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Venture Capital Firm Setup in India: Trust vs LLP/LLC


17-Mar-2026 (In Corporate Law)
I am planning to start a Venture Capital firm in India and am deciding between a trust-based structure and an LLP/LLC structure. If I choose LLP/LLC, what challenges will I face and what is the tax structure? If I choose a trust-based VC, what legal procedures and compliances are required? Also, what are the advantages and disadvantages of both structures, and which is better for setting up a VC firm?
Answers (1)

Answer #1
851 votes
If you’re setting up a VC in India, LLP is easier to start but not ideal—tax is around 30% and investors usually don’t prefer it for fund structures. A trust-based structure (AIF) is more practical—it gives pass-through taxation and is what most VCs use, but it needs SEBI registration and ongoing compliance. In terms of pros/cons, LLP is simpler but restrictive; AIF is slightly complex but far more efficient for raising and managing funds. We handle VC structuring and compliances regularly. It's better to meet once and discuss your plan in detail.
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