Taxation of PMS and AIF – Simplified

Introduction
Tax treatment often decides net returns. Understanding how PMS and AIFs are taxed in India helps investors plan better.

Taxation of PMS

• PMS investments are held in investor’s demat account.
• Tax treatment = same as direct investing.
  • Equity: STCG @15% (if held <12 months); LTCG @10% (if >12 months, above ₹1 lakh).
  • Debt: As per investor’s slab.
• Investors receive capital gains statements for tax filing.

Taxation of AIF

• Depends on Category:
  • Category I & II: Pass-through for all income except business income. Taxed in hands of investors.
  • Category III: Taxed at fund level, then distributed.

Suggested Visual: Table comparing PMS vs AIF taxation.

Key Takeaway

• PMS = investor taxed directly.
• AIF = depends on category; structure impacts tax outcome.
• Always consult tax advisor before investing.

Disclaimer
This blog is for educational purposes only and does not constitute investment advice or tax advice. Past performance may or may not be sustained in the future. Investments in AIFs and PMS are subject to market risks. Please consult your SEBI-registered investment advisor and tax consultant before investing.