The recent Budget has established that income from the sale of securities by Category I and II alternative investment funds (AIFs) will be classified as capital gains instead of business income. This alignment with foreign portfolio investors (FPIs) aims to reduce litigation and provide tax clarity, with capital gains taxed at 12.5% compared to 25-35% for business income. The Budget also eliminated the ambiguous TCS provision affecting AIFs, easing compliance burdens. Additionally, a ₹10,000 crore fund will support deep tech startups, enhancing R&D and commercialization efforts in India.