I had applied for US B1 visa from China and got refusal. Now I am applying again US B1/B2 visa from India. Which option should I select "Yes or No" for below question.
Have you ever been denied or refused a visa or entry to any country?
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Of course you should answer "Yes!" You have been denied a visa before; that was literally the first thing you told us about yourself here.
The US officials aren't stupid. They have your previous application records available and know that you were refused before. If you answer "No," they will rightly conclude you have given a false statement on your application, and then you will have much bigger problems. Any lies on a visa application greatly hurt your credibility and can make it far harder to get a visa in the future.