The angel tax is a 30% tax levied on investments made by external investors in start-ups. It is not that the whole investment is taxed, it is only the amount which is above the “fair market value” (FMV) valuations of the start-up that is classified as ‘income from other sources’ liable to tax under the Income-Tax Act. However, considering the nature of businesses of start-ups, they are valued subjectively using discounted cash flows or taking into account intangibles such as goodwill, brand value, etc. (which are not accounted usually).   Chirag Nangia, Nangia & Co LLP contributed an article on How angel tax demonises a growing start-up for Financial Express.

Tax Deducted at Source (TDS) is a concept that was introduced by the Government of India to prepone tax collection and curb tax evasion, by collecting tax from the very source of income. This “pay as you earn” measure of tax collection is a regular source of revenue to the Government, and provides for a wider tax base. Chirag Nangia, Nangia & Co LLP contributed an article on Should you deduct tax at source (Full page article)for Hindu business Line special issue on Guide to Taxation.