Skip to content

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

Which statement about tax deducted at source (TDS) and the dividend or interest income received on securities in a client's PMS portfolio is most accurate?

Dividend and interest income is taxable in the client's hands, and TDS deducted by the payer is credited to the client. The client claims this credit against the final tax liability when filing the return.

  1. ASuch income is never subject to TDS in a PMS account
  2. BIncome is taxable in the client's hands, and any TDS deducted by the payer is available to the client as credit against the tax liabilityCorrect
  3. CTDS credit is available only to the Portfolio Manager
  4. DDividend income is taxed in the Portfolio Manager's hands

Explanation

Because the client is the owner of the portfolio assets, income such as dividend and interest is taxable in the client's hands. Any TDS deducted by the payer is reflected against the client's PAN. The client claims it as credit while filing the return.

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.

Practise Taxation (NISM XXI-A)Free diagnostic mock

More Taxation (NISM XXI-A) questions