Wishing you a happy Republic Day from everyone at Inc42! ____________________________________________________________________________________________ Budget 2026: Startup Tax Clarity? Indian startups are entering the budget season in a tougher new normal. Capital is tighter, scrutiny is higher, and policy frictions are the norm. Amid this, founders want clarity on two major pain points – Angel Tax legacy cases and ESOP taxation. Will Budget 2026 finally clean up this mess? The Ghost Of Angel Tax: The Centre abolished Angel Tax for startups in July 2024, but many founders say the rollback didn’t resolve past demand notices and penalties. Investors argue that these unresolved liabilities get priced into funding deals or trigger indemnity demands that founders can’t cover. This is especially grim for early stage startups, where one tax shock can consume the entire fund raise. The ESOP Tax Trap: On the other hand, Indian regulators often tax ESOP gains twice – first at exercise and again at sale. This creates a cash-flow crunch as IPO timelines stretch, making liquidity less predictable. Add the ESOP restriction for the promoters of IPO-bound companies, and you have a cocktail that can distort employee incentives, invite scrutiny, and weaken alignment right before the listing. What’s The Resolve? Founders… Read MoreInc42 Media
