If you are comparing pms vs aif in India, start with two facts. First, AIF commitments stood at about ₹14.18 lakh crore as of June 30, 2025, reflecting rapid growth in private-market strategies (Source:- Securities and Exchange Board of India ). 

Second, PMS is governed by a separate SEBI rulebook focused on direct, client-level portfolios and reporting. These are different vehicles built for different needs. 

This guide answers practical questions HNIs ask: which is better pms or aif india, how taxation on aif returns india differs from taxation on pms returns india, and what the fees in pms vs aif india mean for your net outcomes. 

Key Takeaways

• Minimum ticket size: PMS usually starts at ₹50 lakh; AIF generally at ₹1 crore per investor.

• Structure: PMS = direct ownership in your demat; AIF = pooled units of a fund.

• Liquidity: PMS typically has no SEBI-mandated lock-in; AIFs usually run multi-year tenures/lock-ins as per scheme terms.

• Tax: PMS gains are taxed to you; AIF tax varies by Category I/II (largely pass-through) vs Category III (fund-level for some income). (Details below with official references.)

• Use-case: PMS suits HNIs who want listed-market exposure, control, and transparency. AIF suits UHNIs/family offices seeking alternatives and diversification with longer horizons.

What Is PMS and How Does It Work?

Portfolio Management Services (PMS) is a SEBI-regulated service in which a registered portfolio manager runs a separate investment account in your name. The manager buys and sells stocks, debt, ETFs, or cash equivalents for you, as per a signed agreement and your risk profile. You own the underlying securities in your demat. You receive regular reports that show holdings, trades, costs, and benchmark data.

For new clients, SEBI requires a minimum ₹50 lakh Investment. PMS is meant for HNIs, not retail. Also, portfolio managers cannot impose a lock-in, though an exit fee can apply as per your agreement. 

Types of PMS:

• Discretionary: The manager decides within agreed limits.

• Non-discretionary / Advisory: You approve trades or receive advice, then act.
  SEBI norms require clear disclosures and risk warnings so you know what you hold and why.

Why many HNIs like PMS:

You get control and clarity. You can align sector limits, tax lots, and rebalancing to your goals. If you are searching what is pms investment in india or are pms suitable for hnis india, think of PMS as professional management with direct ownership and detailed reporting.

Risk note: Equity and debt can fall in value. Under SEBI rules, guaranteed returns are not allowed.

What Is AIF and How Does It Work?

Alternative Investment Funds (AIFs) are privately pooled funds registered with SEBI. Investors commit money and get units of the fund. The manager invests as per a defined strategy in private equity, venture capital, private credit, real assets, or long/short equity, depending on the AIF Category. AIFs are not mutual funds and are aimed at sophisticated investors. 

Categories and threshold:

• Category I: Venture, SME, infrastructure, social impact, etc.

• Category II: Private equity, debt funds with limited leverage for operations.

• Category III: Long-only or long/short strategies that may use leverage/derivatives.
  The general minimum commitment is ₹1 crore per investor (specific exceptions exist in the regulations).

Why investors choose AIFs: 

AIFs provide access beyond listed markets, add diversification, and use expert governance. The space has scaled up quickly; SEBI’s published dashboard shows strong growth through June 2025, and industry trackers quoted ₹14.18 lakh crore commitments. 

For what is aif in india or are aifs good for hnis india, the short view is yes,if you accept longer lock-ins, complex fees, and valuation cycles. 

Risk note: AIFs involve illiquidity, concentration, leverage, and valuation risks. Always read the Private Placement Memorandum (PPM). 

PMS vs AIF — A Comparative Table for 2025

Before we compare line by line, set the lens right. PMS is like a custom portfolio in your name with daily-market visibility. AIF is a fund structure that pools money and chases private or complex strategies with set terms. 

This core difference drives liquidity, taxation, transparency, and exit options when you weigh pms vs aif.

Taxation on PMS vs AIF Returns in India (2025)

PMS tax is similar to you holding listed equity directly. AIF tax depends on category and structure.

PMS (listed equity):

• STCG (Section 111A): 20% for STT-paid listed equity from 23-07-2024.

• LTCG (Section 112A): 12.5% on gains above ₹1.25 lakh; STT and other conditions apply.

These changes were announced by the Government and clarified by PIB/CBDT FAQs. (Source:- Press Information Bureau )

AIF (high-level):

• Category I & II: Many streams are pass-through (taxed in investors’ hands), subject to the Income-tax Act and CBDT rules.

• Category III: Some income/gains may be taxed at fund level; distribution rules apply. Check the PPM and confirm with your tax advisor for your case. 

What this means for you: 

When comparing taxation on pms returns india and taxation on aif returns india, always run post-tax numbers for your slab and your holding period.

Risk, Return, and Liquidity Comparison

PMS gives market-linked returns, high visibility, and generally quicker exits. AIFs seek different sources of return but often lock money for years.

• PMS: Risk comes from listed markets. You or your manager can rebalance or raise cash faster (contract terms apply). Good for goal-based equity exposure, capital preservation with growth, and clear reporting.

• AIF: Access to private equity, private credit, real assets, and long/short strategies. This can add diversification and upside, but brings illiquidity and valuation lag.

Fees and Performance Transparency in PMS vs AIF

How fees are charged and reported is different, and that changes your net return.

PMS: 

Your agreement sets a fixed fee (as % of AUM) and, for eligible clients, a performance fee over a hurdle. SEBI does not fix the fee, but requires clear disclosure and periodic reports that show what you own, what it costs, and how it compares to the benchmark. This gives you line-of-sight to holdings and costs. 

AIF: 

Most AIFs have a management fee plus a carry (profit-share) over a preferred return/hurdle. Because your money is pooled and locked, valuation and payouts follow set cycles. Reporting is at the fund level, as stated in the PPM. It is transparent, but not security-by-security in your name. 

The key question is: “What is my net, post-tax IRR after all costs?” 

Why it matters: 

Two products can show the same gross number, yet your net can differ after fees + taxes. When comparing fees in pms vs aif india, read the hurdle, clawback, valuation policy, audit, and reporting frequency. It is simple work that protects outcomes. 

Which Is Better for HNIs in India, PMS or AIF?

There is no single best. The right choice depends on your goals, liquidity needs, tax profile, and comfort with pooled vs direct ownership.

• Choose PMS if you want listed-market exposure, control, and clear reports you can read any day.

• Choose AIF if you can lock capital for 5–10 years and want diversification into private or complex strategies.

• Many investors blend both: core equity via PMS and a satellite AIF allocation.

How to Choose Between PMS and AIF in India

Before the checklist, use a simple frame: time, tax, and transparency. If you want daily visibility and flexible access, PMS is natural. If your family office can stay invested for longer and wants non-listed opportunities, explore AIF.

Step-by-Step Checklist

1. Horizon & liquidity: Do you need access within 3–5 years or can you commit for 7–10 years?

2. Post-tax math: Model the new 111A (20%) and 112A (12.5% over ₹1.25 lakh) for PMS. For AIF, get a Category-wise tax note from the PPM and your advisor.

3. Transparency needs: Prefer direct holdings and position-level reports (PMS), or are fund-level updates fine (AIF)?

4. Regulatory checks: Confirm SEBI registration, fee and risk disclosures, and reporting format for both PMS and AIF.

5. Exit options: Read the lock-in/exit/fees sections. PMS has no SEBI lock-in; AIFs usually have set tenures.

Why Choose Ckredence Wealth Management

When you compare portfolio management services vs alternative investment funds india, you also need a solid PMS partner for the core of your equity exposure. Ckredence Wealth Management is a SEBI-registered Portfolio Manager (INP000007164) with a long operating history across Surat, Mumbai, and Vadodara. 

The firm focuses on capital preservation with growth, risk-adjusted returns, and clean reporting, so you always know what you own and why.

What you get with Ckredence PMS:

• Regulatory trust: SEBI Registration INP000007164; PMS run under SEBI’s 2020 rulebook.

• Scale with access: As per the company website, ₹610+ crore AUM and 435+ clients (as of 30 Sept 2025).

• Four approaches: All Weather, Diversified, Business Cycle, ICE Growth to match different market phases and risk levels.

• Transparent fees: Fixed fee plus performance fee (with hurdle where applicable), documented in the PMS agreement. (PMS fee setting is disclosure-driven under SEBI.)

• Local service + tech: Branch presence in Surat, Mumbai, Vadodara with online portfolio tracking and scheduled reviews.

Prefer a detailed discussion? 

Book a demo call with our advisory team to get a personalised PMS review and a neutral comparison of PMS vs AIF for your goals. 

Conclusion

Think in three parts: time, tax, and transparency. If you want listed-market control with daily clarity, PMS fits well. If you want access to private or complex strategies and can stay invested for years, AIF is valid. 

SEBI’s data shows AIF scale is rising, while PMS rules give HNIs a clear, client-level path. A blended plan often works: mutual funds for SIPs, PMS for customised listed exposure, and AIF for diversification.

FAQs

1) What is the minimum investment for PMS and AIF in India?
PMS: ₹50 lakh (new clients). AIF: typically ₹1 crore per investor; scheme terms apply. 

2) Which gives better returns: PMS or AIF?
It depends on the time horizon and needs. PMS gives listed-market exposure and clear reports. AIFs give alternatives with longer lock-ins. Do a post-tax comparison before choosing.

3) How are PMS and AIF returns taxed?
PMS (listed equity): STCG 111A = 20%, LTCG 112A = 12.5% over ₹1.25 lakh (from 23-07-2024). AIF: Category-wise; some pass-through, some fund-level. Confirm via PPM and tax advisor. 

4) Is PMS safer than AIF for HNIs?
“Safer” depends on what you value. PMS offers direct ownership, high transparency, and usually easier exits. AIFs can diversify beyond listed markets but come with illiquidity and strategy risk.