How is PMS taxed for NRIs?
SBNRI Team
answered on 30/03/2020
Portfolio Management Services (PMS) can be understood as the management of funds of HNIs (High Net-Worth Individuals: A wealthy person, in particular one with investable assets in excess of $1 million) by various wealth management companies or Portfolio Managers (people responsible for handling your account) who invest these funds into a varied range of stocks, fixed incomes, debt, cash and other individual securities. These investments are aimed at meeting specific objectives and the minimum investment amount for PMS is Rs. 50 Lakhs. The portfolio consists of a lesser number of stock holdings that are bought on the philosophy of “Buy and Hold”. PMS offers a structured way of investing money and is a very effective medium for higher returns.
Also read: PMS for NRI: A Comprehensive Overview
PMS Taxation for NRI
The taxes applicable for NRI investors in PMS services are deducted at source (TDS) by the brokerage firm and net profits are paid. The portfolio Managers (people responsible for handling your account) help you with the filing of your taxes by providing the tax statements at the end of the year. They also keep the entire process of investments transparent and will not sell or invest anywhere without letting you know.
However, if the net profit/income in India for an NRI is below Rs. 2,50,000/-, a tax return can be filed to claim a refund of the taxes deducted as there are no taxes applicable for people in India with annual income of less than Rs. 2,50,000/-. Here is a table of tax slabs for your reference:
Income Tax Slab | Tax Rate |
| Up to 2.5 Lakhs | Nil |
2.5 Lakhs to 5 Lakhs | 5% |
| 5 Lakhs to 7.5 Lakhs | 10% |
7.5 Lakhs to 10 Lakhs | 15% |
| 10 Lakhs to 12.5 Lakhs | 20% |
12.5 Lakhs to 15 Lakhs | 25% |
| 15 Lakhs and above | 30% |
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