XX Taxation in Securities Markets - 1

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Q 1. What is the significance of the amendment made by the Finance Act, 2020, regarding the taxation of ESOPs in eligible start-ups?

It increases the tax burden on employees of eligible start-ups

This allows eligible start-ups to defer the deduction and payment of tax on ESOP prerequisites

It exempts eligible start-ups from paying any tax on ESOP prerequisites

Reducing the number of eligible start-ups for tax benefits
 
Q 2. Which of the following is NOT considered a conversion of securities?

Converting bonds into shares of the same company

Converting preferred shares into equity shares of the same company

Converting debentures into shares of another company

Converting Foreign Currency Exchange Bonds into shares of any company
 
Q 3. What is the responsibility of a securitization trust regarding tax deductions while distributing income to investors?

No tax deduction is required by the securitization trust

The trust must deduct tax at a flat rate of 10%

Trusts must deduct tax at the rate specified under Part II of the Finance Act

The trust must deduct tax at 25% for individuals or HUFs and 30% for other recipients
 
Q 4. What is the tax rate for short-term capital gains on Index ETFs in India?

10%

20%

15%

25%
 
Q 5. Which of the following statements regarding the tax treatment of withdrawal from NPS is incorrect?

Partial withdrawal is exempt up to 25% of the employee’s contribution made to NPS.

Final withdrawal at the time of closure of the account or opting out of the scheme is exempt from up to 60% of the total corpus available in the NPS account of the subscriber.

The amount received by a nominee on the death of the subscriber is fully exempt from tax.

Withdrawal from the Tier II account is fully exempt from tax.
 
Q 6. Under what circumstances would the payment for the purchase of securities (held as stock-in-trade) be disallowed while computing the business income?

If the payment exceeds Rs. 10,000 in total

If the payment is made in cash

If the payment is made through a bank draft

If the payment was made through an electronic clearing system
 
Q 7. When a zero-coupon bond matures, what is it considered?

Redemption

Transfer

Investment

Dividend
 
Q 8. What is the holding period for determining whether capital gains from the transfer of units of REIT are short-term or long-term?

12 months

24 months

36 months

48 months
 
Q 9. Which bonds are excluded from the definition of capital assets?

Corporate bonds

Government bonds

Gold Bonds issued in 1977 and 1980

Municipal bonds
 
Q 10. What does ESOS stand for in the context of employee share-based schemes?

Employee Stock Option Scheme

Employee Stock Ownership Scheme

Employee Stock Offering Scheme

Employee Stock Purchase Scheme
 
Q 11. Which section of the Income-tax Act provides for the taxation of profits or gains arising from the transfer of a capital asset?

Section 2(47)

Section 45

Section 55

Section 80C
 
Q 12. What is the tax treatment of the sum received from NPS in case of partial withdrawal?

Fully-taxable

Exempt from tax up to 25% of the employee's contribution

Exempt from tax up to 50% of the employee's contribution

Exempt from tax up to 75% of the employee's contribution
 
Q 13. Where can Interest Rate Derivative contracts be traded?

Only on recognized stock exchanges

Only over-the-counter

Both on recognized stock exchanges and over-the-counter

Only on electronic trading platforms
 
Q 14. What changes regarding stamp duty came into effect from April 1, 2020?

Removal of stamp duty on share transactions

Reduction in stamp duty rates across all states

Imposition of unified stamp duty rates for listed securities across India

Exemption of stamp duty for intraday trading
 
Q 15. Which provision of the Income-tax Act provides relief under Section 89?

Relief for AMT credit

Relief over foreign tax credit

Relief for late filing of return

Relief from arrears, advance salary, or family pension
 
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