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The Indian Private Equity & Venture Capital Association (IVCA) has called for GST exemption on the management fees of private equity funds.
Currently, fund management fees in the case of private equity funds are subjected to 18 per cent Goods and Service Tax (GST).
“We have made a written representation to the GST Council that the 18 per cent GST on fund management fees should be done away with,” Rajat Tandon, President, IVCA, told BusinessLine here. The GST Council is expected to next meet on July 19.
Tandon pointed out that India-based fund managers are disadvantaged vis-à-vis those based abroad and managing India-focussed private equity funds.
“Foreign fund managers will hesitate to locate themselves in India because of the 18 per cent GST on fund management fees,” he said.
Management fees for private equity funds range from 1-2 per cent a year.
LP training programme
Meanwhile, IVCA plans to organise a Limited Partners Training Programme at Mumbai on September 6-7.
“This is the first time IVCA is organising a LP Training Programme specially designed for chief investment officers and top decision-makers of institutions/organisations that are deemed to be potential limited partners (banks, insurance companies, family offices, wealth management advisors, multi-family offices, etc),” he said.
The objective of the programme is to educate investment decision-makers on higher capital allocations, educate LPs and potential LPs on their rights as an investor, enable domestic pension funds and insurance companies to increase allocation in AIFs, and increase the flow of long-term capital from both domestic and international investors in AIFs.
PE flows
Tandon said that private equity flows continue to be robust in the Indian market, maintaining the momentum seen in calendar year 2017.
In fact, 2017 was one of the best years for PE and VC activity in India with flows to the tune of $26.4 billion, much higher than the $16 billion level seen in the previous calendar year.
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