*The Three categories of Alternative Investment Funds (AIFs) in India are*

✳️ *Category I* AIFs that invest in sectors with high growth potential, such as start-ups, social ventures, small and medium-sized enterprises (SMEs), or infrastructure. These funds may receive tax pass-through benefits and other incentives or concessions from the government or other regulators.

✳️ *Category II* AIFs that invest in diversified stocks and bonds, or in unlisted companies in the mid or late stages of growth. These funds are often preferred by risk-averse investors.

✳️ *Category III* AIFs that use complex trading strategies to generate short-term profits, or that invest in shares of listed companies. These funds can be open-ended or close-ended, and may include hedge funds or funds that trade with a view to make short-term returns.

🔹 *How are AIFs taxed?*

AIFs are subject to a taxation framework that differs by category:

✅ *Category I and II AIFs*: Have pass-through status; income is tax-exempt at the fund level, with gains taxable in the hands of investors.

✅ *Category III AIFs*: Taxed at the fund level. Investors aren't taxed again on these gains.

*What is the minimum investment required for AIFs?*

The minimum investment in AIFs is typically Rs 1 crore. This higher threshold means AIFs are predominantly geared towards High-Net-Worth Individuals (HNIs) and institutions.

*Investments are subject to market risks, read all scheme related documents carefully before investing*