Section 56 (2) (vii b) in the Income Tax Act is referred to as:
Show answer & explanation
Correct answer: B
Explanation
The correct answer is option 2 i.e. Angel Tax.
Angel Tax under Section 56(2)(vii)(b) is a tax levied on the excess money received by unlisted companies from investors during the issuance of shares, where the amount exceeds the fair market value of the shares. It aims to prevent companies from receiving investments as disguised income or black money. This provision taxes the excess amount as income, discouraging inflated valuations in startup funding rounds. Although initially a concern for startups, the government has since introduced exemptions and relaxations to encourage genuine investments and promote entrepreneurship in India.
Other Options:
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Normal Investments: Not related to this section.
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Normal Taxing: Generic term, not specific.
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Angel Fund: Refers to a type of investment fund, not a tax provision.