Portfolio Management Fees (PMS)

Hi,

Hope you are doing well!

It is only the fees attributable to short-term capital gains which can be claimed as a deduction in computing short-term capital gains on the sale of shares subject to litigation.

Thanks & Regards,

Payal Chhajed

Please find below the relevant case laws:

https://taxguru.in/income-tax/pune-itat-portfolio-management-pms-fees-deductible-computing-capital-gains.html?amp

Thanks & Regards,

Payal Chhajed

Hi

Please let us know how the PMS fees is calculated.

Because only that portion of PMS fees can be taken as deduction which is attributable to STCG. Burden of proof is on you that pms fee claimed as deductible, has a direct Nexus with STCG.

Issue is litigative.

Dear Sir,

Please share the basis of calculation of PMS annual fees.

The only portion of PMS annual fees which directly attributable to STCG, can only allow as deduction.

However, this issue is debatable and subject to litigation

Warm Regards,

Karishma Chhajer

Hi,

If you can prove that the PMS fee paid is directly attributable to the short term capital gain that you have earned during the year, then you can claim the fees as deduction.

However the Issue is litigative.

Regards,

Nikhil.

Hi

Since the fees of 87000 relates to entire PMS and not only STCG, you cannot claim the whole of it.

Claim the charges which directly relates to the STCG. This too is litigative but you may claim such expenses.

There have been recent Mumbai Tribunal judgement wherein it has been ruled that PMS fees are not deductible against the capital gains earned by the assessee. The Tax Department has been taking a position that such PMS fees are not transfer expenses and hence, not deductible against capital gains earned.

IN CASE OF SHORT TERM CAPITAL GAIN YOU HAVE TO ALLOWED ONLY THE FOLLOWING EXPENSES

COST OF ACQUISITION AND COST OF IMPROVEMENTS

AND HENCE THE PMS FEES WILL NOT BE ALLOWED IN YOUR CASE AS EXPENSES

ONLY IN CASE OF BUSINESS INCOME YOUR CAN CLAIM PMS CHARGES

The fee paid to PMS company may be adjusted against the STCG of FY 2017-18 Net STCG will be 113000

Dear Sir,

Fees paid to PMS for the maintenance of account with PMS and for other purposes. It was not paid for the acquisition of the shares on which you earned STCG therefore it can not be treated as cost of acquisition of such shares.

Thanks

Dear Sir,

As per Income tax Act,1961, expenses which are directly related to the transactions through which the capital gain is generated shall be allowed as deduction.

As per your case, if the STCG is generated by the advice's and expertise provided by the fund management co. then you only can claim the expenses in your ITR.

The same can be reduced from the net consideration amount in ITR fomr filled by you.

Hope this resolves your query.

Hi

Expenses directly related with transaction can be claimed as expenses.

Get the statement of PMS fees directly related to STCG of 2 lac and claim it as expenses.

In my opinion 87000 if full year fees ,not transaction specific related to sale.

Hope it help