New Delhi, April 14 -- Category III AIF, which was established as an investment category in 2012, continues to be entangled in a maze of tax issues.

Even though the category is the second largest among the alternate investment fund (AIF) categories, with Rs.1.29 trillion worth of investor funds raised so far, the tax rules are not clear.

"Unlike other investment products, which clearly fall under a specified tax regime, the category III AIF does not have a well-defined tax framework yet. These AIFs are mostly set up as trusts and therefore get taxed under trust rules," explained Tushar Sachade, partner at Price Waterhouse & Co. LLP.

Here is a look at some of these tax issues and issues that already affect investors' post-tax returns du...