Taxation of PMS?
Income from shares purchased through PMS is taxable under Portfolio Management Taxability India as Capital Gains. Nature of these gains could be short term or long term depending on the churn in the portfolio.
Typically, PMS follows a low churn but it depends upon the portfolio strategy. So, gains from stocks that are held for more than a year get treated as long term and are taxed @ 10% plus surcharges. For the holdings that traded within 1 year, treatment is short term, and are taxed @ 15% plus surcharges.
For the income earned in form of dividends credited in the financial year, dividend distribution tax is already deducted at the source and in the hands of investor, these dividends tax-free. But, if total income from such dividends earned in a financial year is more than 10 lacs across all investments, this is where Portfolio Management Taxability India comes into picture, then additional dividend income tax is also applicable.
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