NISM Certifications · NISM-Series-XXI-A: Portfolio Management Services (PMS) Distributors · Taxation (NISM XXI-A)
When a PMS client's portfolio manager receives dividends on shares held in the client's account, how are these dividends generally taxed?
Dividends received in a PMS account are taxed in the client's hands under the head income from other sources. The client is the beneficial owner of the shares, so the portfolio manager's income is not affected. They are not capital gains and are not tax-free.
- AAs the client's income from other sources in the client's handsCorrect
- BAs business income of the portfolio manager
- CAs capital gains of the client
- DThey are never taxable
Explanation
Dividends are taxed in the hands of the shareholder, who here is the PMS client, under the head income from other sources. They are not the portfolio manager's business income, and they are not capital gains. They are also not exempt from tax.
Did you get it right without looking?
One question tells you little. A timed set on Taxation (NISM XXI-A) shows your real accuracy, how long you take and where you lose marks.
More Taxation (NISM XXI-A) questions
- A PMS client's portfolio has a short-term capital loss of Rs 50,000 on listed equity shares and a long-term capital gain of Rs 3,00,000 on l…
- Dividends received in a client's PMS account from listed companies are, under the current Indian tax approach as generally taught, taxed in …
- For income-tax purposes, how is a Portfolio Management Services (PMS) client's investor in a discretionary PMS account generally treated wit…
- A PMS client's portfolio has realised a short-term capital loss on listed shares of Rs 50,000 and a long-term capital gain of Rs 1,20,000 on…
- A resident individual's PMS account sold listed equity shares (held over 12 months) with a long-term capital gain of Rs 3,00,000 in a year, …
- Which of the following is generally the position regarding the tax a PMS client bears on expenses such as the portfolio manager's management…