HNI wealth · PMS
PMS vs MF: when to switch and why post-Budget 2024 the gap narrowed
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Facts
Pre-Budget 2024, PMS had a significant disadvantage over MF, MF's LTCG was exempt up to ₹1L while PMS investor directly bore STT and had no exemption pooling benefit. Post-Budget 2024: LTCG at 12.5% (above ₹1.25L) for both.
Provisions and law
- IT Act, LTCG at 12.5% for both listed equity | Budget 2024
Analysis
PMS advantages over MF: Customisation, can exclude sectors, exclude specific stocks (e.g. conflict of interest), concentrated bets. Transparency, you see every holding. No pool effects, your exits don't trigger redemptions for others. MF advantages over PMS: Tax deferral on unrealised gains. No capital gains until redemption. SIP discipline. Lower minimum. Better for HNI building toward ₹50L threshold.
Conclusion
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