Explanation:

The buyer of an option contract is required to pay an upfront fee known as the option premium to the seller of the option.

Explanation:

An income statement shall be required to be furnished to the income tax department by the securitization trust in Form No. 64E.

Explanation:

For unlisted preference shares to qualify as a long-term capital asset, the holding period required is 24 months. This means that the shares must be held for at least 24 months from the date of acquisition to be considered for long-term capital gains taxation benefits. Holding the shares for this duration ensures that any gains arising from their transfer will be taxed at the long-term capital gains tax rate, which is generally more favorable compared to short-term capital gains tax rates.

Explanation:

When anyone opens an account with the National Pension System (NPS), they are allotted a unique Permanent Retirement Account Number (PRAN). This PRAN serves as a unique identifier for their NPS account and is used for all transactions and communications related to the NPS.

Explanation:

Interest received from notified infrastructure debt funds by non-resident Indians is taxable at a concessional rate of 5%.

Explanation:

Short-term capital gains arising from the transfer of securities, including equity shares, are chargeable to tax at the rate of 15% plus applicable surcharge and cess. This rate is specified in the Income Tax Act and applies to such gains made within a short holding period, typically less than one year.

Explanation:

Under Section 115BAD of the Income Tax Act, resident co-operative societies have the option to pay taxes at concessional rates. Since they choose this option, the provisions of the Alternative Minimum Tax (AMT) do not apply to them. This section provides relief to cooperative societies by allowing them to avail themselves of the concessional tax rates without being subject to AMT.

Explanation:

Under the GST (Goods and Services Tax) regime, when lenders earn a lending fee for lending their securities to borrowers, the nature of GST levied on such lending is IGST (Integrated Goods and Services Tax) under RCM (Reverse Charge Mechanism). This means that the recipient of the lending service is liable to pay the GST directly to the government instead of the supplier.

Explanation:

The losses arising from the transfer of bonus units of mutual funds shall be disallowed if any person buys units within a period of 3 months prior to the record date.

Explanation:

“Income from other sources” includes various types of income, such as dividend income, employees’ contributions towards staff welfare schemes, and deemed income of a closely held company, among others.

Explanation:

The target capital structure of a company is primarily determined by its debt-to-equity ratio. This ratio represents the proportion of debt and equity used to finance the company’s operations and investments. By adjusting the debt-to-equity ratio, the company can achieve its desired balance between debt and equity financing, which aligns with its financial goals, risk tolerance, and cost of capital. Therefore, the debt-to-equity ratio is a crucial factor in determining the target capital structure of a company.

Explanation:

As per Section 194F of the Income Tax Act, if the investor fails to furnish their PAN (Permanent Account Number), the tax deducted at source (TDS) rate applicable on the repurchase of units by UTI (Unit Trust of India) for a resident person is 40%. This higher TDS rate is applied as a penalty for non-compliance with PAN submission requirements.

Explanation:

A minimum contribution of Rs. 1,000 annually is required for Tier I NPS accounts to maintain the account’s active status and avail tax benefits.

Explanation:

Section 2(7) of the Income-tax Act defines the term “assessee” as the person who is liable for the payment of taxes or any other sum of money under the Act. This section clarifies who is subject to taxation and responsible for complying with the provisions of the Income-tax Act.

Explanation:

A Fund of Funds is a mutual fund scheme that invests in other schemes of mutual funds. Instead of directly investing in stocks or bonds, a Fund of Funds invests in a portfolio of other mutual funds.

Explanation:

Pass-through certificates are debt securities that are created from a select pool of assets, primarily consisting of debt or receivables of an enterprise. These securities pass the income generated from the underlying assets through to the holders of the certificates, hence the name “pass-through.” Investors receive payments proportional to their investment in the pool of assets, making them a type of asset-backed security.

Explanation:

Securities lending fees are subject to GST under the reverse charge mechanism. This means the recipient of the lending service is responsible for paying the GST directly to the government, rather than the supplier.

Explanation:

The book value of liabilities includes arrears of dividends payable for cumulative preference shares. Cumulative preference shares have a feature that if the company is unable to pay dividends in any year, the arrears accumulate and must be paid before dividends can be distributed to equity shareholders. Therefore, these arrears of dividends payable for cumulative preference shares are considered a liability of the company and are included in the book value of liabilities. This ensures accurate financial reporting and assessment of the company’s financial position.

Explanation:

ETE stands for “Exempt-Exempt-Taxable”. This category refers to investments where contributions are exempt from tax at the time of investment, earnings are also exempt from tax while the investment grows, but withdrawals or returns are taxable at the time of withdrawal. Examples include traditional IRAs (Individual Retirement Accounts) and 401(k) plans.

Explanation:

Forward contracts have customized contract size and expiry dates and are traded on the OTC market. These characteristics distinguish them from standardized futures contracts traded on organized exchanges.

Explanation:

Explanation:

The scheme of indexation, which allows for adjusting the cost of acquisition of an asset based on inflation, does not apply to any transfer of a bond or debenture. This is because bonds and debentures are considered as non-capital assets for the purpose of indexation under the Income Tax Act. Therefore, gains arising from the transfer of bonds or debentures are not eligible for indexation benefit.

Explanation:

An Options contract is a contract that gives the holder the right to purchase or sell the underlying security at a specified price within a specified period of time.

Explanation:

Explanation:

Income in the form of interest on securities is taxable under the head of business income when it’s earned as part of the regular business operations of the assessee.

Explanation:

A borrower can borrow securities to cover short positions and to avoid settlement failure.

Explanation:

Long-term capital gains from the transfer of securities, specifically equity shares, exceeding Rs. 1 lakh are chargeable to tax at a concessional rate.

Explanation:

Section 56(2) of the Income Tax Act exempts the resultant fund from tax liability when it receives a capital asset from the original fund.

Explanation:

Currency swap entails swapping both principal and interest between the parties, with the cash flow in two different currencies.

Explanation:

Under section 115A of the Income Tax Act, dividend income from any security received by Foreign Portfolio Investors (FPIs) is taxable at a flat rate of 20%. This provision ensures uniform taxation on dividend income received by FPIs, irrespective of their country of residence or the tax treaty provision

Explanation:

In the context of the Goods and Services Tax (GST) regime in India, the threshold limit for GST registration for suppliers engaged in the business of both goods and services is Rs. 10 lakhs of aggregate turnover. This means that businesses whose aggregate turnover exceeds Rs. 10 lakhs in a financial year are required to register for GST. This threshold is applicable for businesses operating in most states in India, although some states have different threshold limits.

Explanation:

If a return is furnished, the Tax Deducted at Source (TDS) applicable for interest on securities for a resident person, as per Section 193 of the Income Tax Act, is 10%.

Section 193 pertains to the TDS on interest on securities. When a resident person receives interest on securities, such as debentures or government securities, exceeding specified limits, TDS is required to be deducted by the payer. If the recipient has furnished their PAN (Permanent Account Number) and a return of income, the TDS rate applicable is 10%. This rate may vary for non-resident recipients or if the recipient has not furnished their PAN. Therefore, for a resident person, the TDS rate is 10% if a return is furnished.

Explanation:

Any interest income that Real Estate Investment Trusts (REITs) earned from Special Purpose Vehicles (SPVs) is exempt in the hands of REITs under Section 10(23FC). This exemption encourages investment in REITs and supports the development of the real estate sector.

Explanation:

ICDS-IV, which stands for Income Computation and Disclosure Standards IV, deals with revenue recognition. It provides guidelines on when to recognize revenue from various types of transactions, ensuring consistency and accuracy in reporting revenue in financial statements. These standards help in aligning the income computation practices of taxpayers with the principles laid down by the Income Tax Act, thereby ensuring transparency and reliability in financial reporting.

Explanation:

The term “salary” is defined under Section 17(1) of the Income-tax Act. This section outlines various components of income that are considered as salary for taxation purposes, including wages, annuity, and pension. It provides the legal framework for determining what constitutes salary income for individuals under the tax laws.

Explanation:

Under Section 112A, long-term capital gains from the transfer of mutual fund units are exempt from tax if the aggregate capital gain during the year is below Rs. 1 lakh.

Explanation:

The Multilateral Convention is a binding international legal instrument that facilitates the implementation of various measures recommended by the Organisation for Economic Co-operation and Development (OECD). It aims to streamline and standardize tax treaties between participating countries, primarily to combat tax avoidance and evasion. The convention provides a framework for countries to update their bilateral tax treaties efficiently and effectively, ensuring consistency and coherence in international tax matters.

Explanation:

ICDS-II (Income Computation and Disclosure Standards – II) deals with the valuation of inventories. According to ICDS-II, during the dissolution of a partnership firm, inventories are required to be valued at their net realizable value on the date of dissolution. This ensures that the assets are valued accurately during the winding up process, reflecting their true market worth.

Explanation:

For startups claiming deduction under Section 80-IAC, the total turnover in the previous year should not exceed Rs. 100 crores.

Explanation:

Under section 115AD of the Income Tax Act, the interest on rupee-denominated bonds for foreign institutional investors (FIIs) is taxable at the rate of 5%. This provision encourages foreign investment in Indian rupee-denominated bonds by providing a lower tax rate on the interest earned, thus making such investments more attractive for FIIs.

Explanation:

Under the Income Tax Act, a firm, local authority, or artificial juridical person cannot be considered as “ordinarily resident.” This status is applicable only to individuals and Hindu Undivided Families (HUFs), not to entities like firms or local authorities

Explanation:

The first tax instance on Employee Stock Ownership Plan (ESOP) arises at the time of the allotment of shares to the employee. At this point, the value of the shares allotted is treated as perquisites and is subject to taxation in the hands of the employee. This is because the allotment of shares represents the realization of the benefit conferred upon the employee through the ESOP scheme.

Explanation:

Losses from a normal business cannot be adjusted against the profits of a speculative business.

Explanation:

1. Capital gain: Income earned from the appreciation in the value of equity products when they are sold for a higher price than their purchase price.

2. Dividend income: Income earned from dividends distributed by companies to their shareholders based on their equity holdings.

Explanation:

The stock market, also known as the secondary market, provides both free marketability and price discharge. Free marketability means that investors can easily buy and sell securities, ensuring liquidity in the market. Price discharge refers to the mechanism through which the forces of supply and demand determine the price of securities, ensuring fair and efficient pricing.

Explanation:

As per Section 112 of the Income Tax Act, an assessee has the option to pay tax at the rate of 10% on long-term capital gains without indexation. This provision allows individuals to opt for a concessional tax rate of 10% on long-term capital gains arising from the transfer of specified assets like equity shares or mutual fund units, without availing the benefit of indexation.

Indexation is a method used to adjust the purchase price of an asset for inflation, thereby reducing the taxable capital gains. However, under Section 112, taxpayers can choose not to index their cost of acquisition and instead pay tax at the lower rate of 10% on the gains. This option provides simplicity and may be beneficial in certain scenarios where indexation results in negligible tax savings. Therefore, Section 112 grants taxpayers the option to avail of this concessional tax rate on long-term capital gains without indexation.

Explanation:

The value of any share allotted to an employee either free of cost or at a concessional rate is considered a perquisite. This means that regardless of whether the shares are provided at no cost or at a reduced rate, they are still considered a form of compensation or benefit provided by the employer to the employee. As such, the value of these shares is subject to taxation as perquisites in the hands of the employee.

Explanation:

The trading in derivatives including commodity derivatives is regulated by SCRA, 1956, which stands for Securities Contracts (Regulation) Act, 1956.

Explanation:

The assessment year under the Income-tax Act refers to the year immediately following the financial year in which the income is earned. It starts from April 1 of a given year and ends on March 31 of the following year. This allows for the computation and assessment of income earned during a specific financial year.

Explanation:

Foreign Portfolio Investors (FPIs) are liable to pay capital gains tax in India on the transfer of shares of an Indian company, irrespective of whether the shares are transferred to another party or not. Capital gains tax is applicable on the profit earned from the transfer of such shares, and FPIs are subject to the provisions of Indian tax laws regarding capital gains taxation. Therefore, they cannot avoid capital gains tax liability by transferring their shareholding to someone else.

Explanation:

Shareholders or unit-holders were indeed exempt from paying tax on dividend income. This exemption was applicable until the Finance Act of 2020 introduced tax on dividend income in certain cases.

Explanation:

An alternative investment fund shall be treated as a specified fund if all the units are held by non-residents except units held by the sponsor.

Explanation:

Under section 115BAA of the Income Tax Act, 1961, any domestic company has the option to pay taxes at a concessional tax rate of 22%. This provision was introduced to provide relief to domestic companies by reducing their tax burden and thereby boosting investment and economic growth. It allows companies to opt for a lower tax rate compared to the regular tax rates applicable to them, which could be higher. This concession aims to make the tax regime more competitive and attractive for businesses, ultimately stimulating economic activity and fostering business expansion.

Explanation:

Explanation:

Stamp duty applies to off-market transactions as well. Stamp duty is a tax levied by the state government on various transactions involving legal documents, including share transfers. It is payable on both on-market (stock exchange) and off-market (outside stock exchange) transactions involving the transfer of securities.

Explanation:

The concept of Real Estate Investment Trusts (REITs) was introduced in 2014 by the Securities and Exchange Board of India (SEBI) to enable investment in real estate assets through a regulated investment mechanism.

Explanation:

Interest received from bonds of an Indian Public Sector Undertaking (PSU) by a non-resident Indian is taxable at a rate of 10%.

Explanation:

Under Regulation 5 of the SEBI (FPI) Regulations, 2019, an FPI (Foreign Portfolio Investor) has the option to seek registration under either Category I or Category II. These categories are defined based on the nature and type of foreign investors seeking registration with SEBI. Choosing either Category I or Category II depends on the investment objectives, risk profiles, and strategies of the foreign investors.

Explanation:

Raw materials for business or profession are considered as stock-in-trade and not as capital assets. Capital assets typically include assets held for investment purposes such as land, buildings, machinery, vehicles, securities, etc. Raw materials, on the other hand, are held for the purpose of generating revenue through the ordinary course of business operations and are classified as stock-in-trade rather than capital assets.

Explanation:

The statement “The tier I NPS account is a voluntary saving account associated with PRAN of the subscriber” is b) FALSE. Tier I NPS account is mandatory for subscribers and forms the core retirement savings account.

Explanation:

The carried forward loss from a non-speculative business can be set off against business income in subsequent years.

Explanation:

Sovereign gold bonds bear interest at the rate of 2.50% per annum on the nominal value of the bond.

Explanation:

Short-term capital gains covered under Section 111A of the Income Tax Act pertain specifically to gains arising from the transfer of equity shares or units of an equity-oriented fund where Securities Transaction Tax (STT) is paid. Deductions under Sections 80C to 80U are not allowed against such gains because they are taxed separately at a concessional rate under Section 111A. This section provides for a flat tax rate on short-term capital gains from specified securities, and therefore, no deductions under other sections of the Income Tax Act are permissible against such gains.

Explanation:

The provisions of Alternate Minimum Tax (AMT) under the Income Tax Act are not applicable to a Hindu Undivided Family (HUF) if its adjusted total income does not exceed Rs. 20 lakhs. Adjusted total income refers to the total income of the HUF computed under normal provisions of the Income Tax Act, with certain adjustments as specified by law. If the adjusted total income of an HUF does not exceed Rs. 20 lakhs, it is exempt from the provisions of AMT.

Explanation:

The taxpayer shall opt for the presumptive taxation scheme under section 44AD of the Income Tax Act if their total turnover does not exceed Rs. 2 crores. This scheme provides for a simplified method of taxation for eligible taxpayers engaged in certain businesses. Under this scheme, the taxpayer is deemed to have earned a specified percentage of their turnover as their income, and they are not required to maintain detailed books of accounts. Since the turnover threshold for opting for this scheme is Rs. 2 crores, taxpayers whose total turnover does not exceed this amount can avail themselves of the benefits of presumptive taxation.

Explanation:

The cost of equity is derived using the Capital Asset Pricing Model (CAPM), which calculates the expected return on equity by considering the risk-free rate, the equity risk premium, and the beta of the asset. This model helps in estimating the required rate of return for equity investments based on their level of systematic risk.

Explanation:

Under section 112A of the Income Tax Act, long-term capital gains from the sale of equity shares allotted under an Employee Stock Option Plan (ESOP), to the extent they exceed Rs. 1,00,000, are taxable at the concessional rate of 10%. This provision aims to provide a tax benefit to employees who receive shares under an ESOP scheme, encouraging employee participation in the growth of the company

Explanation:

Under the Income Tax Act, an assessee engaged in business is required to get their books of accounts audited if their gross turnover or receipts during the relevant previous year exceed Rs. 1 crore. This audit requirement is mandated to ensure the accuracy and reliability of financial reporting and to facilitate proper assessment of income tax liabilities.

Explanation:

Forward derivatives are not standardized and typically involve counterparty risk. Unlike futures contracts, which are standardized and traded on organized exchanges, forward contracts are customized agreements between two parties, leading to counterparty risk because there is no central clearinghouse to guarantee performance.

Explanation:

Swap contracts are indeed considered portfolios of forward contracts. They involve an agreement between two parties to exchange cash flows or other financial instruments over a specified period. This arrangement resembles a series of forward contracts combined into one overall agreement.

Explanation:

The banker to an issue is involved in the acceptance of allotment or call monies during an IPO (Initial Public Offering). They play a crucial role in the issuance process by collecting subscription payments from investors, allotting shares, and managing the funds until the allotment process is completed.

Explanation:

The applicable TDS rate on repurchase of units by UTI for a resident person as per section 194F of the IT Act is 20%. This means that when UTI repurchases units from a resident investor, it is required to deduct tax at the rate of 20% on the income component associated with the repurchase. This ensures compliance with tax regulations and facilitates tax collection at the time of redemption or repurchase of units.

Explanation:

Masala bonds are an innovative type of bonds that are linked to the Indian rupee but issued to overseas investors. They allow foreign investors to invest in Indian debt securities denominated in Indian rupees, thereby reducing currency risk.

Explanation:

Pass-through status has been accorded to Category-I AIFs and Category-II AIFs. This means that the income earned by these Alternative Investment Funds (AIFs) is taxed directly in the hands of the investors and not at the level of the fund itself. Category-III AIFs, however, do not enjoy pass-through status, and therefore, their income is taxed at the level of the fund itself.

Explanation:

Securities Transaction Tax (STT) and Commodity Transaction Tax (CTT) are levied on the purchase and sale of securities and commodities, respectively. No deduction is allowed for any sum paid on account of STT or CTT while calculating the capital gains from the sale of securities or commodities. This is because these taxes are specifically imposed on transactions in securities and commodities and are not considered as allowable deductions for the purpose of computing capital gains.

Explanation:

The securities held by foreign portfolio investors are always treated as capital asset. (FALSE)

Explanation:

If the books of accounts of an assessee are required to be audited under any other law, such as the Companies Act, the audit report shall be furnished in Form 3CA. This form is prescribed under the Income Tax Act and is used to report the audit conducted under other laws. It provides information about the audit conducted under different statutes to ensure compliance with various regulatory requirements.

Explanation:

MAT (Minimum Alternate Tax) provisions are applicable to companies, including technology companies, whose tax payable, as computed under the regular provisions of the Income Tax Act, is less than a certain percentage (usually 18.5%) of their book profits. This provision ensures that even if a company’s taxable income is low or nil due to various deductions and incentives, it still pays a minimum amount of tax.

Explanation:

In derivative transactions, the aggregate of both favorable (profits) and unfavorable (losses) differences is considered as turnover. This is because turnover includes the total value of transactions, regardless of whether they result in profits or losses. Therefore, both profits and losses contribute to the overall turnover in derivative transactions.

Explanation:

Profits from the sale of Gold ETFs held for more than 36 months are considered long-term capital gains and taxed accordingly.

Explanation:

The surcharge on the dividend income taxable shall be taxed at the rate 15% if it is above Rs.1 crore in case of a trust.

Explanation:

Cash management bills are typically issued for a very short period, usually less than 91 days. This short-term nature allows governments and financial institutions to manage their cash flow efficiently by borrowing funds for a brief period to meet immediate financial needs, such as covering short-term deficits or managing liquidity requirements.

Explanation:

Category-III Alternative Investment Funds (AIFs) are those funds that employ diverse or complex trading strategies and undertake leverage or borrowing to generate returns for their investors. These funds typically engage in activities such as trading in listed or unlisted derivatives, commodity derivatives, or engaging in short-selling strategies. Therefore, both statements 1 and 2 are true regarding category-III AIFs.

Explanation:

No tax implication arises either in the hands of the company or in the hands of the shareholders at the time of allotment of bonus shares is TRUE.

Explanation:

Infrastructure Investment Trusts (InvITs) and Real Estate Investment Trusts (REITs) are eligible to issue rupee-denominated bonds. These entities are regulated by SEBI and are permitted to raise funds through various debt instruments, including rupee-denominated bonds. This enables them to access capital markets for financing their infrastructure and real estate projects, thereby facilitating investment in these sectors.

Explanation:

The scheme of indexation applies to capital indexed bonds and sovereign gold bond schemes. Indexation allows for adjustments to the purchase price of an asset, considering inflation, which helps in reducing the taxable capital gains

Explanation:

According to Section 55 of the Companies Act, 2013, a company cannot issue irredeemable preference shares. Irredeemable preference shares are those shares that do not have a fixed maturity date for repayment of capital, meaning they are not liable to be redeemed by the company at any future date. However, the Companies Act prohibits the issuance of such shares, requiring preference shares to be redeemable within a specified period. This provision is aimed at ensuring the financial flexibility and accountability of companies by mandating the redemption of preference shares within a reasonable timeframe.

Explanation:

In the case where all transactions are made through a bank account, the presumptive income shall be 6% of the turnover. This provision is mentioned in Section 44AD of the Income Tax Act, which allows certain eligible businesses to declare their income at a prescribed rate of turnover without the need for maintaining detailed books of accounts. The prescribed rate under this section is 6% of the total turnover if the receipts are received through banking channels.

Explanation:

Securities traded in the F&O segment and liquid index exchange-traded funds (ETFs) are eligible for lending and borrowing under the Securities Lending and Borrowing (SLB) scheme. This scheme facilitates short-term trading and liquidity management in the securities market.

Explanation:

The Finance Act, 2020 amended Section 191 of the Income Tax Act, which deals with the provision related to the liability of a person responsible for deducting tax at source. The amendment likely introduced changes regarding direct payment of tax by the employee, aiming to reduce the tax burden on individuals.

Explanation:

If an investment is chargeable to tax only at the time of transfer or withdrawal, then it falls under the category of Exempt-Exempt-Taxable (EET) taxation.

Explanation:

Under Section 196B of the Income Tax Act, tax on capital gains arising on transfer is required to be deducted only if such income is payable to an offshore fund. Offshore funds are entities registered and operated outside the jurisdiction of India, and specific provisions apply to them for tax deduction purposes under Indian tax laws.

Explanation:

According to Section 80-IAC defined by DPIIT, an entity qualifies as an eligible startup for the benefit of deferment of TDS for up to 10 years from the date of its registration. This provision aims to support startups by providing them with tax benefits for an extended period, thereby facilitating their growth and development.

Explanation:

Section 145 of the Income-tax Act provides methods of computation for income under both Income from Other Sources and Capital Gains.

Explanation:

Normal business loss can be set off against any income other than salary and income from gambling activities.

Explanation:

FCCBs (Foreign Currency Convertible Bonds) are treated similarly to coupon bonds for tax purposes. Therefore, the taxability of capital gains arising from the transfer of FCCBs is indeed the same as in the case of coupon bonds. Both are considered debt instruments, and the taxation principles applicable to them are similar.

Explanation:

The taxability of securitized debt instruments is governed by Section 115TCA of the Income Tax Act. This section provides specific provisions regarding the taxation of income arising from securitized debt instruments, ensuring clarity and consistency in the tax treatment of such financial instruments.

Explanation:

The period of holding for GDRs to qualify for long-term capital asset is 36 months.

Explanation:

An individual is treated as a resident in India if he stays in India for 365 days or more in 4 years preceding the previous year.

Explanation:

As per section 43(5) of the Income-tax Act, a transaction of purchase or sale of any commodity is considered as a speculative transaction if it is periodically or ultimately settled.