Edelweiss Mutual Fund told investors on 21 October 2026 that paused SIPs in six of its international funds had been cancelled and "shall not be reactivated", Value Research reported. The funds have taken no new money since July, because SEBI caps how much each fund house can invest abroad at its February 2022 level. Clients who lose a monthly SIP into a US or Europe fund will ask their advisor what else exists. Many will have read that PMS overseas investment is now allowed, and they will assume a portfolio manager can simply take over where the fund stopped.
That assumption is early. SEBI has approved and notified rules that let portfolio managers buy foreign securities for clients, but the rules start on 1 April 2027, the limits are still to be set by SEBI, and the money moves under each client's own remittance limit and tax. The useful work for advisors over the next five months is to prepare clients for that route, not to promise it. Our guide to GIFT City mutual funds and other global routes sets out the options clients can use today.
What SEBI changed for portfolio managers
The SEBI Board approved a new framework for portfolio managers at its meeting on 24 September 2026. Its press release lists "enabling investment in Foreign Securities" for both discretionary and non-discretionary services, covering listed equity, debt, REITs, overseas mutual funds, ETFs, index funds and foreign government debt. The SEBI (Portfolio Managers) Regulations, 2026 followed, with a notification dated 7 October 2026, as reproduced by TaxGuru. They replace the 2020 regulations from 1 April 2027.
The regulation itself leaves the detail open. Regulation 17(1)(c) says a portfolio manager shall invest client funds in foreign securities "in such manner as maybe specified by the board". That means a SEBI circular still has to set the permitted instruments, any limits and the reporting. The regulations also keep management and execution in India, with one exception for executing trades in foreign securities. Until the circular appears, no advisor can tell a client how much a PMS may place abroad or on what terms.
Why PMS overseas investment runs on the client's LRS limit
The press release says the foreign securities route is governed by FEMA and the Liberalised Remittance Scheme. This is the structural difference from a mutual fund. A fund house invests abroad from its own pooled limit, which is why one cap can shut a whole scheme. A PMS manages money in each client's own name, so the money that goes abroad for that client counts against that client's LRS limit of USD 250,000 per financial year, as set out in the RBI's LRS FAQs.
In practice, a client who already uses LRS for a child's education, a US brokerage account or a private investment will have less room for a PMS. The regulations also require the portfolio manager to keep each client's securities in separate accounts, under Regulation 16(8). Foreign securities bought for a client will therefore sit in that client's own portfolio, which means the CA should plan for them in Schedule FA, the part of the return that lists foreign assets.
What TCS on an overseas PMS remittance looks like
Money sent abroad under LRS for investment attracts TCS, the tax collected at source by the bank, under Section 394 of the Income-tax Act, 2025. According to the Income Tax Department's Section 394 page, the rate for purposes other than education or medical treatment is 20 per cent on the amount above ₹10 lakh in a tax year. The threshold applies to the client's total LRS remittances, not to each one separately.
For example, a client who remits ₹40 lakh in tax year 2027-28 so that a portfolio manager can buy foreign securities would have ₹6 lakh collected, being 20 per cent of the ₹30 lakh above the threshold. The TCS is not a final tax. It appears in Form 26AS and is claimed as credit in the client's return, which is where cash flow planning matters for clients who remit large sums early in the year. Our guide to TCS on foreign remittance covers the credit process. These are tax year 2026-27 rates, and the Union Budget on 1 February 2027 will come before the route opens, so the rate needs checking again then.
How the overseas PMS route compares with other global routes
Each route a client can use today has its own strengths and limits. Domestic international funds and fund-of-funds are simple to hold and report, but their capacity depends on the fund house cap, which is why international mutual funds keep closing. GIFT City funds sit outside that cap and are bought under LRS, although they carry their own entry levels and currency mechanics. Direct US stocks bought through a brokerage give the client full control, while leaving the client with the record keeping and Schedule FA reporting.
A PMS that invests abroad would add a professional manager and a portfolio built for one client, at a higher entry level and with fees that vary by manager. Private US commercial real estate is a different exposure altogether. Indian clients usually invest through a US corporation, known as a blocker, that holds the property interest, and they receive Form 1042-S for US tax. Our explainer on US commercial real estate investment for advisors describes that structure. None of these routes is better in general. The fit depends on the client's LRS headroom, time horizon, need for liquidity and appetite for reporting.
What advisors should tell clients before April 2027
Clients should hear the risks of investing abroad through any route before they commit. Overseas markets can fall, and a client can lose capital. Currency movements can work against the rupee value of a holding, and concentration in one market or sector adds to that. Some instruments may be hard to sell quickly, and private real estate is illiquid, with distributions that may not be paid. A professional manager does not remove any of these risks, so the preparation should start now, in this order.
- Map each interested client's LRS use for 2026-27 and expected use for 2027-28, so that the headroom is known before any PMS mandate is signed.
- Check that past Schedule FA filings are complete, since a new overseas portfolio will add to what the client reports each year.
- Watch for SEBI's circular on foreign securities and for the Union Budget on 1 February 2027, and recheck limits and TCS rates after each.
- Ask any portfolio manager offering the route how foreign securities will be held, valued and reported to the client and the CA.
Advisors who introduce eligible clients through Raveum's partner page will recognise the same division of work. Raveum handles KYC, agreements and US tax forms for diversified US commercial real estate, where each deal is reviewed by Raveum and held in its own legal entity, while the client's Indian tax position stays with the client and their CA.
The Edelweiss notice is a reminder that the mutual fund door depends on a limit no client controls. The PMS route moves that limit to the client's own LRS headroom, which is more predictable but also more personal, because every rupee sent abroad shows up in that client's TCS credit and foreign asset schedule. The advisors who will serve clients best in April 2027 are the ones who use these months to get the LRS records, the reporting and the expectations in order. The wider set of choices is laid out in our guide to global investment routes for advisors.
Frequently asked questions
Can a PMS invest in foreign stocks for Indian clients?
Yes, from 1 April 2027. The SEBI (Portfolio Managers) Regulations, 2026 allow discretionary and non-discretionary portfolio managers to invest client funds in foreign securities in the manner SEBI specifies. SEBI's Board named listed equity, debt, REITs, overseas mutual funds, ETFs, index funds and foreign government debt as the instruments in scope.
When does PMS overseas investment start?
The new regulations take effect on 1 April 2027 and replace the 2020 regulations. Before the route is usable, SEBI still has to issue a circular setting out how portfolio managers may invest in foreign securities, including any limits. Advisors should treat the route as approved in principle but not yet open.
Does PMS overseas investment count towards the LRS limit?
Yes. SEBI's press release says the foreign securities route is governed by FEMA and the RBI's Liberalised Remittance Scheme. Money a portfolio manager sends abroad for a client counts against that client's LRS limit of USD 250,000 per financial year, together with all other remittances the client makes.
Is TCS collected on money sent abroad through a PMS?
Yes, when it goes under LRS for investment. For tax year 2026-27 the bank collects TCS of 20 per cent on the client's total LRS remittances above ₹10 lakh in the year, under Section 394 of the Income-tax Act, 2025. The client claims the TCS as credit in the income tax return.
Do foreign securities held through a PMS go in Schedule FA?
They should be planned for. A portfolio manager must keep each client's securities in separate accounts, so foreign securities bought for a resident client sit in that client's own portfolio. Foreign assets of a resident are reported in Schedule FA, so the client's CA should confirm the treatment once SEBI's circular sets out how holdings are kept.
What are the risks of investing abroad through a PMS?
The main risks are loss of capital if overseas markets fall, currency movements against the rupee, concentration in one market or manager, and some instruments that are hard to sell quickly. Fees vary by manager. A PMS also suits only clients with enough LRS headroom and the patience to hold through market swings.
This article is for general education and is not tax, legal or investment advice. Rules change and depend on individual circumstances. All investing involves risk, including loss of capital, illiquidity and currency movements. Offerings on Raveum are available to eligible investors only and are not open to the general public.
