The Securities and Exchange Board of India (SEBI) has passed new tax rules that would provide a big boost to India's hedge fund sector. SEBI has recommended "unit-based taxation" for products classified as hedge funds, according to Bloomberg. The rule change would make hedge fund investors eligible for exemptions on capital gains, reducing both the administrative and payment burdens these funds currently work under. The rule change, hedge funds say, would bring them on par with the mutual fund industry in terms of how they are being regulated. 

Till date a tax of about a third of income from hedge fund investments - versus no levy for mutual fund picks held for at least a year - kept India's hedge fund industry extremely small compared to the overall investment economy. Under the rules SEBI is looking to change, a return of 20% from the fund amounted to less than 12% after the taxes and fees were paid out. Hedge funds are a recent play in India, with regulators allowing these funds only since 2012.