NISM Certifications · NISM-Series-XXI-A: Portfolio Management Services (PMS) Distributors · Taxation (NISM XXI-A)
Dividend income received by a resident individual client from shares held in a PMS portfolio is taxed under which head of income?
Dividend income from shares in a PMS portfolio is taxed as income from other sources in the hands of the resident individual client, at the applicable slab rates, unless the shares are held as business stock. It is not a capital gain.
- ACapital gains
- BIncome from house property
- CIncome from other sourcesCorrect
- DSalary
Explanation
Dividends on shares are taxed in the hands of the shareholder under the head income from other sources, at the slab rates applicable to the individual, unless the shares are business stock-in-trade. Dividends are not capital gains because no transfer occurs, and they have no connection with house property or salary.
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