The parity would meaningfully unlock Indian capital and significantly accelerate the fund flow to private credit AIFs.
FinTech BizNews Service
Mumbai, 31 January 2026: With the Union Budget 2026 around the corner, Vineet Sukumar, Founder and Managing Director of Vivriti Capital and Co-Chair of IVCA’s Credit and Special Situations Council, shares a few expectations from the budget:
“As private credit AIFs increasingly becoming a large stakeholder in India’s corporate bond markets, bringing tax parity for private credit vehicles and faster tax assessments are relevant asks in the Union Budget 2026. Currently, investors in credit AIFs are taxed on notional income, unlike debt mutual funds where taxation applies only at redemption. Correcting this anomaly and shifting to taxation on realized income would create a level playing field between debt mutual funds and AIFs and encourage deeper participation in private credit. There is also a strong case for harmonizing tax rates in Indian funds for domestic investors with those applicable to global investors, which are typically around 10% (for most western European economies). Such parity would meaningfully unlock Indian capital and significantly accelerate the fund flow to private credit AIFs. Additionally, faster and time-bound tax assessments for AIFs ideally 12 months from the date of close would reduce uncertainty for investors and fund managers alike, improve return efficiency, and enhance India’s attractiveness for global capital.”
