📊 NISM Series XXI-A Chapter 11 of 12 ⚖ 5 of 100 marks weightage

Ch.11: Taxation

Practice questions for NISM-Series-XXI-A: Portfolio Management Services (PMS) Distributors Certification Examination, Chapter 11: Taxation. This chapter covers how income earned through PMS is taxed in the hands of different investor types. It sets out residency tests, the treatment of equity gains, dividends, interest and F&O income, whether PMS fees are deductible, the tax reports a portfolio manager must give clients, and how NRIs access PMS through the Portfolio Investment Scheme. All rates are the post-July 2024 position. Carries 5 out of 100 marks. The exam has 100 MCQs, 60% passing score, and −10% negative marking per wrong answer.

What You Will Learn in This Chapter

How residential status (ROR, RNOR, NRI) and entity type decide what PMS income is taxable in India.
The holding period, rates and exemption for equity LTCG and STCG, and the tax and TDS treatment of dividends and interest.
Why F&O income in a PMS is business income, and the set-off, carry-forward and tax audit rules that follow.
Why PMS fees, brokerage and GST are not deductible when computing capital gains, and when they can be claimed as business expenses.
What tax reports a PM must give clients and when, and how NRIs invest through PMS using NRE or NRO accounts under the Portfolio Investment Scheme.

Key Terms:Resident and Ordinarily Resident (ROR)Resident but Not Ordinarily Resident (RNOR)DTAASection 111A / Section 112AIndexationProfits and Gains from Business or Profession (PGBP)Carry forward of lossesForm 16APortfolio Investment Scheme (PIS)NRE vs NRO account

Free Sample Question

Q1MCQMediumShort-term gains on debt

A portfolio manager trades debt securities frequently and books short-term gains. How are these gains taxed in the hands of an individual investor?

AAt a flat 20% under Section 111A

BAt 12.5% after indexation benefit

CAt a flat 15% with TDS deducted

✓At the investor's income tax slab rate

💡 Short-term capital gains on debt are taxed at the investor's applicable slab rate, without indexation. The 20% rate under Section 111A is for short-term gains on equity.

39 more questions in this chapter

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About this content: These practice questions are written by BullWiser from the syllabus of the NISM-Series-XXI-A: Portfolio Management Services (PMS) Distributors Certification Examination, using the workbook published by the National Institute of Securities Markets (NISM), Mumbai (September 2025 edition) as the fact source. NISM is a SEBI-established institution. Questions cover Chapter 11: Taxation with verified answers and explanations. BullWiser is an independent exam preparation platform — not affiliated with NISM, SEBI or APMI. Last updated: September 30, 2026.

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