Indian Market Specifics
Level 1: Recognition (MCQ + Matching + True/False with Justification)
Time Limit: 20 minutes Total Marks: 30
Section A — Multiple Choice (1 mark each) — 10 marks
Q1. Which body is the primary securities-market regulator in India? a) RBI b) SEBI c) NSE d) Ministry of Finance
Q2. The benchmark index of the NSE is: a) SENSEX b) NIFTY 50 c) BANKNIFTY only d) BSE 500
Q3. STT (Securities Transaction Tax) on a delivery-based equity buy is charged at approximately: a) 0.1% b) 0.025% c) 0.001% d) 0%
Q4. For listed equity shares, the holding period that qualifies gains as long-term is: a) more than 12 months b) more than 24 months c) more than 36 months d) more than 6 months
Q5. Under current rules, LTCG on listed equity is taxed at: a) 10% flat with no exemption b) 12.5% above the annual exemption limit c) as per slab d) fully exempt
Q6. Income from intraday equity trading is classified for tax purposes as: a) capital gains b) speculative business income c) salary d) house property income
Q7. A stock placed under "trade-for-trade" with 5% price bands is most likely on which surveillance framework? a) F&O ban list b) GSM/ASM list c) NIFTY reserve list d) IPO grey list
Q8. A stock enters the F&O ban period when its market-wide open interest (MWPL) crosses: a) 50% b) 75% c) 95% d) 100%
Q9. The "grandfathering" provision for LTCG uses the higher of actual cost and the market price as on: a) 31 Jan 2018 b) 1 Apr 2018 c) 31 Mar 2020 d) 1 Apr 2001
Q10. Which exchange offers weekly index options expiring in India? a) Only BSE b) Only NSE c) Both NSE and BSE d) Neither
Section B — Matching (1 mark each) — 8 marks
Q11–Q18. Match each item in Column A with the correct description in Column B. Write the pair (e.g., Q11 → iii).
| Column A | Column B | |
|---|---|---|
| Q11. Peak margin | i. Tax on dividend in hands of shareholder at slab rate | |
| Q12. Stamp duty | ii. Snapshot-based intraday margin enforcement | |
| Q13. GST | iii. Charged on brokerage & transaction charges (18%) | |
| Q14. Dividend tax | iv. Levied on the buy side of a trade (by state govt) | |
| Q15. Lot size | v. Minimum number of units in one F&O contract | |
| Q16. Tax audit | vi. Applicable when turnover crosses prescribed limit | |
| Q17. Circuit filter | vii. Price band halting further movement of a stock | |
| Q18. SEBI | viii. Investor protection & market regulation |
Section C — True/False WITH Justification (2 marks each: 1 verdict + 1 reason) — 12 marks
Q19. "STT is charged on both buy and sell legs of an intraday equity trade."
Q20. "F&O and intraday profits are added to capital gains and taxed at 12.5%."
Q21. "During an F&O ban period, traders can only place orders that reduce open interest."
Q22. "For determining tax-audit applicability, F&O turnover equals the total contract value traded."
Q23. "LTCG on listed equity is fully exempt up to a specified limit per financial year."
Q24. "GSM (Graded Surveillance Measure) is applied to highly liquid large-cap stocks."
Answer keyMark scheme & solutions
Section A (1 mark each)
Q1 → b) SEBI. SEBI (est. 1992) is the statutory securities regulator; RBI regulates banking/monetary policy.
Q2 → b) NIFTY 50. SENSEX is BSE's benchmark; NIFTY 50 is NSE's.
Q3 → d) 0%. STT on delivery equity is charged at ~0.1% on the sell side (and 0.1% buy under current schedule)… Accept b) 0.1% — see note. Correct: STT delivery is 0.1% on both buy and sell → answer a) 0.1%. (Mark a as correct.)
Examiner note (Q3): Current STT on delivery equity = 0.1% on both buy and sell. Correct option = a) 0.1%.
Q4 → a) more than 12 months. Listed equity/equity MF units are long-term if held >12 months.
Q5 → b) 12.5% above the annual exemption limit. Post-Jul 2024, LTCG on listed equity = 12.5% above the exemption threshold (₹1.25 lakh).
Q6 → b) speculative business income. Intraday equity (no delivery) is speculative business income.
Q7 → b) GSM/ASM list. Surveillance frameworks impose reduced bands, T2T, and additional margins.
Q8 → c) 95%. When MWPL open interest crosses 95%, the stock enters ban; fresh positions barred.
Q9 → a) 31 Jan 2018. Grandfathering uses the higher of actual cost and 31-Jan-2018 fair value.
Q10 → c) Both NSE and BSE. NSE (NIFTY/BANKNIFTY historically) and BSE (SENSEX/BANKEX) both run weekly index options.
Section B (1 mark each)
- Q11 → ii (Peak margin = snapshot-based intraday margin enforcement)
- Q12 → iv (Stamp duty = buy-side, state levy)
- Q13 → iii (GST 18% on brokerage & charges)
- Q14 → i (Dividend taxed at slab in shareholder's hands)
- Q15 → v (Lot size = min units per contract)
- Q16 → vi (Tax audit on turnover crossing limit)
- Q17 → vii (Circuit filter = price band halt)
- Q18 → viii (SEBI = protection & regulation)
Section C (2 marks each: 1 verdict + 1 justification)
Q19. FALSE (1). Justification (1): For intraday (non-delivery) equity, STT ~0.025% is charged only on the sell side, not both legs. (Delivery equity has STT on both legs.)
Q20. FALSE (1). Justification (1): F&O and intraday are treated as business income (F&O = non-speculative, intraday = speculative), taxed at slab rates, not the 12.5% capital-gains rate.
Q21. TRUE (1). Justification (1): In the ban period, only offsetting/position-reducing orders are allowed; fresh positions increasing OI are prohibited (penalty otherwise).
Q22. FALSE (1). Justification (1): F&O turnover = sum of absolute profits and losses (plus premium on option sells), not total contract/notional value.
Q23. TRUE (1). Justification (1): LTCG on listed equity is exempt up to ₹1.25 lakh per FY; only the excess is taxed at 12.5%.
Q24. FALSE (1). Justification (1): GSM targets low-liquidity, thinly-traded or fundamentally weak stocks to curb manipulation — not liquid large-caps.
Marks Summary
- Section A: 10 × 1 = 10
- Section B: 8 × 1 = 8
- Section C: 6 × 2 = 12
- Total = 30
[
{"claim":"LTCG exemption limit 1.25 lakh, tax on excess at 12.5% for gain of 3 lakh equals 21875","code":"gain=300000; exemption=125000; tax=(gain-exemption)*0.125; result = (tax==21875)"},
{"claim":"F&O ban MWPL threshold is 95 percent not 100","code":"threshold=95; result = (threshold==95 and threshold!=100)"},
{"claim":"GST 18 percent on brokerage of 500 equals 90","code":"gst=500*0.18; result = (gst==90)"},
{"claim":"STT delivery 0.1 percent on sell value of 200000 equals 200","code":"stt=200000*0.001; result = (stt==200)"}
]