Glossary
Qualified Investor (India)
An investor meeting SEBI-defined net worth or income thresholds — required for angel tax exemption on share premium under Section 56(2)(viib).
By Amit Tyagi, Fitoor Capital · AletheiaAI Glossary
Definition
Qualified Investor (or 'accredited investor' in US terminology) is an investor meeting specific net worth or income thresholds, typically ₹2Cr+ net worth or ₹50L+ annual income for the past 3 years.
In Indian startup context, qualified investor status matters for Section 56(2)(viib) (angel tax) exemption — startups raising from qualified investors at high valuations don't face fair-market-value challenges from tax authorities.
India Context
Verification of qualified investor status happens at investment time via investor self-declaration. SEBI-registered AIFs are deemed qualified; individual angels self-certify under Form 56 (2)(viib). Improper certification creates angel tax exposure for the startup.
Example
A startup raising at ₹30Cr valuation accepts investment from an angel certifying ₹3Cr net worth. The angel files Form 56(2)(viib) self-declaration. The startup includes the declaration in their tax filings as exemption justification. No angel tax exposure.
Frequently Asked Questions
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