Redemption of Units in AIF Category 3

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This discussion clarifies the tax treatment of gains from redeemed units in AIF Category 3. Income from these funds is generally tax-free for investors as the fund itself is liable for tax. When redeeming units, any amount received above your initial investment should be declared under exempted income in your Income Tax Return (ITR).

H Thakar

H Thakar (Querist)
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10 July 2024 Redemption of Units in AIF Cat 3. I have redeemed 2 AIF after holding them for period of 9 months & 16 months. How Gains on above redemptions will be treated & taxed???

Dhirajlal Rambhia

Dhirajlal Rambhia (Expert)
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10 July 2024 Income from Category III AIFs is tax-free at the investor’s level because these AIFs are not granted a pass-through status, meaning that the fund is responsible for paying the tax.

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H Thakar

H Thakar (Querist)
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10 July 2024 Understood. But what about amount received in excess of investment amount. Suppose invested Rs 1 Cr and at time of redemption received 1.25 Crs. I want to understood how 0.25 Crs will be accounted and in ITR whether to show above figure or not

Dhirajlal Rambhia

Dhirajlal Rambhia (Expert)
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10 July 2024 Declare it under Exempted income.

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H Thakar

H Thakar (Querist)
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10 July 2024 Thank you for the quick response

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Dhirajlal Rambhia

Dhirajlal Rambhia (Expert)
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10 July 2024 "Sorry, I am not a featured member."

For featured members contact....

https://www.caclubindia.com/catalogue/featured.asp

Dhirajlal Rambhia