new delhi indian startups that have been struggling to raise capital amid a global economic downturn will get no immediate relief from angel tax the ambit of which was proposed to be extended to foreign investors in the budget 202324according to the key amendments made to the finance bill 202324 no changes have been made to the angel tax proposals announced in the budget and they will come into effect from fy2024 or assessment year 20242025with passing of the finance bill 2023 the applicability of angel tax on foreign investors has been cemented there was confusion about whether this goes live from april 1 2024 or april 1 2023 but the memorandum to the finance bill 2023 clearly states that it applies from assessment year 202425 which is financial year 202324 said siddarth pai founding partner at 3one4 capitalthe only two classes of investors whose investments are exempted from angel tax are sebiregistered cat i and ii aifs alternate investment fund as well as ifscaregistered cat i and ii aifs under the ifsca fme regulations 2022 pai saidstartups faced by angel tax notices are required to pay 25 of the investment raised as the tax amount and twice that amount as penalty for violating the exemption conditions experts saidthe industry however is still hopeful that the government will come around and provide relief to the startup sector the startup ecosystem still holds hope for exemptions to international institutional investors like vc funds the central government is empowered to do so via notification the hope is that the notification comes before april 1 2023 so that ongoing funding rounds arent dislocated pai addedexpanding the scope of angel tax to foreign investors at a time when funding is already sluggish is a blow for startups many of whom depend on overseas funding to grow their businesses investments from global firms like japans softbank usbased tiger global have helped several startups scale their businesses and achieve billion dollar valuations after raising close to 40 billion in funding in 2021 startup investments dipped to 257 billion last year