PMS Tax & Operations

PMS management fees are generally not deductible against capital gains under current Indian tax rules. Brokerage and STT directly tied to specific transactions reduce the cost basis or sale proceeds for capital gains computation. Always consult your CA for the precise treatment.

Dividends are paid directly to the investor (since securities sit in their demat). Dividend income is taxable at the investor's slab rate. The PMS's annual reporting includes dividend income alongside capital gains for completeness, but the dividend amounts also appear in the investor's Form 26AS. Both must reconcile.

Corporate actions are reflected in the PMS's cost-basis tracking automatically — the system adjusts FIFO records when the action occurs. The annual capital gains statement reflects post-action quantities and adjusted cost bases. CA review confirms the math; rare edge cases (very early-vintage holdings before AMC system upgrades) may need manual verification.

When ₹50 lakh of capital arrives, the PMS manager does NOT buy 22 stocks at full target weight on day 1. Doing so would create market impact, especially in mid-cap or small-cap names. Instead, positions are built over 30-60 days through laddered orders managing average price and volume impact. The investor sees gradual position-building in their demat as orders execute.

September-November is common — far enough into the financial year to assess performance, before the busy year-end PMS reporting cycle. Trustner schedules these meetings 4-6 weeks in advance to ensure the PMS manager, RM, and client can all attend.

It is a regulatory breach — the AMC must address the delay and report. Trustner's framework treats this as an operational red flag and triggers an immediate review of the AMC's operational standing. Repeated delays warrant de-empanelment consideration, with managed exit for existing client allocations.

Marginal — possible but tight. A ₹1 crore Cat II AIF at ₹4 cr wealth is 25% of portfolio, on the upper edge of acceptable. Combined with a ₹50 lakh PMS (12.5%), AIF + PMS together would be 37.5% — meaningful concentration. Consider whether the AIF gap is genuinely critical at this wealth level. Below ₹4 cr, AIF is generally not appropriate.

Both target similar outcomes (long-short equity for downside protection). SIF minimum is ₹10 lakh; Cat III AIF minimum is ₹1 crore. For investors below ₹10 cr liquid wealth, SIF is operationally more practical. For UHNIs above ₹10 cr, Cat III AIF may offer additional strategy flexibility (more aggressive leverage, broader instrument universe) at the cost of ₹1 crore commitment vs ₹10 lakh.