The new valuation methods proposed by the income tax department for computation of fair market value (FMV) for angel tax is expected to provide flexibility to investors. Experts, however, said implementation would be the key to these measures as valuation can often be subjective and called for some more leeway for investments into domestic startups through compulsorily convertible preference shares (CCPS).

The Central Board of Direct Taxes (CBDT) had on May 26 invited comments on the draft rules relating to the method of computation of FMV of unquoted equity shares for the purpose of angel tax. It has sought comments from the public by June 5.