In a way, startups in India are paying for what parliamentarian YS Jagan Mohan Reddy did in 2012. In Bengaluru alone, scores of startups have been slapped with notices from the Income Tax department over the last year. Most of them are around a certain Section 56 (2) (viib) of the Income Tax Act, 1961. Startup folks know this section as “Angel Tax” but the IT department officers have a more characteristic name for it.

They call it the Jagan Reddy Section.

The moniker is a hat-tip to the events that unfolded after pharma companies in Hyderabad were given land at throwaway prices by the YS Rajashekar Reddy government between 2006 and 2011.


Arundhati Ramanathan

Arundhati is Bengaluru-based. She is interested in how people use money in the digital age and how new economies will take shape based on that interaction. She has spent over 10 years reporting and writing on various subjects. Previous stints were at Mint, Outlook Business and Reuters.

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