NISM Certifications · NISM-Series-XXI-A: Portfolio Management Services (PMS) Distributors · Taxation (NISM XXI-A)
Which statement best describes the tax position of a PMS client regarding dividend received on shares held in the portfolio?
Dividend received on shares in a PMS portfolio is taxable in the client's hands as income from other sources, at the client's applicable rate. It is not exempt, is not taxed in the portfolio manager's hands, and is not a capital gain.
- ADividend is exempt in the client's hands
- BDividend is taxable in the client's hands as income from other sourcesCorrect
- CDividend is taxed only in the hands of the portfolio manager
- DDividend is treated as capital gain
Explanation
Dividends from shares in the client's PMS portfolio belong to the client and are taxed as income from other sources at the applicable slab rate. They are not exempt, not taxed in the manager's hands and not capital gains.
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