The proposed Corporate Laws (Amendment) Bill, 2026 could provide Category III Alternative Investment Funds (AIFs) with a more tax-efficient operating framework by enabling their conversion from trusts to limited liability partnerships (LLPs). The proposed changes have the potential to reduce tax costs while addressing long-standing structural challenges faced by these funds.
Commenting on the proposed amendments, Partner Nandini Pathak said: “Category I and Category II AIFs set up as LLPs should continue to remain eligible to take advantage of the tax pass-through status accorded to such AIFs under the Income-tax Act, 2025, irrespective of these amendments. There is no separate tax recognition given to carried interest; it is a commercial construct which is not intended to interfere with the tax pass-through structure of such AIFs.”
Read the full story here: Corporate amendment bill likely to provide tax relief to Category III AIFs | Mint