The Indian government has deferred the implementation of GAAR- General Anti-Avoidance Rules by an year, giving temporary relief to startups, which were to be taxed for angel investments since the Budget had proposed to consider share premium in excess of the fair market value as income. In the opening remarks made by Finance Minister, Pranab Mukherjee, at the beginning of the discussion on Finance Bill 2012 in the Lok Sabha, he mentioned that the applicability of GAAR was being deferred by one year: " To provide more time to both taxpayers and the tax administration to address all related issues, I propose to defer the applicability of the GAAR provisions by one year. The GAAR provisions will now apply to income of Financial Year 2013-14 and subsequent years," said the Minister. The finance minister has said that there would be a provision for exempting angel investments in unlisted companies: "It has been proposed in the Finance Bill that any consideration received by a closely held company in excess of the fair market value of its shares would be taxable. Considering the concerns raised by angel investors who invest in start-up companies, I propose to provide an enabling provision in the Income Tax Act for exemption to a notified class of investors," he added. Update: However, as Deepak Shenoy of Capital Mind, notes in one his blog posts, an angel investor isn't a specified class anywhere in any act and the only specific kinds of investor entities are Venture Capital Funds or Private Equity Funds. He feels that…
