Unit ko samjho · NISM Series XXI-A
Taxation
7 questions is unit mein
Sawaal aur jawaab English mein hain, kyunki NISM ka exam paper bhi English mein hota hai.
Is unit mein kya hai
- Two investors hold similar securities through PMS, but one is a resident individual and the other is a non-resident company. What should happen before applying a tax calculation?
- For this question only, taxable interest is ₹80,000 and the final tax rate is 25%. Creditable tax already withheld is ₹8,000. With no other credits or levies, what additional tax remains payable?
- Assume an investment is taxed on realised gains when sold. Securities costing ₹4 lakh are sold for ₹4.6 lakh, and all proceeds stay in the PMS cash account. With no deductible costs, what gain is realised under this supplied rule?
- For this question, sale proceeds are ₹1,20,000 and acquisition cost is ₹1,00,000. A ₹500 selling charge is deductible, but a ₹1,000 management fee is not deductible in this gain calculation. What taxable gain follows?
- Which information set is most useful for reconciling a client’s investment tax reporting?
- For a particular client and period, assume verified tax advice classifies the specified derivative-trading result as business income. How should a reporting preparer treat it?
- An NRI’s onboarding file refers to both a bank-linked Portfolio Investment Scheme arrangement and a PMS agreement. What should the distributor avoid assuming?
Zaroori ideas
Practice bank se · 1
Two investors hold similar securities through PMS, but one is a resident individual and the other is a non-resident company. What should happen before applying a tax calculation?
Tax assessment depends on the investor, the character of income and the applicable legal period, not only the investment channel. Identify residence, legal form and the relevant transaction and income categories. Apply verified rules for the relevant period and circumstances. Do not infer a universal tax rate from the fact that investments are managed through PMS. Remember: Identify the taxpayer and income type before applying a tax rate.
Hint Common mistake: Assuming that every PMS client has the same tax treatment.
XXI-A-129Practice bank se · 2
For this question only, taxable interest is ₹80,000 and the final tax rate is 25%. Creditable tax already withheld is ₹8,000. With no other credits or levies, what additional tax remains payable?
Tax withholding is a collection mechanism. The final liability must be calculated and reconciled with valid credits. Final tax = ₹80,000 × 25% = ₹20,000. Additional payable = ₹20,000 − ₹8,000 = ₹12,000. The rate and full credit eligibility are expressly hypothetical. Remember: Calculate final liability first, then deduct eligible tax credits.
Hint Common mistake: Treating the withholding amount as the final tax or as an extra tax.
XXI-A-130Practice bank se · 3
Assume an investment is taxed on realised gains when sold. Securities costing ₹4 lakh are sold for ₹4.6 lakh, and all proceeds stay in the PMS cash account. With no deductible costs, what gain is realised under this supplied rule?
Realisation, account cash movement and withdrawal by the investor are separate events under the stated tax assumption. The securities have been sold, so the supplied realisation condition is satisfied. Gain = ₹4,60,000 − ₹4,00,000 = ₹60,000. Retaining the proceeds in the account does not undo the sale under that assumption. Remember: Distinguish investment realisation from movement of the resulting cash.
Hint Common mistake: Assuming that no withdrawal necessarily means no realised gain.
XXI-A-131Practice bank se · 4
For this question, sale proceeds are ₹1,20,000 and acquisition cost is ₹1,00,000. A ₹500 selling charge is deductible, but a ₹1,000 management fee is not deductible in this gain calculation. What taxable gain follows?
An economic expense and a tax-allowable deduction are not automatically the same thing. Gain before allowed charges = ₹1,20,000 − ₹1,00,000 = ₹20,000. Deduct the permitted ₹500 selling charge to obtain ₹19,500. Do not deduct the ₹1,000 fee because the question expressly excludes it. Remember: Apply the stated tax classification of costs rather than deducting every economic expense.
Hint Common mistake: Assuming that a fee reducing portfolio value is always deductible in the same tax computation.
XXI-A-132Practice bank se · 5
Which information set is most useful for reconciling a client’s investment tax reporting?
Tax records must explain the transactions and income being reported, not just the value of the investment account. Reconcile buys, sells and income with the underlying statements and supporting documents. Identify costs, dates, classifications and credits applicable to the investor. Resolve differences before using a summary in a return. Remember: Keep a transaction-level audit trail rather than relying only on performance summaries.
Hint Common mistake: Using NAV or portfolio return as a substitute for tax-reporting data.
XXI-A-133Practice bank se · 6
For a particular client and period, assume verified tax advice classifies the specified derivative-trading result as business income. How should a reporting preparer treat it?
Investment-channel labels and account age do not substitute for determining the character of a particular income item. Use the verified classification expressly given in the scenario. Apply the corresponding computation and reporting rules for that client and period, without importing capital-gain treatment from unrelated transactions. Remember: Classify the income item before applying the relevant tax computation.
Hint Common mistake: Assigning every PMS transaction to automatically.
XXI-A-134Practice bank se · 7
An NRI’s onboarding file refers to both a bank-linked Portfolio Investment Scheme arrangement and a PMS agreement. What should the distributor avoid assuming?
Similar labels can refer to different arrangements. An investment route is not the same as a contract delegating investment decisions. Separate the bank-linked route and its applicable conditions from the PMS service agreement. Then establish investor status, permissions, account arrangements and decision authority from the relevant documents. Do not infer one from the name of the other. Remember: Distinguish the route through which investments are made from the authority to manage them.
Hint Common mistake: Treating PIS and PMS as interchangeable service descriptions.
XXI-A-135A capital gain is the gain from selling an asset for more than its eligible cost.
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