When it comes to venture capital investments funding start-ups in India, it’s largely foreign money that comes in. Many governments throughout the world see startups as a key driver of economic growth. In India, for example, there has been an increase in the number of start-ups in recent years.
Governments around the world have introduced tax incentives and exemptions as a way to encourage people to invest in early-stage businesses, promoting participation in venture capital schemes.
@nithin tweeted about UK’s 50% tax relief and capital gains exemption for startup investments.
Here’s a comparison of Income Tax Relief Schemes in the UK:
You can learn more about these schemes by visiting the official UK government website: Tax relief for investors using venture capital schemes - GOV.UK.
Again, in the United States, qualifying small business stock (QSBS) allows investors to claim up to 100% of capital gains on eligible small business stock. Here’s a detailed article from AngelList on this: What is Qualified Small Business Stock? | AngelList
Singapore also recently introduced the Angel Investors Tax Deduction Scheme. This offers a tax exemption for angel investors, providing a 50% tax benefit on their investment amount after a two-year holding period. The deduction is capped at S$250,000 per year and is offset against total taxable income. More on this here: Angel Investors Tax Deduction Scheme | GuideMeSingapore - by Hawksford
These schemes are important as they help in creating wealth for individuals, contributing to better wealth distribution.
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It would be great if these are implemented in India and similar schemes were popularised to divert investments from gold, real estate, and fixed deposits. This could encourage entrepreneurs in our country and may contribute to individual wealth over time. What are your thoughts on these?