Debt AIFs ready for a big leap with the new lease of life from regulators

SEBI’s regulatory changes aim to bring transparency to the Alternative Investment Fund (AIF) industry and instill confidence in both fund managers and investors. A key change allows investor participation in AIFs via a direct plan, which avoids upfront payment of distributor commission and lowers costs for investors. Mandatory dematerialisation of AIF units aims to ensure transferability and liquidity. The Finance Act 2023 brings tax parity across all debt products, making incremental investment in debt MFs post-April 1, 2023, subject to long-term capital gains tax. With indexation benefits no longer available, high-performing credit AIF strategies offer high-yielding returns to investors.