How many questions come from Chapter 11 (Taxation of Equity Products) in the NISM Series X-B exam?

The workbook gives marks by module; shared over the module's chapters by length, this chapter is worth about 4 of the 150 marks, across MCQs and case studies.

Is there negative marking in NISM Series X-B?

Yes — 25% of the marks of a question is deducted for a wrong answer (0.25 on a 1-mark MCQ, 0.50 on a 2-mark case question), so leave a question blank when you cannot eliminate options.

Where can I practise NISM Series X-B Chapter 11 questions for free?

Aumsetu's free X-B mock test has an untimed chapter-wise practice mode with an explanation after every question, in English and Hindi, plus ten full-length timed mock tests.

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NISM Series X-B · Chapter 11: Taxation of Equity Products

इक्विटी उत्पादों का कराधान · NISM-Series-X-B: Investment Adviser (Level 2) Certification Examination

~4 of 150 marks 90 MCQs + 6 case studies · 150 marks · 3 hours · 60% to pass · −25% of a question's marks per wrong answer 28 practice questions in our bank + 1 case study

What this chapter covers

Dividends and capital gains on listed and unlisted shares, preference shares, warrants and equity-oriented funds; Section 112A with the 31 January 2018 grandfathering rule, Section 111A, surcharge caps, derivatives as business income, bonus stripping, and the benefits denied on concessionally taxed gains.

इक्विटी उत्पादों का कराधान — 112A, 111A, ग्रैंडफादरिंग, सरचार्ज सीमा, F&O आय और बोनस स्ट्रिपिंग।

What to master before the exam

Listed equity and equity-fund units with STT: short-term (12 months or less) at 20% under Section 111A; long-term at 12.5% above Rs 1,25,000 a year under Section 112A; without STT, long-term 12.5% and short-term at slab rates.
Grandfathering for shares bought on or before 31 January 2018: cost = the higher of actual cost and the lower of the 31-01-2018 fair market value and the sale price (bought 100, FMV 200, sold 250 ⇒ LTCG 50).
Surcharge on gains under Sections 111A, 112 and 112A and on dividends is capped at 15%; Chapter VI-A deductions and the 87A rebate cannot be used against Section 112A tax.
F&O income is non-speculative business income at normal rates; turnover is the total of favourable and unfavourable differences, including premium received on options sold; losses carry forward 8 years against business income.
Bonus stripping (Section 94(8)): units bought within 3 months before the record date and the originals sold within 9 months after — the loss is ignored and added to the cost of the bonus units; unlisted shares become long-term after 24 months.

Exam tip: Part of Module 9 (20 marks). Be fluent in the 20% / 12.5% / Rs 1.25 lakh rules, the grandfathering formula and the 15% surcharge cap — they often appear inside tax case questions.

Sample questions from this chapter

Five of the 28 questions in our free bank. Open the answer to see the explanation — every question in the mock test has one, in English and Hindi.

Question 1

As per the workbook, a dividend declared at the annual general meeting of a company is deemed to be the income of the shareholder for:

वर्कबुक के अनुसार, किसी कंपनी की वार्षिक आम बैठक (AGM) में घोषित लाभांश शेयरधारक की किस वर्ष की आय माना जाता है?

the previous year in which it is actually receivedवह पिछला वर्ष जिसमें यह वास्तव में प्राप्त होता है
the previous year in which the company's profits were earnedवह पिछला वर्ष जिसमें कंपनी ने लाभ अर्जित किया
the previous year in which it is declaredवह पिछला वर्ष जिसमें इसकी घोषणा की जाती है
the year in which the shareholder files the return of incomeवह वर्ष जिसमें शेयरधारक आयकर रिटर्न दाखिल करता है

Show answer & explanation

Answer: C — the previous year in which it is declared
A dividend declared at the AGM is deemed to be income of the previous year in which it is declared; the date of receipt is not material. An interim dividend is taxed in the year in which it is unconditionally made available to the shareholder (receipt basis).
AGM में घोषित लाभांश उस पिछले वर्ष की आय माना जाता है जिसमें इसकी घोषणा होती है; प्राप्ति की तारीख महत्वपूर्ण नहीं है। अंतरिम लाभांश उस वर्ष कर-योग्य है जिसमें वह शेयरधारक को बिना शर्त उपलब्ध कराया जाता है (प्राप्ति आधार)।

Question 2

Which statement about the rebate under section 87A is correct as per Chapter 11 of the workbook?

वर्कबुक के अध्याय 11 के अनुसार धारा 87A के अंतर्गत रिबेट के बारे में कौन-सा कथन सही है?

The rebate is not available on tax payable on LTCG covered under section 112A, but it is allowed on the tax on total income as reduced by tax on such gainsधारा 112A के अंतर्गत आने वाले LTCG पर देय कर पर रिबेट उपलब्ध नहीं है, लेकिन ऐसे लाभ पर कर घटाकर कुल आय पर कर पर यह अनुमत है
The rebate is fully available on tax payable on LTCG covered under section 112Aधारा 112A के अंतर्गत आने वाले LTCG पर देय कर पर रिबेट पूरी तरह उपलब्ध है
The rebate is available only against tax on section 112A gainsरिबेट केवल धारा 112A लाभों पर कर के विरुद्ध उपलब्ध है
The rebate is denied altogether to anyone who has any capital gain in the yearवर्ष में किसी भी पूंजीगत लाभ वाले व्यक्ति को रिबेट पूरी तरह अस्वीकार है

Show answer & explanation

Answer: A — The rebate is not available on tax payable on LTCG covered under section 112A, but it is allowed on the tax on total income as reduced by tax on such gains
Section 11.9.1: rebate under section 87A is not available on income-tax payable on LTCG covered under section 112A (equity shares, equity-oriented fund units, specified ULIPs, REIT/InvIT units). It is, however, allowed on the tax payable on total income as reduced by the tax on such gains.
खंड 11.9.1: धारा 112A के अंतर्गत आने वाले LTCG (इक्विटी शेयर, इक्विटी-ओरिएंटेड फंड यूनिट, निर्दिष्ट ULIP, REIT/InvIT यूनिट) पर देय आयकर पर धारा 87A का रिबेट उपलब्ध नहीं है। हालांकि, ऐसे लाभों पर कर घटाकर कुल आय पर देय कर पर यह अनुमत है।

Question 3

Ms. Q trades in futures and options. Her F&O turnover, computed as per the ICAI Guidance Note, is Rs. 1.5 crore and all receipts are through banking channels. If she opts for the presumptive scheme under section 44AD as described in the workbook, her presumptive income is:

सुश्री Q फ्यूचर्स और ऑप्शंस में ट्रेडिंग करती हैं। ICAI Guidance Note के अनुसार गणना किया गया उनका F&O टर्नओवर रु. 1.5 करोड़ है और सभी प्राप्तियाँ बैंकिंग चैनलों से हैं। यदि वे वर्कबुक में वर्णित धारा 44AD की प्रकल्पित (presumptive) योजना चुनती हैं, तो उनकी प्रकल्पित आय कितनी होगी?

Rs. 12,00,000रु. 12,00,000
Rs. 15,00,000रु. 15,00,000
Rs. 4,50,000रु. 4,50,000
Rs. 9,00,000रु. 9,00,000

Show answer & explanation

Answer: D — Rs. 9,00,000
Under section 44AD (turnover not exceeding Rs. 2 crore or 3 crore, as the case may be), profit can be declared at 6% of turnover for receipts through banking or digital modes (8% for cash receipts). 6% × 1.5 crore = Rs. 9,00,000; no further expenses are allowed or disallowed.
धारा 44AD के अंतर्गत (टर्नओवर रु. 2 करोड़ या 3 करोड़, जैसा भी हो, से अधिक न हो), बैंकिंग या डिजिटल माध्यम से प्राप्तियों पर टर्नओवर का 6% (नकद प्राप्तियों पर 8%) लाभ घोषित किया जा सकता है। 6% × 1.5 करोड़ = रु. 9,00,000; इसके बाद कोई और व्यय अनुमत या अस्वीकृत नहीं होता।

Question 4

Equity shares listed on a recognised stock exchange in India are treated as short-term capital assets if they are held for:

भारत में मान्यता प्राप्त स्टॉक एक्सचेंज पर सूचीबद्ध इक्विटी शेयर अल्पकालिक पूंजीगत परिसंपत्ति माने जाते हैं, यदि वे कितनी अवधि तक रखे गए हों?

not more than 24 months24 महीने से अधिक नहीं
not more than 12 months12 महीने से अधिक नहीं
not more than 36 months36 महीने से अधिक नहीं
less than 6 months6 महीने से कम

Show answer & explanation

Answer: B — not more than 12 months
Listed shares are short-term capital assets if held for not more than 12 months immediately preceding the date of transfer; otherwise they are long-term. Unlisted shares need more than 24 months to be long-term.
सूचीबद्ध शेयर अल्पकालिक पूंजीगत परिसंपत्ति हैं यदि ट्रांसफर की तारीख से ठीक पहले 12 महीने से अधिक नहीं रखे गए; अन्यथा वे दीर्घकालिक हैं। असूचीबद्ध शेयरों को दीर्घकालिक होने के लिए 24 महीने से अधिक चाहिए।

Question 5

Credits to Mr. R's demat account were: on 05-03-2022, 1,500 shares bought in demat form on 02-03-2022; on 12-03-2022, 4,000 shares dematerialised from physical certificates bought on 10-08-2008; on 20-03-2022, 2,000 shares bought on 18-03-2022. He now sells 3,000 shares from this account. As per section 45(2A) and the workbook, the shares sold are taken as:

श्री R के demat खाते में जमा (credits) इस प्रकार थे: 05-03-2022 को, 02-03-2022 को demat रूप में खरीदे गए 1,500 शेयर; 12-03-2022 को, 10-08-2008 को खरीदे गए भौतिक प्रमाणपत्रों से dematerialise किए गए 4,000 शेयर; 20-03-2022 को, 18-03-2022 को खरीदे गए 2,000 शेयर। अब वे इस खाते से 3,000 शेयर बेचते हैं। धारा 45(2A) और वर्कबुक के अनुसार, बेचे गए शेयर किस प्रकार माने जाएँगे?

1,500 shares acquired on 02-03-2022 and 1,500 shares acquired on 10-08-200802-03-2022 को अर्जित 1,500 शेयर और 10-08-2008 को अर्जित 1,500 शेयर
All 3,000 shares acquired on 10-08-2008, the earliest purchase dateसभी 3,000 शेयर 10-08-2008 को अर्जित, जो सबसे पहली खरीद तारीख है
2,000 shares acquired on 18-03-2022 and 1,000 shares acquired on 10-08-200818-03-2022 को अर्जित 2,000 शेयर और 10-08-2008 को अर्जित 1,000 शेयर
1,500 shares acquired on 02-03-2022 and 1,500 shares acquired on 18-03-202202-03-2022 को अर्जित 1,500 शेयर और 18-03-2022 को अर्जित 1,500 शेयर

Show answer & explanation

Answer: A — 1,500 shares acquired on 02-03-2022 and 1,500 shares acquired on 10-08-2008
In demat form FIFO applies, and for old physical stock dematerialised later the basis for movement out of the account is its date of entry into the account. Order of credit: 1,500 (credited 05-03-2022), then 4,000 (credited 12-03-2022). So 1,500 shares carry the 02-03-2022 purchase and the next 1,500 are treated as acquired on 10-08-2008, at the relevant cost.
demat रूप में FIFO लागू होता है, और बाद में dematerialise किए गए पुराने भौतिक स्टॉक के लिए खाते से निकासी का आधार खाते में उसकी प्रविष्टि की तारीख है। जमा का क्रम: 1,500 (05-03-2022 को जमा), फिर 4,000 (12-03-2022 को जमा)। अतः 1,500 शेयर 02-03-2022 की खरीद के और अगले 1,500 शेयर 10-08-2008 को अर्जित माने जाएँगे, संबंधित लागत पर।

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All X-B chapters

1. Basics of Insurance · 11 marks 2. Life Insurance Products · 9 marks 3. Non-Life Insurance Products · 5 marks 4. Retirement Planning Basics · 5 marks 5. Retirement Products · 19 marks 6. Miscellaneous Aspects of Retirement Planning · 6 marks 7. Concepts in Taxation · 4 marks 8. Capital Gains · 2 marks 9. Income from Other Sources · 1 marks 10. Taxation of Debt Products · 2 marks 11. Taxation of Equity Products · 4 marks 12. Taxation of Other Products · 4 marks 13. Tax Provisions for Special Cases · 3 marks 14. Basics of Estate Planning · 5 marks 15. Tools for Estate Planning · 15 marks 16. Basics of Behavioural Finance · 7 marks 17. Behavioural Finance in Practice · 3 marks 18. Risk Profiling for Investors · 12 marks 19. Comparison of Products across Categories · 20 marks 20. Case Studies · 13 marks

← Chapter 10: Taxation of Debt Products Chapter 12: Taxation of Other Products →

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