PMS Tax Computation — Transaction-Level Mechanics

Unlike a mutual fund where tax events occur only on redemption, a PMS portfolio creates tax events on every transaction the manager executes. A typical PMS with 30-50% annual turnover generates 50-100 buy-sell transactions per year per investor. Each Sell transaction's cost basis is computed using First-In-First-Out (FIFO) — the earliest-bought lot of that stock is matched against the sold quantity. The holding period is computed from the original purchase date of those specific shares to the sale date. This granularity creates complexity in tax computation and reporting. The PMS manager's annual capital gains statement details every transaction with: date of buy, date of sell, quantity, cost basis (FIFO-matched), sale value, gain/loss, holding period (LTCG or STCG classification). The investor reports this in Schedule CG of ITR-2 or ITR-3 with appropriate aggregation. The ₹1.25 lakh annual equity LTCG exemption applies aggregate across all sources — PMS LTCG + mutual fund LTCG + direct stock LTCG combined — not per source. CA support is recommended given the volume and granularity. Trustner's framework includes coordination with the client's CA at year-end.