India: Funding rounds are revenue after all
The tag line for this site is “True Fact: Funding rounds are not revenue”, except in India, where a new tax code law has deemed that funding rounds that take place “at above fair value” are indeed income.
The new rule applies to startups that have undergone a down round. If the preceding round was not from a VC firm registered with the Indian securities regulator (in other words it was from an angel investor), then the differential of the preceding round from the new, lower valuation will be deemed as “income” and taxed accordingly.
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