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Q.1- Non-Resident Indians (NRIs) can invest in India as per a regulation of Foreign Exchange
Management
(Transfer or issue of Security by a person resident outside India) Regulations, 2000. However, as per
the regulation
1. NRIs cannot invest in shares or debentures.
2. NRIs may contribute foreign capital either by way of capital contribution
Which of the above is/are correct?
A. 1 only
B. 2 only
C. Both 1 and 2
D. None
Your Answer : B
Correct Answer : B
Answer Justification :
Justification: Statement 1: As per Regulations, NRIs may invest in shares or partly paid up shares
of an Indian company under Foreign Direct Investment (FDI) Scheme subject to certain terms and
conditions.
Statement 2: NRIs may even acquire securities or units on a Stock Exchange in India on
repatriation basis (i.e. they can take the investment back abroad) under the Portfolio Investment
Scheme.
NRIs even hold FCNR deposits in India banks that earn them interest. We will cover FCNR in
details in coming tests.
Q Source: DSM/SBS/KA (Release ID :169208)
Q.3 A Task Force on Shell Companies under the Joint Chairmanship of Revenue Secretary and
Secretary,
Ministry of Corporate Affairs was constituted in February, 2017. What are Shell Companies?
A. Oil companies that cause heavy ecological damage
B. Fly by night operators
C. A corporate entity without active business operations
D. A company engaged in deep sea precious stones extraction
Your Answer : C
Correct Answer : C
Answer Justification :
Concept: Shell Company is a corporate entity without active business operations or significant
assets.
It cant be asserted that shell corporations are illegal. They are deliberate financial
arrangements by many big companies to avoid taxes without attracting legal actions.
Tax avoidance is not illegal, though it is not desirable.
Learning: But many shell companies park black money, carryout illegal transactions and
sometimes act as facilitators of money laundering.
Often, shell companies remain untraceable and happen to be the vehicle of choice for money
launderers, bribe givers and takers, tax evaders and financiers of terrorism.
Most of the shell companies are registered in tax havens like British Virgin Islands or Cayman
Islands.
Recently it was found that a single address hosted 75 firms and no employees! The taskforce
Q.4- With reference to flammable ice, recently seen in news, consider the following statements:
1. It consists of methane trapped within water crystals.
2. It is another name for permafrost.
3. All of its reserves are trapped in plateaus at higher latitudes.
4. India is considering it as an alternative energy source.
Select the correct answer using the codes below.
A. 1, 3 and 4 only
B. 2 and 3 only
C. 1 and 4 only
D. only
Your Answer : C
Correct Answer : A
Answer Justification :
Justification: Statement 1: Flammable ice (also known as methane hydrate or methane clathrates)
consists of methane trapped within water crystals. It is the worlds largest natural gas resource
trapped beneath permafrost and ocean sediment where low temperature and moderate pressure
combine to trap methane in this specific way.
Statement 2: Permafrost appears on top of it. Permafrost is frozen chunks of ice that often contain
carbon and volatile gases.
Statement 3: China has successfully produced natural gas from methane hydrate, also known as
flammable ice, in an experimental project in the South China Sea (SCS).
Most of its reserves are located deep in ocean floors, especially continental shelves.
Statement 4: India, USA, China and Canada all are looking at it as an alternative energy source.
Learning: The methane hydrate is highly flammable and energy-intensive fuel as one cubic metre
of the compound can releases about 160 cubic metres of gas.
It can break down into water and methane after temperature is raised or pressure is lowered.
Q Source: Chinas South China sea ocean drilling programme
Q.5 The Government is implementing an Ethanol Blended Petrol (EBP) Programme in India. Consider
the
following with reference to it.
1. The Government has introduced free market pricing mechanism for procurement of ethanol under
EBP Programme.
2. The Government has allowed procurement of ethanol produced from cellulosic and lignocellulosic
feedstock.
Which of the above is/are correct?
A. 1 only
B. 2 only
C. Both 1 and 2
D. None
Your Answer : Correct
Answer : B Answer
Justification :
Background: For the development of Biofuels, a National Policy on Biofuels has been announced in
the year 2009. So, under the EBP Oil Marketing Companies sell ethanol blended petrol with
percentage of ethanol up to 10% as per BIS specifications, depending upon its availability.
Justification: Statement 1: The prices are administered so that the availability of ethanol can be
improved by adequately incentivizing the producers.
Statement 2: This is an eco-friendly way to convert ethanol from bio feed stock.
Learning: In order to encourage production of Biodiesel in the country, the Government had also
announced the Biodiesel Purchase Policy in October, 2005.
The Government has also permitted the direct sale of Biodiesel (B-100) for blending with High
Speed Diesel to all consumers, in accordance with the specified blending limits and the standards
specified by the BIS.
Q Source: RM/RS- USQ1844 - LS (Release ID :169151)
Q.6- With reference to Indian Green Building Council (IGBC), consider the following statements.
1. It is a body under Department of Urban Development.
2. It organizes the Green Building Congress.
3. It offers green building rating programmes.
Select the correct answer using the codes below.
A. 1 only
B. 2 and 3 only
C. 2 only
D. 3 only
Your Answer : A
Correct Answer : B
Answer Justification :
Justification: The IGBC is part of the Confederation of Indian Industry (CII) formed in 2001.
It offers a wide array of services including developing new green building rating programmes,
green building training programmes and certification services.
It also organises Green Building Congress, its annual flagship event on green buildings.
It closely works with several State Governments, Central Government, World Green Building
Council etc.
Q Source: IGBC conference 2017
Q.7- Consider the following about Advance Pricing Agreements (APA) scheme.
1. It was introduced by the Income-tax (IT) Act.
2. It cannot be signed with individual companies.
3. It endeavors to provide certainty to taxpayers in the domain of transfer pricing.
4. It is not applicable to international transactions.
Select the correct answer using the codes below.
A. 1 and 3 only
B. 2 and 4 only
C. 2, 3 and 4 only
D. 1, 3 and 4 only
Your Answer :
Correct Answer : A
Answer Justification :
Concept: Suppose two subsidiaries A and B of the same company X are located in two different tax
regimes. Say A is subjected to more taxes, and B has to pay less tax.
If company X transfers most of its profit from A to B, it will need to less taxes then, because B is
taxed at lower rate.
This is called transfer pricing, when profits are transferred to subsidiaries to reduce tax burden.
Justification: Statement 2 and 3: It is signed with companies so that this tax evasion can be
regulated. It also gives certainty to the tax department in terms of revenue collection.
Q Source: The Central Board of Direct Taxes (CBDT) has entered into 9 Unilateral Advance Pricing
Agreements (UAPAs) with Indian taxpayers in July, 2017.