NISM Certifications · NISM-Series-XXI-A: Portfolio Management Services (PMS) Distributors · Taxation (NISM XXI-A)
For a resident individual PMS client, interest received from debt securities held in the portfolio is generally taxed as:
Interest from debt securities is generally taxed as income from other sources at the individual's slab rate. It is regular income rather than a capital gain, and holding the bonds through a PMS does not make it exempt.
- ACapital gains at a flat rate
- BIncome from other sources at the client's slab rateCorrect
- CExempt income
- DSalary income
Explanation
Interest on debentures and bonds is not a capital gain; it is regular income. For an individual investor it is generally taxed under income from other sources at the applicable slab rate. It is not exempt merely because it arises within a PMS, and it has no connection with salary.
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