Private Credit AIF Taxation for Individuals

Many private-credit strategies operate through Category II AIFs, where specified income may pass through to investors while business income is treated differently. The investor’s statement, Form 64B information and current tax law determine reporting—not the marketing label ‘post-tax yield’.

Interest, capital gains and business income can have different treatment.

Withholding or advance-tax cash flows may not equal final tax liability.

Resident, non-resident and entity investors can face different compliance.

A target net return may assume a tax rate that does not match the investor.

Income may be reportable even if cash distribution timing differs.

Tax rules and forms can change.

Before acting, answer five questions in writing: ask for a sample tax statement; identify expected income heads; model surcharge and cess where relevant; coordinate form 64b/pti reporting with the tax return; and obtain current professional advice.

Evaluate credit returns on an investor-specific, post-tax basis—never a generic tax assumption.