📊 NISM Series X-BChapter 6 of 20⚖ 8 marks weightageCase-Based ✓
Ch.6: Miscellaneous Aspects of Retirement Planning
Practice questions for NISM-Series-X-B: Investment Adviser (Level 2) Certification Examination
(mandated by SEBI under the Investment Advisers Regulations, 2013).
Chapter 6 carries 8 out of 150 marks
in the final examination. The exam has 90 MCQs + 9 case-based sets (5 sub-questions each, mixed 1-mark
and 2-mark weighting), 180-minute duration, 60% passing score, and 25% negative marking on the marks
of each wrong answer.
30
MCQ
1
Case Sets
35
Total Qs
8
Exam Marks
60%
Pass Score
−25%
Neg. Marking
What You Will Learn in This Chapter
Understand reverse mortgage and senior citizen savings schemes
Know post-retirement healthcare and estate considerations
Understand annuitization options available at retirement
For Assessment Year 2024-25, Mr. Sharma, a resident individual, opts for the new tax regime under Section 115BAC. His total income is Rs. 6,50,000. What is the maximum tax rebate he can claim under Section 87A?
ARs. 12,500
✓Rs. 25,000
CRs. 60,000
DNo rebate is applicable as his income exceeds Rs. 5,00,000.
💡 As per Section 87A, from Assessment Year 2024-25 onwards, if a resident individual opts for the new tax regime under Section 115BAC and his total income is up to Rs. 7,00,000, he can claim a higher amount of tax rebate of up to Rs. 25,000. Mr. Sharma's income of Rs. 6,50,000 falls within this limit.
Q2MCQ · 1 markMediumCapital Assets
Which of the following assets, even if held for personal use by an assessee, is specifically NOT considered a 'personal effect' and therefore treated as a capital asset under the Income Tax Act, as per the provided text?
ACar
BWearing apparel
✓Jewellery
DFurniture
💡 The text lists 'Personal Effects' as an exclusion from capital assets, including examples like 'wearing apparel, furniture, car, scooter, TV, refrigerator, musical instruments, gun, revolver, generator'. However, it then explicitly states: "However, the following assets, even if are meant for personal use, shall not be considered as personal effects and any gain arising from their sale shall be charged to tax: i. Jewellery..."
Mr. A, an Indian resident, earns rental income from a house property located in the US. Both India (residence country) and the US (source country) impose tax on this income. According to the text, how do Double Taxation Avoidance Agreements (DTAAs) typically provide relief from such double taxation?
AThe source country (US) is required to exempt the income from tax.
✓The residence country (India) allows a credit for the taxes paid to the source country (US).
CThe taxpayer can choose to pay tax in only one of the two countries.
DBoth countries agree to tax only 50% of the income.
💡 The text states: 'In most cases DTAAs provide relief from double taxation by the residence country giving right to claim credit for taxes paid to the source country.' This means India, as the residence country, would provide credit for the taxes Mr. A paid in the US.
According to the provided text, which of the following investment categories is correctly matched with its taxation regime?
APublic Provident Fund (PPF) - EET
BEquity Linked Saving Schemes (ELSS) - EEE
✓Tax saving Bank Fixed deposit for 5 years or more - ETE
DSenior Citizen Savings Scheme (SCSS) - EEE
💡 As per the table in Section 7.16:
- Public Provident Fund (PPF) is EEE.
- Equity Linked Saving Schemes (ELSS) is EET.
- Tax saving Bank Fixed deposit for 5 years or more is ETE.
- Senior Citizen Savings Scheme (SCSS) is ETE.
Therefore, option C is the correct match.
Which of the following investments is explicitly categorised under the 'EET' taxation regime, where 'E' denotes Exempt and 'T' denotes Taxable, as per the provided text?
APublic Provident Fund (PPF)
✓Equity Linked Saving Schemes (ELSS)
CTax saving Bank Fixed Deposit for 5 years or more
DSenior Citizen Savings Scheme (SCSS)
💡 The provided text's table of examples lists: EEE for Public Provident Fund, EET for Equity Linked Saving Schemes (ELSS), and ETE for Tax saving Bank Fixed Deposit for 5 years or more and Senior Citizen Savings Scheme.
Q6MCQ · 1 markEasyCapital Assets
Which of the following assets, typically held for personal use, is explicitly NOT considered a 'personal effect' and thus treated as a capital asset for tax purposes as per the Income Tax Act?
AWearing apparel
BFurniture
CCar
✓Jewellery
💡 Section 8.2, under 'Exclusions' for 'Personal Effects', states that 'However, the following assets, even if are meant for personal use, shall not be considered as personal effects and any gain arising from their sale shall be charged to tax: i. Jewellery...'. Wearing apparel, furniture, and cars are listed as examples of personal effects that are excluded from capital assets.
Q7MCQ · 1 markMediumGross Total Income vs. Total Income
Which of the following statements accurately describes the relationship between 'Gross Total Income' and 'Total Income' as per the Income Tax Act?
AGross Total Income is computed after making deductions under Chapter VI-A, while Total Income is computed before such deductions.
✓Total Income is computed after making deductions under Chapter VI-A from Gross Total Income.
CGross Total Income includes income from other persons that has been clubbed, but Total Income does not.
DTotal Income is always higher than Gross Total Income.
💡 Section 80B(5) defines 'Gross Total Income' as the total income computed before making any deduction under Chapter VI-A. Section 7.13 states that 'Total Income' is the balance income remaining after claiming various deductions from 'Gross Total Income'. Therefore, Total Income is computed after making deductions under Chapter VI-A from Gross Total Income.
Q8MCQ · 1 markHardCapital Asset Definition
Which of the following assets, if held by an assessee for personal use, would still be considered a 'capital asset' under the Income Tax Act, meaning any gain arising from its sale would be chargeable to tax?
AA personal car used for daily commute.
BWearing apparel.
✓A collection of antique paintings.
DFurniture in a residential house.
💡 The text specifies that 'Personal Effects - Movable property held for personal use... is not treated as capital asset' and lists 'wearing apparel, furniture, car, scooter, TV, refrigerator, musical instruments, gun, revolver, generator, etc.,' as personal effects. However, it explicitly states an exception: 'the following assets, even if are meant for personal use, shall not be considered as personal effects and any gain arising from their sale shall be charged to tax: i. Jewellery (including ornaments...), drawings, paintings, sculptures, any work of art.' Therefore, a collection of antique paintings is a capital asset.
Q9MCQ · 1 markEasyMaximum Marginal Rate
As per Section 2(29C) of the Income Tax Act, what is the Maximum Marginal Rate of Tax (MMR) for an individual, including surcharge and Health & Education Cess, as specified in the provided text?
A30%
B37%
✓42.744%
D34.944%
💡 As per Section 7.17, the Maximum Marginal Rate (MMR) is calculated as: Highest slab rate applicable in case of Individual (30%) + Surcharge (30% * 37% = 11.1%) + Health & Education cess ({(30%)+(11.1%)} * 4% = 1.644%) = 42.744%.
Mr. A, a resident of India, earns rental income from a house property located in the United States. India follows a dual approach to taxation, while the US may apply source-based taxation. To avoid double taxation of this income, which mechanism do countries typically use, as described in the text?
AUnilateral relief provided by the source country.
✓DTAA, where the residence country typically gives credit for taxes paid to the source country.
CDTAA, where the source country typically gives credit for taxes paid to the residence country.
DThe income is taxed only in the country where the property is located.
💡 The text states: "To avoid double taxation of income, countries enters into Double Taxation Avoidance Agreement (DTAA)." It further clarifies: "In most cases DTAAs provide relief from double taxation by the residence country giving right to claim credit for taxes paid to the source country."
An investment scheme offers tax benefits at the time of making the investment (deposit) and at the time of withdrawal. However, the returns or interest generated from this investment during its tenure are subject to tax. Which taxation regime category best describes this investment?
AEEE (Exempt-Exempt-Exempt)
BEET (Exempt-Exempt-Taxable)
✓ETE (Exempt-Taxable-Exempt)
DTEE (Taxable-Exempt-Exempt)
💡 The text defines ETE as: 'if an investment provides tax benefit at the time of deposit and withdrawal but return on such investment is chargeable to tax then it will fall under the category of “ETE”'. The question describes tax benefit at deposit (first E) and withdrawal (third E), with returns being taxable (middle T), matching ETE.
Q12MCQ · 1 markEasyGross Total Income
As per Section 80B(5) of the Income Tax Act, ‘Gross Total Income’ means the total income computed in accordance with the provisions of the Income Tax Act before making any deduction under Chapter VI-A. Which of the following is the final step in computing Gross Total Income before applying Chapter VI-A deductions?
ACalculating income under the five heads of income.
BClubbing income of other persons with the assessee's income.
✓Setting off losses of the current year or earlier years.
DDeducting investments and savings made by the assessee.
💡 The text states the steps for computing Gross Total Income are: Step 1: Calculate income under five heads of income, Step 2: Club income of other persons, Step 3: Set-off the losses of the current year or earlier years. Therefore, setting off losses is the final step before making any deductions under Chapter VI-A.
Q13MCQ · 1 markHardCapital Assets and Personal Effects
According to the Income Tax Act, which of the following items, despite being held for personal use, is explicitly NOT considered a 'personal effect' for the purpose of exclusion from capital assets, meaning any gain from its sale would be charged to tax?
AA personal car used for daily commute.
BWearing apparel used by the assessee.
✓Jewellery made of gold and precious metals.
DA television set used in the household.
💡 The text under 'Exclusions' for Capital Assets states: 'Movable property held for personal use of the assessee or any member of his family... is not treated as capital asset. Example, wearing apparel, furniture, car, scooter, TV, refrigerator, musical instruments, gun, revolver, generator, etc., are personal effects, thus, they are not treated as capital assets.' However, it explicitly lists exceptions: 'However, the following assets, even if are meant for personal use, shall not be considered as personal effects and any gain arising from their sale shall be charged to tax: i. Jewellery (including ornaments made of gold, silver, platinum or any other precious metal or any alloy containing one or more of such precious metals whether or not worked or sewn into any...).'
According to the provided text, which of the following investments is categorized under the 'ETE' taxation regime, with the caveat that its first leg of 'E' is not available under the new tax regime?
APublic Provident Fund (PPF)
BEquity Linked Saving Schemes (ELSS)
✓Senior Citizen Savings Scheme (SCSS)
DNational Pension System (NPS) Tier I
💡 Section 7.16 provides examples: Public Provident Fund (EEE), Equity Linked Saving Schemes (EET), and Tax saving Bank Fixed deposit for 5 years or more; Senior Citizen Savings Scheme (ETE). The note states: '* The first leg of E is not available under the new tax regime' applies to all listed examples. Therefore, SCSS is an ETE investment.
India follows a dual approach to taxation. Which of the following best describes this approach?
AA resident in India pays tax only on Indian income, while a non-resident pays tax on worldwide income.
BIndia primarily follows source-based taxation for all residents and non-residents.
✓A person resident in India is liable to pay tax on his total worldwide income, and a person who is non-resident in India is liable to pay tax only on his Indian income.
DIndia only taxes income that arises within its territory, regardless of the residency status of the individual.
💡 The text states: 'India follows the dual approach whereby on one hand, a person resident in India is liable to pay tax in India on his total worldwide income. On the other hand, a person, who is non-resident in India during the year, is liable to pay tax only on his Indian income.'
Based on the provided text, which of the following investments is categorized under the 'EEE' taxation regime?
AEquity Linked Saving Schemes (ELSS)
BTax saving Bank Fixed deposit for 5 years or more
✓Public Provident Fund (PPF)
DSenior Citizen Savings Scheme
💡 The text explicitly lists 'Public Provident Fund*' under the 'EEE' category in the table of examples for EEE, EET, and ETE investments. ELSS is EET, and Tax saving Bank FD and Senior Citizen Savings Scheme are ETE.
Mr. A, a resident of India, owns a house property in the US from which he earns rental income. Based on India's dual approach to taxation and the purpose of a Double Taxation Avoidance Agreement (DTAA), which of the following statements is most accurate regarding Mr. A's tax liability?
AMr. A will only pay tax on his rental income in the US, as it is the source country, and not in India.
✓Mr. A will pay tax on his worldwide income in India, and the US may also tax the rental income as the source country, but DTAA will typically allow India (residence country) to give credit for taxes paid in the US (source country).
CMr. A will pay tax on his worldwide income in India, and he is exempt from paying any tax in the US under DTAA.
DMr. A will only pay tax in India on his Indian income, as he is a resident of India.
💡 As per Section 7.15, India follows a dual approach where a resident in India is liable to pay tax on his total worldwide income. The US, as the source country, may also impose tax. This leads to double taxation. To avoid this, DTAAs are entered into, and 'In most cases DTAAs provide relief from double taxation by the residence country giving right to claim credit for taxes paid to the source country.' The example of Mr. A's rental income from the US property illustrates this principle.
Q18MCQ · 1 markHardMaximum Marginal Rate of Tax
As per the Income Tax Act, what is the Maximum Marginal Rate (MMR) of tax for an individual, considering the highest slab rate, surcharge, and Health & Education Cess as provided in the text?
A30%
B41.1%
✓42.744%
D43.68%
💡 The calculation for MMR is provided in the text:
1. Highest slab rate applicable in case of Individual = 30%
2. Add: Surcharge [(B) = (A) * 37%] = 30% * 0.37 = 11.1%
3. Add: Health & Education cess [(C) = {(A)+(B)} * 4%] = (30% + 11.1%) * 0.04 = 41.1% * 0.04 = 1.644%
4. Maximum Marginal Rate (MMR) = 30% + 11.1% + 1.644% = 42.744%
Q19MCQ · 1 markEasyGross Total Income
As per Section 80B(5) of the Income Tax Act, 'Gross Total Income' is defined as the total income computed in accordance with the provisions of the Act before making any deduction under which Chapter?
✓Chapter VI-A
BChapter IV
CChapter II
DChapter VIII
💡 Section 80B(5) explicitly states that ‘Gross Total Income’ means the total income computed in accordance with the provisions of the Income Tax Act before making any deduction under Chapter VI-A.
Q20MCQ · 1 markEasyGross Total Income
As per Section 80B(5) of the Income Tax Act, 'Gross Total Income' means the total income computed in accordance with the provisions of the Income Tax Act before making any deduction under which of the following Chapters?
AChapter II
✓Chapter VI-A
CChapter X
DChapter XII-A
💡 The text states: 'Section 80B(5) of the Income Tax Act provides that ‘Gross Total Income’ means the total income computed in accordance with the provisions of the Income Tax Act before making any deduction under Chapter VI-A.'
Q21MCQ · 1 markMediumRebate under Section 87A
For Assessment Year 2024-25, a resident individual opting for the new tax regime under Section 115BAC has a total income of Rs. 6,80,000. What is the maximum tax rebate this individual can claim under Section 87A?
ARs. 12,500
✓Rs. 25,000
CRs. 60,000
DNo rebate is available as income exceeds Rs. 5,00,000.
💡 The text states: "from Assessment Year 2024-25 onwards, if a resident individual opts for the new tax regime under Section 115BAC and his total income is up to Rs. 7,00,000, he can claim a higher amount of tax rebate of up to Rs. 25,000." Since the individual's income of Rs. 6,80,000 is within the Rs. 7,00,000 limit for AY 2024-25 under the new tax regime, they can claim a rebate of up to Rs. 25,000.
Mr. A, a resident of India, earns rental income from a house property located in the US. Both India and the US have the right to tax this income based on their respective taxation principles. To avoid double taxation, which mechanism do countries typically employ, and how does it usually provide relief?
ACountries enter into a DTAA, where the source country gives credit for taxes paid to the residence country.
✓Countries enter into a DTAA, where the residence country gives credit for taxes paid to the source country.
CCountries avoid DTAA, and the taxpayer must pay tax in both countries without relief.
DCountries enter into a DTAA, but it only applies to corporate income, not individual income.
💡 The text states: 'To avoid double taxation of income, countries enters into Double Taxation Avoidance Agreement (DTAA).' It further clarifies: 'In most cases DTAAs provide relief from double taxation by the residence country giving right to claim credit for taxes paid to the source country.'
Q23MCQ · 1 markEasyGross Total Income
As per Section 80B(5) of the Income Tax Act, ‘Gross Total Income’ means the total income computed in accordance with the provisions of the Income Tax Act before making any deduction under which Chapter?
✓Chapter VI-A
BChapter VIII
CChapter VII
DChapter X
💡 The text states: "Section 80B(5) of the Income Tax Act provides that ‘Gross Total Income’ means the total income computed in accordance with the provisions of the Income Tax Act before making any deduction under Chapter VI-A."
Q24MCQ · 1 markHardTax Rebate and Capital Gains
Mr. Sharma, a resident individual, has a total income of ₹6,50,000 for Assessment Year 2024-25 under the new tax regime (Section 115BAC). His income includes ₹1,50,000 from long-term capital gains chargeable under Section 112A from the sale of equity-oriented mutual funds. If his tax liability before rebate is ₹20,000 (excluding tax on 112A income) plus tax on 112A income, what is the maximum rebate he can claim under Section 87A?
A₹25,000
B₹12,500
C₹0
✓₹20,000
💡 1. **Eligibility for Rebate:** For AY 2024-25, under the new tax regime, a resident individual with total income up to ₹7,00,000 can claim a rebate of up to ₹25,000 (Section 7.11). Mr. Sharma's total income is ₹6,50,000, which is within this limit, making him eligible for the rebate.
2. **Rebate Restrictions:** Section 7.11 explicitly states: 'The rebate under Section 87A is not available from tax payable as per section 112A in respect of long-term capital gains arising from the transfer of equity shares, units of equity-oriented mutual funds...'
3. **Calculation:**
* Mr. Sharma's total income is ₹6,50,000.
* This includes ₹1,50,000 from LTCG u/s 112A. The tax on this portion is not eligible for rebate.
* His tax liability *before rebate* is stated as ₹20,000 (excluding tax on 112A income).
* Since the rebate cannot be claimed against tax on 112A income, it can only be claimed against the other tax liability.
* The maximum rebate available for his income level is ₹25,000, but it cannot exceed the tax liability against which it can be claimed.
* Therefore, the maximum rebate he can claim is ₹20,000 (the tax payable *other than* u/s 112A).
Q25MCQ · 1 markMediumTax Rebate under Section 87A
For Assessment Year 2024-25, a resident individual opts for the new tax regime under Section 115BAC. If their total income is Rs. 6,50,000, what is the maximum tax rebate this individual can claim under Section 87A?
ARs. 12,500
✓Rs. 25,000
CRs. 60,000
DNo rebate is available under this regime for this income.
💡 The text states: 'from Assessment Year 2024-25 onwards, if a resident individual opts for the new tax regime under Section 115BAC and his total income is up to Rs. 7,00,000, he can claim a higher amount of tax rebate of up to Rs. 25,000.' Since the individual's income of Rs. 6,50,000 is within this limit, the maximum rebate is Rs. 25,000.
Q26MCQ · 1 markMediumEffective Rate of Tax
An individual has a total taxable income of ₹25,00,000 and the total income tax payable (including surcharge and cess) is ₹5,87,500. What is the effective tax rate for this individual?
A21.45%
✓23.50%
C25.00%
D20.00%
💡 As per Section 7.18, for an individual, the effective tax rate is computed as total income-tax as a percentage of total taxable income.
Effective tax rate = (Total income tax payable / Total taxable income) * 100
Effective tax rate = (₹5,87,500 / ₹25,00,000) * 100 = 0.235 * 100 = 23.50%.
Q27MCQ · 1 markEasyTax Rebate u/s 87A
What is the maximum tax rebate available under Section 87A for a resident individual who opts for the new tax regime under Section 115BAC and whose total income is up to Rs. 7,00,000 for Assessment Year 2024-25 onwards?
ARs. 12,500
✓Rs. 25,000
CRs. 60,000
DNo rebate is available.
💡 As per Section 87A, from Assessment Year 2024-25 onwards, if a resident individual opts for the new tax regime under Section 115BAC and his total income is up to Rs. 7,00,000, he can claim a higher amount of tax rebate of up to Rs. 25,000.
Q28MCQ · 1 markEasyTax Rebate
From Assessment Year 2024-25 onwards, if a resident individual opts for the new tax regime under Section 115BAC, what is the maximum tax rebate amount they can claim if their total income is up to Rs. 7,00,000?
ARs. 12,500
✓Rs. 25,000
CRs. 60,000
DNo rebate is available under the new tax regime.
💡 As per Section 7.11, from Assessment Year 2024-25 onwards, if a resident individual opts for the new tax regime under Section 115BAC and their total income is up to Rs. 7,00,000, they can claim a higher amount of tax rebate of up to Rs. 25,000.
Q29MCQ · 1 markHardCapital Asset Exclusions
According to the Income Tax Act, which of the following assets, even if held for personal use by an assessee, is NOT considered a 'personal effect' and therefore any gain arising from its sale IS chargeable to tax as a capital gain?
AA personal car used for daily commute
BWearing apparel
✓Jewellery inherited from a family member
DA refrigerator used in the household
💡 The text lists 'Personal Effects' as an exclusion from capital assets, giving examples like wearing apparel, furniture, car, and refrigerator. However, it explicitly states: 'However, the following assets, even if are meant for personal use, shall not be considered as personal effects and any gain arising from their sale shall be charged to tax: i. Jewellery...'. Therefore, jewellery is a capital asset, and its sale is taxable.
Q30MCQ · 1 markMediumCapital Assets
Which of the following assets, typically considered for personal use, is explicitly NOT treated as a personal effect and thus any gain arising from its sale would be chargeable to tax as per the provided text?
AA car used for daily commute.
BA television set in a household.
✓Jewellery owned by the assessee.
DWearing apparel.
💡 As per the 'Exclusions' section under 8.2 Capital asset, movable property held for personal use is generally not a capital asset (e.g., car, TV, wearing apparel). However, the text explicitly states: 'However, the following assets, even if are meant for personal use, shall not be considered as personal effects and any gain arising from their sale shall be charged to tax: i. Jewellery'.
Case-Based Questions (1 sets)
Case 1Case-Based · 1 mark eachTax Aspects of Retirement Investments
Mr. Rajiv Sharma, a 45-year-old resident individual, is diligently planning for his retirement at age 60. For the Financial Year 2024-25, his annual salary income is Rs. 6,50,000. Additionally, he has an annual income of Rs. 50,000 from other sources, which includes interest from a regular savings account. He has made the following investments to build his retirement corpus and save tax:
1. Public Provident Fund (PPF): Rs. 1,00,000
2. Equity Linked Saving Schemes (ELSS): Rs. 50,000
3. 5-year Tax-saving Bank Fixed Deposit: Rs. 30,000
Mr. Sharma is evaluating his tax liability for FY 2024-25 and is considering opting for the new tax regime under Section 115BAC. He wants to understand the tax implications of his investments, especially concerning their tax treatment at different stages. Assume no other income, losses, or deductions apart from those mentioned, and all conditions for the new tax regime (Section 115BAC) are met. For the purpose of tax calculations in the new regime, assume the following slab rates for FY 2024-25: up to Rs. 3,00,000 - Nil; Rs. 3,00,001 to Rs. 6,00,000 - 5%; Rs. 6,00,001 to Rs. 9,00,000 - 10%.
Medium Sub-question 1
Mr. Sharma is comparing his ELSS and 5-year Tax-saving Bank Fixed Deposit investments. Which of the following statements accurately describes their tax treatment at the stage of withdrawal/maturity, based on their EEE/EET/ETE classification provided in the chapter text?
AELSS is taxable at withdrawal, and the Tax-saving FD is also taxable at withdrawal.
BELSS is exempt at withdrawal, and the Tax-saving FD is also exempt at withdrawal.
✓ELSS is taxable at withdrawal, while the Tax-saving FD is exempt at withdrawal.
DELSS is exempt at withdrawal, while the Tax-saving FD is taxable at withdrawal.
💡 As per the provided text:
- ELSS is categorized as EET (Exempt, Exempt, Taxable). This means the investment (first E) and its returns/interest during the accumulation phase (second E) are exempt, but the amount withdrawn or transferred is taxable (T). Therefore, ELSS is taxable at withdrawal.
- Tax-saving Bank Fixed Deposit for 5 years or more is categorized as ETE (Exempt, Taxable, Exempt). This means the investment (first E) and withdrawal (third E) are exempt, but the returns/interest generated during the accumulation phase are taxable (T). Therefore, the Tax-saving FD is exempt at withdrawal.
Thus, the correct statement is that ELSS is taxable at withdrawal, while the Tax-saving FD is exempt at withdrawal.
Easy Sub-question 2
What is the tax treatment category (EEE, EET, or ETE) for Mr. Sharma's Public Provident Fund (PPF) investment as per the provided chapter text, assuming he opts for the old tax regime?
✓EEE
BEET
CETE
DTEE
💡 As per the provided text, Public Provident Fund (PPF) is an example of an EEE (Exempt, Exempt, Exempt) investment. This means the investment qualifies for deduction, the returns/interest on investment are exempt from tax, and no tax is levied at the time of withdrawal of principal or interest. The note in the text states that 'The first leg of E is not available under the new tax regime,' but the question specifies 'assuming he opts for the old tax regime,' making it a full EEE.
Hard Sub-question 3
Considering Mr. Sharma's Gross Total Income of Rs. 7,00,000 and his decision to opt for the new tax regime under Section 115BAC for FY 2024-25, calculate his effective tax rate.
✓0%
B2.14%
C3.57%
D4.29%
💡 Mr. Sharma's Gross Total Income (GTI) = Rs. 7,00,000.
Since he opts for the new tax regime and deductions under Chapter VI-A are generally not allowed for the mentioned investments, his Total Income for tax calculation purposes remains Rs. 7,00,000.
Tax Calculation under New Regime (FY 2024-25):
1. On first Rs. 3,00,000: Nil = Rs. 0
2. On next Rs. 3,00,000 (Rs. 3,00,001 to Rs. 6,00,000): 5% of Rs. 3,00,000 = Rs. 15,000
3. On balance Rs. 1,00,000 (Rs. 6,00,001 to Rs. 7,00,000): 10% of Rs. 1,00,000 = Rs. 10,000
Total Tax before Rebate = Rs. 15,000 + Rs. 10,000 = Rs. 25,000.
As per Section 87A (New Tax Regime for AY 2024-25 onwards), if total income is up to Rs. 7,00,000, a rebate of up to Rs. 25,000 is available.
Since Mr. Sharma's tax liability before rebate is Rs. 25,000 and his total income is exactly Rs. 7,00,000, he is eligible for a full rebate of Rs. 25,000.
Net Tax Payable = Total Tax before Rebate - Rebate = Rs. 25,000 - Rs. 25,000 = Rs. 0.
Effective Tax Rate = (Net Tax Payable / Total Taxable Income) * 100
Effective Tax Rate = (Rs. 0 / Rs. 7,00,000) * 100 = 0%.
Medium Sub-question 4
If Mr. Sharma opts for the new tax regime under Section 115BAC for FY 2024-25, what would be the amount of tax rebate he can claim under Section 87A, given his Gross Total Income?
ARs. 0
BRs. 12,500
✓Rs. 25,000
DRs. 35,000
💡 Mr. Sharma's Gross Total Income (GTI) is Rs. 7,00,000. Under the new tax regime, most Chapter VI-A deductions are not allowed, so his Total Income for rebate calculation is also Rs. 7,00,000.
As per the provided text, from Assessment Year 2024-25 onwards, if a resident individual opts for the new tax regime under Section 115BAC and his total income is up to Rs. 7,00,000, he can claim a higher amount of tax rebate of up to Rs. 25,000. Since his total income is exactly Rs. 7,00,000, he is eligible for the full rebate of Rs. 25,000.
Easy Sub-question 5
What is Mr. Sharma's Gross Total Income (GTI) for the Financial Year 2024-25?
ARs. 6,50,000
✓Rs. 7,00,000
CRs. 5,20,000
DRs. 5,70,000
💡 As per Section 80B(5) of the Income Tax Act, Gross Total Income means the total income computed in accordance with the provisions of the Income Tax Act before making any deduction under Chapter VI-A.
Salary Income = Rs. 6,50,000
Income from Other Sources = Rs. 50,000
Gross Total Income = Salary Income + Income from Other Sources = Rs. 6,50,000 + Rs. 50,000 = Rs. 7,00,000.
About this content: These practice questions are based on the
NISM-Series-X-B: Investment Adviser (Level 2) Certification Examination Workbook
published by the National Institute of Securities Markets (NISM), Mumbai.
NISM is a SEBI-established institution. Questions cover Miscellaneous Aspects of Retirement Planning with verified answers and explanations.
BullWiser is an independent exam preparation platform — not affiliated with NISM or SEBI.
Last updated: .
Ready to Test Yourself Under Exam Conditions?
Full 180-minute mock exam with all 20 chapters, mixed-weight case-based questions, negative marking, and NISM-accurate 60% pass threshold.