An Alternative Investment Fund (AIF) body suggested that even AIFs should get a tax parity and clarity like Foreign Portfolio Investment (FPI), it said in a pre-Budget consultation meeting with the Finance Minister Nirmala Sitharaman on June 20.
The Indian Venture and Alternate Capital Association (IVCA) also suggested measures to encourage large domestic capital pools of insurance and pension funds to participate in the AIF industry to finance infrastructure, credit and start-ups.
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Here are the key suggestions from IVCA:
1)AIFs should get tax parity and clarity like FPIs so that tax litigation is minimized, which would lead to ease of doing business.
2)Expand the exemptions from angel tax in genuine situations.
3)There should be a clear definition of private equity. The definition should consider both direct investors and indirect investors.
4) Made suggestions which could incentivize global fund managers to set up in India versus in an overseas jurisdiction.
5)Requested a reconsideration of CCI's definition of control over companies by PE firms. The current view that a PE firm holds 'control' over companies due to minority stakes and board seats, information, and veto rights could lead to misconceptions about collusion. IVCA recommended that these rights are negative and defensive, intended to protect minority interests, and do not provide control to PE firms.
IVCA represents 45 percent of the overall AIFs in the country. Its members are the most active domestic and global VCs, PEs, funds for infrastructure, real estate, credit funds, family offices, and others.
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