Indian Market, Regulation & Taxation

Additional Surveillance Measure

An exchange framework placing restrictions on securities showing unusual price or volume behaviour.

Test: the security meets criteria on price variation, volume, delivery percentage, concentration or valuation over the review period qualitative

Advance Tax

Income tax paid in instalments during the financial year rather than as a lump sum at the end.

Instalments: 15% by 15 June, 45% by 15 September, 75% by 15 December and 100% by 15 March, cumulative of the estimated liability ₹

Indian Market, Regulation & Taxation

AMFI

The Association of Mutual Funds in India, the industry body that sets standards and publishes industry data.

Test: the entity is a SEBI-registered mutual fund and a member of the association qualitative

Indian Market, Regulation & Taxation

Anchor Investor

A qualified institutional buyer allotted shares in an IPO a day before the issue opens to the public, at a fixed price.

Test: the investor is a qualified institutional buyer allotted within the anchor portion, subject to a minimum application size and a lock-in qualitative

Indian Market, Regulation & Taxation

Annual Information Statement

A consolidated statement from the income tax department showing financial transactions reported against a taxpayer's PAN.

Test: the transaction was reported to the tax department by a bank, broker, depository, fund house or registrar against the taxpayer's PAN qualitative

Indian Market, Regulation & Taxation

ASBA

Application Supported by Blocked Amount: the mechanism by which IPO application money is blocked in the applicant's bank account rather…

Test: the application amount is blocked in the investor's own bank account and debited only to the extent of shares actually allotted qualitative

Indian Market, Regulation & Taxation

Bank Nifty

The NSE's index of the most liquid large Indian banking stocks, used widely as a derivatives underlying.

Index Value computed from free-float market capitalisation of its banking constituents, weighted and capped per index rules index points

Indian Market, Regulation & Taxation

Bombay Stock Exchange

Asia's oldest stock exchange, founded in 1875, whose benchmark index is the Sensex.

Test: the security is admitted to trading on the BSE, which additionally assigns a numeric scrip code to each listed security qualitative

Indian Market, Regulation & Taxation

Business Income

Income from trading treated as a business rather than as investment, taxed at slab rates with expenses deductible.

Business Income = Trading Profit - Deductible Expenses including brokerage, exchange charges, internet, depreciation and advisory fees ₹

Indian Market, Regulation & Taxation

Capital Gains Tax

Tax on the profit realised when a capital asset is transferred.

Taxable Gain = Sale Consideration - Cost of Acquisition - Cost of Improvement - Transfer Expenses ₹

Indian Market, Regulation & Taxation

Carry Forward of Losses

The ability to carry an unabsorbed loss into future years to set off against future income of the permitted type.

Test: the return is filed by the due date, and the loss is set off in later years only against income of the category the rules permit ₹

Indian Market, Regulation & Taxation

CDSL

The Central Depository Services Limited, India's second depository, holding securities in electronic form.

Test: the demat account number is a 16-digit numeric identifier qualitative

Indian Market, Regulation & Taxation

Commodity Transaction Tax

A tax on the sell side of non-agricultural commodity derivative transactions on recognised exchanges.

CTT = Sell-Side Transaction Value x Applicable Rate %

Indian Market, Regulation & Taxation

Cost of Acquisition

The amount treated as having been paid for an asset, used as the base against which a capital gain is computed.

Capital Gain = Sale Consideration - Cost of Acquisition - Transfer Expenses ₹

Indian Market, Regulation & Taxation

Demat Account

An account with a depository in which securities are held in electronic form in the investor's name.

Test: the account is opened with a depository participant and holds securities as a beneficial owner record at NSDL or CDSL qualitative

Indian Market, Regulation & Taxation

Dematerialisation

The conversion of physical share certificates into electronic holdings in a demat account.

Test: the physical certificate is surrendered to the depository participant and an equivalent electronic credit is made to the demat account qualitative

Indian Market, Regulation & Taxation

Depository

An institution that holds securities in electronic form and enables their transfer between accounts.

Test: the entity is registered with SEBI as a depository and maintains securities in dematerialised form for beneficial owners qualitative

Indian Market, Regulation & Taxation

Dividend Taxation

The taxation of dividends in the hands of the shareholder at their applicable slab rate, following the 2020 change.

Tax on Dividend = Dividend Received x Marginal Slab Rate, with TDS deducted by the company above a threshold ₹

Indian Market, Regulation & Taxation

First In, First Out

The convention that the earliest-acquired units of a security are treated as sold first.

Test: on a partial sale, the cost and holding period of the oldest lot are used first, then the next oldest qualitative

Indian Market, Regulation & Taxation

Foreign Portfolio Investor

A non-resident investor registered with SEBI to invest in Indian securities markets.

Test: the entity holds a SEBI FPI registration in the applicable category and invests within prescribed limits qualitative

Indian Market, Regulation & Taxation

Front Running

Trading ahead of a known large order to profit from the price movement that order will cause.

Test: a person with knowledge of an impending substantial order transacts in the same security before that order is executed qualitative

Indian Market, Regulation & Taxation

GIFT City

India's international financial services centre in Gujarat, where transactions occur in foreign currency under a separate regulator.

Test: the entity or transaction is located in the International Financial Services Centre and regulated by the IFSC Authority qualitative

Indian Market, Regulation & Taxation

Graded Surveillance Measure

An exchange framework applying escalating restrictions to securities with weak fundamentals or unusual price behaviour.

Test: the security meets criteria on net worth, net income, price-to-earnings, market capitalisation or price movement, placing it in one of six stages qualitative

Indian Market, Regulation & Taxation

Grandfathering

The rule protecting gains accrued before long-term capital gains tax on listed equity was reintroduced in 2018.

Deemed Cost = Higher of (Actual Cost) and (Lower of Fair Market Value on 31 January 2018 and Sale Consideration) ₹