The move, which is to ensure availability of funds for startups, follows concerns regarding the taxation of angel investments in this sector. The Central Board of Direct Taxes will notify the changes separately.
In the ranking process, states have been identified as leaders across categories — startup policy, incubation hubs, seeding innovation, scaling innovation, regulatory change champions, procurement leaders, and communication champions.
Push from a marquee investor like SoftBank to grab opportunity across the borders comes at a time when growth in India is said to be slowing down in particular categories as the firms go deeper into the geography.
As many as 18 start-ups have received notices for the “angel tax” under Section 56(2)(viib) of the Income Tax Act, 1961. This section seeks to tax any capital raised by a closely-held company which is above its fair market value as income from other sources.