The core principle: transaction-level taxation
Every sale in a PMS portfolio is a taxable event in your hands, in the financial year it occurs.
Short-term capital gains (STCG): Listed equity held for 12 months or less - taxed at 20%.
Long-term capital gains (LTCG): Listed equity held beyond 12 months - taxed at 12.5% on gains above the annual exemption of ₹1.25 lakhs.
Each stock's holding period runs from its individual purchase date to its individual sale date. A portfolio-level view doesn't exist for tax purposes - the ledger is transaction by transaction, exactly as with your self-managed demat.
Dividends received on portfolio holdings are taxed at your slab rate, again identical to direct equity.
The factor worth understanding: churn
Here's where professional management introduces a practical difference - not in tax rules , but in tax frequency .
You might hold your self-managed positions for years, generating few taxable events. A professionally managed strategy transacts on its own logic - rebalancing, position-sizing, exits on thesis completion. More transactions can mean more taxable events, and a higher proportion of gains realised short-term.
A strategy's 1-year turnover figure offers a rough signal: higher turnover generally implies more frequent realisation of gains. It's an imperfect measure - but a useful conversation-starter when evaluating any strategy.
What this means at filing time
PMS providers issue detailed transaction statements and capital gains reports for each financial year - every buy, sell, holding period and gain classification, ready for your tax filing. The compliance workload is well-supported; the liability, as always, is yours.
The honest caveat
This overview covers listed equity taxation under current rules - which change with Finance Acts. Strategy-specific instruments, and the treatment of covered call premiums where used, add further texture that generic articles cannot responsibly cover. AND Fintech is a distributor, not a tax advisor: for decisions of this size, a qualified Chartered Accountant's review of your specific situation is not a formality - it's the correct sequence.
The takeaway
PMS introduces no alien tax regime - it's the direct equity framework you already know, applied to a professionally managed book. The single new variable worth examining is transaction frequency. Ask about it before you sign, not at filing time.
Strategy-level data, including turnover →