Ch.9 · Investor Services

Systematic Transactions — SIP, SWP, STP

40 practice questions on this topic

What is the consequence of a mutual fund investor not providing or updating their email ID in the folio?

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EXPLANATION

If an investor has not registered an email ID, all account-related communications including account statements and CAS are sent by physical post to the registered mailing address. There is no transaction restriction.

What is the TDS rate on short-term capital gains from equity mutual fund redemptions for an NRI?

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EXPLANATION

NRI investors face TDS at 20% on STCG from equity mutual funds (Section 111A), plus applicable surcharge and cess. Note: Post July 2024 Budget, the STCG rate for equity is 20% (increased from 15%).

In a mutual fund folio, which of the following is the correct order of holding for joint accounts in terms of redemption authority?

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EXPLANATION

In 'Either or Survivor' mode, any joint holder can redeem independently. In 'Joint' mode, all holders must sign the redemption request. The holding mode governs operational authority.

Can a minor investor have a joint holding in a mutual fund folio?

A.Yes — a minor can be either first or second joint holder
B.Yes — as long as one of the joint holders is an adult
C.Yes — but only if the joint holder is a parent
D.No — a minor can only be the sole account holder with a guardian operating the folio

A switch transaction in mutual funds refers to:

A.Changing the nomination in a folio
B.Converting regular plan units to direct plan units across AMCs
C.Moving units between two different AMCs
D.Transferring units from one scheme to another within the same AMC

In an SWP, each withdrawal from an equity fund held for more than 12 months is treated as:

A.Ordinary income taxable at slab rate
B.Short-term capital gain taxable at 20% flat
C.Tax-free as the fund has been held for over 1 year
D.Long-term capital gain taxable at 12.5% above ₹1.25 lakh annual exemption

What does the Account Statement sent within 5 business days of a transaction contain?

A.Only the number of units allotted and folio number
B.An estimate of future returns based on the invested amount
C.A summary of all folios linked to the investor's PAN
D.Detailed transaction confirmation including units, NAV, amount, and current folio balance

An investor submits a redemption request for an equity mutual fund at 4:00 PM on a business day. Which NAV will be applicable?

A.Next business day's NAV
B.Previous day's NAV
C.Same day's NAV
D.NAV two days later

An NRI investor from the UK redeems units from an equity mutual fund held for 15 months. The AMC will deduct TDS at:

A.No TDS — NRIs are exempt from TDS on LTCG from equity funds
B.20% on entire capital gain without any exemption limit
C.10% flat on entire redemption value
D.12.5% plus surcharge and cess on gains exceeding ₹1.25 lakh

What does SWP stand for in the context of mutual fund investor services?

A.Systematic Withdrawal Plan
B.Systematic Wealth Plan
C.Scheduled Withdrawal Process
D.Systematic Wealth Preservation

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