Angel Tax · FY 1969-70
Section 56(2)(viib), plainly computed.
FMV vs issue price · DPIIT exemption · Surcharge & cess
When a private Indian company raises funding above its fair market value, the excess amount is taxed as 'income from other sources' under Section 56(2)(viib) — commonly called angel tax. This calculator shows whether your funding round triggers angel tax and how much. DPIIT-registered startups are exempt.
Is your company DPIIT registered?
DPIIT-recognised startups must also have filed Form 2 with DPIIT to claim Sec 56(2)(viib) exemption.
Funding round details
For reference; calculation uses issue price × shares
As per chosen method above
Section 56(2)(viib) computation
Total consideration received₹5,00,00,000
Fair market value of shares₹3,00,00,000
Amount exceeding FMV (taxable)₹2,00,00,000
Tax @ 30%₹60,00,000
Surcharge₹9,00,000
Cess @ 4%₹2,76,000
Total angel tax liability
₹71,76,000
Note
Get a formal FMV valuation report from a registered valuer before closing your round. This protects you from reassessment if the assessing officer challenges the valuation 4–10 years later.
We help funded startups with angel tax advisory and DPIIT registration.
Valuation review, Form 2 filing, exemption claims, response to Sec 56(2)(viib) notices.
Book a consultationHow this is computed
- ·Section 56(2)(viib): excess of issue price over FMV of unquoted shares issued by a private company is taxable as 'Income from Other Sources' in the hands of the issuing company.
- ·DPIIT-recognised startups are exempt provided they meet conditions in CBDT Notification (paid-up capital + share premium ≤ ₹25 cr, no investments in specified assets for 7 years, Form 2 filed).
- ·FMV is computed under Rule 11UA — NAV method, DCF method (by merchant banker), or valuation by a registered valuer.
- ·Finance Act 2023 extended Section 56(2)(viib) to non-resident investors as well (effective from AY 2024-25), with separate Rule 11UA(2) options including specified investor exclusions.
- ·Specified investor exclusions for non-residents include SEBI-registered Category I & II AIFs, listed companies meeting prescribed conditions, and entities from 21 notified jurisdictions.
- ·Tax rate = 30% + applicable surcharge (per income slabs) + 4% Health & Education Cess on the excess amount.
- ·Get a contemporaneous valuation report before the round closes — reassessment risk arises 4–10 years later if FMV is challenged.
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