed accordingly.
  • Original provision:
  • Section 56(2) VII B of the Income Tax Act, colloquially known as the ‘angel tax’ was first introduced in 2012.
  • The provision states that: 
    • when an unlisted company, such as a start-up, receives equity investment from a resident for issue of shares that exceeds the face value of such shares, it will be counted as income for the start-up and be subject to income tax under the head ‘Income from other Sources’ for the relevant financial year.
  • Significance of provision:
    • The provision aims to deter the generation and use of unaccounted money through the subscription of shares of a closely held company at a value that is higher than the fair market value of the firm’s shares.
  • Changes by the Finance Bill, 2023:
    • However, with the latest amendment, the government has proposed to also include foreign investors in the ambit, meaning that when a start-up raises funding from a foreign investor, that too will now be counted as income and be taxable.
      • For example, if the fair market value of a start-up share is Rs 10 apiece, and in a subsequent funding round they offer it to an investor for Rs 20, then the difference of Rs 10 would be taxed as income.


  • Role of foreign investors in India’s start-ups:
    • Foreign investors are a key source of funding for start-ups and have played a big role in increasing their valuation.
      • For instance, Tiger Global, one of the most prolific foreign investors in India, has invested in over a third of the start-ups that have turned unicorn, with a valuation of at least $1 billion.
        • Unicorns are privately held, venture-capital-backed startups that have reached a value of $1 billion.
  • Already lacking funds:
    • The move could adversely impact financing available to the start-ups, which have already been reeling under a funding winter since 2022, industry insiders are speculating.
      • The change comes as the funding for India’s startups dropped by 33 percent to $24 billion in 2022 as compared to the previous year
  • May repel foreign investors:
    • This could compel more startups to flip overseas, as foreign investors may not want to deal with additional tax liability by virtue of their investment in the startup.
Start-up ecosystem in IndiaAbout:India has the 3rd largest startup ecosystem in the world; expected to witness YoY growth of consistent annual growth of 12-15%.The pace of growth in the startup ecosystem has increased to 15% year-on-year in 2018, while the growth of the number of incubators and accelerators has grown to 11%The Indian startups have gone on to raise sizable ticket sizes from various global and domestic funds. Role of Women:Significantly, the number of women entrepreneurs stood at 14%, up from 10% and 11% in the previous two years (2021-22).India’s startup city:Bangalore has been listed within the world’s 20 leading startup cities in the 2019 Startup Genome Project ranking. It is also ranked as one of the world’s five fastest growing startup cities.Government’s initiatives to promote Start-ups in India:Startup India Initiative: Since the launch of the initiative in January 2016, more than 69,000 startups have been recognized in the country till May2022.Sectors: They were launched across 56 diverse sectors, including:13% from IT services, 9% from health and life sciences, 7% from education, 5% from professional and commercial services, 5% from agriculture, and 5% food and beverage. Functions: Enhanced infrastructure including incubation centers.Easier IPR facilitation, including easier patent filingA better regulatory environment including tax benefits, easier compliance, improved of setting up a company, faster exit mechanisms and moreAn economic stimulus in the form of a INR 10,000 crore Fund of Funds managed by SIDBI, with the goal of increasing funding opportunities. Government Data: As per data from the Ministry of Commerce and Industry, the number of people employed in start-ups covered under the Start-up India initiative stood at about 1.74 lakh in 2021.Start-Up India Programme: A flagship initiative, intended to build a strong eco-system for nurturing innovation and start-ups in the country to drive sustainable economic growth and generate large scale employment opportunities.Start-up India Digital Platform: It is the world’s largest virtual incubator with over 300,000 registered start-ups and aspiring entrepreneurs.Start-up Grand Challenge: It channelizes the entrepreneurial capacity between Indian and Korean start-ups to work together and build solutions for the challenges facing the world.

Source: IE

Budget on Green Growth

  • In News
  • Recently the Ministry of Finance listed priorities for Green Growth in the Budget submission for 2022-2023.

Key Takeaways:

  • The Union ministry has listed a series of seven initiatives from green hydrogen to mangroves protection to green credit to replacement of polluting vehicles.
  • These principles complement each other and act as the ‘Saptarishi’ guiding India through the Amrit Kaal.
  • Previously, the Prime Minister has given a vision for “LiFE”, or Lifestyle for Environment, to spur a movement of environmentally conscious lifestyle.
  • India was moving towards the ‘panchamrit’ and net-zero carbon emission by 2070 to usher in green industrial and economic transition.

Push for Green Growth:

SchemesImportant features
Green Hydrogen MissionNational Green Hydrogen Mission was launched with an outlay of Rs 19,700 croresIt aims to transition the economy to low carbon intensityIt will help reduce dependence on fossil fuel importsIt will make India assume technology and market leadership in this sunrise sectorIt also aims to reach a target of an annual production of 5 MMT of green hydrogen by 2030
Energy TransitionProvided Rs 35,000 crore for priority capital investments towards energy transition and net zero objectives, and energy security by Ministry of Petroleum & Natural GasIt will support Energy Storage Projects, Battery Energy Storage Systems with capacity of 4,000 MWH with Viability Gap FundingA detailed framework for Pumped Storage Projects will also be formulated
Renewable Energy EvacuationWill construct Inter-state transmission system for evacuation and grid integration of 13 GW renewable energy from Ladakh with investment of Rs 20,700 crore
Green Credit ProgrammeGreen Credit Programme will be notified under the Environment (Protection) ActIt will incentivize environmentally sustainable and responsive actions by companies, individuals and local bodiesIt will help mobilize additional resources for such activities
PM-PRANAMA new “PM Programme for Restoration, Awareness, Nourishment and Amelioration of Mother Earth” will be launchedIt will incentivize States and Union Territories to promote alternative fertilizers and balanced use of chemical fertilizers
GOBARdhan scheme500 new ‘waste to wealth’ plants under GOBARdhan scheme will be establishedIt will include 200 compressed biogas (CBG) plants, including 75 in urban areas, and 300 community or cluster-based plants at total investment of Rs 10,000 crore
Bhartiya Prakritik Kheti Bio-Input Resource Centres Facilitating over the next three years 1 crore farmers to adopt natural farmingSetting up 10,000 Bio-Input Resource Centres
MISHTIMangrove Initiative for Shoreline Habitats & Tangible Incomes (MISHTI) will be taken up for mangrove plantation
Amrit DharoharPromoting conservation of wetlands through Amrit DharoharEncouraging optimal use of wetlands, enhancing bio-diversity, carbon stock, eco-tourism opportunities and income generation for local communities
Coastal ShippingCoastal shipping will be promoted as the energy efficiency and lower cost mode of transport, both for passengers and freight and Vehicle ReplacementAllocating adequate funds to scrap old vehicles of the Central GovernmentStates will also be supported in replacing old vehicles and ambulances.

Way ahead

  • Green growth is crucial for India as it offers a pathway for sustainable economic development while preserving the environment. 
  • In India, green growth can address challenges such as air pollution, water scarcity, and climate change. Adopting green growth strategies can increase the use of renewable energy, promote resource efficiency, and support sustainable agriculture, resulting in a more inclusive and sustainable development. 
  • The shift towards green growth can also create new job opportunities in the fields of renewable energy and sustainable agriculture. Overall, green growth is essential for India’s economic and environmental well-being.

Source: IE

Jharkhand Domicile Bill

In News

  • The Jharkhand Governor has returned the Domicile Bill, which defines a ‘local’ in the state to the state government to “seriously review” its legality.


  • Domicile is a legal concept that links a person to a place with  which he has a personal connection or treats it as his permanent is not always the place of person’s residence.
  • Jharkhand was formed in 2000 by separating districts which had significant tribal population from Bihar with the goal of better tribal development and cultural preservation.
  • Since its formation the definition of domicile was contested. In 2002 it was  based on land records of 1932. In 2016 the government came up with a relaxed domicile policy,which mentions six ways in which one could be considered domicile.
  • The present government has reignited the debate for domicile with its new bill.

Provisions of draft domicile Bill

  • It defines a ‘local’ in Jharkhand on the basis of 1932 land records. People who have their names or their ancestor’s name in the land records of 1932 or before, will be considered local inhabitants of Jharkhand.
  • Those who have lost their land records or are landless people can approach their respective Gram Sabhas for their inclusion.
  • Only local persons, as identified under it, would be eligible for appointment in class 3 and 4 positions of the state government.
  • The bill would come into force only after the Centre carries out amendments to include it in the Ninth Schedule, putting it beyond judicial scrutiny.

Arguments in Favour of the Bill: Why is 1932 the cut-off year?

  • In 1932, the land survey and revenue register (also known as ‘1932 khatiyan’) was done in large parts of the State. 
  • It was observed that migration of people from other States to Jharkhand (undivided Bihar) had negatively impacted the “original inhabitants/moolvasis/aboriginals”.
  • The percentage of people from Scheduled Tribes and moolvasis has seen a steady decline since the census of 1941 in Jharkhand.
  • The affirmative action for the development moolvasis will provide them social, cultural, educational service and other benefits.

Arguments against the Bill

  • Policy measures like reservation without social and economic development will encourage fragmentation and flame regional tensions which can become counter-productive
  • Various areas of Jharkhand are covered under the Fifth Schedule (dealing with provisions for Scheduled Tribes). In the case of Satyajit Kumar vs. State of Jharkhand, the Supreme Court has declared 100 per cent reservation given by the state in scheduled areas as unconstitutional.
  • Making only local persons eligible for appointment in class 3 and 4 positions of the state government is not in accordance with Article 16 of the Constitution, which guarantees equality in employment. 
  • According to Article 16(3) of the Constitution, only the parliament has been empowered to impose any kind of conditions in the case of employment under Section 35 (A) under special provision. The State Legislature does not have this power.
  • The Bill goes against supreme court orders in the case of AVS Narasimha Rao and others vs Andhra Pradesh, which was about jobs to non-domicile persons.

Way Forward

  • This bill is in line with the recent trend of reserving jobs for local persons by states such as Andhra and Haryana, who earlier passed bills to this effect. There is a need to study  repercussions of such bills in a holistic manner and arrive at a consensus within the four walls of the constitution.

Ninth Schedule

  • NINTH Schedule became a part of the Constitution in 1951, when the document was amended for the first time
  • It was created by the new Article 31B, which along with 31A was brought in by the government to protect laws related to agrarian reform and for abolishing the Zamindari system. While A. 31A extends protection to ‘classes’ of laws, A. 31B shields specific laws or enactments.
    • For example when The Tamil Nadu Backward Classes, Scheduled Castes and Scheduled Tribes (Reservation of Seats in Educational Institutions and of Appointments or Posts in the Services under the State) Act, 1993, ran into legal obstacles in the 1990s for reserving 69 per cent of the seats in colleges and jobs in the state government. To save it from legal troubles,its reservation provision was then included in the Ninth Schedule.
  • When the Tamil Nadu law was challenged in 2007 (I R Coelho v State of Tamil Nadu), the Supreme Court ruled in a unanimous verdict that while laws placed under Ninth Schedule cannot be challenged on the grounds of violation of fundamental rights, they can be challenged on the ground of violating the basic structure of the Constitution.
  • By placing the current legislation in the Ninth Schedule,the jharkhand government aims to shield it from judicial scrutiny.


No bar on contesting two seats in one poll

In News 

  • The Supreme Court rejected a petition to bar candidates from contesting from more than one constituency in the general or assembly elections.

Why has SC rejected the Petition?

  • SC called it a matter of “parliamentary sovereignty” and “political democracy”.
  • The matter squarely falls within the “legislative domain” (

Contesting Elections from 2 Constituencies

  • Section 33(7) of the Representation of People Act (RPA) permits a candidate to contest any election (parliamentary, state assembly, biennial council, or by-elections) from up to two constituencies. 
  • The provision was introduced in 1996 prior to which there was no bar on the number of constituencies from which a candidate could contest.
  • Section 70 of RPA states that if a person is elected to more than one seat in either House of Parliament or in the House or either House of the Legislature of a State, then, unless within the prescribed time he resigns all but one of the seats all the seats shall become vacant. 

Government’s View on the validity of Section 33(7)

  • The Government is of the opinion that the law cannot curtail the right of a candidate to contest elections and curtail the polity’s choice of candidates.
  • Before the amendment, candidates could contest from any number of constituencies. The government had said the restriction to two constituencies was reasonable enough, and there was no need to change the law now.

View of Election Commission of India (ECI) on Section 33(7)

  • The EC had, in an affidavit in 2018 informed the Supreme Court that it had proposed an amendment to Section 33(7) in 2004.
  • The EC had pointed out that “when a person contests election from two constituencies, and wins from both, he has to vacate one seat out of the two constituencies. Which means a by-election would be required from one constituency involving avoidable expenditure on the conduct of that bye-election”.
  • TheEC had even suggested that a candidate should deposit an amount of ?5 lakh for contesting in two constituencies in an Assembly election or ?10 lakh in a general election. The amount would be used to cover the expenses for a by-election.

Pen Monument

In News

The public hearing on the proposed pen memorial for former Chief Minister M. Karunanidhi was marked by disruptions as groups supporting the construction of the monument created a ruckus while opposing views were presented on grounds of environmental damage and loss of livelihoods.

Courtesy: Print 

About Monument

  • The Pen Memorial pays tribute to M. Karunanidhi.
    • The idea of a monument on water derives from the metaphorical catamaran to which Karunanidhi compared himself. 
  • The Rs 81-crore ‘Pen Monument’, standing in the Bay of Bengal 360 m from the coast and is expected to become a Chennai landmark on completion.
  • It has been planned as a representation of Tamil culture and architecture and will incorporate regional motifs, architecture, and designs with Tamil heritage elements.
  • Features 
    • The design of the monument is based on the Veena, a traditional Carnatic musical instrument that is handmade in Tamil Nadu with extreme precision. 
    • The Thumba is used to represent the pen pedestal, the neck portion the long bridges, the music hole a pen statue, and the peg the tensile canopy seating on the bridge.
    • The frets are used to represent the distance between the bridge’s columns, and the strings are used to represent the Meru or Kudira
    • The design for the landscaped garden on the memorial pedestal is inspired by Sikku Kolam, a traditional drawing made by Tamil women in their homes, in which a geometric shape is created using dots and circles. Locally procured granite will be used for the memorial.
  • Status 
  • The proposed ‘Muthamizh Arignar Dr Kalaignar Pen Monument’ off Marina beach falls under Coastal Regulation Zones (CRZ) IA, II, and IVA, and requires clearance under Section 4(ii)(j) of the Union Environment Ministry’s Coastal Regulation Zone Notification, 2011 (amended up to March 22, 2016).
M. KarunanidhiHe was one of the most influential figures in Tamil Nadu and Dravidian politics who, apart from being president of the DMK from 1969 to 2018 and Chief Minister of Tamil Nadu for five terms between 1969 and 2011, made significant contributions to Tamil literature as an orator, poet, and writer of non-fiction and fiction, plays, and films.The memorial in the shape of a pen represents his many contributions to Iyal (poetry and literature), Isai (music), and Naadagam (theatre), the three fundamental pillars of both ancient and contemporary Thamizh, or Tamil.Karunanidhi ruled Tamil hearts and developed into a mass leader using the pen, a “symbol of [his] greatest talent and prowess”

Joint Parliamentary Committee (JPC)

In News

The Opposition joined hands to demand a probe either by a Joint Parliamentary Committee (JPC), headed by the Supreme Court or monitored by the Chief Justice of India, into the allegations of fraud and stock manipulation against the Adani Group.

About  Joint Parliamentary Committee (JPC)

  • It is set up by the Parliament for a special purpose, like for the detailed scrutiny of a subject or Bill. 
  • It has members from both the Houses and from both the ruling parties and the opposition. 
  • It is dissolved after its term ends or its task has been completed.
  • Process of Setting up: A JPC is set up after one House of Parliament has passed a motion and the other has agreed to it.
    • Members of the JPC are decided by the Parliament. The number of members can vary – there is no fixed number.
  • Functions:  the mandate of a JPC depends on the motion constituting it.
    • For example, “The terms of reference for the JPC on the stock market scam asked the committee to look into financial irregularities, to fix responsibility on persons and institutions for the scam, to identify regulatory loopholes and also to make suitable recommendations.
    • To fulfill its mandate, a JPC can scrutinise documents and summon people for questioning. It then submits a report and makes recommendations to the government.
  • Applicability of Recommendations: While the recommendations of a JPC have persuasive value, they are not binding on the government.
    • The government can choose to launch further investigations based on what the JPC has said, but it can’t be forced to do so.
    • The government is required to report on the follow-up action taken on the basis of the recommendations of the JPC and other committees. 
    • The committees then submit ‘Action Taken Reports’ in Parliament on the basis of the government’s reply
  • Current Status:  There have been six JPCs set up so far. 

India’s UPI Push

In News

  • Recently, the National Payments Corporation of India (NPCI) paved the way for NRIs to be able to transact using Unified Payments Interface (UPI).
    • ‘Non-resident Indian’ (NRI) is a person resident outside India who is a citizen of India. 


  • The NPCI has listed 10 countries where non-resident account holders can make transactions through UPI. These countries are Singapore, Australia, Canada, Hong Kong, Oman, Qatar, United States of America, Saudi Arabia, United Arab Emirates and the United Kingdom.
  • Since UPI follows SIM binding where the user’s bank account is integrated with his/her mobile number, NRIs were unable to use UPI from their international numbers. 
  • Who can use it? NRIs holding NRE/NRO accounts with banks in India will be able to register themselves on UPI platforms from their international numbers.
    • Non Resident External (NRE) accounts are those used by non-residents to transfer earnings from foreign soil to India while Non Resident Ordinary (NRO) accounts are used to manage income earned in India by non-residents.  

What is UPI?

  • Unified Payments Interface (UPI) is a system that powers multiple bank accounts into a single mobile application (of any participating bank), merging several banking features, seamless fund routing & merchant payments into one hood. 
  • It was developed by NPCI in 2016.
  • Participants in UPI: Payer Payment Service Provider (PSP), Payee PSP, Remitter Bank, Beneficiary Bank, NPCI, Bank Account holders, and Merchants.
  • While many countries including Singapore, Bhutan, UAE, Oman, and others have adopted the UPI architecture, the government of India is already in talks with several countries to enable UPI payments in their countries. 
  • In this context, the NPCI’s latest move marks a significant moment for India’s UPI going global.
National Payments Corporation of IndiaIt is an umbrella organisation for operating retail payments and settlement systems in India, established by Reserve Bank of India (RBI) and Indian Banks’ Association (IBA) in 2008 under the provisions of the Payment and Settlement Systems Act, 2007.It has been incorporated as a “Not for Profit” Company under the provisions of Section 25 of Companies Act 1956 (now Section 8 of Companies Act 2013), with an intention to provide infrastructure to the entire Banking system in India for physical as well as electronic payment and settlement systems. 

Paris Club

In News

  • Paris Club is likely to give the IMF financial guarantees about the Sri Lankan debt.

Key points:

  • The Paris Club is an informal group of mostly western creditor countries.
  • It grew from a 1956 meeting in Paris between Argentina and its public creditors.
  • Its objective is to find sustainable debt-relief solutions for countries unable to repay their bilateral loans.
  • The members of the Paris Club are also members of the Organisation for Economic Co-operation and Development (OECD).
  • Members: Australia, Belgium, Canada, Denmark, Finland, France, Germany, Ireland, Israel, Japan, Netherlands, Norway, Russia, South Korea, Spain, Sweden, Switzerland, the United Kingdom and the United States.
  • Since its inception, the Paris Club has reached 478 agreements with 102 different debtor countries, with a total treated debt of $614 billion.
  • The Paris Club operates on the principles of consensus and solidarity and any agreement reached with the debtor country applies equally to all Paris Club creditors.
  • The club used to be a dominant bilateral lender in the last century, but its importance has diminished with the emergence of China as the world’s largest bilateral lender.
  • In the case of Sri Lanka, China, Japan, and India are the largest bilateral creditors, with Japan being a member of the Paris Club.

Puisne Judge

In News

  • Chief Justice of India (CJI) has recently reiterated that collegium takes into “consideration the seniority of Chief Justices and senior puisne judges while deciding on recommending judges.

Key points:

  •  “Puisne” is a French word meaning “later born” or “younger.”
  •  The term is almost always used in the context of judges and denotes seniority of rank.
  •  A puisne judge is a judge who is ranked lower in seniority than the Chief Justice of that court.
  •  The term is used in common law countries like India and the UK.
  • In the UK, a puisne judge is defined as any judge of the High Court besides the Lord Chancellor, the Lord Chief Justice of England, and the Master of the Rolls.
  •  In India, all judges have the same judicial powers, but the Chief Justice is the senior-most judge and has an additional administrative role.
  • The reference to a puisne judge in India is only used while considering the order of seniority for appointments and elevations to High Courts, but it does not affect a judge’s judicial power.

Source: IE

New START Treaty

In News

  • Recently, the U.S. accused Russia of not complying with the New START treaty.

New Start treaty

  • About
    • The New START treaty is formally known as the Measures for the Further Reduction and Limitation of Strategic Offensive Arms.
The term ‘strategic offensive arms’ applies to nuclear warheads deployed by Strategic Nuclear Delivery Vehicles (‘SNDVs’).SNDVs are Inter-Continental Ballistic Missiles (‘ICBMs’) with a range exceeding 5,500 kilometres, strategic bombers, warships (including strategic submarines ) and cruise missiles, including air and sea-launched cruise missiles.
  • It is the last remaining arms control treaty between the world’s two main nuclear powers, US and Russia.
  • It is one of the key controls on the superpower deployment of nuclear weapons.
  • Signed by: Barack Obama in 2010 and extended by Joe Biden till 2026.
    • It took effect in February 2011.
    • The treaty will remain in force till 4 February, 2026.
  • Structure:
    • It restricts both countries to a maximum of 1,550 deployed strategic nuclear warheads each and limits launchers and heavy bombers to 800.
    • It also outlines mutual inspections and regular data exchanges on warheads and delivery mechanisms.
    • It includes an agreement to notify each other about the status of some ballistic missiles.
  • Background:
    • It is a successor to the START framework of 1991 (at the end of the Cold War) that limited both sides to 1,600 strategic delivery vehicles and 6,000 warheads.


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