Suggesting that Indian start-ups should reduce dependency on foreign funding sources like the US and China, the Parliamentary Standing Committee on Finance called for expansion of the Small Industries Development Bank of India (SIDBI) Fund-of-Funds vehicle to allow it to play an anchor investor role.
The House panel, which tabled its report on “Financing the Startup Ecosystem” in Parliament on Tuesday, also recommended the Centre to abolish the long-term capital gains tax for all investments in startups made through angel funds, alternate investment funds and investment LLPs.
“… At a minimum, this should be done for at least the next 2 years to encourage investments during the pandemic period. After this 2 year period, the Securities Transaction Tax (STT) may be applied to CIVs so that revenue neutrality is maintained,” the panel noted in its report.
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