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AIFs explore limited liability partnerships to bypass high taxes

Dolat Capital has been the first off the block in setting up such a structure for its Category-III fund

funds, AIF, LLP, taxes, taxation, tax, firms, companies, company, savings, investment

The LLP structure comes with its own restrictions. These include curbs on non-banking financial companies investing in them | Illustration: Binay Sinha

Ashley Coutinho Mumbai
Alternative investment funds (AIFs) may be looking to set up in the form of a limited liability partnership (LLP) instead of a trust structure, given the favourable tax treatment to the former.

The business income earned by the funds constituted as LLPs will be taxed at the fund level at applicable tax rates of 34.94 per cent, against 42.74 per cent that is otherwise applicable to a trust (taking into consideration the highest income bracket).

Further, any distributions made to the investors/partners out of the tax-paid income will be exempt in the hands of investors/partners.

Dolat Capital has been the first off the

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First Published: Oct 30 2020 | 12:54 AM IST

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