Complete Guide to Portfolio Management Services in India

Portfolio Management Services account is an investment portfolio in Stocks, Debt, and fixed income products managed by a professional plutocrat director, that can potentially be acclimatized to meet specific investment objects. When you invest in PMS, you enjoy individual securities unlike a collective fund investor, who owns units of the entire fund. You have the freedom and inflexibility to knitter your portfolio to address particular preferences and fiscal pretensions. Although portfolio directors may oversee hundreds of portfolios, your account may be unique. As per SEBI guidelines, only those realities who are registered with SEBI for furnishing PMS services can offer PMS to guests. There’s no separate instrument needed for dealing any PMS product. So this is a case where mis- selling can be. As per the SEBI guidelines, the minimal investment needed to open a PMS account isRs. 5 Lacs. still, different providers have different minimal balance conditions for different products. For Eg Birla, AMC PMS is having min quantum demand ofRs. 50 lacs for a product. also, HSBC AMC is having a minimal demand of 50 lacs for their PMS and Reliance is having min demand ofRs. 1 Crore. In India, Portfolio Management Services are also handed by equity broking enterprises & wealth operation services.

types of Portfolio Management Services

optional PMS India
Where the investment is at the discretion of the fund director & the customer has no intervention in the investment process.

Non-Discretionary PMS
Under this service, the portfolio director only suggests investment ideas. The choice, as well as the timings of the investment opinions, rest solely with the investor. still, the prosecution of the trade is done by the portfolio director. The customer may give a negative list of stocks in a optional PMS at the time of opening his account and the Fund Manager would insure that those stocks aren’t bought in his portfolio. The maturity of PMS providers in India offer Discretionary Services.

How can investors invest in Portfolio Management Services?

There are two ways in which an investor can invest in Portfolio Management Services

  1. Through Cheque payment
  2. Through transferring being shares held by the client to the PMS account. The Value of the portfolio transferred should be above the minimal investment criteria.

Besides this client will need to subscribe a many documents like – PMS agreement with the provider, Power of Attorney agreement, New Demat account opening format( indeed if the investor has a Demat account he’s needed to open a new bone
), and documents like visage, address evidence and Identity attestations are obligatory. NRIs can invest in a PMS. The NRI needs to open a PIS account for investing in PMS. The attestation needed for an NRI, still, is different from a resident Indian. A roster of documents is handed by each PMS provider.

Working of a Portfolio Management Services( PMS)

Each PMS account is unique and the valuation and portfolio of each account may differ from one another. There’s no NAV for a PMS scheme; still, the client will get the valuation of his portfolio on a diurnal base from the PMS provider. Each PMS account is unique from one another. Every PMS scheme has a model portfolio and all the investments for a particular investor are done in the Portfolio Management Services on the base of the model portfolio of the scheme. still, the portfolio may differ from investor to investor. This is because of

  1. Entry of investors at different times.
  2. The difference in the number of investments by the investors
  3. Redemptions/ fresh purchases done by the investor
  4. request script – Eg If the model portfolio has an investment in Infosys, and the current view of the Fund Manager on Infosys is “ HOLD ”( and not “ BUY ”), a new investor may not have Infosys in his portfolio.

Taxation for Portfolio Management Services( PMS)
Any income from the Portfolio Management Services account is a business income. Unlike MF, PMS isn’t needed to remain 65 invested in equity to get equity taxation benefit. Each Portfolio Management Services account is in the name of an fresh investor and so the duty treatment is done on an individual investor position.

Profit on the same can be considered as business income.(i.e crossbeams). Profit can be considered as Capital gain.( STCG( 15) or LTCG( 10)). It depends on the customer’s Chartered Accountant or the assessing officer how he treats this Income. The PMS provider sends an audited statement at the end of the FY giving details of STCG and LTCG, it’s on the customer and his CA to decide to treat it as capital gain or business income.

Image credit: Photo by Chris Liverani on Unsplash

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