Certifications Mock Tests Study Material Menu Certifications Mock Tests Study Material NISM Series XX: Taxation in Securities Markets Certification Mock Test (Set 4) /50 NISM Series XX: Taxation in Securities Markets Certification Mock Test (Set 4) 1 / 50 1. The trading in derivatives including commodity derivatives is regulated by ________. a. SCRA, 1956 b. LLP Act, 2002 c. Companies Act, 2013 d. PMLA, 2002 Explanation:The trading in derivatives including commodity derivatives is regulated by SCRA, 1956, which stands for Securities Contracts (Regulation) Act, 1956. 2 / 50 2. In the case of FPIs, the resultant gains from derivatives shall always be _________. a. Short-term capital gain b. Speculative business income c. Long-term capital gain d. Long-term business income Explanation:In case of FPIs, the resultant gains from derivatives shall always be Short-term capital gain. 3 / 50 3. The unlisted shares of a company are treated as short-term capital assets if they are held for not more than _______. a. 12 months b. 24 months c. 36 months d. 48 months Explanation:The unlisted shares of a company are treated as short-term capital asset if they are held for not more than 24 months. 4 / 50 4. The losses can be carried forward for ______ only in case of non-speculative business losses. a. 2 years b. 4 years c. 6 years d. 8 years Explanation:The losses can be carried forward for 8 years only in case of non-speculative business losses. 5 / 50 5. Which one of these is true concerning Stock Split or Stock Divide? a. Process of dividing outstanding shares into smaller shares b. Stock Split or Stock Divide increases number of shares in the company c. Market Cap remains the same d. All of these Explanation:With respect to Stock Split or Stock Divide, all of these are true: Process of dividing outstanding shares into smaller shares, Stock Split or Stock Divide increases the number of shares in the company, and Market Cap remains the same. 6 / 50 6. The share or interest shall be deemed to derive its value substantially from the assets located in India if the value of such assets exceeds the amount of ______. a. Rs. 10 crore b. Rs. 15 crore c. Rs. 20 crore d. Rs. 25 crore Explanation:The share or interest shall be deemed to derive its value substantially from the assets located in India if the value of such assets exceeds the amount of Rs. 10 crore. 7 / 50 7. The taxability of long-term capital gains arising from the transfer of Masala bonds is the same as _______. a. Deep discount bonds b. Zero coupon bonds c. Coupon Bonds d. Both 1 and 2 Explanation:The taxability of long-term capital gains arising from the transfer of Masala bonds is the same as Coupon bonds. 8 / 50 8. An income statement shall be required to be furnished to the income tax department by the securitization trust in _______. a. Form No. 44A b. Form No. 64E c. Form No. 34C d. Form No. 54F Explanation:An income statement shall be required to be furnished to the income tax department by the securitization trust in Form No. 64E. 9 / 50 9. The short-term capital gain arising from the transfer of an alternate investment fund is chargeable to tax at the rate of ________. a. 10% b. 20% c. 30% d. 40% Explanation:The short-term capital gain arising from the transfer of alternate investment fund is chargeable to tax at the rate of 30%. 10 / 50 10. Which is true in the case of liquidation of the company? a. All the liabilities are paid off first b. Remaining assets are distributed among the equity shareholders c. Such distribution of assets not treated as transfer for capital gains d. All of these Explanation:In the case of liquidation of the company, all of these are true: All the liabilities are paid off first, Remaining assets are distributed among the equity shareholders, and Such distribution of assets is not treated as transfer for capital gains. 11 / 50 11. Any transfer of FCCBs by a non-resident on a recognized stock exchange located in any IFSC is treated as a transfer. a. True b. False Explanation:Any transfer of FCCBs by a non-resident on a recognized stock exchange located in any IFSC is treated as FALSE. 12 / 50 12. The subscribers of tier I NPS account shall be entitled to tax deduction under _______ at the time of contributing to NPS. a. Section 81D b. Section 81C c. Section 80CU d. Section 80CCD Explanation:The subscribers of tier I NPS account shall be entitled to tax deduction under Section 80CCD at the time of contributing to NPS. 13 / 50 13. _______ is a contract that gives the holder the right to purchase or sell the underlying security at a specified price within a specified period. a. Options contract b. Futures contract c. Forward contract d. Swap contract 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. 14 / 50 14. The ELSS fund has a compulsory lock-in period of _______. a. 2 years b. 3 years c. 4 years d. 5 years Explanation:The ELSS fund has a compulsory lock-in period of 3 years. 15 / 50 15. A company issues rupee-denominated shares in the name of the depository which delivers these shares to its _______. a. Local stock exchange b. Foreign depository c. Local custodian bank d. Both 2 and 3 Explanation:A company issues rupee-denominated shares in the name of the depository which delivers these shares to its Local custodian bank. 16 / 50 16. A person opting for the presumptive scheme shall be allowed to claim a deduction of only revenue expenses. a. True b. False Explanation:A person opting for presumptive scheme shall be allowed to claim a deduction of only revenue expenses is FALSE. 17 / 50 17. The preference shareholders would carry a preferential right to _______. a. Repayment in the case of a winding-up b. Payment of dividend c. Voting rights d. Only 1 and 2 Explanation:The preference shareholders would carry a preferential right to Repayment in the case of a winding-up and Payment of dividend. 18 / 50 18. The long-term capital gains arising from ULIPs would be charged to tax at ________ under section 112 of the IT Act. a. 10% b. 15% c. 20% d. 25% Explanation:The long-term capital gains arising from ULIPs would be charged to tax at 20% under section 112 of IT act. 19 / 50 19. 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. a. True b. False 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. 20 / 50 20. _______ expresses the present value of a business as a function of its future cash earnings capacity. a. Book value method b. DCF method c. Payback period method d. Cash flow to firm method Explanation:DCF method expresses the present value of a business as a function of its future cash earnings capacity. 21 / 50 21. The requirement of the method of accounting applies only to dividend income. a. True b. False Explanation:The requirement of method of accounting apply only to dividend income is FALSE. 22 / 50 22. The dual option warrants cannot be used to sell equity shares in different markets. a. True b. False Explanation:Dual option warrants cannot be used to sell equity shares in different markets is FALSE. 23 / 50 23. If the fund is not deemed to have a business connection in India is a category I FPI, the enumeration paid to an eligible fund manager shall be lower than _______ of AUM. a. 10% b. 20% c. 30% d. 40% Explanation:If the fund not deemed to have a business connection in India being a category I FPI, the enumeration paid to an eligible fund manager shall be lower of 10% of AUM. 24 / 50 24. The rental income is chargeable to tax under the head _______. a. Profits and gains from business b. Income from other sources c. Both 1 and 2 d. Annuity income Explanation:The rental income is chargeable to tax under the head Both 1 & 2. 25 / 50 25. In the case of a foreign currency convertible bond the issuer has no control over the transfer mechanism. a. True b. False Explanation:TRUE: In case of foreign currency convertible bonds (FCCBs), the issuer typically lacks control over the transfer mechanism, as it’s generally the bondholder who exercises the conversion option. 26 / 50 26. Any agricultural land situated in any rural area in India is not a capital asset. a. True b. False Explanation:TRUE: Agricultural land situated in any rural area in India is not considered a capital asset for taxation purposes. 27 / 50 27. If the notional loss is not computed under this ICDS VIII, it shall be disallowed under ________ of the IT act. a. Section 21D(7) b. Section 40A(13) c. Section 20B(10) d. Section 30C(8) Explanation:Section 40A(13): If the notional loss is not computed in accordance with ICDS VIII (Income Computation and Disclosure Standards), it shall be disallowed under Section 40A(13) of the Income Tax Act. 28 / 50 28. A company can avoid any dilution in earnings per share that a further issue of equity might cause by issuing ______. a. Debt for equity swap b. Masala bonds c. Foreign currency convertible bond d. Bearer debentures Explanation:Foreign currency convertible bonds (FCCBs): A company can avoid dilution in earnings per share caused by further issuance of equity by issuing FCCBs. 29 / 50 29. The securities transaction tax is levied in case of transactions carried out through a stock exchange located in IFSC. a. True b. False Explanation:FALSE: Securities transaction tax (STT) is not levied on transactions carried out through a stock exchange located in an International Financial Services Centre (IFSC). 30 / 50 30. The GST threshold limit if the supplier is engaged only in the supply of goods is ________. a. Rs.10 lakhs b. Rs.20 lakhs c. Rs.30 lakhs d. Rs.40 lakhs Explanation:Rs. 40 lakhs: The GST threshold limit for suppliers engaged only in the supply of goods is Rs. 40 lakhs. 31 / 50 31. The ICDS VI relates to ________. a. Tangible fixed assets b. Revenue recognition c. Effects of change in foreign exchange rates d. Borrowing costs Explanation:Effects of change in foreign exchange rates: ICDS VI relates to the treatment of foreign exchange gains and losses arising from the effects of changes in foreign exchange rates. 32 / 50 32. Which of the following are not allowed in IFSC stock exchanges? a. Commodity trading b. Equity derivatives c. Issuance of foreign currency bonds d. None of the above Explanation:None of the above: Commodity trading, equity derivatives, and issuance of foreign currency bonds are all allowed in IFSC stock exchanges. 33 / 50 33. An income statement shall be required to be furnished to the investors by the securitization trust in _______. a. Form No. 44F b. Form No. 53F c. Form No. 64F d. Form No. 12F Explanation:Form No. 64F: An income statement is required to be furnished to the investors by the securitisation trust in Form No. 64F. 34 / 50 34. As per _______ of the IT act, income in the nature of interest on securities shall be computed by the method of accounting regularly employed by the assessee. a. Section 155 b. Section 135 c. Section 125 d. Section 145 Explanation:Section 145: Income in the nature of interest on securities shall be computed by the method of accounting regularly employed by the assessee as per Section 145 of the IT Act. 35 / 50 35. The deposit of money shall be charged to GST if the stockbroker applies such deposit as a consideration in his books of accounts towards the supply of broking services. a. True b. False Explanation:TRUE: Deposit of money is charged to GST if a stockbroker applies such deposit as consideration in his books of accounts towards the supply of broking services. 36 / 50 36. Any loss arising from F&O can be set off against any normal business income. a. True b. False Explanation:TRUE: Loss arising from Futures and Options (F&O) trading can be set off against any normal business income. 37 / 50 37. The share transfer agent is involved in _______. a. Finalizing the list of persons entitled to allotment b. Redemption of its securities c. Maintaining the records of holders of securities issued d. Both 2 and 3 Explanation:Both 2 & 3: Share transfer agents are involved in redemption of securities and maintaining records of holders of securities issued. 38 / 50 38. Which of the following is true concerning share consolidation? a. Decreases the number of shares b. Increases the market value of the shares c. Decreases the market price per share d. Both 1 and 2 Explanation:Both 1 & 2: Share consolidation decreases the number of shares and increases the market value of the shares. 39 / 50 39. ______ entities or funds are considered as alternative investment fund. a. SME funds b. ESOP trusts c. Family trusts d. All the above Explanation:SME funds: SME funds are considered as alternative investment funds (AIFs). 40 / 50 40. The fee earned from the lending of securities shall be taxable under the head _______ if the assesses is in the business. a. Capital gains b. Income from other sources c. Profits and gains from business d. Property Income Explanation:Profits and gains from business: Fees earned from lending of securities are taxable under the head of profits and gains from business if the assessee is engaged in the business. 41 / 50 41. The original fund means a fund that is _______. a. Established in India b. Person resident in India c. Registered outside India d. Only 1 and 2 Explanation:Registered outside India: An original fund is a fund that is registered outside India. 42 / 50 42. The short-term capital gains on index ETFs would be taxable at the rate of _______ under Section 111A. a. 20% b. 15% c. 12% d. 18% Explanation:15%: Short-term capital gains on index Exchange Traded Funds (ETFs) are taxable at the rate of 15% under Section 111A. 43 / 50 43. The multilateral convention shall implement the measures recommended by the _______ to prevent base erosion and profit shifting. a. World Bank b. OECD c. European Union d. BRICS union Explanation:OECD: The multilateral convention implements measures recommended by the OECD to prevent base erosion and profit shifting. 44 / 50 44. The intra-day trading of shares is considered a speculative transaction. a. True b. False Explanation:TRUE: Intraday trading of shares is considered a speculative transaction. 45 / 50 45. In the case of cumulative preference shares, the dividend is only payable out of the net profits of each year. a. True b. False Explanation:FALSE: In case of cumulative preference shares, dividends can be payable even if there are no profits. 46 / 50 46. An FPI being an investment division of an offshore banking unit is subject to the provisions of alternate minimum tax. a. True b. False Explanation:FALSE: An FPI being an investment division of an offshore banking unit is not subject to the provisions of alternate minimum tax. 47 / 50 47. The lender is required to deposit _______ of the lending price as a margin in the case of SLB. a. 10% b. 15% c. 20% d. 25% Explanation:25%: The lender is required to deposit 25% of the lending price as margin in case of Securities Lending and Borrowing (SLB). 48 / 50 48. The ________ of the company shall be deemed to be an assesses-in-default for the amount of tax payable on buyback of shares. a. Treasury b. Custodian c. Nominee director d. Principal officer Explanation:Principal officer: The principal officer of the company shall be deemed to be an assessee-in-default for the amount of tax payable on buyback of shares. 49 / 50 49. _______ arises when the agent is empowered to enter into the contracts and carry out jobs exclusively for its principal. a. Construction PE b. Service PE c. Agency PE d. Either 2 or 3 Explanation:Agency PE: Agency Permanent Establishment (PE) arises when the agent is empowered to enter into contracts and carry out jobs exclusively for its principal. 50 / 50 50. ________ shall be levied on inter-state supply of goods or services. a. CGST b. SGST c. IGST d. Both 1 and 2 Explanation:IGST (Integrated Goods and Services Tax) shall be levied on inter-state supply of goods or services. Your score is 0% Restart quiz Exit
