Taxation in India is multi-layered. While the ‘pass-through’ status covers income tax, investors must also be aware of the Goods and Services Tax (GST). The management fee you pay to the AIF manager is considered a service and attracts GST, typically at 18%.
This is an additional cost that is deducted from your capital or NAV. While it may seem like a drag on returns, it is a standard regulatory cost of accessing professional management. Smart investors factor this 18% levy on fees into their net return calculations to avoid surprises.
