Fall in angel funding worrisome: Nasscom

The National Association of Software and Services Companies (Nasscom) had last November shared its concern over the taxation issues in the startup scene, which led to a steep 50 per cent fall in angel investments and a signif icant decline in series A funding. “While angel investments are the critical first piece that gets a startup going, series A fund is the one where the angel investors really make their exits and make money. 

That’s what incentivises them to continue their investments,” Nasscom President R Chandrashekhar said. “We had pointed that out and felt that corrective measures are needed. However, we did not find that being addressed in the Budget,” he added. 

It can be noted that the taxmen had demanded Rs 110 crore income tax from the e-tail major Flipkart, which the company had challenged in the appellate tribunal and has reportedly lost the appeal. The department’s claim was based on its findings that the company was showing losses by offering huge marketing discounts. 

The ecommerce major had a profit of Rs 408 cr in FY16 and thus a tax liability of Rs 110 crore, while the company had claimed a net loss of Rs 796 cr for the year. Finance Minister Arun Jaitley recently had issued directives to the I-T department to not adopt very coercive methods in respect of angel investments. “We need to be far more focused on the things that are needed to galvanise the startup and entrepreneurial ecosystems,” he said.