NISM V-D Taxation — Practice Questions
Practise the taxation of mutual fund investors — capital gains on equity and non-equity schemes, holding periods, IDCW taxation, STT and ELSS deductions.
18 questions on Taxation in the ScoreSetu bank — each with a detailed explanation and, where useful, a memory hook.
What this topic covers
- Equity vs non-equity holding periods
- Short- and long-term capital gains
- IDCW taxation
- STT and Section 80C
Free sample questions
1. Identify the FALSE statement : 1. When an investor sells his mutual fund units, the re-purchase is done by the mutual fund. Therefore the investor does not have to bear a tax on the capital gains 2. When an investor invests in a debt mutual fund for more than three years, the capital gains will be considered as Long term capital gain
- A. Only 1 is false
- B. Only 2 is false
- C. Both 1 and 2 are false ✅
Answer: C — Both 1 and 2 are false
Why: 1. Re-purchase transactions are treated as a sale of units by the investor. Therefore, there will be an element of capital gain (or capital loss) and it will be taxed accordingly. 2. As per Finance Act 2023, growth option of debt funds was made taxable as short term capital gains (STCG) irrespective of holding period. Therefore there is no Long term capital gain tax in debt funds.
💡 Both false: re-purchase is a taxable sale; post-Finance Act 2023 debt-fund gains are STCG (no LTCG).
2. Sale of units of equity oriented mutual fund (delivery based) will attract Securities Transaction Tax at ______ %.
- A. 0.01
- B. 0.001 ✅
- C. 0.017
- D. 0.125
Answer: B — 0.001
Why: When an investor sells units of an equity fund in the stock exchange, or offers them for re-purchase to the fund, he/she will have to incur Securities Transaction Tax (STT). STT is charged at 0.001% on such sale transactions.
💡 STT on sale of equity-oriented MF units (delivery) = 0.001%.
3. Securities transaction Tax (STT) is applicable on redemption of both Equity mutual funds and Debt mutual funds - State whether True or False?
- A. True
- B. False ✅
Answer: B — False
Why: STT is not applicable to transactions in debt securities or debt mutual fund schemes.
💡 FALSE: STT hits equity MF redemption only, NOT debt MF.
Practise all 18 Taxation questions
Plus the full 853-question NISM V-D bank and real-feel mock exams.
Other NISM V-D topics
Investment LandscapeConcept & Role of Mutual FundsLegal StructureLegal & RegulatoryScheme Related InformationDistribution & ChannelsNAV, TER & PricingInvestor ServicesRisk, Return & PerformanceScheme PerformanceScheme SelectionBasics of DerivativesUnderstanding the IndexForwards & FuturesOptionsEquity Derivative StrategiesInterest Rates & Fixed IncomeInterest Rate DerivativesInterest Rate FuturesInterest Rate OptionsInterest Rate Strategies