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In recent years, Indian investors—particularly high-net-worth individuals—have increasingly sought tailored, high-conviction strategies beyond traditional avenues like real estate, mutual funds and fixed deposits.
As a result, Portfolio Management Services (PMS) have emerged as a premier investment solution. PMS provides enhanced customization, flexibility, and direct ownership of securities to effectively meet evolving financial objectives.
This transition focuses on aligning your investments with your specific financial goals, risk appetite, and tax efficiency, rather than solely seeking higher returns.
This document covers
💡 Tip: PMS taxation can get complex quickly. Use EZTax to simplify capital gains calculation and ITR filing.
Portfolio Management Services (PMS) follow a structured process to manage an individual’s investments in a personalized manner
This structure ensures full transparency, control, and alignment with investor-specific goals.
| S.No | Factor | Benefit | Limitation |
|---|---|---|---|
| 1 | Personalization | Portfolio is customized to individual's goals, risk and other preferences | Requires clarity on the investor financial objectives |
| 2 | Diversification | Investment is done across various asset classes and sectors to manage risk | Fewer investments compared to mutual funds, so risk is higher |
| 3 | Management | Managed by Professional and experienced portfolio managers | Heavy dependence on portfolio manager skills and decisions |
| 4 | Cost | Management and performance fees | Overall cost can be significantly higher than mutual funds |
| 5 | Flexibility | Portfolio can be actively adjusted based on market conditions | Frequent changes can increase risk and costs |
| 6 | Control & Transparency | Direct visibility of each stock in your portfolio | May lead to overreaction to short-term market movements |
| 7 | Return Strategy | Focused, high-conviction bets can outperform markets | Higher downside if key investments underperform |
| 8 | Tax Efficiency | Portfolio manager considers tax impact while making investment decisions, helping improve post-tax returns | Taxes are applied directly to the investor, and frequent buying/selling can increase tax liability |
| 9 | Liquidity | Easy exit compared to locked investments | Exit timing may impact returns |
Investing in Portfolio Management Services (PMS) involves various fees and expenses. PMS follows a flexible but relatively complex fee structure, which can significantly impact net returns if not evaluated carefully.
💡 NOTE: Investors should always evaluate post-fee returns, not just gross performance.
Below are the top 7 PMS providers in India
Apart from the above, several large financial institutions and banks also offer PMS services through their wealth divisions. They are ICICI Prudential Asset Management company, Axis Asset Management company, Kotak Mahindra Asset Management Company, Aditya Birla Sun Life Asset Management Company, HDFC Asset Management Company etc
🧭 The criteria for listing the top 7 based on EZTax experience with the its clientele over the past decade, publicly available information, and general industry presence. This is not a recommendation.
PMS taxation depends on the type of underlying investment (equity, debt, etc.), not the PMS structure itself.
All gains in PMS are taxed in the hands of the investor. The taxability of different types of investments in PMS are as follows
| Type of Income | Holding Period | Rate of Tax |
|---|---|---|
| Short Term Capital Gain - Equity | Less than 12 months | 20% w.e.f 23rd July 2024 (15% until 22nd July 2024) |
| Long Term Capital Gain - Equity | More than 12 months | 12.5% w.e.f 23rd July 2024 (10% until 22nd July 2024) |
| Short Term Capital Gain - Other than Equity | Less than 24 months | As per slab rates |
| Long Term Capital Gain - Other than Equity | More than 24 months | 12.5% w.e.f 23rd July 2024 (20% until 22nd July 2024) |
NOTE: Frequent buying and selling by PMS managers can result in higher short-term capital gains taxation, impacting net returns.
EZTax helps you automatically:
You can use our expert services or DIY self-service portal
Yes, Non-Resident Indians (NRIs) can invest in Portfolio Management Services (PMS) in India, subject to regulatory guidelines under FEMA and SEBI.
PIS account allows NRI to buy and sell shares, debentures of Indian companies recognized on Indian Stock Exchange. PIS accounts are allowed in specified branches as per FEMA
Since PMS transactions involve multiple buy and sell transactions throughout the year, calculating capital gains, tracking holding periods, and ensuring accurate tax reporting can become complex for investors. Using reliable tax filing and computation platforms like EZTax can help simplify this process by automatically consolidating transactions, computing capital gains, and assisting with accurate income tax return filing.
Disclaimer: This article provides an overview and general guidance, not exhaustive for brevity. Please refer Income Tax Act, GST Act, Companies Act and other tax compliance acts, Rules, and Notifications for details.