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NISM Certifications · NISM-Series-XXI-A: Portfolio Management Services (PMS) Distributors · Taxation (NISM XXI-A)

Which of the following is generally true for a resident individual PMS client regarding portfolio management fees paid to the portfolio manager?

Portfolio management fees attract GST charged by the portfolio manager, because portfolio management is a taxable service. The fee is not deductible from salary income, is not exempt from GST, and is not treated as capital gains.

  1. AThe fee is always deductible from salary income
  2. BThe fee is exempt from GST
  3. CThe fee is subject to GST charged by the portfolio managerCorrect
  4. DThe fee is treated as capital gains and taxed at 12.5%

Explanation

Portfolio management is a taxable service, so the portfolio manager charges GST on the fees it collects. The fee is not adjusted against salary income and is not capital gain. It is not exempt from GST.

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