NISM Series XIX-C AIF Managers Certification Exam - 3

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Q 1. Which Income Tax Act (ITA) section exempts Investment Funds from withholding taxes on non-business income?

a) Section 197A(1C)

b) Section 197A(1F)

c) Section 115UB

d) Section 64C
 
Q 2. Which tax rate is higher for domestic companies, MAT or normal provisions?

a) MAT

b) Normal provisions

c) Both are the same

d) None of the above
 
Q 3. According to section 115R of the ITA, who is liable to pay additional income tax on income distributed by mutual funds?

a) Mutual funds

b) Unitholders

c) Trustees

d) Regulators
 
Q 4. How are gains from transactions in derivative contracts such as futures and options taxed for Category III AIFs?

a) Exempt from tax

b) Taxed at a flat rate

c) Taxed at a concessional rate

d) Subject to withholding tax
 
Q 5. What are resident investors entitled to claim in their income returns under the ITA, as per section 194LBB?

a) Deductions for charitable donations

b) Rebates on medical expenses

c) Credit of taxes withheld by the Investment Fund

d) None of the above
 
Q 6. Under what conditions are Unitholders eligible for pass-through of losses?

a) Holding units in the Fund for at least 6 months

b) Holding units in the Fund for at least 3 years

c) Holding units in the Fund for at least 12 months

d) Holding units in the Fund for exactly 1 year
 
Q 7. How are gains on the sale of units of the Fund taxed in the hands of investors?

A) Taxed as business income

B) Taxed as dividend income

C) Taxed as long-term capital gains

d) Taxed at applicable rates for capital gains
 
Q 8. Effective from when will the bonus stripping provisions cover all securities and units?

a) April 1, 2021

b) April 1, 2022

c) April 1, 2023

d) None of the above
 
Q 9. Which of the following is NOT a stream of income for unit holders in a Category III AIF?

a) Interest income

b) Rental income

c) Gains on transfer of unlisted securities

d) Gains arising from derivatives trading
 
Q 10. What is the potential tax treatment of early redemption of units of a Category III AIF?

a) No tax liability

b) Treated as a separate taxable transfer

c) Taxable at a concessional rate

d) Taxable only in the hands of the Fund
 
Q 11. How are gains from transactions in derivative contracts such as futures and options taxed for Category III AIFs?

a) Exempt from tax

b) Taxed at a flat rate

c) Taxed at a concessional rate

d) Subject to withholding tax
 
Q 12. What is the minimum corpus required for each scheme of a Special Situation Fund (SSF)?

a) INR 10 crore

b) INR 50 crore

c) INR 100 crore

d) INR 500 crore
 
Q 13. What is the penalty for non-compliance with SEBI (Alternative Investment Funds) Regulations if a fund or person managing such fund fails to adhere to the regulations?

A) INR 1 crore

B) Three times the amount of gains made

C) INR 1 lakh for each day of non-compliance

d) None of the above
 
Q 14. What type of funds are allowed to employ leverage, including through investment in both listed and unlisted derivatives?

A) Venture Capital Funds

B) Social Impact Funds

C) Hedge Funds

d) Debt Funds
 
Q 15. What is considered a special situation asset for Special Situation Funds?

a) Gold and silver

b) Stocks of Fortune 500 companies

c) High-yield bonds

d) Mutual funds

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