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Indian Government To Tax Angel Funding

samzenpus posted more than 2 years ago | from the nothing-is-free dept.

Businesses 157

kousik writes "The Indian Government proposes to tax Angel Investment as income and is asking start-ups to pay a 30% tax on the funding. From the article: 'Ravi Kiran, co-founder of middle-India advisory Friends of Ambition (FoA) and member of Indian Angel Network told Firstpost: “There seems to certainly have been an error in understanding on the part of the Budget makers. If this is pushed through, it will spell serious trouble for the angel investor and entrepreneurship space. I feel this is an error and should be corrected quickly before it leads to confusion.”'"

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157 comments

do they tax frosty piss? (-1, Troll)

Anonymous Coward | more than 2 years ago | (#39398099)

chug it, you curry farting faggots!

Re:do they tax frosty piss? (1)

Taco Cowboy (5327) | more than 2 years ago | (#39398731)

âoeThere seems to certainly have been an error in understanding on the part of the Budget makers"

I sincerely think that the Indian budget makers do understand what Angel Funding is

My guess is that the Indian budget makers want everything to be done "Indian Style", that is, they are trying to prevent foreigners from owning any Indian inventions

Re:do they tax frosty piss? (1)

Anarke_Incarnate (733529) | more than 2 years ago | (#39399019)

Yet "Please give us the codes" appears on how many pages for assistance?

Re:do they tax frosty piss? (1)

Anonymous Coward | more than 2 years ago | (#39399493)

Got to love first post reply whores. Don't have much of a point, but try to get to the top of the heap by replying to unrelated first post.

I'm sure the devil... (2, Insightful)

davidwr (791652) | more than 2 years ago | (#39398113)

... is in the details.

Re:I'm sure the devil... (2)

FatdogHaiku (978357) | more than 2 years ago | (#39399595)

... is in the details.

Empirical data indicate he's still at the capital... every capital... like usual...

Selling shares is debt, not income (5, Insightful)

EmagGeek (574360) | more than 2 years ago | (#39398143)

It's clear the legislators have zero clue what investment means.

When a company receives startup funding, it is in exchange for ownership shares. That makes it borrowing, not income. Shareholder Equity offsets that funding on the balance sheet.

Equity (2)

alexander_686 (957440) | more than 2 years ago | (#39398157)

Selling shares is selling equity - which is kind of the opposite of debit. Well, assets are the opposite of debit, but I am sure that is were part of the cash will go..

Re:Equity (0)

Anonymous Coward | more than 2 years ago | (#39398219)

Wait.. I would expect investment transaction on a company balance sheet to include a debit on the cash assets and a credit on the equity. IOW, the company and the investor agree on a valuation, and we simply transform, say, 50% of the company's value to 50% of the cash valuation of the company.

From the investors' perspective, I would expect the transaction to simply be a pure asset transaction -- the debit would account for the new ownership I have in this new company I'm investing in, and a credit for the loss of cash.

Re:Equity (5, Informative)

alexander_686 (957440) | more than 2 years ago | (#39398311)

Equity = Assets - Liabilities

The investors trades cash for shares with the company - So your right there. On the other hand, for the company the new cash, an asset, is coming into the company, This will increase both the asset account and the equity account.

The accounting transactions would be
      Credit the cash account in Assets
      Debit the Paid In Capital account in Equity.

If the company was issuing new debt - and thus no new equity, the accounting transactions would be:
          Credit the cash account in Assets
            Debit the Long Term Debt Account in Liabilities.

Re:Equity (1)

Anonymous Coward | more than 2 years ago | (#39398345)

"This will increase both the asset account and the equity account"

Right.. why would it be a credit on the cash account if we're increasing the asset? And why aren't we debiting if we're increasing the equity account?

Slashdot rewards STUPID moderators (0, Troll)

gavron (1300111) | more than 2 years ago | (#39398367)

Finally someone posts a succinct and informative financially correct explanation assets, equity, liabilities and debt.
What does he get modded: 2.

moderators: Instead of following each other like lemming looking for the Heh Heh (Nelson Muntz) posts,
and modding everything that bores you down... if you can't be bothered to understand the topic, just leave it alone
and go mod something you do understand. Toilet humor and all that are that way --->

The parent is correct, informative, and on-topic.

You see, dear mods who modded it down, you're affecting future slashdot readers' ability to read this very
informative post. You make slashdot worse.

Remeber what Larry Niven said -- Think of it as Evoution in action. Take the right step, and step off.

E

Re:Slashdot rewards STUPID moderators (3, Insightful)

mooingyak (720677) | more than 2 years ago | (#39398459)

So your complaint is that he didn't hit +5 inside of the 11 minutes between when you posted and when he posted?

Re:Slashdot rewards STUPID moderators (1)

therealobsideus (1610557) | more than 2 years ago | (#39398573)

This ^^. Even if a mod abuses his points, it will typically correct itself in the end.

Re:Slashdot rewards STUPID moderators (1)

eugene ts wong (231154) | more than 2 years ago | (#39399685)

The truth of the matter is that he started writing 9 minutes after the post that he is complaining about, and had to wait 2 minutes submit.

In the moderators defense, I have often read through a thread, and got the posts ready for moderating, before clicking on submit. The idea is that I want to upmod a whole bunch at the same time, instead of clicking a whole bunch and waiting for Slashdot to load pages.

Re:Slashdot rewards STUPID moderators (1)

Anonymous Coward | more than 2 years ago | (#39398583)

Finally someone posts a succinct and informative financially correct explanation assets, equity, liabilities and debt.
What does he get modded: 2.

Yes, the only problem is that he got debit and credit completely the wrong way around, so his explanation is actually not correct at all. Other than that, it's great.

Remember, cash coming into your bank account is recorded as a CR because from the bank's point of view the amount of money they owe you has gone up. If you keep your own books using double entry then you need to record it as a DR.

Re:Equity (0)

Anonymous Coward | more than 2 years ago | (#39398507)

This post is, of course, the exact wrong way round

Raising equity is DR cash, CR shareholders' funds
Raising debt is DR cash, CR long-term liabilities

Re:Equity (1)

Anonymous Coward | more than 2 years ago | (#39401567)

If the company was issuing new debt - and thus no new equity, the accounting transactions would be:

          Credit the cash account in Assets

            Debit the Long Term Debt Account in Liabilities.

Issuing debt? I think your equation is a little bit off. Companies issue debt for cash, they don't purchase debt with cash during the issuance. It would be a debit to cash and a credit to notes payable, bonds payable, or some sort of equity stock...You have the equation for purchasing debt.

Either way this move doesn't surprise me as the red tape in india and the bureaucracy is far more complex, time consuming and ludicrous than anything that we have seen in the west. I would suggest taking a look at the "Commanding Heights" Videos to gain a much better insight. Great series that covers India, Russia, the UK and the US on this very subject.

Re:Equity (1)

khallow (566160) | more than 2 years ago | (#39398287)

Selling shares is selling equity - which is kind of the opposite of debit.

The point is that the corporation is receiving money in exchange for creating a substantial future obligation on the income of the business. (This incidentally means that selling equity is not an "opposite" of debt in any sense of the word. The debit is the shareholder equity as EmagGeek explained.) And it sure isn't income any more than debt is.

Re:Equity (0)

sycodon (149926) | more than 2 years ago | (#39398933)

Doesn't matter what you call it, what you do with it or where you got it from, Government will always want part of it.

Did Ted Kennedy get reincarnated in India?

Re:Selling shares is debt, not income (3, Informative)

LostCluster (625375) | more than 2 years ago | (#39398175)

Bonds are debt, stock is ownership.

Re:Selling shares is debt, not income (2)

khallow (566160) | more than 2 years ago | (#39398323)

Bonds are fixed sized claims on future income. Stock is a claim on ownership. They aren't that different. Both engender an obligation in the corporation in exchange for money.

Re:Selling shares is debt, not income (2, Informative)

Anonymous Coward | more than 2 years ago | (#39398515)

A company that issues a bond is obligated to pay interest on the bond and to return the principal when the bonds mature. A company that issues stock has no obligation to pay dividends or to buy back the shares. If a company goes bankrupt bondholders are at the front of the line to get repaid. Common stock holders are at the back of the line and only get what is left after everybody else has been repaid.

Re:Selling shares is debt, not income (1)

therealobsideus (1610557) | more than 2 years ago | (#39398587)

Keyword there... common stockholders. Most angel investors (at least the smart ones) receive convertible preferred stock and typically recoup their investment if the business fails.

Re:Selling shares is debt, not income (1)

khallow (566160) | more than 2 years ago | (#39398907)

A corporation does as per its bylaws have to follow the direction of its stockholders in various things, such as leadership of the corporation and disposition of assets outside of bankruptcy. That is the obligation to stockholders.

Re:Selling shares is debt, not income (5, Interesting)

whoever57 (658626) | more than 2 years ago | (#39398371)

It's clear the legislators have zero clue what investment means.

True enough.

When a company receives startup funding, it is in exchange for ownership shares. That makes it borrowing, not income. Shareholder Equity offsets that funding on the balance sheet.

Now you are showing your ignorance. It's not a loan. It's not borrowing.

But the summary doesn't tell the whole story (I know, what a shock!):

There is a Budget proposal to tax at 30 percent any investment received by closely held companies where the aggregate investment exceeds the fair market value of shares.

Most likely, this is aimed at money laundering. The uncertainty caused by this and the possible corruption amonst those who enforce this are likely to stifle angel investment.

Re:Selling shares is debt, not income (1)

Anonymous Coward | more than 2 years ago | (#39399381)

If I own something that is in your possession, you are borrowing it from me. The OP is correct in that ownership of stock creates a "debt-like" obligation, where the company is in possession of the actual assets, but where the stockholder owns the equity (which is assets - debt). It's not per se debt, like bonds, but it is an instrument where the assets you hold are owned by me, and you are borrowing them from me in order to make money for me.

I believe you are simply being pedantic here. Most people understand what the OP is talking about.

Re:Selling shares is debt, not income (0)

Anonymous Coward | more than 2 years ago | (#39400077)

Then why are shareholders creditors if a company goes into administration/liquidation/bankruptcy etc.?

Re:Selling shares is debt, not income (-1, Flamebait)

hateu (2598389) | more than 2 years ago | (#39400821)

pc hollow sheet [ytfoam.com]

Re:Selling shares is debt, not income (1)

sociocapitalist (2471722) | more than 2 years ago | (#39401463)

Most likely, this is aimed at greedy and ignorant politicians wanting to tap an inflow of money and has nothing to do with targeting money laundering.

FTFY

It's no different from taxes on bankrupt loans (2)

Barbara, not Barbie (721478) | more than 2 years ago | (#39398643)

It's no different from going bankrupt, then finding out that you have to declare the portion of any loans you never paid back as "income". Plenty of people got bitten by that when they were foreclosed on, and plenty of students will get bitten by that in the future, now that student loans are a bubble.

Re:It's no different from taxes on bankrupt loans (1)

russotto (537200) | more than 2 years ago | (#39399879)

It's no different from going bankrupt, then finding out that you have to declare the portion of any loans you never paid back as "income".

Because that's not actually true. Debt discharged in bankruptcy is not taxable.

Plenty of people got bitten by that when they were foreclosed on

Foreclosures are more complex, but if your home was your only significant asset, or you declared bankruptcy to discharge the residual debt, the cancelled debt likely isn't taxable.

Re:It's no different from taxes on bankrupt loans (1)

Barbara, not Barbie (721478) | more than 2 years ago | (#39400055)

People were going bankrupt, then the next year getting a tax bill for the principle that was discharged in bankruptcy (because they didn't include the tax liability in the actual bankruptcy).

Plenty of people got gob-smacked with $50k - $100k tax bills after discharge, which is why a temporary law was put in place [about.com]

People who have lost their homes through foreclosure or who have restructured their mortgage loans may qualify for tax relief under a new tax law, the Mortgage Forgiveness Debt Relief Act of 2007. The tax relief was extended to cover the years 2007 through 2012 under the Emergency Economic Stabilization Act.

Prior to the law being passed, there were people who went bankrupt, had the debt itself discharged, but didn't figure on the tax liability - for example, they did a deed in lieu with the bank the prior year, so they wouldn't list the cancelled debt (since it wasn't a debt any more) when they'd flush their other debts - and if you don't list a debt when you go bankrupt, it isn't discharged. This became a big problem by 2006.

Re:Selling shares is debt, not income (2)

Ihmhi (1206036) | more than 2 years ago | (#39399641)

India's government is just as corrupt as most other governments in the world. They just don't give as much of a shit about hiding it.

Re:Selling shares is debt, not income (1)

KiloByte (825081) | more than 2 years ago | (#39401209)

The US government instead declares corruption legal.

Re:Selling shares is debt, not income (1)

gl4ss (559668) | more than 2 years ago | (#39401227)

well.. maybe someone in india started selling stock in his company rather than say, milk, and giving access to milk if you had company stock. thus dodging sales tax.

of course, what sucks about this for indians is that this is higher than usual expected roi for worthwhile investing.. "haha".

Wow (4, Insightful)

JWW (79176) | more than 2 years ago | (#39398159)

And her I thought regulatory uncertainty and IP law we stifling innovation.

The Indians are taking innovation killing to a whole new level.

Re:Wow (5, Insightful)

Anonymous Coward | more than 2 years ago | (#39398231)

Don't be live the summary. The Indians are worried about tax dodges exploiting a loophole by pretending it is investment when it is just hiding cash in a shell organization.

Re:Wow (4, Informative)

Sir_Sri (199544) | more than 2 years ago | (#39398305)

Sure they are. That's not the point. Everyone knows india is corrupt top to bottom, and there are people using every means possible to dodge tax, legally or otherwise.

The issue is whether or not the law would, if applied, seriously stifle investment. Which, assuming the text is correct, it would. The intent of laws and there impact don't always align, this seems to be one of those cases, where either the people who wrote the law don't really grasp the spillover effects, or the people who are writing about it don't understand what the law says.

Now the thing is, lots of countries have 'double taxation' where the profits a corporation makes are taxes, *and* the dividends to shareholders are taxed. In this case they're saying investment in the company would be taxed as well, which could be triple taxation, or it could just be a stupid way of trying to collect existing owed taxes.

And yes, of course, if you set up your own business and invest in it you could be trying to dodge tax (Sri's game testing and cat sitting services, who's sole customer is Sri, who is, incidentally, the sole investor). I don't dispute the possibility of that being widespread and damaging to the economy and tax base.

Re:Wow (0)

ExploHD (888637) | more than 2 years ago | (#39398523)

lots of countries have 'double taxation' where the profits a corporation makes are taxes, *and* the dividends to shareholders are taxed.

That's not double taxation; the government is taxing the dividends of shareholders as capital-gains because dividends reduce the stockholders equity by the amount of the dividend. It would be no different if you sold your sock at x amount of dollars or x - dividends.

Right now dividends are being used as a tax dodge because the max tax rate on capital gains in the US is 15% and no FICA. If you work your ass off at a job you're going to being paying your tax bracket plus FICA. Why do you think some CEO's have a dollar salary; it's not for show.

Re:Wow (1)

Sir_Sri (199544) | more than 2 years ago | (#39398781)

hence the quotes. Just because it isn't always real double tax doesn't mean that isn't the talking point or the way the public generally understands it.

I'm not in the US, so I'm not familiar with FICA particularly, nor was it in reference to US law. As I explicitly said "lots of countries".

Re:Wow (3, Insightful)

khallow (566160) | more than 2 years ago | (#39399717)

That's not double taxation

Sure it is.

Dividends are paid from corporate income which is already taxed. Capital gains usually are a result of reinvestment in the corporation which is not taxed as corporate income.

Right now dividends are being used as a tax dodge because the max tax rate on capital gains in the US is 15% and no FICA.

Dividends are considered income in the US not capital gains. And no FICA makes sense since the income is coming from an investment. If you're investing, then you're not the problem Social Security was meant for.

Re:Wow (0)

Anonymous Coward | more than 2 years ago | (#39399965)

Dividends are a distribution of profits - they are taxed in the US at ordinary income rates. Increase in the market value of stocks and selling those at a profit are capital gains and taxed at the 15% rate. So, the trick is to get paid in what are basically pieces of paper and then seeking them off as capital gains at the lower rate. That's why all these execs are paid in stock options...

Re:Wow (0)

Anonymous Coward | more than 2 years ago | (#39398999)

Knowing why something is being do be is the point, it helps establish what to do with any problems.

Just like with the inland US state planning on acquiring an aircraft carrier, the reasons shape your response.

In that case, ridicule.

In this India situation, it's dismiss the poor analysis.

Re:Wow (1)

gl4ss (559668) | more than 2 years ago | (#39401271)

so they're thinking they'll just TAX when people are hiding cash when they shouldn't have in the first place? yeah that'll work fine!

Tax too high and it stops. (3, Insightful)

LostCluster (625375) | more than 2 years ago | (#39398169)

If they charge 130 to get a 100 investment... the business must go up 30% in order for the investor to make a profit. Better off taking that money to another market where you can get 130 for your 130. This idea stinks.

Re:Tax too high and it stops. (2, Interesting)

bill_mcgonigle (4333) | more than 2 years ago | (#39398247)

This idea stinks.

Not if you're the incumbent the startup is about to compete against. Cui bono.

Re:Tax too high and it stops. (1)

Anonymous Coward | more than 2 years ago | (#39398467)

India doesn't have a lot of native incumbents.

Re:Tax too high and it stops. (1)

biodata (1981610) | more than 2 years ago | (#39398571)

You may not have noticed companies like the $100Bn Tata.

Re:Tax too high and it stops. (0)

blackraven14250 (902843) | more than 2 years ago | (#39399953)

Tata isn't exactly a startup that this would affect...

Re:Tax too high and it stops. (1)

green1 (322787) | more than 2 years ago | (#39400165)

I think Tata was being used as an example of an incumbent this law might help (by stifling the competition) rather than an example of a startup that might try to compete with it and get hurt by this...

Coming to an anti-capitalist country near you (3, Insightful)

mysidia (191772) | more than 2 years ago | (#39398189)

Stock split taxation.... What, you owe stock, and, the number of shares you have is doubled? Now you will have to pay a 30% share price tax on your increase in shares.

Credit card taxation.... spend $$$ on a credit card, sounds like free money, you will have to pay 30% of your credit card spendings to the government.

Auto purchase taxation... what, free money from the bank? OK, but you will owe 30% of your auto purchase in taxes.

Mortgage taxation.... what, more free money? OK, but you will have to pay 30% of the money you get from your mortgage back to the government.

Sold your home for less than you bought it for? Oh, it still looks like you got lots of money from selling it. We will have to charge a 30% tax on this windfall income.

Re:Coming to an anti-capitalist country near you (1)

BenJury (977929) | more than 2 years ago | (#39398383)

HA! There are already here!

Stock split taxation.... What, you owe stock, and, the number of shares you have is doubled? Now you will have to pay a 30% share price tax on your increase in shares.

Capital gains tax is applicale to the selling of shares.

Credit card taxation.... spend $$$ on a credit card, sounds like free money, you will have to pay 30% of your credit card spendings to the government.

VAT.

Auto purchase taxation... what, free money from the bank? OK, but you will owe 30% of your auto purchase in taxes.

Also VAT, plus fuel duty and VED.

Mortgage taxation.... what, more free money? OK, but you will have to pay 30% of the money you get from your mortgage back to the government.

Stampy duty.

Sold your home for less than you bought it for? Oh, it still looks like you got lots of money from selling it. We will have to charge a 30% tax on this windfall income.

Also subject to capital gains tax if it's not your main home. Regardless of stamp duty.

Re:Coming to an anti-capitalist country near you (4, Informative)

mysidia (191772) | more than 2 years ago | (#39398575)

Capital gains tax is applicale to the selling of shares.

Let me explain how that's different: Capital gains tax is (PROCEEDS OF SALE) MINUS (COST BASIS)

Currently you don't pay any taxes on a stock split and don't necessarily pay taxes on capital distributions either (your cost basis is decreased). What happens with a stock split is the number of outstanding shares are doubled in a 2:1 split, so you wind up with twice as many shares, each worth half their original share price.
In a normal 2:1 stock split, you don't get any cash, only additional shares of stock that are distributed to you, but all shares (including the ones you already hold) are now only worth half as much a share in the company, so your total share in the company remains the same after the split.

VAT.

Let me explain how VAT is different. VAT is a tax you pay on the purchase. Currently you don't pay an additional tax on the actual you money you borrow on the credit card. Currently debt you take out is not treated as income.

Also subject to capital gains tax if it's not your main home. Regardless of stamp duty.

Currently you only pay capital gains tax if you sold the home for more than your Adjusted cost basis, (Purchase Price) Plus (Property Improvement Costs) Minus (Depreciation)

Re:Coming to an anti-capitalist country near you (1)

zippthorne (748122) | more than 2 years ago | (#39398657)

I notice that "adjusted cost basis" does not appear to account for inflation....

Re:Coming to an anti-capitalist country near you (2)

mysidia (191772) | more than 2 years ago | (#39399069)

I notice that "adjusted cost basis" does not appear to account for inflation....

Indeed it does not. You also still pay taxes on interest earned in a savings account, even if inflation during the year was higher than the interest earned -- so that in fact, your purchasing power was eroded during the year by more real dollars than the actual increase.

It's a fundamental flaw and unfairness in the way that income taxes are devised -- they tax numerical change in number of dollars, instead of taxing numerical change in the usefulness of the money you have for purchasing products.

In a fair system, during times of deflation, you would have a 'synthetic income' based on the increase of value of your money, and during times of inflation, you would have a 'synthetic loss' based on the change of value to your money; and the rate of taxation should also be adjusted properly.

Re:Coming to an anti-capitalist country near you (1)

GryMor (88799) | more than 2 years ago | (#39398601)

Stock Split: No capital gains, you didn't sell/buy anything (value of a share was halved, quantity was doubled)

Credit card: No VAT, the VAT is on what you used the credit card to pay for (at least, in every country I've been in that had VAT).

Sold Home: No capital gains (capital loss, in fact) for the given example.

Re:Coming to an anti-capitalist country near you (2)

unixisc (2429386) | more than 2 years ago | (#39400187)

For the US, you forgot the one that takes the cake - AMT on imputed income. Namely, if you had stock options of $x, which you exercised when its price was $(x+y), you'd get taxed on the $y, even though you've not sold a single share and have actually made squat. Let's say you sold it during tax time to pay out that tax, and lets say you sold it when the price was back @ $x, then you essentially have to pay taxes on $y - money you never made, but only theoretically had.

Don't ask me for a car analogy to explain the above!

Bad for India... (1)

Nutria (679911) | more than 2 years ago | (#39398197)

good for everyone else.

Thank you, India. (4, Insightful)

pubwvj (1045960) | more than 2 years ago | (#39398223)

The rest of the business world thanks the Indian government for destroying India's competitive edge. Now it will be all the easier to compete against India. Rah-rah, India!

Why is it that government's just don't get it. They need business to provide jobs so they can have something to tax. Dummies.

Re:Thank you, India. (-1)

Anonymous Coward | more than 2 years ago | (#39398353)

what's to compete against ?

they finally got the telephones working, that's all.

I guess we can look forward to surgical instruments that would make a Packistaini blush.

Re:Thank you, India. (0)

Anonymous Coward | more than 2 years ago | (#39398437)

Different idea. Established leaders want to stamp out competition. So you 'invest' in existing companies and they create sub companies that hold your money. So it is not a 'angel investor' it is just someone investing in an existing company and someone who did not get money before gets a cut.

My bet is on something like that. It is being used to stamp out competition. Laws like these are usually written by incumbent companies who grab their local law maker and hand them a script. This sort of shit happens here in the US too. We just call it 'campaign contributions' instead of bribes.

http://stopthecap.com/2012/03/14/inside-alec-how-corporations-ghost-write-anti-consumer-state-telecom-legislation/ [stopthecap.com]

Re:Thank you, India. (0)

scamper_22 (1073470) | more than 2 years ago | (#39399465)

The goal of all active governments in practice is to take from one group and give to the groups connected to the government.

They really don't care about 'the greater goals'.

It's basic gang like nature. Why do you think ghettos don't prosper? Everyone is out taking... and if you work hard and become successful, someone will just take from you. That everyone in the ghetto would be better off with an honest environment doesn't really matter.

The government gets it. It wants money to do things and it sees lots of money coming in right now. So it must get its cut.

 

Re:Thank you, India. (0)

Anonymous Coward | more than 2 years ago | (#39401251)

Americans are funny.

suadeshva makes a comeback (-1)

Anonymous Coward | more than 2 years ago | (#39398245)

I thought that socialism in India was abandoned in 1991 just in time for the H1B visa program.

I got RESERVATIONS about this; it's that CREAMY LAYER nonsense.

atlas shrugged (0)

Anonymous Coward | more than 2 years ago | (#39398251)

who needs to read the book atlas shrugged when we can just live it first hand, world wide

Understanding may not be the problem. (4, Insightful)

Shavano (2541114) | more than 2 years ago | (#39398261)

Major corporations would be FOR this sort of legislation. It prevents competitors from getting into your market.

Re:Understanding may not be the problem. (2)

ErikZ (55491) | more than 2 years ago | (#39398265)

Any established business, not just "Corporations".

Re:Understanding may not be the problem. (2)

Shavano (2541114) | more than 2 years ago | (#39398365)

Yes, but small established businesses may need investor funding to expand their operations and compete on a larger scale. They're getting screwed. Only the big boys who don't need outside funding benefit.

Re:Understanding may not be the problem. (0)

Anonymous Coward | more than 2 years ago | (#39399443)

Yep. Not just because of the static barrier to entry, but also because said corporations(or established businesses more correctly) have the political pull and knowledge to game the system and to get politicians to give them loopholes.

Hey everyone lets starve Indias economy! (0)

atari2600a (1892574) | more than 2 years ago | (#39398269)

We can start by implementing a 30% tax on business bootstrapping!

What an angel investor is. (4, Informative)

JoshuaZ (1134087) | more than 2 years ago | (#39398295)

Neither the summary nor TFA said what this term meant. For those who don't know, essentially an angel investor is someone who invests their own money in a start-up or very young company in return for weak control of a part of the company.

Sounds like a scam to me (0)

Anonymous Coward | more than 2 years ago | (#39399175)

Then again, some of the biggest companies started that way. But in today's scam driven stock market, I would not trust this kind of program without it showing actual / real success.

Re:What an angel investor is. (1)

cold fjord (826450) | more than 2 years ago | (#39399235)

Guy Kawasaki on Angel Investors [inc.com]

Who exactly are angel investors, and how do I know if they are an appropriate funding source for my company?

Guy Kawasaki's response:

Broadly defined, angel investors are high net-worth individuals who invest in entrepreneurial companies, usually at an early stage. Like institutional venture capital firms, many angel investors provide cash to young companies and take equity in return. One difference is that angel investors typically invest smaller amounts of money in individual companies than venture capitalists do, making them a possible resource for companies that have exhausted their "friends and family" financing options but are not ready to approach VCs for capital

India's Recent History (1, Interesting)

Anonymous Coward | more than 2 years ago | (#39398321)

After achieving independence, India tried to be a socialist state with a planned economy. Lots of their leadership was not merely socialist but Marxist. The planned socialist economy failed to improve life for nearly everyone there, but there are still lots of people in power who disapprove of capitalism and especially entrepreneurship. I think you'll find many in government who very much want to believe that the Angel Investors are in that top of that top 1% that deserves to be separated from their money and that they can easily afford a "mere 30%" tax. No matter that it will go to line the pockets of the bureaucrats rather than lift poor out of their poverty, something that India's economic "planners" have been unable to do since independence.

Re:India's Recent History (1)

Anonymous Coward | more than 2 years ago | (#39398413)

A lot of India's problems since independence has been caused by corrupt politicians. This looks like another opportunity to collect a bribe.

Re:India's Recent History (1)

Anonymous Coward | more than 2 years ago | (#39400197)

India's current finance minister - Pranab Mukherjee - who presented this budget - was a finance minister for several years during the 80s. Unlike prime minister Manmohan Singh, there is no evidence that he had ever converted his socialist views. So it's not surprising that such a hairbrained scheme should have come from him.

Doomsday scenario or ..... (1)

slowLearner (2498468) | more than 2 years ago | (#39398333)

everyone will carry on investing like they did before and pay tax on their investments. It may cause some people to be more selective about who/what they invest in but I figure with a growth market like India things will carry on, innovators will still innovate and investors will still find ways to pay little or no tax.

Re:Doomsday scenario or ..... (2)

alexander_686 (957440) | more than 2 years ago | (#39398387)

For high risk, high return start ups, like tech, maybe not.

But it will dent the low risk, low return start ups. Got a nice little business that you want to start up, like a corner shop. Expecting 5 to 15% returns per year? All of a sudden you have pushed the break even point for the investor 5 years out into the future. piss poor returns here.

Re:Doomsday scenario or ..... (1)

biodata (1981610) | more than 2 years ago | (#39398621)

If it's low risk, low return, you don't really need angels and they won't be interested in you. Try your bank manager.

Re:Doomsday scenario or ..... (2)

dbc (135354) | more than 2 years ago | (#39398529)

I see you are posting under the handle "slowLearner". Why, yes, I'd say you are.

Re:Doomsday scenario or ..... (1)

slowLearner (2498468) | more than 2 years ago | (#39398929)

oooooooooooo! why did I not see that one coming! (SLAPS HEAD).

My point is that when new taxes are announced business leaders ALWAYS claim that it is the end of the world as we know it. I have never seen any other reaction. DOOM followed by GLOOM followed by the END OF THE WORLD AS WE KNOW IT!
Sometimes they get their way, sometimes they don't, but I have never seen the collapse of all things.
Things change, laws change, taxes change all the time. Business and in particular Angel investors will still invest because that is how they make money. They won't suddenly stop investing in India because of the imposition of a tax on investment, but they sure as hell will say that they will in order to try to influence the government to change it's policy.
IF this change takes place and Angel investor stop throwing money around then come back and I we can talk then. I think that if investors see an new opportunities growing in India they will be off like a ferret down a drainpipe, because at the end of the day that is what they do, they use money to make money and as long as they get their returns they don't care.

Re:Doomsday scenario or ..... (1)

dbc (135354) | more than 2 years ago | (#39399029)

Everything interesting happens on the margin. India just moved the margin 30% further out. Angels can invest anywhere. Now India is going to be getting less of it. To argue otherwise is complete nonsense. I can not be as sanguine as you. Like it or not, there is global competition for investment. If this passes, India will have put up a "please invest elsewhere" sign in their front lawn.

I suggest you retake economics. Any economist, left-leaning or right-leaning, will tell you that is how the model works. You get less of what you tax. What they argue about is whether or not you are better off, on balance, with less of that thing you are taxing. It *is* going to matter, despite your wishful thinking. Will it totally kill investment? No, but it most definitely will reduce it, drive it underground, or drive more members of their entrepreneurial class to other countries.

Re:Doomsday scenario or ..... (1)

slowLearner (2498468) | more than 2 years ago | (#39399297)

I don't think I actually said anything in my post that does not fit with what you have written above, aside from that I am not particularly sanguine, i just understand that business will squeal and holler like a stuck pig when it sees the bottom line being affected. I mainly turn down the volume of the hyperbole in my head from 11 to something a bit more reasonable.
You are right, tax more get less of something, I agree. But you also agree have to agree that investment will not stop. It may be at a reduced level but it will continue.
But I notice that you you also said "drive it (investment) underground", what you failed to mention is that business will evolve and investment opportunities will change.
I think what we are seeing a small group of extremely wealthy individuals tantrum because the rules got changed.
Are we going to see the death of investment in India? No
Are we going to see some changes in how investments are made and who invests there? Maybe.
Will the Indian government raise more taxes from the increasing disproportionately wealthy upper class? Probably not.
in the end there will be loop holes and there will be exemptions and things will go on!
They always do!

That is the point I was making.

Re:Doomsday scenario or ..... (1)

gl4ss (559668) | more than 2 years ago | (#39401283)

if it's just slapped on everyone, then it would affect farmers as well.

borrowing seeds would then have 30% added interest rate. fun?

Re:Doomsday scenario or ..... (1)

slowLearner (2498468) | more than 2 years ago | (#39401325)

Read this comment, it's not mine but should be modded up
http://slashdot.org/comments.pl?sid=2732783&cid=39400829 [slashdot.org]
As I have said it is hyperbole, it is not real, it is a fiction to say that the investment will be taxed at 30% and you are falling for it.

Re:Doomsday scenario or ..... (1)

phantomfive (622387) | more than 2 years ago | (#39400653)

Uh, you know that tax changes actually do have real world consequences, right? Just because you haven't paid attention, doesn't mean there isn't any effect.

It should be intuitively obvious....if you increase the cost of something, fewer people will be interested in it. Adding a tax onto something increases the cost. If you want to decrease activity, put a tax on it.

Increasing taxes on investing decreases investment. People are going to change their investment strategies.....instead of investing in cool new products, they will invest in giving cheap, high-interest loans to poor people. Don't believe it happens? Look at America.

Re:Doomsday scenario or ..... (1)

slowLearner (2498468) | more than 2 years ago | (#39401255)

Why do you assume that I haven't paid attention? Do you really think that the continuation of the Bush tax break in the USA to the already rich did anything but make them richer? If you do then you will probably never reach the end of this next few lines, cause you will be a denier.
Wealth tends to pool at the top, it doesn't tend to trickle down. It doesn't tend to distribute. Wealth attracts more wealth. If you want a fast way to get money into an economy you give it to poor people who have a hundred different things that they HAVE to spend it on. That money gets to work straight away by buying something, usually physical item or service, a bill or some food or a TV or some electricity or some rent. This contributes to the wider society straight away.
When the rich people get more money they save it or invest it, and by invest I mean that they buy things that will make THEM richer, they don't invest in the community they invest in themselves.
The odd philanthropist will buck the trend and invest in some good projects and will be held up as a poster child to show that the system works and that this is how the system is supposed to work and if only those damn lefties with their taxes would shut up everything would be fine.
What is the premiss of this whole argument? That I am supposed to give a rats ass that some multi-millionaire cannot build upon their wealth in India because they have to pay tax?
Angels can make 20 to 30 times there investment back from the initial loan (I admit that the average number is smaller than that but Angels don't play for average) even if the number is closer to the 2-3 times their investment, think of those numbers for a while and see if you think there should be some sort of Taxation involved.
In the poor places that sort of return on investment is usually only available to Loan Sharks and drug dealers.
So at the end if you could be bothered to read all of this and I haven't been modded out of existence they will still invest, because if they don't their pile of cash can only get smaller, even if they have to pay some tax, a little tax, they will still invest. They will still invest in India and China and USA and the UK and the Ukraine and any place that they can make money.
As I have said before it is what they do, it will not change!

Investment (0)

Anonymous Coward | more than 2 years ago | (#39398355)

So the dude procuring these investments doesn't get anything in return? Tax that shit.

India is Not immune to the problems of the west (0)

Anonymous Coward | more than 2 years ago | (#39398653)

Indian Government is in trouble they are raising taxes across the board so much for the Bric's .....
http://www.bloomberg.com/news/2012-03-16/india-raises-gold-import-tax-for-second-time-prices-drop-1-.html
they have figured out that they also have a problem.....

No problem (0)

frovingslosh (582462) | more than 2 years ago | (#39399193)

India wants to impose a 30% tax on these charity investments. We should just read that as they don't want us trying to help anyone in India and butt out of that country's affairs. They will likely consider any form of charity in similar ways, so just to be safe, avoid any form of charity that might go to India.

Hah! What Has Indian Invented? (0)

curmudgeon99 (1040054) | more than 2 years ago | (#39399353)

This is rich. They're going to tax Indian entrepreneurs. So, who? What has India invented? The last thing they invented was Sanscrit. The rest has been derivative.
But I will say the only impact this law will have is making sure it stays that way. To a person who lives in the United States, this is comical. "Don't interfere with your enemy when he's committing suicide."

Who cares if it's borrowing or income... (1)

joshamania (32599) | more than 2 years ago | (#39399719)

What it really is is an investment killer. And here I was thinking Illinois has an awful business climate.

Re:Who cares if it's borrowing or income... (1)

phantomfive (622387) | more than 2 years ago | (#39400673)

What it really is is an investment killer.

IF you ever write a sentence with 'is' twice in a row, please think twice about it, for the love of English!

Re:Who cares if it's borrowing or income... (0)

Anonymous Coward | more than 2 years ago | (#39401223)

Why would anybody love English? English is a fucking slut. Takes on french, german, and scandinavian.. sometimes all in the same sentence!

Sagara (0)

Anonymous Coward | more than 2 years ago | (#39400205)

Switch to your neighbour Sri Lanka. Sri Lanka charges only 0.005%. That is, Rs. 5/- for every Rs. 1000/- invest.

You know (0)

Anonymous Coward | more than 2 years ago | (#39400421)

all the "experts" commenting on how bad it this decision should remind themselves that the decision was arrived by the elected representatives of people of India. This is far far better than some over zealous nitwit in IRS deciding or "interpreting" Tax laws. Lets talk about AMT and then come back to stuff that might hurt [bm]illionaires, shall we?

pc solid sheet (1)

hateu (2598389) | more than 2 years ago | (#39400815)

pc solid sheet [ytfoam.com]

Reading the article helps (3, Informative)

Coeurderoy (717228) | more than 2 years ago | (#39400829)

The budget proposal is much more complex and interesting as it seems.
First it apparently it applies only on money invested by residents, so it would not slow down any foreign investments (although there might be other mecanism impacting this).
Second the 30% tax is not on the investment, but on any money paid for share over the fair market value.

So in short, if I create a company investing 10 K, make some business and show that realistically the company is worth 20 K, and then go to Mr MoneyBag and offers him to invest 20K for 50% of the share, I and hil pay nothing.
If I ask 15K and invest 10K in the capital keep 5K for me and give 50% of the company to Mr MoneyBag (effectivelly selling 5K of shares), I pay nothing.
Now If I ask 20K but make it prudently in two time, 15K "tax free" and then 5K tax "heavy" I would pay 1.5 K in taxes, to be compared to
using the 5K to pay me a salary that would be impacted by taxes and various social costs.

So the real issue will be on "how to evaluate the fair market share of a closely held company" and it's impact on "petty corruption", but the law is rather reasonable, and it encourage entrepreneurs to leave money in their company until it really "runs" rather than cash out at the earliest opportunity.

they have a newspaper called FirstPost in India? (0)

Anonymous Coward | more than 2 years ago | (#39401571)

lolwat

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