Section 28: Angel investor allowance

28. Angel investor allowance (1) (a) Where an angel investor has, in an income year, invested a minimum of 100,000 rupees to the seed capital of a qualifying start-up SME by way of acquisition of shares, he shall be entitled to a relief, by way of a deduction from his net income, of 50 per cent of the amount invested in that income year. (b) The relief under subsection (1) shall be subject to such terms and conditions as may be prescribed. (c) The total deduction under this subsection shall not exceed 500,000 rupees in an income year. (2) (a) An angel investor together with his relatives shall not hold more than 25 per cent of the share capital of a qualifying start-up SME. (b) The shares purchased under subsection (1) shall be held for at least 36 months from date of the acquisition, failing which the deduction allowed under subsection (1) shall be clawed back and added as taxable income in the income year in which the shares are disposed. (c) The qualifying start-up SME shall, within 36 months of the disposal of any shares acquired under subsection (1), inform the Director-General accordingly. (3) Any unrelieved amount under subsection (1) in an income year may be carried forward and deducted against the net income of the 2 succeeding years. (4) In this section – “angel investor” means an investor meeting such eligibility criteria as may be prescribed; 314 Acts 2022 “qualifying start-up SME” means an SME set up on or after 1 July 2022 and meeting such eligibility criteria as may be prescribed. (i) in section 67L – (i) by numbering the existing provision as subsection (1); (ii) in the newly numbered subsection (1) – (A) by deleting the words “50 million rupees” and replacing them by the words “100 million rupees”; (B) by deleting the words “of 10 per cent”; (iii) by adding the following new subsection – (2) The deduction allowable under subsection (1) shall be – (a) 10 per cent of the amount of expenditure incurred during the period starting on 1 July 2021 and ending on 30 June 2022; and (b) 25 per cent of the amount of expenditure incurred as from 1 July 2022. (j) in section 73B, by repealing subsection (4); (k) by inserting, after section 74, the following new section –