What is Alternative Investment Funds?
Alternative Investment Funds (AIFs) are investment vehicles that pool funds from investors to invest in assets or strategies that differ from traditional investment options like stocks, bonds, or cash. AIFs can offer investors exposure to a wide range of alternative asset classes and investment strategies, providing diversification and potential returns not correlated with traditional markets.
1. Diversification:
AIFs provide Indian investors with access to a broader range of investment opportunities beyond traditional asset classes such as stocks and bonds. This diversification can help mitigate risks associated with market volatility and economic downturns.
2. Support for Start-ups and SMEs:
Category I AIFs, such as venture capital funds, play a crucial role in providing funding and support to start-ups and small and medium-sized enterprises (SMEs). By investing in these early-stage companies, AIFs contribute to job creation, innovation, and economic growth in India.
3. Infrastructure Development:
Infrastructure funds, a subset of Category I AIFs, invest in projects such as roads, bridges, power plants, and renewable energy facilities. These investments help address India’s infrastructure deficit, promote sustainable development, and stimulate economic activity across various sectors.
4. Real Estate Investment:
AIFs focused on real estate investments enable investors to participate in India’s property market without directly owning physical properties. Real estate funds can offer diversification, professional management, and liquidity benefits to investors seeking exposure to the Indian real estate sector.
5. Risk Management:
AIFs in India, particularly Category II and Category III funds, offer sophisticated investment strategies and risk management techniques. These funds may use derivatives, hedge positions, and other complex instruments to manage risks and enhance returns for investors.
6. Professional Management:
AIFs in India are managed by experienced fund managers with specialized expertise in alternative asset classes and investment strategies. Professional management helps investors navigate complex markets, identify attractive opportunities, and achieve their investment objectives.
7. Regulatory Framework:
The Securities and Exchange Board of India (SEBI) regulates AIFs in India, providing investors with certain protections and ensuring transparency, accountability, and compliance with regulatory requirements. The regulatory framework enhances investor confidence and promotes the growth and stability of the AIF industry in India.
WHY ASHUTOSH FINANCIAL SERVICES?
Ashutosh Financial Services is a 20+ years old company that has been assisting individuals and companies in various aspects like Financial, Insurance, Income Tax Planning, etc. At Ashutosh Financial Services we always put the investors’ interests first and do our best to ensure that investors’ objectives are achieved in a timely manner. We strive to make every Indian financially literate and independent.
We at Ashutosh Financial Services put maximum importance on understanding your Investment objectives and creating a customized investment plan to ensure the complete achievement of your investment goals. We pride ourselves to be the best goal-based planners. Post Investment, we keep regular track of all your investments to ensure the complete achievement of your investment objectives.
Through our years of experience, we at Ashutosh Financial Services have created a process through which we aim to provide you with the best investment-related services and ensure that you have a hassle-free experience. We have a team of well-qualified and experienced members that are more than enough capable to assist you regarding all your investment matters.
Understanding
AIF
The first and foremost step would be to inform you about all the significant details of investing in a Alternative Investment Funds. We will also discuss about all the regulatory formalities and documentation that you will have to adhere to. We will also inform you about the tax implications of investing in Alternative Investment Fund. We also collect the necessary information regarding your financial position, and your goals to help us better in selecting a AIF scheme for you.
Risk
Assessment
One of the most important tasks is assessing the risk you should take to achieve your goals. Based on the data collected by us in the preliminary meeting, we use our preset strategies to determine the optimum level of risk you should ideally take. Risk Assessment helps in selecting the right AIF scheme for your objectives.
Research
&
Analysis
We, at Ashutosh Financial Services, take immense pride in being one of the very few companies in this field to have our own Research & Analysis Department. Once your goals and risks are ascertained, our research team will look at all the available Alternative Investment Fund and determine the best scheme that will suit your future goals. The Research Team will look at the past performance of the scheme, the portfolio manager’s style of investing, the stock selection in the scheme, etc.
Investment
Process
We will then approach you again with all the necessary documents. Along with the documents, you will also be given data about the past performance of the scheme, the factsheets, and other relevant materials.
After
Investment
Process
Once the investment process is concluded you will be provided with a dedicated relationship manager, who shall be available at all times to solve any queries. Apart from this we at Ashutosh Financial Services also do a periodical review of your investment to ensure that all your goals are being met consistently. We shall also contact you if there is a need to change any of your investments to achieve your goals after our periodic review.
Our aim is to become your one-stop solution for your financial needs. Through our expert and qualified team, we try to give you the best advice regarding your investments. We also keep ourselves updated with all the activities happening in the world of finance. We aim to provide you with quality & unbiased services to secure your goals and future needs. We at Ashutosh Financial Services, are committed to continuously providing financial services to our investors to the best of our ability.
ALTERNATIVE INVESTMENT FUNDS (AIF)
1. Alternative Investment funds (AIF): Category I & Category II:
- Category I shall invest in startups, early stage ventures, Social Venture Funds, SME Funds, Social Impact Funds, Infrastructure Funds, Special situation funds, and such other Alternative Investment funds, etc.
- Category II shall invest in Private Equity funds, Debt funds and Fund of Funds.
- Pass through status has been granted.
- Income other than Business Income is taxable in the hands of Investor.
- Business Income is taxed at AIF level.
- Any Business loss incurred on investments is carried forward and set-off with Business income in the following year.
Taxation of Category I and II Alternative Investment Funds
| Type of Investment | Type of Gain | Tax Rate for Resident |
|---|---|---|
| 1) Listed Shares | STCG | 15% (Section 111A) |
| - | LTCG | After exemption of Rs. 1 lakh taxed at 10% (Section 112A) (without indexation) |
| Type of Investment | Type of Gain | Tax Rate for Resident |
|---|---|---|
| 2) Unlisted Shares | STCG | As per Tax Slab |
| - | LTCG | 20% (with indexation) |
| Type of Investment | Type of Gain | Tax Rate for Resident |
|---|---|---|
| 3) Listed Non-Convertible Debentures | STCG | As per Tax Slab |
| - | LTCG | 10% (with indexation) |
| Type of Investment | Type of Gain | Tax Rate for Resident |
|---|---|---|
| 4) Unlisted Non-Convertible Debentures | STCG | As per Tax Slab |
| - | LTCG | 20% (with indexation) |
| Type of Investment | Type of Gain | Tax Rate for Resident |
|---|---|---|
| 5) Market Linked Debentures | STCG | As per Tax Slab |
| 6) (Section 50AA) | LTCG | As per Tax Slab |
| Type of Investment | Type of Gain | Tax Rate for Resident |
|---|---|---|
| 7) Other types of Income from Investments | Dividend Income / Interest Income | As per Tax Slab |
| - | Business Income | Taxed at Maximum Marginal rate (MMR) = basic tax (30%) + surcharge (25%) + education cess (4%) = 39% |
2. Alternative Investment funds (AIF): Category III
- Category III AIF are those which are registered as Category III AIFs.
- No pass-through status granted to Category III AIFs.
Thus, Income from Category III is taxed at AIF level and is exempt in the hands of the Investor.
Taxation of Category III Alternative Investment Funds
| Type of Investment | Type of Gain | Tax Rate for Resident |
|---|---|---|
| 1) Listed Shares | STCG | Taxed at Maximum Marginal rate (MMR) = basic tax (15%) + surcharge (15%) + education cess (4%) = 17.94% |
| - | LTCG | Taxed at Maximum Marginal rate (MMR) = basic tax (10%) + surcharge (15%) + education cess (4%) = 11.96% |
| Type of Investment | Type of Gain | Tax Rate for Resident |
|---|---|---|
| 2) Unlisted Shares and Other than equity-Oriented Fund | STCG | Taxed at Maximum Marginal rate (MMR) = basic tax (30%) + surcharge (25%) + education cess (4%) = 39% |
| - | LTCG | Taxed at Maximum Marginal rate (MMR) = basic tax (20%) + surcharge (15%) + education cess (4%) = 23.92% |
| Type of Investment | Type of Gain | Tax Rate for Resident |
|---|---|---|
| 3) Specified mutual funds (Section 50AA) | STCG | Taxed at Maximum Marginal rate (MMR) = basic tax (30%) + surcharge (25%) + education cess (4%) = 39% |
| Type of Investment | Type of Gain | Tax Rate for Resident |
|---|---|---|
| 4) Other types of Income from Investments | Business Income / Interest Income | Taxed at Maximum Marginal rate (MMR) = basic tax (30%) + surcharge (25%) + education cess (4%) = 39% |
| - | Dividend Income | Taxed at Maximum Marginal rate (MMR) = basic tax (30%) + surcharge (15%) + education cess (4%) = 35.88% |
