New Delhi, April 21 -- India's financial landscape offers a variety of collective investment schemes - mutual funds (MFs), unit linked insurance plans (ULIPs), real estate investment trusts (REITs), infrastructure investment trusts (InvITs), alternate investment funds (AIFs), and portfolio management schemes (PMS).

While all these vehicles pool investors' money for investment and are regulated by the Securities and Exchange Board of India (Sebi), they are governed by different sets of regulations - and taxed under strikingly different rules.

This fragmented approach has created opportunities for tax arbitrage, where investors can choose routes that offer more favourable tax outcomes for similar underlying investments.

While some of the...