The SEBI (Alternative Investment Funds) Regulations 2012 define three categories: Category I (startup, SME, social venture, infrastructure funds — funds that invest in the 'socially desirable' sectors), Category II (private equity, debt funds, and other funds not in Cat I or III), and Category III (hedge funds, which can trade and take leverage). The selector maps your strategy to the right category.

A Category I or II AIF must maintain a minimum corpus of ₹20 crore and each investor must commit a minimum of ₹1 crore, per the SEBI (AIF) Regulations 2012. Angel funds enjoy a lower framework: a minimum corpus of ₹5 crore and a minimum ticket of ₹25 lakh per investor. The selector enforces these thresholds before you commit to a structure.

Category III domestic funds are generally not pass-through — fund-level tax can arise, creating complexity — unlike Category I and II funds, which are pass-through entities whose income is taxed in the hands of investors under s.10(23FBA) and the trust provisions of the Income-tax Act 1961. The selector warns on Category III so a fund isn't surprised by a fund-level tax bill.

No — Category I and II AIFs cannot borrow or use leverage except for temporary funding of up to 30 days, per the SEBI (AIF) Regulations 2012, while Category III AIFs may borrow up to the limits in the regulations. If your strategy needs leverage, you're structurally a Category III fund, and the selector reflects that constraint.

The fund must be registered with SEBI under Regulation 3 of the SEBI (AIF) Regulations 2012, set up as a trust, company, LLP, or body corporate, with a SEBI-registered investment manager — and the private placement memorandum must be filed with SEBI. The selector handles the category choice; the PPM, leverage limits, and investor-class conditions need professional drafting before registration.