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Category III AIFs may turn to GIFT to move past surcharge hurdle

Category III AIFs registered as FPIs in GIFT will still have to pay tax at 30 per cent on derivatives gains

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Ashley Coutinho Mumbai
A section of alternative investment funds (AIFs) that primarily target foreign investors may toy with the idea of registering anew in Gujarat’s tax-friendly zone to avoid paying higher surcharge.

Category III funds, specifically long-short funds that do derivatives trades and earn income under the head 'business income', remain impacted by the higher surcharge introduced in the Union Budget. Such funds will see an increase in tax rate to 42.7 per cent, from 35.9 per cent, if income earned exceeds Rs 5 crore.
 
“The current tax regime makes it unattractive to run long-short AIF strategies in the onshore market,

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First Published: Aug 29 2019 | 7:30 PM IST

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