DIWAKAR EDUCATION HUB
INCOME TAX UNIT -10 MCQ
As Per Updated Syllabus
DIWAKAR EDUCATION HUB
11/2/2019
UGC NET UNIT -10 INCOME TAX MCQ AS PER UPDATED SYLLABUS
1. The Central Government has been empowered by entry ________________ of the Union list of schedule
VII of the constitution of India to levy tax on income other than agricultural income.
A. 84
B. 82
C. 81
D. 85
2. The Income tax act, 1961 came into force w.e.f........ __________ _
A. Is' April, 1962
B. 31st March, 1961
C. 1st April, 1961
D. None of above
3. Amongst the following _________________ is empowered to levy tax on agricultural income.
A. Central Government
B. State Government
C. Commissioner
D. President
4. Circulars and Notifications are binding on the
A. Central Board of Direct Taxes (CBDT)
B. Assessee
C. Income Tax Appellate Tribunal (ITAT)
D. Income Tax Authorities
5. Supreme Courts precedent in binding on
A. Courts
B. Appellate Tribunals
C. Income Tax Authorities
D. All of the above.
6. High Court's precedents are not binding on
A. Tribunal
B. Income Tax Authorities
C. Assessee
D. None of the above.
7. Wherever in the Act the phrase as prescribed appears it means that A. Regulations are to be framed is in this respect.
B. Rules have been framed in this respect.
C. Regulations were earlier framed in this respect.
D. Regulations are framed in this respect.
CONTACT US - 7310762592
Email- info@diwakareducationhub.in
8. Who amongst the following confers on the power to issue circulars and clarifications?
A. ITAT
B. Central Government
C. CBDT
D. State Government
9. Amendments by the finance act are made applicable from
A. First day of next financial year
B. First day of same financial year
C. Last day of same Accounting year
D. None of the above.
CONCEPT OF CHARGE OF INCOME TAX, PERSON,
ASSESSEE AND EXCEPTIONS TO PREVIOUS YEAR RULE
10. Income Tax is charged in A. Financial Year
B. Assessment Year
C. Previous Year
D. Accounting Year
11. A person includes:
A. Only Individual
B. Only Individual and HUF
C. Individuals, HUF, Firm, Company only
D. Individuals, HUF, Company, Firm, AOP or BOI,Local Authority, Every Artificial Juridical Person
12. As per section 2(31), the following is not included in the definition of 'person'
A. An individual
B. A Hindu undivided family
C. A company
D. A minor
13. Every assessee is a person, and A. every person is also an assessee
B. every person need not be an assessee
C. an individual is always an assessee
D. A HUF is always an assessee
14. Describe the status of the following person (i.e. individual, HUF, Firm, Company etc.) X and Yare legal heirs
of Z. Z died in 2018 and X and Y carry on his business without entering into a partnership.
A. Firm
B. Limited Liability Partnership
C. Company
D. Body of Individual
CONTACT US - 7310762592
Email- info@diwakareducationhub.in
15. Assessment year can be a period of :
A. only more than 12 months
B. 12 months and less than 12 months
C. only 12 months
D. 12 months and more than 12 months
16. Year in which income is taxable is known as ___________ and year in which income is earned is known as --A. Previous year, Assessment year
B. Assessment year, Previous year
C. Assessment year, Assessment year
D. Previous year, Previous year
17. The year in which the income is earned is known as
A. Previous year
B. Financial year
C. Both (A) or (B)
D. None of the above.
18. All assesses are required to follow:
A. Uniform previous year which must be calendar year only
B. Uniform previous year which must be financial year only
C. Any period of 12 months
D. Period starting from 1st July to 30th June only
19. XYZ LLP falls under which---------- category of person A. Individual
B. Partnership firm
C. Company
D. Association of person
20. Municipality of Delhi falls under----- category of personA. Artificial juridical person
B. Local authority
C. Individual
D. Association of Person
21. Under Income Tax Act partnership firm includes CONTACT US - 7310762592
Email- info@diwakareducationhub.in
A. Limited liability partnership
B. Limited liability company
C. One person company
D. Association of person
22. A.O.P should consist of :
A. Individual only
B. Persons other than individual only
C. Both individual and non individual persons.
D. None of these
23. Body of individual should consist of :
A. Individual only
B. Persons other than individual only
C. Both individual and non individual persons.
D. None of these
24. A person becomes a member of HUF by A. Contract
B. Agreement
C. Popularity
D. Status
25. In order to be assessed as HUF there should be A. Partnership
B. Co-Partnership
C. Co -Parcenership
D. Co-Ownership
26. Section __ of the Income-tax Act, 1961 defines the term 'person' A. 4
B. 2(31)
C. 5
D. 2(32)
CONTACT US - 7310762592
Email- info@diwakareducationhub.in
27. --------------must be one in which two or more persons join in for a common purpose or common action with
the object of earning income or profits or gains.
A. Partnership
B. Co-ownership
C. Body of Individuals
D. Association of Persons
28. Which amongst the following is Artificial Juridical Person?
A. Corporation
B. Local Fund
C. District Board
D. None of these
29. Previous year is defined in A. Section 2(34)
B. Section 2(9)
C. Section 3
D. Section 4
30. Financial year means a year commencing on –
A. 31st March of the period
B. 1" day of the April
C. Mid of the year
D. None of these
31. First previous year in case of a business/profession newly set up on 31-3-2019 would:
A. Start from 1st April, 2018 and end on 31st March 2019
B. Start from 31" March, 2019 and will end on 31st March, 2019
C. Start from 1st January, 2019 and end on 31st December, 2019
D. Start from 1st January, 2019 and will end on 31st March,2019
32. Dr. Ashok commenced medical practice on 1st September, 2018. The previous year for the profession for
the assessment year 2019-20 would be _
A. 1st April, 2018 to 31st March, 2019
CONTACT US - 7310762592
Email- info@diwakareducationhub.in
B. 1st September, 2018 to 31st March, 2019
C. 1st June, 2018 to 31st March, 2019
D. 1st September, 2018 to 31st January, 2019
33. Income of business commenced on 1st March, 2019 will be assessed in assessment yearA. 2018-19
B. 2019-20
C. 2020-21
D. 2021-22
34. A person follows calendar year for accounting. For taxation, he has to follow:
A. Calendar year only :1stJanuary to 31st December
B. Financial year only :1st April to 31st March
C. Any of the Calendar or Financial year as per his choice
D. He will to follow extended year from 1st January to next 31st March (a period of 15 months)
35. In which of the following cases, income of previous year is assessable in the previous year itself:
A. Assessment of persons leaving India
B. A person in employment in India
C. A person who is into illegal business
D. A person who is running a charitable institution
36.
In which of the following cases, Assessing Officer has the discretion to assess the income of previous year
in previous year itself or in the subsequent assessment year:
A. Shipping business of non-residents
B. Assessment of Association of Persons or Body of Individuals formed for a particular event or
purpose
C. Assessment of persons likely to transfer property to avoid tax
D. Discontinued business
37. In case of non-residents engaged in shipping business in India income earned during the financial year is
A. Taxable in India the same financial year
B. Taxable in India the relevant assessment year
C. Not taxable in India in the same financial year
D. Not taxable in India.
CONTACT US - 7310762592
Email- info@diwakareducationhub.in
38. In case of non-residents engaged in shipping business _____________ freight paid or payable to the owner
or charterer shall be deemed to be total income.
A. 5%
B. 10%
C. 7.5 %
D. 20 %
39. Which amongst the following is an exception to the previous year rule?
A. Business or Profession newly set up.
B. Where a source of income newly set up.
C. Non-resident engaged in shipping business
D. None of the above.
40. Income Tax is levied on the ___________ of a person.
A. Total Income
B. Total Income-Debt
C. Gross Total Income
D. Net Income-Debt Perquisites
41. The period of 12 months commencing on the rt day of April every year is known as ____________ _
A. Financial Year
B. Assessment Year
C. Previous Year
D. Accounting Year
42. The charging section of the Income-tax Act, 1961, states that the income earned in a year is taxable in the
next year. This is known as ______
A. Principle of mutuality
B. Previous year rule
C. Financial year rule
D. None of these.
43. Income-tax in India is charged at the rates prescribed by A. The Finance Act of the assessment year
CONTACT US - 7310762592
Email- info@diwakareducationhub.in
B. The Income-tax Act, 1961
C. The Central Board of Direct Taxes
D. The Finance Act of the previous year.
44. A new business was set-up on 1st July, 2018 and trading activity was commenced from 1st September,
2018, the previous year would be the period commencing from
A. 1st April, 2018 to 31st March, 2019
B. 1st July, 2018 to 31st March, 2019
C. 1st September, 2018 to 31st March, 2019
D. 1st October, 2018 to 31st March, 2019.
CONCEPTS OF INCOME, METHOD OF ACCOUNTING
45. According to section 2(24) definition of 'income' is ------A. Inclusive
B. Exhaustive
C. Exclusive
D. Descriptive.
46. 'Income' under section 2(24) includes (i) The profits and gains of a banking business carried on by a co-operative society with its
members.
(ii) Any advance money forfeited in the course of negotiations for transfer of capital asset.
Choose the correct option with reference to the above statements _
A. Both (i) and (ii)
B. Only (i)
C. Only (ii)
D. Neither (i) nor (ii).
47. Income includes A. Profits and gains
B. Profit in lieu of Salary
C. Income from other sources
D. All of the above
CONTACT US - 7310762592
Email- info@diwakareducationhub.in
48. Income is divided in ___________ heads of Income.
A. 4
B. 5
C. 6
D. 3
49. Income includes A. Profits or Gains
B. Capital gains
C. Lottery winnings
D. All of the above
50. The term' income' includes the following types of incomes A. ' Legal
B. Illegal
C. Legal and illegal both
D. None of the above,
51. Which of the following income is not included in the term 'income' under the Income-tax Act, 1961 A. Profit and gains
B. Dividend
C. Profit in lieu of salary
D. Reimbursement of travelling expenses.
52. Which amongst the following is not a head of Income?
a. Salaries
b. Income from house Property
c. Capital gains
d. Income from exports
53. Amongst the following which activity will be taxable?
A. Profits & gains of any insurance business
B. Income from specific services provided by carried on by a co-operative society. Trade, professional
or similar association.
C. The profits and gains of any banking business carried on by a co-operative society.
CONTACT US - 7310762592
Email- info@diwakareducationhub.in
D. All of the above.
54. AB & Co. received Rs.`2, 00,000 as compensation from CD & Co. for premature termination of contract of
agency. Amount so received is ----A. Capital receipt and taxable
B. Capital receipt and not taxable
C. Revenue receipt and taxable
D. Revenue receipt and not taxable
55. Subsidy if given as assistance to carry on business already commenced is a ----A. Revenue receipt
B. Capital receipt
C. It is not a receipt
D. None of these
56. Which of the following is not included in taxable income A. Income from smuggling activity
B. Casual income
C. Gifts of personal nature subject to a maximum of `50,000 received in cash
D. Income received in kind.
57. Compensation on account of loss of profit is A. Revenue receipt
B. Capital receipt
C. Revenue expenditure
D. Capital expenditure
58. Out of the following, which of the capital receipt is not taxable:
A. Capital gains of Rs.` 10,00,000
B. Amount of Rs.`5,00,000 won by way of lottery, games, puzzles
C. Amount of Rs.`2,00,000 received by way of gift from relatives
D. Amount of Rs.`1,00,000 received by way of gift from a friend on marriage anniversary
59. In case the Key man insurance policy is taken in name of any other person any sum received on its maturity
by such person shall be taxable under the head CONTACT US - 7310762592
Email- info@diwakareducationhub.in
A. Salaries
B. Profits & Gains of Business or Profession
C. Capital Gains
D. Income from Other Sources
60. Method of Accounting is not relevant for –
A. Salaries
B. Income from House Property
C. Capital Gains
D. All of the above
61. Income-tax in India is charged at the rate(s) prescribed by A. The Finance Act
B. The Income-tax Act
C. The Central Board of Direct Taxes
D. The Ministry of Finance.
62. Which of the following is not included in taxable income A. Reimbursement of expenses
B. Cash gifts received from non relatives
C. Income from illegal activity
D. Profit on sale of equity shares of unlisted company.
63. The Central Government has notified Income computation and disclosure standards for computing income
under the head Profits and Gains of Business and Profession - .
A. 2
B. 5
C. 8
D. 10
64. An individual is said to have substantial interest in a concern if he or she, along with his or her relatives, is,
at any time during the previous year, beneficial owner of equity shares carrying or more of the voting
power in a company; or entitled to or more of the profits of such concern.
A. 20% ,10%
B. 10% ,20%
CONTACT US - 7310762592
Email- info@diwakareducationhub.in
C. 10%, 10%
D. 20% ,20%
MODE OF COMPUTATION OF INCOME AND TAX RATES FOR ASSESSMENT YEAR 2019-20
65. Surcharge @ 12 is payable by a domestic company if the total income exceeds.
A. Rs.` 10 lakhs
B. Rs.` 1 crore
C. Rs.` 10 crore
D. None of the above.
66. Surcharge @ 7 is payable by a domestic company if the total income exceeds.
A. Rs.` 10 lakhs
B. Rs.` 50 lakhs
C. Rs.` 1 crore
D. Rs.` 10 crores.
67. The tax exemption limit for a resident senior citizen is A. Up to Rs.` 2,00,000
B. Up to Rs.` 5,00,000
C. Up to Rs.` 1,80,000
D. Up to Rs.` 3,00,000
68. The tax exemption limit for a resident Super senior citizen is A. Up to Rs.` 2,00,000
B. Up to Rs.` 5,00,000
C. Up to Rs.` 1,80,000
D. Up to Rs.` 3,00,000
69. Surcharge of 15% is payable by an individual where the total income exceeds:
A. Rs.` 7,50,000
B. Rs.` 8,50,000
C. Rs.` 1,00,00,000
D. None of the three
CONTACT US - 7310762592
Email- info@diwakareducationhub.in
70. The maximum amount on which income-tax is not chargeable in case a co-operative society is:
A. Rs.` 50,000
B. Rs.` 30,000
C. Rs.` 20,000
D. Nil
71. Additional surcharge (health and education cess) of 4 per cent is payable onA. Income tax
B. Income tax plus surcharge
C. Surcharge
D. None of the three
72. What is the maximum amount of income not chargeable to tax in case of AOP /BOI?
A. Rs.` 2,50,000
B. Rs.` 1,45,000
C. Rs.` 10,000
D. None of these.
73. In case of Partnership firm or company and foreign company marginal relief is provided if total income
exceeds ` -A. . Rs. ` 1 crore
B. Rs.` 10 lakhs
C. Marginal relief
D. None of these
74. The total income is rounded off to the nearest multiple of A. Rs.`1
B. Rs.`10
C. Rs.`100
D. Rs.`1,000
75. The MMR of 35.88% for Assessment Year 2019-20 is relevant in case of which of the following person if
income exceed 1crore
A. Individual
CONTACT US - 7310762592
Email- info@diwakareducationhub.in
B. Association of Persons
C. None of (a) and (b)
D. Both of (a) and (b)
76. If a firm's total Income is Rs.` 1,03,00,000, the marginal relief available to the firm is –
A. Rs.` 3,09,000
B. Rs.` 3,03,000
C. Rs.` 1,60,800
D. None of these.
77. The amount of health and education cess to be collected along with income-tax for assessment year 201920 shall be
A. 1 %
B. 2%
C. 3%
D. 4%
78. In respect of a resident assessee, who is of the age of 60 years or more at any time during the previous year
but less than 80 years on the last day of Previous Year relevant to Assessment Year 2019-20:
A. Rebate of tax payable subject to a maximum of Rs.20,000.
B. Higher basic exemption of Rs.` 1, 50,000.
C. Higher basic exemption of Rs.` 3, 00,000.
D. Higher basic exemption of Rs.` 1, 35,000.
79. Surcharge of 15% is payable by an Hindu Undivided Family where the total income exceeds:
A. Rs.` 7,50,000
B. Rs.` 8,50,000
C. Rs.` 1,00,00,000
D. None of the three.
80. In case of resident HUF, what is maximum exemption limit for Assessment Year 2019-20 :
A. Rs.` 3,00,000
B. Rs.` 2,50,000
C. Rs.` 5,00,000
D. Rs.` 2,20,000
CONTACT US - 7310762592
Email- info@diwakareducationhub.in
81. In case of a female individual, who is of 59 years of age, what is the maximum exemption limit for AY?
2019-20:
A. Rs.` 3,00,000
B. Rs.` 2,50,000
C. Rs.` 5,00,000
D. Nil
82. The income-tax payable by a Resident Individual (aged 30 years) for AY. 2019-20 if his total income is
Rs.`3,00,000 will be:
A. Rs.` 2,600
B. Rs.` 2,210
C. Rs.` 2,206
D. Nil
83. The income-tax payable by a Non Resident Individual (aged 30 years) for Assessment Year 2019-20 if his
total income is Rs.` 2,70,000 will be:
A. Rs.` 2,060
B. Rs.` 2,210
C. Rs.` 2,206
D. Rs.1040
84. The income-tax payable by a Resident Individual (aged 30 years) for AY. 2019-20 if his total income is Rs.`
3,01,500 will be:
A. Rs.` 2,630
B. Rs.` 78
C. Rs.` 150
D. Rs.` 2,626
85. The income-tax payable by a Mrs. Swati Non Resident Individual (aged 65 years) for AY. 2019-20 if her total
income is Rs.` 2,75,000 will be:
A. Rs.560
B. Rs.` 2,575
C. Rs.` 2,580
D. Rs.` 1300
CONTACT US - 7310762592
Email- info@diwakareducationhub.in
86. The income-tax payable by a Mr. Bansal Resident Individual (aged 25 years) for AY. 2019-20 if his total
income is Rs.` 4,50,000 will be :
A. Rs.10,400
B. Rs.` 15,450
C. Rs.` 20,600
D. Rs.` 540
87. Arun, a non-resident of India celebrated his 80th birthday on 10th October 2018. If his total income for the
previous year is Rs.` 6,00,000, his income-tax liability for the previous year 2018-19 is
A. Rs.` 46,350
B. Rs.` 41,200
C. Rs.` 20,600
D. Rs. ‘ 33,800
88. The amount of marginal relief admissible to Mr. Bansal Resident Individual (aged 25 years) for AY 2019-20 if
his total income is Rs.1,01,00,000 will be :
A. Rs.`3,58,250
B. Rs.` 2,00,000
C. Rs.` 2,20,000
D. Rs.3,56,375
89. The maximum income of ` ---------------is not chargeable to tax is case of non-resident woman of 60 years of
age.
A. Rs.` 2,50,000
B. Rs.` 3,00,000
C. Rs.` 5,00,000
D. Rs.` 10,00,000
90. The tax payable is rounded off to the nearest multiple of A. Rs.` 1
B. Rs.` 1,000
C. Rs.` 10
D. Rs.` 100
91. The income-tax payable by a Non Resident Individual (aged 30 years) for AY 2019-20 if his total income s
Rs. ` 2,75,500 will be:
CONTACT US - 7310762592
Email- info@diwakareducationhub.in
A. Rs.` 1,326
B. Rs.` 566
C. Rs.` 570
D. Rs.` 2,626
92. The income-tax payable by a Resident Individual (aged 30 years) for AY 2019-20 if his total income is Rs.`
5,00,000 will be:
A. Rs.` 20,600
B. Rs.` 25,750
C. Rs.` 33,990
D. Rs. ‘ 13,000
93. The income-tax payable by a Resident Individual (aged 30 years) for AY 2019-20 if his total. income is Rs.`
6,00,000 will be:
A. Rs.` 46,350
B. Rs.` 44,290
C. Rs.` 45,000
D. Rs.` 33,475
94. The income-tax payable by a Resident Individual (aged 30 years) for AY 2019-20 if his total income is Rs. `
16,00,000 will be:
A. Rs.` 3,14,150
B. Rs.` 3,19,000
C. Rs.` 3,04,200
D. Rs.` 3,30,000
95. The income-tax payable by a Non Resident Individual (aged 62 years) for AY 2019-20 if his total income is
Rs. ` 2,90,000 will be:
A. Rs.2,080
B. Rs.`2,060
C. Rs.` 4,120
D. Rs.` 4,000
96. The income-tax payable by a Resident Individual (aged 62 years) for AY 2019-20 if his total income is Rs.`
3,00,000 will be :
A. Nil
CONTACT US - 7310762592
Email- info@diwakareducationhub.in
B. Rs.`2,060
C. Rs.` 4,120
D. Rs.` 4,000
97. The income-tax payable by a Resident Individual (aged 62 years) for AY 2019-20 if his total income is Rs.`
3,50,000 will be:
A. Rs.` 2,060
B. Rs.` 1,030
C. Rs.` 4,120
D. Nil
98. The income-tax payable by a Resident Individual (aged 62 years) for AY 2019-20 if his total income is Rs.`
3,60,000 will be:
A. Rs.` 1,030
B. Rs.` 6,180
C. Rs.` 8,240
D. Rs. ` 3,120
99. The income-tax payable by a Resident Individual (aged 80 years) for AY 2019-20 if his total income is Rs.`
5,00,000 will be:
A. Nil
B. Rs.` 1,030
C. Rs.` 8,240
D. Rs.` 6,180
100.
The income-tax payable by a Resident Individual (aged 80 years) for AY 2019-20 if his
Rs. ` 5,10,000 will be:
total income is
A. Rs.2,080
B. Rs.` 2,060
C. Rs.`1,030
D. Rs.` 6,180
101.
An assessee, being an individual resident in India, is entitled to a deduction, from the amount of
income-tax on his total income which is chargeable for an assessment year, of an amount equal to 100
of such income-tax or a lesser amount. The maximum amount of total income qualifying for such
deduction and the maximum amount of deduction so available is
CONTACT US - 7310762592
Email- info@diwakareducationhub.in
A. Rs.` 5 lakh and Rs.` 2,000 respectively
B. Rs.` 3lakh and Rs.` 2,000 respectively
C. Rs.` 5 lakh and Rs.` 5,000 respectively
D. Rs.` 3.5 lakh and Rs. ` 2,500 respectively
102. Calculate Income-tax payable by an Individual (aged 30 years) for AY 2019-20 if his total income is Rs. `
1,01,20,000:
A. Rs.`30,33,350
B. Rs.`32,47,180
C. Rs.` 29,14,900
D. Rs.` 33,42,300
103. Calculate the amount of rebate u/s 87 A in case of a resident individual having total income of Rs.` 3,
00,000. For A.Y 2019-20
A. Rs.` 30,000
B. Rs.` 10,000
C. Rs.` 2,500
D. Rs.` 5,000
104. The income-tax payable by a XYZ Inc a foreign company on total income of Rs.` 12,25,500 will be :
A. Rs.` 5,09,800
B. Rs.` 5,04,906
C. Rs.` 3,78,520
D. Rs.` 3,78,525
105. The income-tax payable by a XYZ Cooperative society on total income of Rs.` 50,000 will be
A. Rs.` 12,360
B. Nil
C. Rs.` 20,600
D. Rs.` 12,480
106. Total income is to be rounded off to nearest multiple of __ and tax is to be rounded off to nearest
multiple of
A. Ten, Rupee
B. Hundred, Ten
CONTACT US - 7310762592
Email- info@diwakareducationhub.in
C. Ten, Ten
D. Rupee, Rupee
107. Unexplained cash credits are chargeable to tax @ ___________ _
A. 10%
B. 15%
C. 20%
D. 30%
108. Long term capital Gains are chargeable to tax @ ___________ _
A. 10%
B. 15%
C. 20%
D. 30%
109. Short term capital gains arising on transfer of listed equity shares through recognized stock
exchange are chargeable to Tax @ _____ _
A. 10%
B. 15%
C. 20%
D. 30%
110. Income by way of dividends in excess of ` 10 lakh in the case of an individual, Hindu undivided
family (HUF) or a firm who is resident in India is chargeable to tax at rate of A. 10%
B. 15%
C. 20%
D. 30%
111. Income by way of royalty in respect of a patent developed and registered in India in respect of
person who is resident in India is chargeable to tax at rate of A. 10%
B. 15%
C. 20%
D. 30%
CONTACT US - 7310762592
Email- info@diwakareducationhub.in
112. For a domestic company, the minimum amount of total income liable for surcharge and the rate of
surcharge applicable therein are A. Rs.` 10 crore and 7 respectively
B. Rs.` 1 crore and 7 respectively
C. Rs.` 1 crore and 12 respectively
D. Rs.` 10 crore and 12 respectively
113. The total income of Atul, a resident individual, is Rs.` 2, 65,000. The rebate allowable u/s 87 A
would be –
A. Rs.` 2.000
B. Nil
C. Rs.` 1,500
D. Rs.`7, 50.
114. For the previous year 2018-19, taxable income of A Ltd., a domestic company (Turnover in FY 201617 was Rs. ` 2, 49.5 crores) is Rs.10, 86,920. Its tax liability would be
A. Rs.` 2,82,600
B. Rs.` 3,39,120
C. Rs.` 3,32,770
D. Rs.` 3,35,860
115. For the previous year 2018-19, taxable income of A Ltd., a domestic company (Turnover in FY 201617 was Exceed Rs.` 2, 50 crores) is Rs.10, 86,920. Its tax liability would be
A. Rs.` 2,82,600
B. Rs.` 4,47,811
C. Rs.` 3,39,120
D. Rs.` 3,35,860
Answer Key
Question
Number
1
Answer
82
2
1ST April, 1962
3
State Government
4
Income Tax Authorities
5
All of the above
6
None of Above
CONTACT US - 7310762592
Email- info@diwakareducationhub.in
7
8
9
10
Regulations are framed in this respect
CBDT
First day of next financial year
Assessment Year
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
29
30
31
32
33
34
35
36
37
38
39
40
41
42
43
44
45
46
47
48
49
50
Individuals, HUF, Company, Firm, AOP or BOI,Local Authority, Every Artificial
Juridical Person
A minor
Every person need not to be an assessee
body of individual
only 12 months
Assessment year, Previous year
Previous year
Uniform previous year which must be financial year only
Partnership firm
Local authority
Limited liability partnership
Both individual and non individual persons
Individual only
Status
Co -Parcenership
2(31)
Association of Persons
Corporation
Section 3
1" day of the April
Start from 31" March, 2019 and will end on 31st March, 2019
1st September, 2018 to 31st March, 2019
2019-20
Financial year only :1st April to 31st March
Assessment of persons leaving India
Discontinued business
Taxable in India the same financial year
7.50%
Non-resident engaged in shipping business
Total Income
Assessment Year
Previous year rule
The Finance Act of the assessment year
1st July, 2018 to 31st March, 2019
Inclusive
Both (i) and (ii)
All of Above
5
All of the above
Legal and illegal both
CONTACT US - 7310762592
Email- info@diwakareducationhub.in
51
52
53
54
55
56
57
58
59
60
61
62
63
64
65
66
67
68
69
70
71
72
73
74
75
76
77
78
79
80
81
82
83
84
85
86
87
88
89
90
91
92
93
94
95
Reimbursement of travelling expenses
income from export
all of above
Revenue receipt and not taxable
Revenue receipt
Gifts of personal nature subject to a maximum of Rs.`50,000 received in cash
Revenue receipt
Amount of Rs.`2,00,000 received by way of gift from relatives
Income from Other Sources
All of the above
The Finance Act
Reimbursement of expenses
10
20% ,20%
Rs.10 crore
Rs.1 core
Up to Rs.` 3,00,000
Up to Rs.` 5,00,000
Rs.` 1,00,00,000
Nil
Income tax plus surcharge
Rs.2,50,000
Rs.1 crore
10
Both of (a) and (b)
Rs.1,60,800
4%
Higher basic exemption of Rs.` 3, 00,000.
Rs.` 1,00,00,000
Rs.` 2,50,000
Rs. 2,50,000
Nil
Rs.1040
Rs.78
Rs.1,300
Rs.10,400
Rs.33,800
Rs.3,56,375
Rs.-` 2,50,000
Rs.-10
Rs.1,326
Rs.13,000
Rs.33,475
Rs.3,04,200
Rs.2,080
CONTACT US - 7310762592
Email- info@diwakareducationhub.in
96
97
98
99
100
101
102
103
104
105
106
107
108
109
110
111
112
113
114
115
Nil
Nil
Rs.3,120
Nil
Rs.2,080
Rs.3.5 lakh and Rs.` 2,500 respectively
Rs.` 33,42,300
Rs.2,500
Rs.` 5,09,800
Rs.` 12,480
Ten, Ten
30%
20%
15%
10%
10%
Rs.` 1 crore and 7 respectively
Rs.7,50
Rs.` 2,82,600
Rs.` 3,39,120
CONTACT US - 7310762592
Email- info@diwakareducationhub.in
CONTACT US - 7310762592
Email- info@diwakareducationhub.in
SOME IMPORTANT HIGH LEVEL MCQ WITH SOLUTION –
Q1.As per section 140A(1) any tax due (after allowing credit for TDS, advance tax, etc.) along with interest under section 234A, 234B
and 234C (if any) and fee should be paid before filing the return of income. Tax paid as per section 140A(1) is called.
.
(a) Advance tax
(c) Tax paid at source
(b) Self assessment tax
(d) Corporate tax
Correct answer : (b)
Justification of correct answer :
As per section 140A(1) any tax due (after allowing credit for TDS, advance tax, etc.) along with interest under section 234A, 234B and
234C (if any) and fee should be paid before filing the return of income. Tax paid as per section 140A(1) is called ‘self assessment tax’.
Thus, option (b) is the correct option.
Q2.Section 234E provides for levy of late filing fees for the delay in filing of
(a) Return of income
(b) TDS return
(c) TCS return
(d) TDS/TCS return
Correct answer : (d)
Justification of correct answer :
Section 234E provides for levy of late filing fees for the delay in filing TDS/TCS return. Thus, option (d) is the correct option.
Q3.If the taxpayer fails to maintain books of account as per the provisions of section 44AA, then he shall be liable to pay penalty under
section
of Rs. 25,000.
(a) 271B
(b) 271A
(c)271AA
(d) 271AB
Correct answer : (b)
Justification of correct answer :
If the taxpayer fails to maintain books of account as per the provisions of section 44AA, then he shall be liable to pay penalty under
section 271A. Penalty under section 271A is Rs. 25,000.
CONTACT US - 7310762592
Email- info@diwakareducationhub.in
Thus, option (b) is the correct option.
Q4.If a taxpayer, in spite of the requirement of section 44AB, fails to get his accounts audited, then he shall be liable for penalty under
section 271B of one-half per cent of total sales, turnover or gross receipts, etc., or
_, whichever is less.
(a) Rs. 2,00,000
(b) Rs. 1,50,000
(c) Rs. 1,00,000
(d) Rs. 50,000
Correct answer : (b)
Justification of correct answer :
Section 44AB prescribes when the accounts of the taxpayer are to be audited. If a taxpayer, in spite of the requirement of section 44AB,
fails to get his accounts audited, then he shall pay penalty under section 271B. Penalty under section 271B will be levied for failure to
get the accounts audited or failure to furnish a report of audit as required under section 44AB. Penalty will be one-half per cent of total
sales, turnover or gross receipts, etc., or Rs. 1,50,000, whichever is less.
Thus, option (b) is the correct option.
Q5.Section 269SS provides that no person shall take or accept loan or deposit or specified sum exceeding Rs. 50,000 by any mode
other than account payee cheque or account payee demand draftor by use of electricity clearing system through a bank account.
Contravention of the provisions of section 269SS will attract penalty under section 271D of an amount equal to loan or deposit taken or
accepted or specified sum.
(a) True
(b) False
Correct answer : (b)
Justification of correct answer :
Section 269SS provides that no person shall take or accept loan or deposit or specified sum exceeding Rs. 20,000 by any mode other
than account payee cheque or account payee demand draftor by use of electricity clearing system through a bank account.
Contravention of the provisions of section 269SS will attract penalty under section 271D. Penalty under section 271D shall be levied of
an amount equal to loan or deposit taken or acceptedor specified sum.
Thus, the statement given in the question is false and hence, option (b) is the correct option.
Q6.Penalty under section 271FA shall be levied for failure to file statement of financial transaction or reportable account (previously
called asAnnual Information Return). Penalty under section 271FA is Rs. for every day during which the failure continues.
(a) 500
(b) 250
(c) 100
(d) 50
Correct answer : (c)
CONTACT US - 7310762592
Email- info@diwakareducationhub.in
Justification of correct answer :
Penalty under section 271FA shall be levied for failure to file statement of financial transaction or reportable account. Penalty under
section 271FA is Rs. 100 for every day during which the failure continues.
Thus, option (c) is the correct option.
Q 7. What is the rate of penalty for underreporting of income under Section 270A? (a) 100%
(c) 300%
(b) 200%
(d) 50%
Correct answer : (d)
Justification of correct answer :
The rate of penalty shall be fifty per cent of the tax payable on under-reported income. However, in a case where under-reporting of
income results from misreporting of income, the taxpayer shall be liable for penalty at the rate of two hundred per cent of the tax
payable on such misreported income.
Q8.As per section 271H, where a person fails to file the statement of tax deducted/collected at source i.e. TDS/TCS return on or before
the due dates prescribed in this regard, then he shall be liable to pay penalty under section 271H. Minimum penalty can be levied of Rs.
10,000 which can go upto Rs.
.
(a) 1,00,000
(b) 2,00,000
(c) 3,00,000
(d) 3,00,000
Correct answer : (a)
Justification of correct answer :
As per section 271H, where a person fails to file the statement of tax deducted/collected at source i.e. TDS/TCS return on or before the
due dates prescribed in this regard, then he shall beliable to pay penalty under section 271H. Minimum penalty can be levied of Rs.
10,000 which can go uptoRs. 1,00,000. Penalty under section 271H will be in addition to late filing fee prescribed under section 234E.
Thus, option (a) is the correct option.
Q9.272B provides penalty in case of default by the taxpayer in complying with the provisions of section 139A or knowingly quoting
incorrect PAN in any document referred to in section 139A(5)(c) or intimates incorrect PAN for the purpose of section 139A(5A)/(5C).
Penalty under section 272B is Rs.
.
(a) 1,00,000
(b)50,000
(c) 50,000
(d) 10,000
Correct answer : (d)
CONTACT US - 7310762592
Email- info@diwakareducationhub.in
Justification of correct answer :
272B provides penalty in case of default by the taxpayer in complying with the provisions of section 139A or knowingly quoting
incorrect PAN in any document referred to in section 139A(5)(c) or intimates incorrect PAN for the purpose of section 139A
(5A)/(5C). Penalty under section 272B is Rs. 10,000
Thus, option (d) is the correct option.
Q10.Section 272BB(1A) provides for penalty for quoting incorrect Tax Deduction Account Number or Tax Collection Account
Number (as the case may be). Penalty under section 272BB is Rs. .
(a) 75,000
(b) 50,000
(c) 10,000
(d) 5,000
Correct answer : (c)
Justification of correct answer :
Section 203A(2) provides that the deductor or collector of tax at source should quote his Tax Deduction Account Number or Tax
Collection Account Number (as the case may be) in the challans, certificates, statement and other documents relating to TDS/TCS.
Section 272BB(1) provides for penalty for failure to obtain Tax Deduction Account Number or Tax Collection Account Number (as the
case may be) and section 272BB(1A) provides for penalty for quoting incorrect Tax Deduction Account Number or Tax Collection
Account Number (as the case may be). Penalty under section 272BB is Rs. 10,000.
Thus, option (c) is the correct option.
Q11. Specified domestic transaction also covers an international transaction.
(a) True
(b) False
Correct answer : (b)
Justification of correct answer :
Specified domestic transactions means few specific transactions described under section 92BA which are not international transactions.
Thus, the statement given in the question is false and hence, option (b) is the correct option.
Q12. Section
provides that every person entering into a specified domestic transaction shall keep and maintain such
information and documents as may be prescribed in this regard under rule 10D.
(a) 92
(b) 92A
(c) 92C
(d) 92D
CONTACT US - 7310762592
Email- info@diwakareducationhub.in
Correct answer : (d)
Justification of correct answer :
Section 92D provides that every person entering into a specified domestic transaction shall keep and maintain such information and
documents as may be prescribed in this regard under rule 10D.
Thus, option (d) is the correct option.
Q13. Every person entering into specified domestic transactions shall keep and maintain documents relating to such transactions for a
period of
from the end of the relevant assessment year.
(a) 2 years
(b) 5 years
(c) 8 years
(d) 10 years
Correct answer : (c)
Justification of correct answer :
In view of Rule 10D every person entering into specified domestic transactions shall keep and maintain documents relating to such
transactions for a period of 8 years from the end of the relevant assessment year.
Thus, option (c) is the correct option.
Q14. The provisions relating to penalty for failure to keep and maintain information and documents in respect of specified domestic
transactions are given in section
.
(a) 271
(b) 271A
(b) 271B
(d) 271AA
Correct answer : (d)
Justification of correct answer :
The provisions relating to penalty for failure to keep and maintain information and documents in respect of specified domestic
transactions are given in section 271AA.
Thus, option (d) is the correct option.
Q15. Penalty under section 271AA will be a sum equal to
1.
.
2% of the value of each specified domestic transaction entered into by the taxpayer
CONTACT US - 7310762592
Email- info@diwakareducationhub.in
2.
1% of the value of each specified domestic transaction entered into by the taxpayer
3.
3% of the value of each specified domestic transaction entered into by the taxpayer
4.
4% of the value of each specified domestic transaction entered into by the taxpayer
Correct answer : (1) Justification of correct answer :
Penalty under section 271AA will be a sum equal to 2% of the value of each specified domestic transaction entered into by the
taxpayer.
Thus, option (1) is the correct option.
Q16. By virtue of section 273B penalty under section 271AA will not be imposed if the taxpayer proves a reasonable cause for failure.
(a) True
(b) False
Correct answer : (a)
Justification of correct answer :
By virtue of section 273B penalty under section 271AA will not be imposed if the taxpayer proves a reasonable cause for failure.
Thus, the statement given in the question is true and hence, option (a) is the correct option.
Q17. Penalty under section 271BA for failure to furnish a report from an accountant as is required by section 92E is
.
(a) Rs. 10,000
(b) 2% of the value of each specified domestic transaction entered into by the taxpayer
(c) Rs. 1,00,000
(d) 1% of the value of each specified domestic transaction entered into by the taxpayer
Correct answer : (c)
Justification of correct answer :
Penalty under section 271BA for failure to furnish a report from an accountant as is required by section 92E is Rs. 1,00,000.
Thus, option (c) is the correct option.
CONTACT US - 7310762592
Email- info@diwakareducationhub.in
Q18. Penalty under section 271G shall be levied @ 2% of the value of the specified domestic transaction for each such failure if the
assessee fails to furnish any such information or document as is required to be furnished under section 92D(3).
(a) True
(b) False
Correct answer : (a)
Justification of correct answer :
As per section 271G, if any person who has entered into a specified domestic transaction fails to furnish any such information or
document as is required to be furnished under section 92D(3), then the tax authorities may direct that such person shall pay, by way of
penalty, a sum equal to 2% of the value of the specified domestic transaction for each such failure.
Thus, the statement given in the question is true and hence, option (a) is the correct option.
Q19. Penalty levied under section 271G cannot be waived by virtue of section 273B even though the taxpayer proves a reasonable
cause for failure.
(a) True
(b) False
Correct answer : (b)
Justification of correct answer :
By virtue of section 273B penalty under section 271G will not be imposed if the taxpayer proves a reasonable cause for failure.
Thus, the statement given in the question is false and hence, option (b) is the correct option.
PART - 2
1. Income tax is collected on all types of income except
.
(a) Agricultural Income (b) Industrial Income
(c) Capital Gain (d) Household Property
2. The Income Tax Act came into force from
.
(a) 1st March 1971 (b) 1st April 1971
(c) 1st March 1961 (d) 1st April 1961
3. The Income Tax Act came into force all over India except
(a) Andaman & Nicobar (b) Maldives
(c) Jammu & Kashmir (d) None of the above
4. As per Income Tax Act, 1961, income tax is charged on the income of
rates which are prescribed by the Finance Act of relevant assessment year.
(a) Current year (b) One year before previous year
(c) Previous year (d) None of the above
5. The tax payer liability is determined with reference to his or her
CONTACT US - 7310762592
.
at a
.
Email- info@diwakareducationhub.in
(a) Financial Status (b) Residential Status
(c) All of the above (d) None of the above
6. As per the definition of Income, the income includes the following
.
(a) Profits and gains
(b) Dividend declared
(c) Voluntary contribution received by a trust c
2 All in One Multiple Choice Questions
9. Under Income Tax Act, the income liable for tax is classified on the basis of
.
(a) Income from Salaries (b) Income from House Property
(c) Agricultural Income (d) Both (a) and (b)
10. Agricultural income is completely exempted for assessment year
.
(a) 1974-75 (b) 1985-86
(c) 1975-76 (d) 1978-79
11. The income from foreign companies by providing the services in project connected with
security of India is
from tax liability.
(a) 50% exempted (b) 20% exempted
(c) 100% exempted (d) 55% exempted
12. An individual is said to be resident in India if
.
(a) It is in India in the previous year for a period of 182 days or more
(b) It is in India for period of 60 days or more during the previous and 365 days or more
during the four years immediately proceeding previous year
(c) All of the above
(d) None of the above
13. The HUF is said to be resident in India if
.
(a) The control and management of its affairs is wholly or partly situated in India
(b) The control and management of its affairs is partially situated out of India
(c) The control and management of its affairs is wholly or partly in out of India
CONTACT US - 7310762592
Email- info@diwakareducationhub.in
(d) None of the above
14. The awards and rewards are exempted from Income Tax if
.
(a) Payment is in cash (b) Payment is in kind
(c) Payment is in cash or in kind (d) None of the above
15. Income received in India whether occurred in India or outside India, the tax incidence in case
of resident is
.
(a) Taxable as per slabs (b) Exempted from tax
(c) Partly exempted (d) None of the above
16. Income received in India whether occurred in India or outside India, the tax incidence in case
of resident but not ordinarily resident is
.
(a) Taxable as per slabs (b) Exempted from tax
(c) Partly exempted (d) None of the above
17. Income received in India whether occurred in India or outside India, the tax incidence in case
of non-resident is
.
(a) Taxable as per slabs (b) Exempted from slab
(c) Partly exempted (d) None of the above
All in One Multiple Choice Questions 3
18. Income deemed to be received in India whether occurred in India or outside India, the tax
incidence in case of resident is
.
(a) Taxable as per slabs (b) Exempted from slab
(c) Partly exempted (d) None of the above
19. The income received and accrued outside India from a business controlled or profession set
up in India, the tax incidence in case of resident is
.
(a) Taxable (b) Non-taxable
(c) Partly taxable (d) None of the above
20. The income received and accrued outside India from a business controlled or profession set
up in India, the tax incidence in case of non-resident is
.
(a) Taxable (b) Non-taxable
(c) Partly taxable (d) None of the above
21. The tax incidence for company or firm in which income received in India and company is
resident is
.
(a) Taxable (b) Non-taxable
(c) Partly taxable (d) None of the above
22. The tax incidence for company or firm in which income received in India and company for
non-resident is
.
(a) Taxable (b) Non-taxable
(c) Partly taxable (d) None of the above
23. The tax incidence for company or firm in which income received outside India from a source
controlled from India for resident is
.
(a) Taxable (b) Non-taxable
(c) Partly taxable (d) None of the above
24. The tax incidence for company or firm in which income received outside India from a source
controlled from India for non-resident is
.
(a) Non-taxable (b) Taxable
(c) Partly taxable (d) None of the above
25.
is exempted from income tax.
(a) Interest from Indian company (b) Dividend from foreign company
(a) Cooperative dividend (d) Dividend from Indian company
26. Which section of the Income Tax Act exempted incomes have been mentioned?
(a) Section 80C (b) Section 80DD
(c) Section 10 (d) Section 2
27.
of Income Tax Act is related to residential status.
CONTACT US - 7310762592
Email- info@diwakareducationhub.in
(a) Section 2 (b) Section 6
(c) Section 5 (d) Section 4
28. Resident of India includes
.
(a) Ordinarily resident (b) Not ordinarily resident
(c) NRI (d) Both (a) and (b)
4 All in One Multiple Choice Questions
29. The Company may have the residential status as
.
(a) Resident or Non-resident (b) Not ordinarily resident
(c) Non-resident (d) Resident
30. The meaning of exempted income is
.
(a) Not included in total income (b) Agricultural income
(c) Not taxable under income tax (d) All of the above
31. The number of income source for a person are
.
(a) One head (b) Two heads
(c) Various heads (d) Any of the above
32. The sum of various heads is called as
.
(a) Taxable income (b) Total income
(c) Gross total income (d) Adjusted income
33. The agricultural income includes
.
(a) Income from sale of crop (b) Income from preparation of crop
(c) Income from nursery (d) All of the above
34.
comes under agricultural income.
(a) Tea garden (b) Commodity farming
(c) All of the above (d) None of the above
35. If the agricultural income is
, then the agricultural income is considered for
calculating tax.
(a) More than ` 5,000 and total income is exceeding exemption limit
(b) More than ` 5,000
(c) More than ` 10,000
(d) Any amount
36. The Income Tax Act, 1961 broadly covers
.
(a) Basic charging income
(b) Rebates and reliefs
(c) Incomes exempted from income tax
(d) All of the above
37. The capital gain is chargeable under
of Income Tax Act.
(a) Section 45 (b) Section 55
(c) Section 56 (d) Section 40
38. The definition of the person includes
.
(a) An individual (b) A company
(c) A Hindu undivided family (d) All of the above
39. Any rent or revenue derived from land which is situated in India and is used for agricultural
purpose is
.
(a) Partially taxable (b) Fully taxable
(c) Exempted from tax (d) None of the above
All in One Multiple Choice Questions 5
40. Residential Status of an assesses can be
.
(a) Different for different previous year in the same assessment year
(b) Different for different assessment year
(c) None of the above
(d) All of the above
41. The income of previous year is chargeable to tax in the
.
CONTACT US - 7310762592
Email- info@diwakareducationhub.in
(a) Immediately succeeding assessment year
(b) Same previous year
(c) Immediately preceding academic year
(d) None of the above
42. The interest on loan paid by the Government of India to a non-resident outside India is
in India.
(a) Not taxable (b) Partially taxable
(c) Taxable (d) Can’t say
43. An individual is resident and ordinarily resident of India if
.
(a) Person had been resident in India at least 2 out of 10 previous years immediately
preceding the relevant previous year
(b) Person been in India for a period of 730 days or more during 7 years immediately
preceding the relevant previous year
(c) All of the above
(d) None of the above
44. The Resident HUF is ordinarily resident in India, if
.
(a) He has been resident in India at least 2 years out of 10 previous years immediately
(b) He has been resident in India at least 3 years out of 10 previous years immediately
(c) He has been resident in India at least 2 years out of 5 previous years immediately
(d) None of the above
45. Basic condition will be for a person who leaves India for employment
.
(a) At least 182 days in India
(b) At least 60 days in previous year and 365 days in preceding 4 years
(c) At least 730 days in preceding 7 years
(d) All of the above
46. Which of the following is not included in the term Income under the Income Tax Act, 1961?
(a) Reimbursement of travelling expenses
(b) Profits and gains of business or profession
(c) Dividend
(d) Profit in lieu of salary
47. The term income includes the following types of incomes.
(a) Illegal (b) Legal income from India only
(c) Legal (d) Legal and illegal both
6 All in One Multiple Choice Questions
48.
is the casual income.
(a) Interest received (b) Dividend income
(c) Pension received (d) Winning from lotteries
49. The way of tax liability by taking full advantage provided by the Act is
.
(a) Tax management (b) Tax avoidance
(c) Tax planning (d) Tax evasion
50. Mr. A, partner of M/s ABC, is assessable as
.
(a) Firm (b) An individual
(c) Body of individual (d) HUF
Answer Key of PART- 2
1 (a) 11 (c) 21 (a) 31 (d) 41 (a)
2 (d) 12 (c) 22 (a) 32 (c) 42 (a)
3 (d) 13 (a) 23 (a) 33 (d) 43 (c)
4 (c) 14 (c) 24 (a) 34 (c) 44 (a)
5 (b) 15 (a) 25 (d) 35 (a) 45 (a)
6 (d) 16 (a) 26 (c) 36 (d) 46 (d)
7 (b) 17 (a) 27 (b) 37 (a) 47 (d)
8 (b) 18 (a) 28 (d) 38 (a) 48 (d)
CONTACT US - 7310762592
Email- info@diwakareducationhub.in
9 (d) 19 (a) 29 (a) 39 (c) 49 (c)
10 (a) 20 (b) 30 (d) 40 (b) 50 (a)
PART- 3
1. The income is chargeable under the head of salary under
of Income Tax
Act, 1961.
(a) Section 15 (b) Section 20
(c) Section 14 (d) Section 16
2. Pension is
under the salary head.
(a) Fully taxable (b) Partially taxable
(c) Not taxable (d) None of the above
3. The salary of Member of Parliament is taxable under the head
.
(a) Salary (b) Income from Other Sources
(c) Income from Business (d) All of the above
4. The salary, remuneration or compensation received by the partners is taxable under the head
.
(a) Income from Other Sources (b) Income from Business
(c) Salary (d) None of the above
5. The death-cum-retirement gratuity received by the Government Employee or employee of
local authority is
.
(a) Partially exempted (b) Fully exempted
(c) Half taxable (d) None of the above
6. Under Section 15 of Income Tax Act, the salary due in previous years and even if it is not
received is
.
(a) Taxable (b) Not taxable
(c) Partially taxable (d) None of the above
7. The assesses can claim relief under
for arrears or advance salary.
(a) Section 89(1) (b) Section 89(2)
(c) Section 89(3) (d) Section 89(4)
8. The Payment of Gratuity Act came into force in
.
(a) 1973 (b) 1980
(c) 1991 (d) 1972
9. X is employed in Complex Ltd. as a Chartered Accountant. The annual membership fees of X
paid by Complex Ltd. is not a perquisite and hence not chargeable to tax.
(a) False (b) True
CONTACT US - 7310762592
Email- info@diwakareducationhub.in
10. The salary of non-resident received for the period in which he is working in India is not
taxable.
(a) True (b) False
11. Which of the following is not taxable under the head Salary?
(a) Remuneration paid to the lecturer of a college for setting a question paper
(b) Salary received by a member of parliament
8 All in One Multiple Choice Questions
(c) Commission received by an employee director of a company
(d) Both (a) and (b)
12. In accordance with the provisions of Section 17(1) of Income Tax Act, 1961, the term salary
includes
.
(a) Any annuity or pension
(b) Any gratuity
(c) Any fees, commission, perquisite or profits in lieu of or in addition to any salary or wages
(d) All of the above
13. The children education allowance, the amount exempted from taxable income is limited to
.
(a) ` 100 per month per child upto 3 children
(b) ` 1,000 per year per child upto 2 children
(c) ` 100 per year per child upto 2 children
(d) None of the above
14. If the employee receives retirement gratuity from more than one employer, he can claim
exemption in respect of
.
(a) Current employer (b) Previous employer
(c) Both employer (d) Not from single employer
15. The family pension received by the family members of armed forces after death of employee
is .
(a) Exempt fully (b) Exempted after fulfilling of certain conditions
(c) Not exempted (d) None of the above
16. The entertainment allowance is applicable to
.
(a) Private sector employees (b) Public sector employees
(c) Government employees (d) All of the above
17. The entertainment tax allowed as a deduction under Section 16 of Income Tax Act is the least
of .
(a) Actual amount of entertainment allowance received
(b) 20% of basic salary of the individual
CONTACT US - 7310762592
Email- info@diwakareducationhub.in
(c) ` 50,00
(d) All of the above
18. The assessment period for income tax on salary is
.
(a) Only more than 12 months (b) 12 months and less than 12 months
(c) Only 12 months (d) 12 months and more than 12 months
19. Total income is to be rounded off to nearest multiple of
rounded off to nearest multiple of
and tax is to be
.
(a) Ten rupee (b) Hundred, ten
(c) Ten, ten (d) Rupee, rupee
All in One Multiple Choice Questions 9
20. Income accrued outside India and received outside India is taxable in case of
.
(a) Resident and ordinary resident (ROR) only
(b) Resident but not ordinary resident (RNOR) only
(c) Non-resident only
(d) ROR, RNOR and Non-resident
21. Gross Total Income is arrived after
.
(a) only adding Income under five heads of Income;
(b) adding Income under five heads of Income excluding losses
(c) adding Income under five heads of Income, after applying clubbing provisions and
making adjustment of set off and carry forward of losses
(d) adding Income under five heads of Income, after applying clubbing provisions and
making adjustment of set off and carry forward of losses and after allowing deduction
under section 80C to 80U
22. Salary of S (` 40,000 per month) becomes due on the last day of the month but is paid on 7th
of next month. Also, salary of April, 2017 and May, 2017 is received in advance in March,
2017. What will be his gross income for Assessment Year 2017-18?
(a) ` 5,60,000 (b) ` 4,80,000
(c) ` 4,40,000 (d) ` 5,20,000
23. Calculate the exempt HRA from the following details:
A is entitled to basic salary of ` 50,000 p.m. and dearness allowance of ` 10,000 p.m., 40% of
which forms part of retirement benefits. He is also entitled to HRA of ` 20,000 p.m. He
actually lives with his parents in Mumbai and does not pay any rent. Market rent of that house
is ` 20,000 p.m. in Mumbai.
(a) Nil (b) ` 1,75,200
(c) ` 64,800 (d) ` 2,40,000
CONTACT US - 7310762592
Email- info@diwakareducationhub.in
24. Deduction under section 80C to 80U cannot exceed
.
(a) Gross Total Income
(b) Total Income
(c) Income from Business or Profession
(d) Income from House Property
25. Employer provides a car (below 1.6 ltr capacity) along with a driver to X partly for official
and partly for personal purpose. The expenses incurred by the company are: running and
maintenance expenses – ` 32,000 and driver’s salary – ` 36,000 .Taxable value of perquisite
is
.
(a) ` 21,600 (b) ` 10,800
(c) ` 32,400 (d) ` 39,600
26. The maximum limit for the claim of deduction under salary head Contributions to certain
pension funds of LIC or any other insurer is
.
(a) Up to ` 2,00,000 (b) Up to ` 1,50,000
(c) Up to ` 1,75,000 (d) None of the above
10 All in One Multiple Choice Questions
27. Encashment of earned leave is given by
of Income Tax Act, 1961.
(a) Section 10(10AA) (b) Section 12(10A)
(c) Section 15(10B) (d) None of the above
28. Compensation received on voluntary retirement is given by
of Income Tax
Act, 1961.
(a) Section 10(10D) (b) Section 10(10C)
(c) Section 10(10E) (d) Section 11(10D)
29. The house rent allowance (HRA) under the salary head of Income Tax Act is given by
.
(a) Section 10 (b) Sec 10(13A)
(c) Section 11(13B) (d) Section 11
30.
of Income Tax Act defines the perquisites and their valuation.
(a) Section 18 (b) Section17
(c) Section 18(C) (d) Section 17(C)
31. The Income tax rate for the financial year 2016-17 for individual is
.
(a) ` 5,00,000 to ` 10,00,000 is 20%
(b) ` 5,50,000 to ` 1,50,000 is 20%
(c) ` 5,00,000 to ` 10,00,000 is 30%
(d) ` 5,00,000 to ` 10,00,000 is 10%
32. Income tax rate for the senior citizens for year 2016-17 is
CONTACT US - 7310762592
.
Email- info@diwakareducationhub.in
(a) Upto ` 5 lakh is Nil (b) Upto ` 10 lakh is 10%
(c) Upto ` 5 lakh is 10% (d) None of the above
33. For computation for Income tax liability for individual, the Education Cess is
.
(a) 3% (b) 4%
(c) 2.5% (d) 2%
34. The rate of tax for the financial year 2016-17 for the foreign companies is
.
(a) 45% (b) 30%
(c) 40% flat (d) None of the above
35. Which of the following are true regarding taxing the rich?
(a) Additional 10% tax on dividends in excess of ` 10 lakh per annum
(b) Surcharge on persons decreased to 12% from 15%
(c) TDS at 1% on purchase of luxury cars exceeding value of ` 10 lakh
(d) All of the above
36. The Secondary and Education Cess on the computation of Income Tax for 2016-17 is
.
(a) 1% of Income Tax (b) 2% of Income Tax
(c) 0.5% of Income Tax (d) None of the above
All in One Multiple Choice Questions 11
37. Surcharge is levied at the rate
if the income exceeds ` 1 crore of the
financial year 2016-17.
(a) 10% (b) 12%
(c) 15% (d) 20%
38. Tax Liability for the individual for 2016-17 who is not the resident of the India whose income
` 2,50,000 to ` 5,00,000 is
.
(a) 10% of total income minus ` 2,00,000
(b) 10% of total income minus ` 1,00,000
(c) 15% of total income minus ` 1,00,000
(d) None of the above
39. If an employer transfers second hand motor car to the employee, the perquisite is valued at
.
(a) Actual cost less depreciation @ 30% for every completed year under straight line method
(b) Actual cost less depreciation @ 20% for every completed year under WDV method
(c) Actual cost less depreciation @ 30% for every completed year under WDV method
(d) Actual cost less depreciation @ 20% for every completed year under SLM method
40. The following is not taxable as income under the head “Salaries”:
CONTACT US - 7310762592
Email- info@diwakareducationhub.in
(a) Commission received by a full-time director
(b) Remuneration received by a partner
(c) Allowances received by an employee
(d) Free accommodation given to an employee
41. The following is exempt income from Income Tax:.
(a) Travel concession to employee
(b) Remuneration received for valuation of answer scripts
(c) Encashment of leave salary whilst in service
(d) Perquisites in India
42. Advance salary is taxable and advance against salary is
.
(a) Fully taxable (b) Partially taxable
(c) Not taxable (d) None of the above
43. If loan granted by employer to employee does not exceed
, it is not treated as
perquisite to employee for purpose of income tax.
(a) ` 20,000 (b) ` 40,000
(c) ` 30,000 (d) ` 25,000
44. Death-cum-retirement gratuity received by an employee of Central Government is wholly
exempt up to
.
(a) ` 2.5 lakh (b) ` 4.5 lakh
(c) ` 3.5 lakh (d) None of the above
12 All in One Multiple Choice Questions
45. Gift to employee up to
p.a. will not be treated as perquisite taxable in the
hands of employee.
(a) ` 4,000 (b) ` 5,000
(c) ` 10,000 (d) ` 2,500
46. Expenditure on free meals to employee in excess of
per meal will be treated
as perquisite of employee.
(a) ` 25 (b) ` 50
(c) ` 100 (d) ` 55
47. Any commission due or received by a partner of a firm from the firm shall not be regarded as
salary income under
.
(a) Section 15 (b) Section 20
(c) Section 17 (d) Section 19
48. Proportional tax is based on the principle ‘higher the income, higher the tax’. Statement is
.
(a) True (b) False
CONTACT US - 7310762592
Email- info@diwakareducationhub.in
49. The tax will be economical if the cost of collection is very small.
(a) True (b) False
50. Income tax is a form of tax which is levied on individual’s total earnings.
(a) False (b) True
Answer Key of Chapter 2
1 (a) 11 (d) 21 (d) 31 (a) 41 (d)
2 (a) 12 (d) 22 (a) 32 (a) 42 (c)
3 (a) 13 (c) 23 (a) 33 (a) 43 (b)
4 (b) 14 (c) 24 (a) 34 (c) 44 (c)
5 (b) 15 (b) 25 (c) 35 (d) 45 (b)
6 (a) 16 (c) 26 (b) 36 (a) 46 (b)
7 (a) 17 (d) 27 (a) 37 (c) 47 (a)
8 (d) 18 (c) 28 (b) 38 (a) 48 (b)
9 (a) 19 (c) 29 (b) 39 (d) 49 (a)
10 (b) 20 (a) 30 (d) 40 (b) 50 (b)
PART- 4
1. The Income from House Property is taxable in the hands of the individual even if property is
not registered in his name
.
(a) When the property has been transferred to spouse for inadequate consideration
(b) Where the property is transferred to a minor child for inadequate consideration
(c) Where the individual holds on importable estate
(d) All of the above
2. Under the Head Income from House Property, the basis of charge is the
of
property.
(a) Annual value (b) Quarterly value
(c) Half-quarterly value (d) None of the above
3. The following conditions must be satisfied to charge the rental income under the head Income
of House Property:
(a) The property should consist of any buildings or lands
(b) The asssessee should be one of the property
(c) The property should not be used by the owner for the purpose of business or professional
purpose
(d) All of the above
CONTACT US - 7310762592
Email- info@diwakareducationhub.in
4. Mr. Ram owns a house property. He lent it to Laxman at ` 10,000 p.m. Laxman sublet it to
Mr. Maruti on monthly rent of ` 20,000 p.m. Rental income of Ram is taxable under the head
.
(a) Income from Salary (b) Income from Other Sources
(c) Income from House Property (d) Income from Business
5. Mr. Ram owns a house property. He lent it to Laxman at ` 10,000 p.m. Laxman sublet it to
Mr. Maruti on monthly rent of ` 20,000 p.m. Rental income of Laxman is taxable under the
head
.
(a) Income from Salary (b) Income from Other Sources
(c) Income from House Property (d) Income from Business
6. An individual who transfers house property without an adequate consideration to his owner
spouse or to minor child is called as
.
(a) Co-owner (b) Deemed Owner
(c) Owner Himself (d) None of the above
7. An individual is considered as a owner of the house property for the purpose of charging tax
to
.
(a) A member of cooperative society, company or AOP to whom a building or a part thereof
is allotted or leased under a house building scheme of the society.
(b) An individual who transfers house property without an adequate consideration to his
owner spouse or to minor child
(c) The holder of importable estate
(d) All of the above
14 All in One Multiple Choice Questions
8. The rental income of person who is resident of Ladakh is
taxable under
Income from House Property.
(a) Fully taxable (b) Not taxable
(c) Partially taxable (d) None of the above
9. If the individual using the property for the business or professional purpose the income
taxable under the
head.
(a) Income from House property (b) Income from HUF
(c) Income from Other (d) Income from Business or Proprietorship
10. If the assesses let out the building or staff quarters to the employee of business, the rent
collected from such employees is assessable as income from
.
(a) Business (b) House Property
(c) Other Sources (d) None of the above
11. The Gross annual value of the property is depends upon the
CONTACT US - 7310762592
.
Email- info@diwakareducationhub.in
(a) Standard rent (b) Municipal Valuation
(c) Fair rent (d) All of the above
12. If Anil is entitled to basic salary of ` 50,000 p.m. and dearness allowance of ` 10,000 p.m.,
40% of which forms part of retirement benefits. He is also entitled to HRA of ` 20,000 p.m.
He actually lives with his parents in Mumbai and does not pay any rent. Market rent of that
house is ` 20,000 p.m. in Mumbai, then calculate the exempt HRA for Mr. Anil.
(a) Nil (b) ` 64,800
(c) ` 2,40,000 (d) ` 1,75,200
13. Calculate the Gross Annual Value from the following details:
Municipal Value ` 45,000
Fair rental value ` 50,000
Standard Rent ` 48,000
Actual Rent ` 42,000
(a) ` 50,000 (b) ` 48,000
(c) ` 45,000 (d) ` 42,000
14. Which of the following is not a case of deemed ownership of house property?
(a) Transfer to a spouse for inadequate consideration
(b) Transfer to a minor child for inadequate consideration
(c) Holder of an importable estate
(d) Co-owner of a property
15. Interest on capital borrowed for acquisition or construction of property is deductible subject to
limit of
per year, if capital is borrowed on or after 1-04-1999. This is
allowable if acquisition or construction is completed within 3 years from end of financial year
in which loan was taken.
(a) ` 1,50,000 (b) ` 2,00,000
(c) ` 1,80,000 (d) ` 2,50,000
All in One Multiple Choice Questions 15
16. For a self-occupied house property occupied on 1.7.2016, for which housing loan was availed,
if the interest up to 31.3.2016 is ` 90,000 and thereafter the interest payable is ` 3,000 p.m.,
the deduction available under section 24 in respect of interest for the year ended 31.3.2017 is
.
(a) ` 50,000 (b) ` 45,000
(c) ` 54,000 (d) None of the above
17. If an assesses earns rent from a sub-tenant in respect to tenanted property let out as a
residence, the said rent is
.
(a) Exempted under Section 10
CONTACT US - 7310762592
Email- info@diwakareducationhub.in
(b) Taxable under the head income from house property
(c) Taxable as business income, as the letting out is a commercial activity
(d) Taxable as income from other sources
18. An assesses, after sale of house property, receiving arrears of rent (is/is not) chargeable to tax;
the same computed in the stipulated manner, is chargeable to tax as
..
(a) Income from House Property (b) Income from Other Sources
(c) Either (a) or (b) (d) Neither (a) nor (b)
19. Arrear rent is taxable after deducting
as per Section 25B of the Income
Tax Act, 1961.
(a) 30% (b) 35%
(c) 10% (d) 20%
20. Monish took a loan of ` 6,00,000 on 1.4.2014 from a bank for construction of a house. The
loan carries an interest @ 10% p.a. The construction is completed on 15.6.2016. The entire
loan is still outstanding. Compute the interest allowable for the assessment year 2016-17.
(a) ` 60,000 (b) ` 1,80,000
(c) ` 84,000 (d) ` 24,000
21. The value of interest-free concessional loans to employees is determined on the basis of
lending rates of
for the same purpose.
(a) SBI (b) RBI
(c) Central Government (d) State Government
22. Value of rent-free accommodation in case of Government employee shall be taxable up to
.
(a) 15% of employee’s salary (b) 8% of employee’s salary
(c) License fee fixed by Government (d) 10% of employee’s salary
23. Value of rent-free accommodation or a house owned by employer in case of non-government
employees with above 25 lakh population is
.
(a) 15% of employee salary (b) 7.5% of employee salary
(c) 20% of employee salary (d) 10% of employee salary
24. Deduction for other expenses except interest in the computation of income from house
property is allowable to the extent of
.
(a) 25% of annual value (b) 10% of annual value
(c) 30% of annual value (d) 20% of annual value
16 All in One Multiple Choice Questions
25. Rate of depreciation on residential building is
.
(a) 10% (b) 20%
(c) 25% (d) 5%
CONTACT US - 7310762592
Email- info@diwakareducationhub.in
26. House property held for less than 36 months is
.
(a) Short-term capital asset (b) Projected capital asset
(c) Exempted capital asset (d) Long-term capital asset
27. Mr. Shushant is the owner of a house, the details of which are given below the gross annual
value would be
.
Municipal value ` 36,000
Actual rent ` 32,000
Fair Rent ` 36,000
Standard Rent ` 40,000
(a) ` 36,000 (b) ` 35,000
(c) ` 30,000 (d) ` 40,000
28. Sunil purchased a house for his residential purpose after taking a loan in January, 2016.
During the previous year 2016-17, he paid interest on loan ` 1,67,000. While computing
income from house property, the deduction is allowable to the extent of
.
(a) ` 30,000 (b) ` 1,00,000
(c) ` 1,67,000 (d) ` 1,50,000
29. Expected rent shall be higher of
.
(a) Municipal value and standard rent (b) Fair rent and actual rent received
(c) Standard rent and fair rent (d) Municipal value and fair rent
30. Municipal Value ` 14,000, Fair rent ` 14,500, Standard Rent ` 14,200, Actual rent as
property let out throughout the previous year ` 16,800 and Unrealized rent of the previous
year ` 7,000. The annual value of the house property shall be
.
(a) ` 9,800 (b) ` 14,200
(c) ` 7,200 (d) ` 7,500
31. Interest on capital, borrowed on 10.10.2000, for self-occupied property is deductible up to a
maximum amount of
.
(a) ` 50,000 (b) ` 1,50,000
(c) ` 5,000 (d) None of the above
32. Deduction from annual value is allowed under
.
(a) Section 24 (b) Section 25
(c) Section 27 (d) Section 28
33.
standard deduction from annual value is allowed.
(a) 10% (b) 20%
(c) 30% (d) 15%
All in One Multiple Choice Questions 17
34. Interest on loan for self-occupied house taken before 1st April, 1999 will be allowed up to
CONTACT US - 7310762592
Email- info@diwakareducationhub.in
.
(a) ` 30,000 (b) ` 1,50,000
(c) ` 10,000 (d) ` 50,000
35. Deduction allowed from annual value is
.
(a) Interest on loan for constitution (b) Interest on loan for repair
(c) Statutory deduction (d) All of the above
36. An individual assesses can show maximum loss of
from a self-occupied
residential house property.
(a) ` 1,50,000 (b) ` 30,000
(c) ` 20,000 (d) ` 5,00,000
37. The Annual Value has been defined under
of Income Tax Act, 1961.
(a) Section 20 (b) Section 22
(c) Section 23(1) (d) Section 23
38. Mr. Rupesh owns a house property. Municipal value ` 1,50,000, Fair Rent ` 1,25,000 and
Standard Rent ` 1,45,000. It is let out throughout the previous year for ` 10,000 p.m. up to
December 31, 2015 and ` 1,45,000 p.m. thereafter. Find out the Gross Annual Value for the
Assessment Year 2016-17.
(a) ` 1,45,000 (b) ` 1,25,000
(c) ` 1,50,000 (d) ` 1,33,000
39. When the portion of the house is self-occupied for the full year and portion is self-occupied
for the whole year, the annual value of the house shall be determined by
.
(a) The full annual value of the house the proportionate annual value of self-occupied portion
for the whole year shall be deducted
(b) Its present standard value
(c) All of the above
(d) None of the above
40. Mr. R owns a house. The Municipal value of the house is ` 50,000. He paid ` 8,000 as local
taxes during the year. He uses this house for his residential purposes but lets out half of the
house @ ` 3,000 p.m. The annual value of the house is
.
(a) ` 15,000 (b) ` 16,000
(c) ` 17,000 (d) ` 18,000
41. If fair rent is not gives, then assume
as fair rent.
(a) Actual rent (b) Standard rent
(c) Average rent (d) None of the above
42. Rent received by original tenant from sub-tenant is taxable under the head
.
(a) Income from House Property (b) Income from Other Sources
CONTACT US - 7310762592
Email- info@diwakareducationhub.in
(c) Income from Capital Gain (d) None of the above
18 All in One Multiple Choice Questions
43. The net annual value of house let out is ` 1,00,000 and actual amount spent by the assessee on
repairs and insurance premium is ` 20,000. The amount of deduction allowed under Section
24(a) shall be
.
(a) ` 35,000 (b) ` 45,000
(c) ` 30,000 (d) ` 25,000
44. Rent from House Property let out by an assessee to his employees when such letting is
incidental to his main business will be chargeable to tax under head
.
(a) Profit and Gain from Business and Profession
(b) Income from Capital Gain
(c) Income from House Property
(d) All of the above
45. When annual value of one-self occupied house is nil, the assesses will be entitled to the
standard deduction of
.
(a) 10% (b) 20%
(c) Nil (d) None of the above
46. Gross annual value shall be higher of
.
(a) Expected rent (b) Actual rent received or receivable
(c) All of the above (d) None of the above
47. Income from property held under trust for charitable or religious purposes is
.
(a) Exempted from tax (b) Taxable @ 10%
(c) Taxable @ 20% (d) None of the above
48. Mr. Anup owns a house property. Municipal value ` 1,80,000, Fair Rent ` 1,35,000 and
Standard Rent ` 1,65,000. It is let out throughout the previous year for ` 10,000 p.m. up to
December 31, 2015 and ` 1,65,000 p.m. thereafter. Find out the Gross Annual Value for the
Assessment Year 2016-17.
(a) 1,80,000 (b) 1,65,000
(c) 1,55,500 (d) None of the above
49. The assessee lets on hire machinery, plant or furniture belonging to him and also building and
the letting of the buildings is inseparable from the letting of the said machinery, plant and
furniture, the income from such letting is chargeable to tax under the head
.
(a) Income from Business (b) Income from Capital Gain
(c) Income from Other Sources (d) Profit and Gain from Business or Profession
50. For computation of Gross Annual Value, if actual rent is more than expected rent, then we
select the
.
CONTACT US - 7310762592
Email- info@diwakareducationhub.in
(a) Actual rent (b) Expected rent
(c) Any of the above (d) None of the above
All in One Multiple Choice Questions 19
Answer
Key of PART- 4
1 (d) 11 (d) 21 (d) 31 (b) 41 (a) 2 (a) 12 (a) 22 (c) 32 (a) 42 (b) 3 (d) 13 (b) 23 (a) 33 (c) 43 (c) 4 (c) 14 (d) 24 (c) 34 (a)
44 (a) 5 (b) 15 (a) 25 (d) 35 (d) 45 (c) 6 (b) 16 (c) 26 (c) 36 (a) 46 (c) 7 (d) 17 (d) 27 (a) 37 (c) 47 (a) 8 (b) 18 (c) 28 (c)
38 (a) 48 (b) 9 (d) 19 (a) 29 (d) 39 (a) 49 (c)
10 (c) 20 (d) 30 (b) 40 (b) 50 (a)
PART-5
1. Maximum limit for the deduction of Life insurance premia from the gross total income is
.
(a) ` 2,00,000 (b) ` 1,50,000
(c) ` 1,00,000 (d) ` 1,25,000
2. The deduction of life insurance premia, contribution to provident fund, etc. will is done under
of Income Tax Act, 1961.
(a) Section 80C (b) Section 80U
(c) Section 80D (d) Section 80E
3. Gross Total Income is arrived after
.
(a) Only adding Income under five heads of Income
(b) Adding Income under five heads of Income excluding losses
(c) Adding Income under five heads of Income, after applying clubbing provisions and
making adjustment of set off and carry forward of losses
(d) Adding Income under five heads of Income, after applying clubbing provisions and
making adjustment of set off and carry forward of losses and after allowing deduction
under sections 80C to 80U
4. In Income Tax Act, 1961, deduction under sections 80C to 80U cannot exceed
.
(a) Gross total income
(b) Total income
(c) Income from business or profession
(d) Income from house property
5. The maximum aggregate amount of deduction under sections 80C, 80CCC and 80CCD
CONTACT US - 7310762592
Email- info@diwakareducationhub.in
cannot exceed
.
(a) ` 1,10,000 (b) ` 2,00,000
(c) ` 1,50,000 (d) Nil
6. Deduction in respect of contribution to political party will
.
(a) Be allowed in respect of sum paid by way of cash
(b) Not be allowed if payment made in cash
(c) This type of deduction is not allowed whether payment is in cash or not
(d) Be allowed if payment made in cash, subject to certain conditions
7. Maximum amount of deduction in case of a person with severe disability under section 80U
will be
.
(a) ` 50,000 (b) ` 75,000
(c) ` 80,000 (d) ` 1,00,000
All in One Multiple Choice Questions 27
8. Government’s contribution to the new pension scheme referred to in Section 80CCD is
.
(a) An exempt income
(b) Income chargeable to tax as salaries in full
(c) 50% thereof is income chargeable to tax as Salaries
(d) Income chargeable to tax as income from other sources in full
9. In case of a hospital built in specified area after 31.3.2008 fulfilling the required conditions
laid down in Section 80IB-(11C), the profits and gains derived from running the hospital are
.
(a) Deductible in full (b) Deduction up to 50%
(c) Taxable in full (d) Deductible up to 75%
10. Deduction in respect of contribution to pension scheme of central government comes under
of Income Tax Act, 1961.
(a) Section 80CCD (b) Section 80U
(c) Section 80EE (d) Section 80G
11. In case of assessees other than companies, the following is advance tax rate to be payable on
or before of 15th September:
(a) 45% (b) 30%
(c) 15% (d) 10%
12. For the purposes of computing minimum alternate tax under Section 115B(a) of the Income
Tax Act, 1961, the book profit need not to be increased by inter alia, the amount of deferred
tax debited to the profit and loss account.
(a) True (b) False
CONTACT US - 7310762592
Email- info@diwakareducationhub.in
(c) Can’t say
13. Deduction under Section 80C can be claimed for fixed deposit made in any scheduled bank, if
the minimum period of deposit is
.
(a) 10 Years (b) 5 Years
(c) 12 Years (d) 8 Years
14. Which of the following is covered under section 80D of the Income Tax Act, 1961?
(a) Medical treatment of handicapped dependent
(b) Medical insurance premium
(c) Reimbursement of medical expenses
(d) Repayment of loan taken for higher education
15. The deduction available under section 80QQB in respect of royalty income of authors shall
not exceed
in previous year.
(a) ` 1,50,000 (b) ` 2,50,000
(c) ` 3,00,000 (d) ` 1,00,000
16. Clubbing of income means
.
(a) Addition income of two partners
(b) Inclusion of income of other person in assessee income
28 All in One Multiple Choice Questions
(c) Total of income of various heads
(d) Collection of income
17. Minors income is clubbed to
.
(a) Father’s income
(b) Mother’s income
(c) Father’s income or mother’s income whichever is greater
(d) Both mother’s and father’s income
18. The income of minor is not clubbed to the following limit:
(a) ` 1,500 (b) ` 10,000
(c) ` 1,000 (d) Whole amount
19.
is a section related to clubbing of income
(a) Sections 60-63 (b) Sections 60-69
(c) Sections 60-64 (d) None of the above
20. Deduction in respect of medical insurance premium is allowed under
.
(a) Section 80C (b) Section 80D
(c) Section 80DD (d) Section 80U
21. Maximum deduction allowed for senior citizen under Section 80D is
.
(a) ` 5,000 (b) ` 15,000
CONTACT US - 7310762592
Email- info@diwakareducationhub.in
(c) ` 20,000 (d) ` 25,000
22. Person with disability is allowed a fixed deduction of
.
(a) ` 50,000 (b) ` 20,000
(c) ` 30,000 (d) ` 1,00,000
23. Expenditure on severe disease under section 80DDB is allowed upto
.
(a) ` 40,000 (b) ` 20,000
(c) ` 25,000 (d) ` 30,000
24. Which of the following donations is eligible for 100% deduction?
(a) Rajeev Gandhi Foundation (b) J.L. Nehru Memorial Fund
(c) National Children Fund (d) National Sports Fund
25. Mr. Sharma contributed to a political party, he can avail deduction under
.
(a) Section 80G (b) Section 80GGB
(c) Section 80GGC (d) Section 80GGD
26. Rate of education cess on total income is
.
(a) 2% (b) 3%
(c) 4% (d) 0.3%
27. The deduction for donation to National Foundation for Communal Harmony is
.
(a) 50% (b) 100%
(c) 100% Qualifying Amount (d) None of the above
All in One Multiple Choice Questions 29
28. Under which section HUF is not entitled to deduction from GTI?
(a) Section 80C (b) Section 80D
(c) Section 80G (d) Section 80E
29. The provision regarding TDS is given under
of income tax.
(a) Section 195 (b) Sections 192-206
(c) Sections 190-230 (d) Sections 185-205
30.
is related to self-assessment.
(a) Section 140 (b) Section 140(A)
(c) Section 140(B) (d) Section 140(C)
31.
deals with PAN.
(a) Section 140 (b) Section 139A
(c) Section 139 (d) Section 154
32. Surcharge on tax on firm’s total income is
.
(a) Applicable
(b) Not applicable
CONTACT US - 7310762592
Email- info@diwakareducationhub.in
(c) Applicable if total income crosses ` 1 crore
(d) Applicable if there is capital gain
33. Interest is paid to partners under
.
(a) Section 40A (b) Section 40B
(c) Section 40C (d) Section 40D
34. The provision of Section 56(2)(vii) is applicable to
.
(a) All assessees (b) An individual and HUF
(c) Aan individual only (d) An HUF only
35. On the occasion of marriage of Mr. Rahul, he received a gift of ` 75,000 from a relative. Such
an amount shall be
.
(a) Taxable
(b) Non-taxable
(c) Taxable subject to standard deduction of 50%
(d) None of the above
36. In case of winning from horse races, payment exceeding
are subject to tax
deduction at source.
(a) ` 2,000 (b) ` 3,000
(c) ` 5,000 (d) ` 10,000
37. Exemption under section 10(37) is available to
.
(a) An individual or an HUF (b) An individual
(c) HUF (d) None of the above
30 All in One Multiple Choice Questions
38. Generally, long-term capital gain is charged to tax @
(plus surcharge and
cess as applicable).
(a) 10% (b) 15%
(c) 20% (d) 30%
39. The exemption under section 54 shall be available
.
(a) To the extent of capital gain invested in the house property
(b) Proportionate to the net consideration price invested
(c) To the extent of amount actually invested
(d) None
40. For the purpose of deduction under section 80DD, which of the following statements is/are
true?
(a) Assessee is either and individual or a HUF
(b) Assessee is resident of India
(c) Assessee has a dependent disable relative
CONTACT US - 7310762592
Email- info@diwakareducationhub.in
(d) All of the above
41. The maximum deduction one can clam under section 80D is
.
(a) ` 30,000 (b) ` 50,000
(c) ` 40,000 (d) ` 60,000
42. Amount of deduction in case of a person with severe disability under section 80U will be
.
(a) ` 75,000 (b) ` 85,000
(c) ` 1,50,000 (d) ` 1,25,000
43. Aggregate amount of deduction under 80C, 80CCC and 80CCD cannot exceed
.
(a) ` 1,10,000 (b) ` 1,20,000
(c) ` 1,30,000 (d) ` 1,50,000
44. In the case of every senior citizen resident in India, tax rebate under section 87A is
.
(a) ` 5,000 (b) ` 2,000
(c) ` 1,000 (d) Nil
45. The provisions regarding TDS on Salaries are contained in
.
(a) Section 190 (b) Section 191
(c) Section 192 (d) Section 193
46. If the payee does not furnish PAN and TDS under section 194, dividends shall be made @
.
(a) 20% (b) 15%
(c) 10% (d) Nil
47. Deduction of tax at source for insurance commission is @
.
(a) 10% (b) 15%
(c) 20% (d) 12%
All in One Multiple Choice Questions 31
48. Deduction of tax at source under section 1941 is @
.
(a) 10% (b) 12%
(c) 15% (d) 5%
49. As per Section 207,
not having any income from business or profession is
not liable to pay advance tax.
(a) A resident individual who is of the age of below 60 years
(b) A resident HUF
(c) A nonresident individual
(d) A resident senior citizen
CONTACT US - 7310762592
Email- info@diwakareducationhub.in
50. Exemption from payment of advance tax under section 207 is also available to a non-resident
senior citizen (i.e., an individual of the age of 60 years or above) not having any income from
business or profession.
(a) True (b) False
Answer Key of Chapter 5
1 (b) 11 (b) 21 (c) 31 (b) 41 (d)
2 (a) 12 (b) 22 (a) 32 (c) 42 (d)
3 (c) 13 (c) 23 (a) 33 (b) 43 (d)
4 (a) 14 (b) 24 (d) 34 (b) 44 (d)
5 (c) 15 (b) 25 (c) 35 (b) 45 (c)
6 (b) 16 (b) 26 (b) 36 (c) 46 (a)
7 (a) 17 (c) 27 (b) 37 (a) 47 (a)
8 (b) 18 (c) 28 (d) 38 (c) 48 (a)
9 (d) 19 (c) 29 (b) 39 (a) 49 (d)
10 (a) 20 (b) 30 (b) 40 (c) 50 (b)
PART-6
A person includes:
a) Only Individual
b) Only Individual and HUF
c) Individuals, HUF, Firm, Company only
d) Individuals, HUF, Company, Firm, AOP or BOI, Local Authority, Every Artificial
Juridical Person
Every assessee is a person, and
a) every person is also an assessee
b) every person need not be an assessee
c) an individual is always an assessee
d) A HUF is always an assessee
First previous year in case of a business/profession newly set up on 31.3.2014 would:
a) Start from 1st April,2013 and end on 31st March,2014
b) Start from 31.3.2014 and will end on 31.3.2014
c) Start from 1st January, 2014 and end on 31st December, 2014
d) Start from 1st January, 2014 and will end on 31st March, 2014
A person follows Calendar year for accounting. For taxation, he has to follow:
a) Calendar year only - 1st January to 31st December
b) Financial year only - 1st April to 31st March
CONTACT US - 7310762592
Email- info@diwakareducationhub.in
c) Any of the Calendar or Financial year as per his choice
d) He will to follow extended year from 1st January to next 31st March (a period of 15
months)
In which of the following cases, income of previous year is assessable in the previous year
itself:
a) Assessment of persons leaving India
b) A person in employment in India
c) A person who is into illegal business
d) A person who is running a charitable institution
In which of the following cases, Assessing Officer has the discretion to assess the
income of previous year in previous year itself or in the subsequent assessment year:
a) Shipping business of non-residents
b) Assessment of Association of Persons or Body of Individuals formed for a particular event
or purpose
c) Assessment of persons likely to transfer property to avoid tax
d) Discontinued business
In case of a female individual, who is of 59 years of age, what is the maximum
exemption limit for AY 2014-15:
a) Rs. 2,00,000
b) Rs. 2,50,000
c) Rs. 5,00,000
d) Nil
Calculate Income-tax payable by an Individual (aged 30 years) for AY 2014-15 if his total
income is Rs. 1,01,20,000:
a) Rs. 30,38,500
b) Rs. 32,47,180
c) Rs. 29,14,900
d) Rs. 29,50,000
Calculate the amount of rebate under section 87A in case of a resident individual
having total income of Rs. 3,00,000.
a) Rs. 30,000
b) Rs. 10,000
c) Rs. 2,000
d) Rs. 5,000
Out of the following, which of the capital receipt is not taxable:
a) Capital gains of Rs. 10,00,000
CONTACT US - 7310762592
Email- info@diwakareducationhub.in
b) Amount of Rs. 5,00,000 won by way of lottery, games, puzzles
c) Amount of Rs. 2,00,000 received by way of gift from relatives
d) Amount of Rs. 1,00,000 received by way of gift from a friend on marriage anniversary
Total income is to be rounded off to nearest multiple of ............. and tax is to be rounded
off to nearest multiple of .........
a) Ten, Rupee
b) Hundred, Ten
c) Ten, Ten
d) Rupee, Rupee
Income accrued outside India and received outside India is taxable in case of:
a) Resident and ordinary resident (ROR) only
b) Resident but not ordinary resident (RNOR) only
c) Non resident only
d) ROR, RNOR and Non-Resident
An Indian company would:
a) be resident in India if its control and management is wholly situated in India
b) be resident in India if its control and management is wholly or partly situated in India
c) be resident in India if its control and management is wholly situated outside India
d) be always resident in India irrespective of control and management
Determine the residential status of a HUF if HUF's control and management is wholly
situated in India and Karta of HUF is a Non-resident in India for that previous year.
a) Resident and Ordinary Resident (ROR)
b) Resident but not ordinary resident (RNOR)
c) Non-Resident (NR)
d) ROR or RNOR
Profits of Rs. 1,00,000 for the year 2012-13 of a business in Germany remitted to India
during the previous year 2013-14 (not taxed earlier) would be:
a) Taxable in India for ROR only
b) Not taxable in India for all (ROR, RNOR and NR)
c) Taxable in India for all (ROR, RNOR and NR)
d) Taxable only for RNOR and NR
Profits of Rs. 2,00,000 is earned from a business in USA which is controlled in India,
half of the profits being received in India. How much amount is taxable in India for a Nonresident
individual?
a) Rs. 2,00,000
b) Nil
CONTACT US - 7310762592
Email- info@diwakareducationhub.in
c) Rs. 1,00,000
d) Rs. 3,00,000
Dividend from British Co. of Rs. 2,00,000 received in London will be taxable in case of:
a) Resident and ordinary resident (ROR) only
b) Not ordinary resident (NOR) only
c) Non resident (NR) only
d) ROR, NOR and NR all
Which out of the following income is exempt from tax?
a) Sum received by a member from HUF
b) Dividend received from a foreign company
c) Agricultural income from Bangladesh
d) Salary Income from a Non Profitable Organisation
Which income out of the following is an exempt income for political party?
a) Income from house property only
b) Income from other sources only
c) Income by way of voluntary contribution from any person only
d) Income from house property, income from other sources, income from capital gains and
income by way of voluntary contribution
Dividend received by a shareholder from an Indian company is exempt. Interest or any other
expenditure incurred for earning such dividend income shall:
a) be allowed as deduction
b) not be allowed as deduction
c) be allowed as deduction subject to certain conditions
d) be allowed only if AO is satisfied that it is only interest expenditure
Gross Total Income is arrived after:
a) only adding Income under five heads of Income;
b) adding Income under five heads of Income excluding losses;
c) adding Income under five heads of Income, after applying clubbing provisions and making
adjustment of set off and carry forward of losses
d) adding Income under five heads of Income, after applying clubbing provisions and making
adjustment of set off and carry forward of losses and after allowing deduction under section
80C to 80U
Salary of S (Rs. 40,000 per month) becomes due on the last day of the month but is paid on
7th of next month. Also, salary of April, 2014 and May, 2014 is received in advance in
March, 2014. What will be his gross income for Assessment Year 2014-15?
CONTACT US - 7310762592
Email- info@diwakareducationhub.in
a) Rs. 5,60,000
b) Rs. 4,80,000
c) Rs. 4,40,000
d) Rs. 5,20,000
Calculate the exempt HRA from the following details:
X is entitled to a basic salary of Rs. 50,000 p.m. and dearness allowance of Rs. 10,000 p.m.,
40% of which forms part of retirement benefits. He is also entitled to HRA of Rs. 20,000 pm.
He actually lives with his parents in Mumbai and does not pay any rent. Market rent of that
house is Rs. 20,000 pm in Mumbai.
a) Nil
b) Rs. 1,75,200
c) Rs. 64,800
d) Rs. 2,40,000
Y received children education allowance of Rs. 500 pm for 10 of his children. Calculate
taxable amount of children education allowance for the assessment year 2014-15 if entire
Rs. 500 is spent by Y.
a) Nil
b) Rs. 4,800
c) Rs. 6,000
d) Rs. 3,600
A Ltd. has advanced an interest free loan of Rs. 5,00,000 to B for purchase of car on
1.5.2013. B has been repaying the loan in instalments of Rs. 20,000 p.m. on the 1st of next
month. Compute the value of perquisite on account of interest assuming the interest charged
by SBI is 10% p.a.
a) Rs. 34,833
b) Rs. 36,667
c) Rs. 40,000
d) Rs. 50,000
Employer provides a car (below 1.6 Ltr. capacity) alongwith a driver to X partly for
official and partly for personal purpose. The expenses incurred by the company are:
running and maintenance expenses - Rs. 32,000
driver's salary - Rs. 36,000
Taxable value of perquisite is:
a) Rs. 21,600
b) Rs. 10,800
c) Rs. 32,400
CONTACT US - 7310762592
Email- info@diwakareducationhub.in
d) Rs. 39,600
X retired on 15.4.2013 from a company. He was entitled to a pension of Rs. 4,000 p.m. At
the time of retirement, he got 75% of the pension commuted and received Rs. 1,20,000 as
commuted pension. Compute the taxable portion of the commuted pension if he is entitled to
gratuity.
a) Rs. 66,667
b) Rs. 53,333
c) Rs. 1,20,000
d) Rs. 78,667
Mr. A (65 years) submits the following information for the Assessment year 2014-15:
Gross salary - Rs. 8,80,000
Income from other sources - Rs. 60,000
Contribution to PPF- Rs. 70,000
Compute the tax liability of A.
a) Rs. 99,000
b) Rs. 97,000
c) Rs. 1,01,970
d) Rs. 99,970
Calculate the Gross Annual value from the following details:
Municipal Value - Rs. 45,000
Fair rental value - Rs. 50,000
Standard rent - Rs. 48,000
Actual Rent - Rs. 42,000
a) Rs. 50,000
b) Rs. 48,000
c) Rs. 45,000
d) Rs. 42,000
M took a loan of Rs. 6,00,000 on 1.4.2011 from a bank for construction of a house. The
loan carries an interest @ 10% p.a. The construction is completed on 15.6.2013. The entire
loan is still outstanding. Compute the interest allowable for the assessment year 2014- 15.
a) Rs. 60,000
b) Rs. 1,80,000
c) Rs. 84,000
d) Rs. 24,000
A had one self occupied house property in Mumbai for residence. Fair rent of that
CONTACT US - 7310762592
Email- info@diwakareducationhub.in
property is Rs. 56,000 per annum. Municipal valuation is Rs. 28,000. Municipal taxes paid
are Rs. 5,000 including Rs. 1,000 for an earlier year. The house was constructed in
December, 2005 with a loan of Rs. 12,00,000 from a bank taken in November, 2004. During
the previous year 2013-14, the assessee refunded Rs. 2,30,000 which includes Rs. 1,68,000 as
current year interest. Compute the income from house property for assessment year 2014-15?
a) Loss of Rs. 30,000
b) Loss of Rs. 1,68,000
c) Nil
d) Loss of Rs. 1,50,000
Which out of the following is not a case of deemed ownership of house property?
a) Transfer to a spouse for inadequate consideration
b) Transfer to a minor child for inadequate consideration
c) Holder of an impartible estate
d) Co-owner of a property
Which of the following income is not chargeable as income of business or profession?
a) Profits and gains of business carried by an assessee during the previous year
b) Income derived by a trade, professional or similar association from specific services
performed for its members
c) Income from the activity of owning and maintaining race horses
d) Salary received by a partner of a firm from the firm in which he is a partner
Income is chargeable as profits of the business, only if the business is carried on by the
assessee at any time during the previous year. However, there are certain exceptions to the
above rule. Which out of the following is not an exception:
a) Recovery against bad debts
b) Sale of capital asset used for scientific research
c) Recovery against any loss, expenditure or trading liability earlier allowed as a deduction
d) Recovery against any loss, expenditure or trading liability earlier not allowed as a
deduction
If a new machinery is purchased on 15.4.2013 and put to use for the purpose of the
business on 28.12.2013, depreciation would be allowable at the rate of:
a) 7.5%
b) 15%
c) 10%
d) 20%
Which of the following expenditure on scientific research is not allowed as deduction?
a) Revenue expenses incurred during the previous year
CONTACT US - 7310762592
Email- info@diwakareducationhub.in
b) Revenue expenses on payment of salary to employees engaged in scientific research and
purchase of material used in scientific research incurred during three years immediately
preceding the commencement of business
c) Capital expenditure incurred on scientific research during the year related to the business
d) Expenditure incurred on acquisition of land during the year for scientific research
Which out of the following is not a condition to be fulfilled for claiming expenditure under
section 37(1)?
a) Such expenditure should not be covered under the specific sections i.e. sections 30 to 36
b) Expenditure should be of capital nature
c) Expenditure should not be of a personal nature
d) Expenditure should have been incurred wholly or exclusively for the purpose of the
business or profession.
Financial statement of A on 31.3.2014 reveals that the following expenses were due
during year ended 31.3.2014 but have been paid after 31.3.2014:
Employer's contribution to provident fund: Rs. 55,000 (Rs. 25,000 paid on 15.7.2014, Rs.
10,000 paid on 31.7.2014 and Rs. 20,000 paid on 15.1.2015)
The due date of filing return is 31.7.2014. What would be the deduction for AY 2014-15?
a) Rs. 55,000
b) Rs. 35,000
c) Rs. 10,000
d) Rs. 45,000
M owns the following commercial vehicles:
(i) 2 light commercial vehicles: one for 9 months and two days and the other for 12 months
(ii) 2 heavy good vehicle - one for 6 months and 25 days and the other for 11 months and 12
days.
(iii) 2 medium goods vehicles - one for 6 months and the other for 8 months and 15 days
Compute the income from business of M if he opts for the scheme under section 44AE.
a) Rs. 99,000
b) Rs. 95,000
c) Rs. 67,500
d) Rs. 2,61,500
Cost of Acquisition in case of bonus shares allotted before 1.4.1981 will be:
a) Nil
b) FMV as on 1.4.1981
c) Rs. 10,000
d) Cost of Original shares on the basis of which bonus shares are allotted.
CONTACT US - 7310762592
Email- info@diwakareducationhub.in
Indexation benefit on Cost of acquisition is available on the long term capital asset.
However, in certain cases, indexation benefit is not available. In which of the following
cases, indexation benefit is allowed?
a) Debentures issued by a company
b) Self generated goodwill of a business
c) Bonus shares allotted on 1.4.2000
d) Jewellery
A owns a house property which was purchased by him on 1.5.1979 for Rs. 3,00,000. The
said property was destroyed by fire on 3.4.2013 and A received a sum of Rs. 38,00,000
from the insurance company during the year. The market value of the above property as on
1.4.1981 was Rs. 4,00,000.
Compute the capital gain for the assessment year 2014-15. (Cost inflation index for F.Y.
1980-81= 100, and 2013-14 = 939)
a) Rs. 44,000
b) Rs. 34,00,000
c) Rs. 35,00,000
d) Rs. 9,83,000
M owns two machineries eligible for depreciation at the rate of 15%. The WDV of these
machines as on 1.4.2013 was Rs. 25,000 and Rs. 40,000 respectively. No other asset was
acquired in this block during the year. One of these machines were sold during the
previous year for Rs. 75,000. Compute the capital gain.
a) Short term capital gain of Rs. 10,000
b) Short term capital loss of Rs. 10,000
c) Long term capital gain of Rs. 10,000
d) No capital gain as depreciation would be allowed on one of the machines left with M.
For availing exemption under section 54, which amount is eligible for availing
exemption?
a) Purchase/Construction of a residential house property upto due date of return of income
only
b) Deposit in capital gain account scheme upto due date of return of income only
c) Purchase/Construction of a residential house property upto due date of return of income
and deposit in capital gain account scheme upto due date of return of income
d) Purchase / construction after three years from the transfer date
Which of the following is not an income taxable as income from other sources?
a) family pension
b) Casual income
CONTACT US - 7310762592
Email- info@diwakareducationhub.in
c) director's sitting fee for attending board meetings
d) Rent received for house property including use of plant and machinery, where rent is
separable between rent for house property and rent for use of plant and machinery.
Q. 50. ABC Private Limited gives a loan of Rs. 5,00,000 to X, who is not a shareholder. X
gives the amount as loan to A who is shareholder in ABC Private Limited holding 15%
shares. In this case, amount taxable as deemed dividends in the hands of X will be. ........ and
that in hands of A will be.............
a) Nil, Nil
b) Nil, Rs. 5,00,000
c) Rs. 5,00,000, Nil
d) Rs. 5,00,000, Rs. 5,00,000
M's property was compulsorily acquired. He received enhanced
compensation on 15.11.2013 which includes Rs. 2,30,000 as interest on such
enhanced compensation. Compute the taxable amount of interest.
a) Rs. 2,30,000
b) Nil
c) Rs. 1,15,000
d) Rs. 2,00,000
Transfer of income without transfer of asset would be taxable in the hands of:
a) Transferor only
b) Transferee only
c) Either transferor or transferee
d) Both transferor and transferee
Income from asset transferred to spouse will be taxable in the hands of transferor if:
a) asset has been transferred in pursuance of an agreement to live apart;
b) asset was transferred for an adequate consideration;
c) asset was transferred before marriage;
d) asset was transferred for inadequate consideration
Long term capital loss can be set off from which of the following:
a) Short term capital gain only
b) Long term capital gain only
c) Income from business or profession
d) Income from salary
Q 55. Loss from house property can be carried forward and set off in the subsequent 8
Assessment years:
a) Only if return of loss is filed within due date
CONTACT US - 7310762592
Email- info@diwakareducationhub.in
b) Even if return of loss is filed after due date
c) It does not matter when return is filed
d) Carry forward of loss from house property is not allowed at all.
Business loss of an amalgamating company shall be:
a) carried forward and set off in the hands of amalgamated company unconditionally
b) carried forward and set off in the hands of amalgamated company subject to certain
conditions
c) not be carried forward
d) allowed to be carried forward only by amalgamating company
Deduction under section 80C to 80U cannot exceed:
a) Gross Total Income
b) Total Income
c) Income from business or profession
d) Income from house property
Aggregate amount of deduction under section 80C, 80CCC and 80CCD cannot exceed: a)
Rs. 1,10,000
b) Rs. 2,00,000
c) Rs. 1,00,000
d) Nil
A pays (through any mode other than cash) during the previous year medical insurance
premia as under:
(i) Rs. 18,000 to keep in force an insurance policy on his health and on the health of his wife
and dependent children;
(ii) Rs. 18,000 to keep in force an insurance policy on the health of his parents where his
father is a senior citizen.
Calculate deduction under section 80D.
a) Rs. 36,000
b) Rs. 33,000
c) Rs. 30,000
d) Rs. 15,000
Deduction in respect of contribution to political party will:
a) be allowed in respect of sum paid by way of cash
b) not be allowed if payment made in cash
c) This type of deduction is not allowed whether payment is in cash or not.
d) be allowed if payment made in cash, subject to certain conditions
Amount of deduction in case of a person with severe disability under section 80U will
CONTACT US - 7310762592
Email- info@diwakareducationhub.in
be:
a) Rs. 50,000
b) Rs. 75,000
c) Rs. 1,00,000
d) Rs. 1,50,000
Gross Total Income of A aged 31 years as computed under Income-tax Act for the AY
2014-15 is Rs. 2,50,000. He deposits Rs. 20,000 in a PPF account. Compute the tax payable
by A assuming that he has agricultural income of Rs. 3,50,000.
a) Rs. 4,120
b) Rs. 3,090
c) Nil
d) Rs. 1,030
Due date of furnishing return of income for a working partner of a firm whose accounts are
required to be audited is:
a) 31st July of the assessment year
b) 30th September of the assessment year
c) 30th November of the assessment year
d) 31st March of the assessment year
Advance tax shall be payable during a financial year, only when the amount of such
advance tax payable by the assessee during that year is:
a) Rs. 10,000 or more
b) More than 0
c) Rs. 1,00,000 or more
d) Rs. 10,00,000 or more
An individual needs to pay Rs. 1,00,000 as advance tax. By 15th of December, how much
amount must be paid by the individual:
a) Rs. 30,000
b) Rs. 60,000
c) Rs. 1,00,000
d) Nil
As per Section 45, Wealth tax is not payable by certain persons. Which of the
following is not mentioned under Section 45:
a) Any company registered under section 25 of the Companies Act, 1956 ( non profit making
companies);
b) Any Political party
c) Reserve Bank of India
CONTACT US - 7310762592
Email- info@diwakareducationhub.in
d) A public limited company
As per Section 2(ea), which of the following is an asset in case of an individual:
a) Cash in hand upto Rs. 50,000
b) Shares
c) Debentures or Bonds
d) Motor car used for official purposes
In case marriage of minor's parents subsists, minor's wealth will be included in the
wealth of the parent:
a) Whose wealth excluding minor's wealth is greater;
b) Whose wealth excluding minor's wealth is lesser;
c) Assessing officer to decide the parent
d) Father only
Money and assets brought into India by citizen of India or persons of Indian origin is
exempt for:
a) only relevant assessment year
b) 5 successive assessment year
c) 6 successive assessment year
d) 7 successive assessment year
Net Wealth is to be rounded off to nearest multiple of ........... and wealth tax is to be
rounded off to nearest multiple of.......
a) Rs. 100, Rs. 100
b) Rs. 100, Rs. 10
c) Rs. 100, Rs. 1
d) Rs. 10, Rs. 10
PART B
Service tax was introduced in India in the year:
a) 1994
b) 2000
c) 2010
d) 2014
Service is applicable to:
a) Whole of India excluding Jammu & Kashmir, Union Territories of Dadra, Nagar Haveli,
Daman and Diu
b) Whole of India excluding Jammu & Kashmir
c) Whole of India
d) Whole of World
CONTACT US - 7310762592
Email- info@diwakareducationhub.in
The provisions relating to service tax are given in:
a) Finance Act, 1994 - Chapter V and VA
b) Income-tax Act, 1961
c) The Central Excise Act
d) The Service Tax Act
On recommendation of which of the following committee, service tax was introduced in
India:
a) Naresh chandra committee
b) Kelkar committee
c) Dr. Raja J Chelliah Committee
d) Justice Verma Committee
Q. 75. Service tax is administered by:
a) Excise Department
b) Income tax department
c) Custom department
d) Service tax department
Q. 76. Power to levy service tax is provided at present in the Constitution vide entry No.:
a) 54 of the State List
b) 84 of the Union List
c) 92C of the Union List
d) 97 of the Union List
India follows which the approach for levying service tax at present:
a) Selective approach
b) Comprehensive approach
c) Hybrid approach
d) As per the directions of Central Board of Excise & Customs (CBEC)
Service tax is not payable in the year of commencement of business if the aggregate value
of invoices issued of taxable service does not exceed:
a) Rs. 1,00,000
b) Rs. 4,00,000
c) Rs. 10,00,000
d) Rs. 9,00,000
Service tax (inclusive of cess) rate at present is: a)
12%
b) 12.36%
c) 12.24%
CONTACT US - 7310762592
Email- info@diwakareducationhub.in
d) 10.3%
Service provider claiming exemption of Rs. 10,00,000 shall have to apply for
registration where the aggregate value of service exceeds:
a) Rs. 10,00,000
b) Rs. 9,00,000
c) Rs. 8,00,000
d) Rs. 12,00,000
Q. 81. Penalty for non-registration is higher of the following:
a) Rs. 10,000 or Rs. 100 per day of default
b) Rs. 10,000 or Rs. 200 per day of default
c) Rs. 1,00,000 or Rs. 2,000 per day of default
d) Rs. 10,00,000 or Rs. 2,000 per day of default
Who can cancel the Registration Certificate?
a) Assistant Commissioner of Income tax
b) Deputy Commissioner of Income tax
c) Superintendent of Central Excise
d) Commissioner of Central Excise
If the gross amount charged in the execution of a works contract is Rs. 2,00,000 and the value
of the property in goods transferred in the execution of such works contract is Rs. 1,30,000.
The value of taxable service in the execution of the works contract shall be:
a) Rs. 2,00,000
b) Rs. 1,30,000
c) Rs. 70,000
d) Nil
A Ltd. receives taxable service from B Ltd. of USA on 28.8.2013 for Rs. 6,00,000. B Ltd.
raises the invoice on 5.9.2013. A Ltd. makes the payment on 6.1.2014. Determine the point
of taxation.
a) 6.1.2014
b) 28.8.2013
c) 5.9.2013
d) 28.3.2014
Due date for payment of service tax in the case of individual assessee is
immediately following the quarter of the financial year except in case of last quarter.
a) 5th of the month
b) 10th of the month
c) 15th of the month
CONTACT US - 7310762592
Email- info@diwakareducationhub.in
d) 11th of the month
VAT is levied by:
a) Central Government
b) State Government
c) Both Central or State Government
d) Any of the Central or State Government
If goods are purchased by Mumbai dealer from Delhi for Rs. 1,02,000 which includes CST
of Rs. 2,000, Delhi dealer will get input tax credit of:
a) Nil
b) Rs. 2,000
c) Rs. 1,02,000
d) Rs. 4,000
Power to levy VAT is drawn from Constitution vide Entry No:
a) 97 of the Union list
b) 92C of the Union list
c) 54 of the State list
d) 53 of the State list
VAT has replaced the:
a) Central Sales tax
b) Local Sales tax
c) Goods & service tax
d) Excise duty
Q. 90. On the recommendation of which Committee, VAT was levied in India:
a) Kelkar Committee
b) Chelliah Committee
c) Naresh Chandra Committee
d) Justice Verma Committee
In case of zero rated goods, input tax credit is ................. and in case of exempted
goods, input tax credit is...........
a) Allowed, Allowed
b) Allowed, Not allowed
c) Not allowed, Not allowed
d) Not allowed, Allowed
Input credit on stock transfer to other states:
a) will not be allowed
b) will be allowed only to the extent of tax paid in excess of 2%
CONTACT US - 7310762592
Email- info@diwakareducationhub.in
c) will be allowed to the extent of full Input VAT on purchases
d) will be allowed only to the extent of tax paid in excess of 4%
Which of the following is not a method of computation of VAT:
a) Addition method
b) Invoice method
c) Substraction method
d) Gross product variant
Which out of the following cannot be a role of Company Secretary under VAT:
a) Record keeping
b) Tax planning
c) Negotiations with suppliers to reduce price
d) Carrying out departmental audit / assessment
Q. 95. In which of the following cases, VAT authorities cannot cancel the registration:
a) The dealer has discontinued the business
b) The dealer has become insolvent
c) There is a change in the constitution of the business
d) Dealer has started selling one more product
Q.96. Which of the following dealer is allowed to opt for composition scheme?
a) Dealer selling goods within the State and not exceeding the specified limit of turnover
b) Dealer who makes inter-state purchases or sales
c) Dealer who wants to issue tax invoice
d) Dealer who exports goods outside India
Q. 97. X a dealer at Mumbai purchased goods from dealer Y of Mumbai for Rs. 13,50,000
including VAT @ 12.5%. X earns a profit @ 25% on the cost and sold the same goods to a
retailer Z. Compute the amount of VAT payable by X.
a) Rs. 37,500
b) Rs. 1,50,000
c) Rs. 1,87,500
d) Nil
Q.98. VAT is a:
a) First Stage tax
b) Last Stage tax
c) Multi stage tax
d) Single stage tax as per the option of the assessee
Q. 99. Which of the following is not an advantage of VAT?
a) Easy to administer and transparent
CONTACT US - 7310762592
Email- info@diwakareducationhub.in
b) Abolition of Statutory Forms
c) Deterrent against tax avoidance
d) No credit for tax paid on inter-state purchases
Q.100. Which out of the following was first State to implement VAT in India:
a) Delhi
b) Haryana
c) Uttar Pradesh
d) Maharashtra
ANSWER – PART-6
86. b
87. a
88. c
1. d 2. b 3. d 4. c 5. b 6. b 7. b 8. b 9. a 10. d 11. a 12. a 13. c 14. c 15. c 16. a 17. d 18. d 19. b 20. c 21. a 22. a 23.
d 24. b 25. c 26. a 27. a 28. b 29. b 30. c 31. a 32. c 33. b 34. c 35. d 36. d 37. c 38. d 39. a 40. d 41. b 42. b 43. d
44. b 45. d 46. a 47. a 48. c 49. d 50. b 51. c 52. a 53. d 54. b 55. b 56. b 57. a 58. c 59. b 60. b 61. c 62. a 63. b
64. a 65. b 66. d 67. d 68. a 69. d 70. c PART B 71. a 72. b 73. a 74. c 75. a 76. c 77. b 78. c 79. b 80. b 81. b 82.
c 83. c 84. a 85. a 86. b 87. a 88. c 89. b 90. a 91. b 92. b 93. d 94. d 95. d 96. a 97. a 98. c 99. d 100. B
PART- 7
1. Surcharge of 10 per cent is payable by an individual where the total income exceeds:
a) Rs.7,50,000 b) Rs.8,50,000 c) Rs.10,00,000 d) None of the three
Ans c
2. Additional surcharge (education cess) of 3% per cent is payable on
a) Income tax b) Income tax plus surcharge c) Surcharge
Ans b
3. Family pension received by a widow of a member of the armed forces where the death of the
member has occurred in the course of the operational duties, is
a) Exempt up to Rs.3,00,000 b) Exempt up to Rs. 3,50,000
c) Totally exempt under section 10(19) d) Totally chargeable to tax
Ans c
4. In respect of shares held as investment, while computing the capital gains, securities transaction
CONTACT US - 7310762592
Email- info@diwakareducationhub.in
tax paid in respect of sale of listed shares sold in a recognized stock exchange,
a) Is deductible up to Rs.1,00,000 b) Is deductible up to Rs.2,00,000
c) Is deductible if C.G.’s is < 5,00,000 d) Is not deductible at all
Ans d
5. Gift of Rs 5,00,000 received on 10 July, 2008 through account payee cheque from a non-relative
regularly assessed to income-tax, is
a) A capital receipt not chargeable to tax b) Chargeable as other sources
c) Chargeable to tax as business income
d) Exempt up to Rs.50,000 and balance chargeable to tax as income from other source
Ans b
6. The rate of tax that is leivable on STCG arising from transfer of Equity shares of a Company or
units of an Equity oriented fund is
a) 10% b) 15% c) 20%
Ans b
7. For an employee in receipt of hostel expenditure allowance for his three children, the maximum
annual allowance exempt under section 10(14) is
a) Rs.10, 800 b) Rs.7,200 c) Rs.9,600 d) Rs.3,600
Ans b
8. For an industrial undertaking fulfilling the conditions, additional depreciation in respect of a
machinery costing Rs.10 lakh acquired and installed on October 3, 2005 is
a) Rs.75,000 b) Rs.1,50,000 c) Rs.1,00,000 d) None of the above
Ans c
9. Assessee is always a person but a person may or may not be an assessee.
a) True b) False
Ans a
10. A person may not have assessable income but may still be assessee.
a) True b) False
Ans a
11. In some cases assessment year and previous year can be same financial year.
CONTACT US - 7310762592
Email- info@diwakareducationhub.in
a) True b) False
Ans a
12. A.O.P should consist of :
a) Individual only b) Persons other than individual only c) Both the above
Ans c
13. Body of individual should consist of :
a) Individual only b) Persons other than individual only c) Both the above
Ans a
14. A new business was set up on15-11-2008 and it commenced its business from 1-12-2008.The
first previous year in this case shall be:
a) 15-11-2008 to 31-3-2009 b) 1-12-2008 to 31-3-2009 c) 2008-2009
Ans a
15. A person leaves India permanently on 15-11-2008.The assessment year for income earned till
15-11-2008 in this case shall be:
a) 2007-08 b) 2008-09 c) 2009-10
Ans b
16. Surcharge in case of an individual or HUF for assessment year 2009-10 is payable at the rate of :
a) 12% of the income-tax payable provided the total income exceed Rs.60,000.
b) 10% of the income-tax payable provided the total income exceeds Rs.10,00,000
c) 5% of the income-tax payable if the total income exceeds Rs.8,50,000
Ans b
17. Surcharge in case of a firm for assessment year 2009-10 is payable at the rate:
a) 2.5% of income-tax payable b) 5% of income-tax payable c) 10% of income-tax payable
Ans c
18. The maximum amount on which income-tax is not chargeable in case of firm is:
a) Rs.1,00,000 b) Rs. 90,000 c) Nil
Ans c
19. The maximum amount on which income-tax is not chargeable in case a co-operative society is:
CONTACT US - 7310762592
Email- info@diwakareducationhub.in
a) Rs.50,000 b) Rs.30,000 c) Nil
Ans c
20. A local authority is taxable at flat rate of income-tax.
a) True b) False
Ans a
21. A co-operative society is taxable at flat rate of 30% on TI.
a) True b) False
Ans b
22. Education cess is leviable @:
a) 3% b) 5% c) 2.5%
Ans a
23. Education cess is leviable in case of:
a) An individual and HUF b) A company assessee only c) All assesses
Ans c
24. In case of an individual and HUF education cess is leviable only when the total income of such
assessee
a) Exceeds Rs.10,00,000 b) No income limit
Ans b
25. The TI of the assessee has been computed as Rs.2,53,494.90. For rounding off ,the TI will be
taken as:
a) Rs.2,53,500 b) Rs.2,53,490 c) Rs.2,53,495
Ans a
26. Income tax is rounded off to:
a) Nearest ten rupees b) Nearest one rupee c) No rounding off of tax is done
Ans a
27. A’s TI for the A.Yr.2009-10 is Rs.2,50,000.His tax liability shall be
a) 10,000 b) 10,300 c) 11,330
Ans b
CONTACT US - 7310762592
Email- info@diwakareducationhub.in
28. Residential status to be determined for :
a) Previous year b) Assessment year c) Accounting year
Ans a
29. Incomes which accrue or arise outside India but are received directly into India are taxable in case of
a) Resident only b) Both ordinarily resident and NOR c) Non-resident d) All the assesses
Ans d
30. Income deemed to accrue or arise in India is taxable in case of :
a) Resident only b) Both ordinarily resident and NOR c) Non-resident d) All the assesses
Ans d
31. Income which accrue outside India from a business controlled from India is taxable in case of:
a) Resident only b) Not ordinarily resident only
c) Both ordinarily resident and NOR d) Non-resident
Ans c
32. Income which accrue or arise outside India and also received outside India taxable in case of:
a) resident only b) not ordinarily resident
c) both ordinarily resident and NOR d) none of the above
Ans a
33. TI of a person is determined on the basis of his:
a) residential status in India b) citizenship in India c) none d) both of the above
Ans a
34. Once a person is a resident in a P.Yr. he shall be deemed to be resident for subsequent P. Yr.
a) True b) False
Ans b
35. Once a person is resident for a source of income in a particular P. Y r. he shall be deemed to be
resident for all other sources of income in the same P. Yr :
a) True b) False
Ans b
CONTACT US - 7310762592
Email- info@diwakareducationhub.in
36. R Ltd., is an Indian company whose entire control and management of its affairs is situated
outside India. R Ltd., shall be :
a) Resident in India b) Non-resident in India c) Not ordinarily resident in India
Ans a
37. R Ltd., is registered in U.K. The control and management of its affairs is situated in India .R Ltd
shall be :
a) Resident in India b) Non-resident c) Not ordinarily resident in India
Ans b
38. R, a foreign national visited India during previous year 2008-09 for 180 days. Earlier to this he
never visited India. R in this case shall be:
a) Resident in India b) Non-resident c) Not ordinarily resident in India
Ans b
39. An Indian company is always resident in India
a) True b) False
Ans a
40. Dividend paid by an Indian company is:
a) Taxable in India in the hands of the recipient b) Exempt in the hands of recipient
c) Taxable in the hands of the company and exempt in the hands of the recipient
Ans c
41. Agricultural income is exempt provided the:
a) Land is situated in India b) Land is situated in any rural area India
c) Land is situated whether in India or outside India.
Ans a
42. If the assessee is engaged in the business of growing and manufacturing tea in India ,the
agricultural income in that case shall be:
a) 40% of the income from such business b) 60% of the income from such business
c) Market value of the agricultural produce minus expenses on cultivation of such produce
Ans b
43. Agricultural income is :
CONTACT US - 7310762592
Email- info@diwakareducationhub.in
a) Fully exempt b) Partially exempt c) Fully taxable
Ans a
44. The partial integration of agricultural income, is done to compute tax on:
a) Agricultural income b) non agricultural income
c) Both agricultural and non agricultural income
Ans b
45. There will be no partial integration of agricultural income with non agricultural income, if the
non agricultural income does not exceed:
a) Rs.1,50,000 b) Rs. 1,00,000 c) Rs.1,10,000
Ans a
46. There will be no partial integration, if the agricultural income does not exceed:
a) Rs.40,000 b) Rs.50,000 c) Rs.5,000
Ans c
47. A local authority has earned income from the supply of commodities outside its own
jurisdictional area. It is :
a) Exempt b) Taxable
Ans b
48. R, a chartered accountant is employed with R Ltd., as an internal auditor and requests the
employer to call the remuneration as internal audit fee. R shall be chargeable to tax for such fee
under the head.
a) Income from salaries b) Profit and gains from Business and Profession
c) Income from other sources.
Ans a
49. R, who is entitled to a salary of Rs.10,000 p.m. took an advance of Rs.20,000 against the salary
in the month of March 2009.The gross salary of R for assessment year 2009-10 shall be:
a) Rs.1,40,000 b) Rs.1,20,000 c) None of these two
Ans a
50. A is entitled to children education allowance @ Rs. 80 p.m. per child for 3 children amounting
Rs. 240 p.m. It will be exempt to the extent of :
CONTACT US - 7310762592
Email- info@diwakareducationhub.in
a) Rs.200 p.m. b) Rs.160 p.m. c) Rs. 240 p.m.
Ans a
51. R gifted his house property to his wife in 2000. R has let out the house property @ Rs.5,000 p.m.
The income from such house property will be taxable in the hands of :
a) Mrs. R
b) R. However , income will be computed first as Mrs. R’s income and thereafter clubbed in the
income of R
c) R as he will be treated as deemed owner & liable to tax
Ans c
52. R transferred his house property to his wife under an agreement to live apart. Income from such
house property shall be taxable in the hands of :
a) R as deemed owner
b) R. However, it will be first computed as Mrs. R income & Thereafter clubbed in the hands of R
c) Mrs. R
Ans c
53. R gifted his house property to his married minor daughter. The income from such house property
shall be taxable in the hands of :
a) R as deemed owner.
b) R. However, it will be first computed as minor daughters income & clubbed in the income of R.
c) Income of married minor daughter.
Ans c
54. A has two house properties. Both are self-occupied. The annual value of
a) Both house shall be nil b) One house shall be nil c) No house shall be nil
Ans b
55. An assessee has borrowed money for purchase of a house & Interest is payable outside India.
Such interest shall:
a) Be allowed as deduction b) Not to be allowed on deduction
c) Be allowed as deduction if the tax is deducted at source
Ans c
56. Salary, bonus, commission or remuneration due to or received by a working partner from the
firm is taxable under the head.
CONTACT US - 7310762592
Email- info@diwakareducationhub.in
a) Income from salaries b) Other sources c) PGBP
Ans c
57. Perquisite received by the assessee during the course of carrying on his business or profession is
taxable under the head.
a) Salary b) Other sources c) PGBP
Ans c
58. Interest on capital or loan received by a partner from a firm is:
a) Exempt U/S 10(2A) b) Taxable U/H business and profession
c) Taxable U/H income from other sources
Ans b
59. Under the head Business or Profession, the method of accounting which an assessee can follow
shall be :
a) Mercantile system only b) Cash system only c) Mercantile or cash system only d)
Hybrid system
Ans c
60. An asset which was acquired for Rs. 5, 00, 000 was earlier used for scientific research. After the
research was completed, the machinery was brought into the business of the assessee. The
actual cost of the asset for the purpose of inclusion in the block of asset shall be :
a) Rs.5,00,000 b) Nil
c) Market value of the asset on the date it was brought into business
Ans b
61. A car is imported after 1- 4- 2005 by R Ltd. from London to be used by its employee. R Ltd. shall
be allowed depreciation on such car at:
a) 15% b) 40% c) Nil
Ans c
62. Unabsorbed depreciation which could not be set off in the same assessment year, can be carried
forward for:
a) 8 Years b) Indefinitely c) 4Years
Ans b
CONTACT US - 7310762592
Email- info@diwakareducationhub.in
63. Certain revenue and capital expenditure on scientific research are allowed as deduction in the
previous year of commencement of business even if these are incurred:
a) Five years immediately before the commencement of business
b) 3 years immediately before the commencement of the business
c) Any time prior to the commencement of the business.
Ans b
64. If any amount is donate for research, such research should be in nature of:
a) Scientific research only b) Social or statistical research only
c) Scientific or social or statistical research
Ans c
65. Preliminary expenses incurred are allowed deduction in:
a) 10 equal annual installments b) 5 equal annual installments c) full
Ans b
66. In case the assessee follows mercantile system of accounting, bonus or commission to the
employee are allowed as deduction on:
a) Due basis b) Payment basis c) Due basis but subject to section 43B
Ans c
67. Interest on money borrowed for the purpose of acquiring a capital asset pertaining to the period
after the asset is put to use is to be:
a) Capitalized b) Treated as revenue expenditure
Ans b
68. Expenditure incurred on purchase of animals to be used by the assessee for the purpose of
carrying on his business& profession is subject to
a) Depreciation
b) Deduction in the previous year in which animal dies or become permanently useless
c) Nil deduction
Ans b
69. Expenditure incurred on family planning amongst the employees is allowed to
a) Any assessee b) A company assessee c) An assessee which is a company or cooperative society
Ans b
CONTACT US - 7310762592
Email- info@diwakareducationhub.in
70. Interest on capital of or loan from partner of a firm is allowed as deduction to the firm to the extent of:
a) 18% p.a. b) 12% p.a. even if it is not mentioned in partnership deed
c) 12% p.a. or at the rate mentioned in partnership deed whichever is less.
Ans c
71. Deduction under section 40(b) shall be allowed on account of salary /remuneration paid to :
a) Any partner b) Major partner only c) Working partner only
Ans c
72. Remuneration paid to working partner shall be allowed as deduction to a firm:
a) In full b) Subject to limits specified in section 40(b) c) None of these two
Ans b
73. A firm business income is nil /negative. It shall still be allowed as deduction on account of
remuneration to working partner to the maximum extent of:
a) Actual remuneration paid as specified in partnership deed b) Rs.50,000 c) Nil
Ans b
74. For person carrying on profession, tax audit is compulsory, if the gross receipts of the previous
year exceeds:
a) Rs.50 lakhs b) Rs.40 lakhs c) Rs.10 lakhs
Ans c
75. Tax audit is compulsory in case a person is carrying on business whose gross
turnover/sales/receipts, as the case may be, exceeds:
a) Rs. 10 lakhs b) Rs. 40 lakhs c) 1 crore
Ans b
76. In case an assessee is engaged in the business of civil construction, presumptive income scheme
is applicable if the gross receipts paid or payable to him in the previous year does not exceed:
a) Rs.10 lakhs b) Rs. 40 lakhs c) Rs. 50 lakhs
Ans b
77. In the aforesaid case ,the income shall be presumed to be :
a) 5% of gross receipts b) 8% of gross receipts c) 10% of gross receipts
CONTACT US - 7310762592
Email- info@diwakareducationhub.in
Ans b
78. In case an assessee is engaged in the business of plying hiring or leasing goods carriage,
presumption income scheme under section 44AE is applicable if the assessee is the owner of
maximum of :
a) 8 goods carriages b) 10 goods carriages c) 12 goods carriages
Ans b
79. In case an assessee is engaged in the business of retail trade, presumptive income scheme is
applicable if the total turnover of such retail trade of goods does not exceed:
a) Rs.10 lakhs b) Rs.30 lakhs c) Rs.40 lakhs d) Rs.50 lakhs
Ans c
80. In the above case the income to be presumed under section 44AF shall be :
a) 8% of total turnover b) 5% of total turnover c) 10% of total turnover
Ans b
81. If the assessee opts for section 44AD or 44AF or 44AE,then the assessee shall:
a) Not be entitled to any deduction under sections 30 to 37
b) Be entitled to deduction under sections 30 to 37
c) Not be entitled to deduction under sections 30 to 37except for interest on capital or loan from
partner and remuneration to a working partner subject to conditions laid down under section 40(b)
Ans c
82. The period of holding of shares acquired in exchange of convertible debentures shall be reckoned
from:
a) The date of holding of debentures
b) The date of when the debentures were converted into shares
c) None of these two
Ans b
83. Securities transaction tax paid by the seller of shares and units shall
a) Be allowed as deduction as expenses of transfer b) Not be allowed as deduction
Ans b
84. The cost inflation index number of the P.Yr.2008-09 is :
CONTACT US - 7310762592
Email- info@diwakareducationhub.in
a) 480 b) 519 c) 551 d) 582
Ans d
85. Conversion of capital asset into stock in trade will result into capital gain of the previous year:
a) In which such conversion took place
b) In which such converted asset is sold or otherwise transferred c) None of these two
Ans b
86. Where a partner transfers any capital asset into the business of firm ,the sale consideration of
such asset to the partner shall be :
a) Market value of such asset on the date of such transfer
b) Price at which it was recorded in the books of the firm
c) Cost of such asset to the partner
Ans b
87. Where the entire block of the depreciable asset is transferred after 36 months, there will be:
a) Short-term capital gain b) Long-term capital gain
c) Short-term capital gain or loss d) Long-term capital gain or loss
Ans c
88. In the case of compulsory acquisition, the indexation of cost of acquisition or improvement shall
be done till the :
a) Previous year of compulsory acquisition b) In which the full compensation received
c) In which part or full consideration is received
Ans a
89. If good will of a profession which is self generated is transferred, there will:
a) Be capital gain b) Not be any capital gain c) Be a short-term capital gain
Ans b
90. Exemption under section 54 is available to :
a) All assesses b) Individuals only c) Individual + HUF.
Ans c
91. The exemption under section 54 ,shall be available:
a) To the extent of capital gain invested in the HP
CONTACT US - 7310762592
Email- info@diwakareducationhub.in
b) Proportionate to the net consideration price invested
c) To the extent of amount actually invested
Ans a
92. The exemption u/s 54B, is allowed to :
a) Any assessee b) Individual only c) Individual or HUF
Ans b
93. For claiming exemption under section 54B the assessee should acquire:
a) Urban agricultural land b) Rural agricultural land c) Any agricultural land
Ans c
94. New assets acquired for claiming exemption u/s 54, 54B or 54D,if transferred within 3 years,
will result in:
a) Short-term capital gain b) long-term capital gain
c) ST or LTCG depending upon original transfer
Ans a
95. Loss from a speculation business of a particular A. Yr. can be set off in the same A. Yr. from:
a) Profit and gains from any business
b) Profit and gains from any business other than speculation business
c) Income of speculation business
Ans c
96. Loss under the head capital gain in a particular assessment year can:
a) Be set off from other head of income in the same assessment year.
b) Be carried forward c) Neither be set off nor carried forward
Ans b
97. The loss is allowed to be carried forward only when as assessee has furnished:
a) Return of loss b) Return of loss before the due date mentioned u/s 139(1)
c) Or not furnished the return of loss
Ans b
98. Loss under the head income from house property can be carried forward:
a) Only if the return is furnished before the due date mentioned u/s 139(1)
CONTACT US - 7310762592
Email- info@diwakareducationhub.in
b) Even if the return is not furnished c) Even if the return is furnished after the due date
Ans c
99. Deduction u/s 80C in respect of LIP, Contribution to provident fund, etc. is allowed to :
a) Any assessee b) An individual
c) An individual of HUF d) An individual or HUF who is resident in India
Ans c
100. Deduction under section 80C is allowed from:
a) Gross total income b) Total income c) Tax on total income
Ans a
101. An assessee has paid life insurance premium of Rs.25,000 during the previous year for a policy
of Rs.1,00,000.He shall:
a) Not be allowed deduction u/s 80C
b) Be allowed Deduction u/s 80C to the extent of 20% of the capital sum assured i.e.Rs.20,000
c) Be allowed Deduction for the entire premium as per the provisions of section 80C
Ans b
102. For claiming Deduction u/s 80C, the payment or deposit should be made:
a) Out of any income b) Out of any income chargeable to income tax
c) During the current year out of any source
Ans b
103. Deduction under section 80C shall be allowed for :
a) Any education fee
b) Tution fee exclusive of any payment towards any development fee or donation or payment of
similar nature c) Tution fee and annual charges
Ans b
104. Deduction under section 80CCC is allowed to the extent of :
a) Rs. 2,00,000 b) Rs. 1,00,000 c) Rs. 4,00,000
Ans b
105. Deduction under section 80D in respect of medical insurance premium is allowed to:
a) Any assessee b) An individual or HUF
CONTACT US - 7310762592
Email- info@diwakareducationhub.in
c) Individual or HUF who is resident in India d) Individual only
Ans b
106. Deduction u/s 80D is allowed if the premium is paid to :
a) Life insurance Corporation
b) General insurance Corporation or any other insurer approved by IRDA
c) Life insurance or General insurance corporation
Ans b
107. The payment for Insurance premium under section 80D should be paid:
a) In cash b) By any mode other than cash c) Cash/by cheque
Ans b
108. The quantum of deduction allowed under section 80D shall be limited to:
a) Rs.20,000 b) Rs.10,000 c) Rs. 15,000
Ans c
109. Deduction U/s 80G on account of donation is allowed to:
a) A business assessee only b) Any assessee c) Individual or HUF only
Ans b
110. The maximum deduction u/s 80GG shall be limited to:
a) Rs. 1,000 p.m. b) Rs. 2,000 p.m. c) Rs. 3,000 p.m.
Ans b
111. Deduction u/s 80GGA in respect of certain donation for scientific research or rural development
is allowed to:
a) any assessee b) non corporate business assessee
c) an assessee whose income does not include PGBP income.
Ans c
112. Deduction under section 80DD shall be allowed:
a) To the extent of actual expenditure/deposit or Rs.40,000 whichever is less
b) For a sum of Rs.50,000 irrespective of actual expenditure or deposit
c) For a sum of Rs.40,000 irrespective of any expenditure incurred or actual deposited
Ans b
CONTACT US - 7310762592
Email- info@diwakareducationhub.in
113. The deduction u/s 80E is allowed for repayment of interest to the extent of :
a) Rs.25,000 b) Rs.40,000 c) Any amount repaid
Ans c
114. The quantum of deduction allowed u/s 80U is :
a) Rs. 40,000 b) Rs. 50,000 c) Rs. 60,000
Ans b
115. As per Sec.139(1), a company shall have to file return of income:
a) When its total income exceeds Rs.50,000
b) When its total income exceeds the maximum amount which is not chargeable to income tax
c) In all cases irrespective of any income or loss earned by it.
Ans c
116. The last date of filing the return of income u/s 139(1) for A. Yr. 2009-10 in case of a company
assessee is
a) 30th November of the assessment year b) 30th September of the assessment year
c) 31st July of the assessment year d) 31st October of the assessment year
Ans b
117. The last date of filing the return of income u/s 139(1) for assessment year 2009-10 in case of a
non corporate business assessee whose accounts are not liable to be audited shall be:
a) 31st July of the assessment year b) 30th June of assessment year
c) 31st October of the assessment year d) 30th September of the assessment year
Ans a
118. For the P.Y. 2008-09 the business income of the assessee before providing C.Yr. depreciation of
Rs. 3,50,000 is Rs. 1,50,000. His due date of return was 30-09-2009 but he submitted the
return on 16-12-2009, the assessee in this case:
a) Be allowed to carry forward unabsorbed depreciation of Rs. 2,00,000
b) Not allowed to carry forward unabsorbed depreciation of Rs.2,00,000
Ans b
119. K finds some mistake in the return of income submitted by him on 05-06-2008 for assessment
year 2009-10, he wishes to revised such return. No assessment has been done in this case. K
CONTACT US - 7310762592
Email- info@diwakareducationhub.in
can revise such return till:
a) 31-03-2009 b) 31-03-2010 c) 31-03-2011
Ans b
PART- 8
NOTE - ONE LINER ANSWER IS GIVEN AHEAD OF QUESTION
1. Income tax is levied on – Yearly Basis
2. Income tax is payable on- Taxable income
3. Income tax is- Direct Tax
4. The authority on whose recommendation the amount
collected as income tax is distributed to state Govt.Finance Commission
5. Income tax was first levied in the year- 1860
6. In case of delay payments of income tax penalty shall be
charged as- 1% per month
7. Number of digits in a PAN are- 10
8. Income tax department works under – CBDT
9. Agricultural income is considered when calculating tax if it
is- More than
MULTIPLE CHOICE QUESTIONS
Subject- Direct Taxation
18. Non-monetary allowance includes- Perquisites
19. In HRA, Salary includes- Basic Salary + Commission
20. Entertainment allowance will be deducted from gross
salary in case of- Govt. Employee
21. Deduction from salary is allowed under- sec 16
22. Interest credited to RPF is taxable if it is more than- 9.5%
23. Education allowance is exempt for children-2
24. Medical bill reimbursement regarding private hospitals are
exempt- up to-15000
25. Deduction allowed against gross salary- professional tax
26. In which section gratuity has been mentioned- sec 10(10)
27. Maximum limit for gratuity is –Rs. 10,00,000
28. Exemption is available for govt. employee at retirementGratuity,
Statutory P.F, Leave encashment
29. Gratuity received by a govt. employee is fully exempted
CONTACT US - 7310762592
Email- info@diwakareducationhub.in
30. Property income is exempt for- local authority, Political
party, Trade union
31. Annual value is determined under which section of income
tax act- Sec 23
32. In case of rental house property only such municipal tax is
deducted which is – paid by owner
33. Deduction from annual value is allowed under section- sec
24
MULTIPLE CHOICE QUESTIONS
Subject- Direct Taxation
34. Standard deduction from annual value is allowed as -30%
of AV
35. Interest on loan for self- occupied house taken before 1st
1999 will be allowed up to- Rs 30000
36. Income from house for self- business is Nil
37. An individual assessee can show maximum loss from a
self-occupied residential house property – Rs. 150000
38. Give the full name of STT- Security Transaction Tax
39. The rate of Depreciation allowed on machinery is- 15%
40. Section 45 is related to- Capital Gain
41. Capital assets includes-Shares
42. Types of capital gains are-2
43. Indexation will be done on- shares
44. Index no. before31st march,1981 is-100
45. The maximum limit amount of deduction on family
pension is- 15000
46. T.D.S is not deducted on lottery income up to – Rs.10000
47. Maximum deduction allowed u/s 80 c- Rs.150000
48. Dedcution in respect of medical insurance premium is
allowed under which section- 80 D
49. Maximum deduction allowed for senior citizen under sec
80 D is- 20000
MULTIPLE CHOICE QUESTIONS
Subject- Direct Taxation
50. Person with disability is allowed a fixed deduction of50000.
51. Sale of agricultural land on 1st April, 1970 is an example of
CONTACT US - 7310762592
Email- info@diwakareducationhub.in
transfer of capital asset – True
52. The TDS Certificate issued by an employer to his employees in
case of salary income is - Form 16
53. YoungStars, a club, lets out its furnished rooms solely to its
members on regular basis. The income earned by the club from
such letting-out will be chargeable under the head- Income from
Other Sources
54. The rates of Income Tax are specified in- Finance Act
55. The amount of taxable income is to be rounded off to the nearest
multiple of Re.1 for income tax calculations.- False
56. Uncommuted pension received by a Government employee is fully
exempt from tax – False
57. Interest on capital, borrowed on 10.10.2000, for self-occupied
property is deductible upto a maximum amount of – 150000
58. Tax' is imposed on a person by - State Govt. and Central Govt.
59. The first income tax act was introduced in the year – 1860
60. The apex body of Income Tax Department. Is – CBDT
61. The Income Tax Act 1961 came into force on - 13th Sept 1961
62. The rates of income tax are specified in - Finance Act
63. The CBDT consists of- One Chairman & Six Members
MULTIPLE CHOICE QUESTIONS
Subject- Direct Taxation
64. Assessment year 2006-07 commenced on - 1st April '06
65. The term "Person" includes- A Registered Firm and An
Unregistered Firm
66. The taxable Income computed should be rounded off to the nearest
multiple of Rs.10.- True
67. House Rent Allowance is exempt from tax – False
68. Expected Rent can be determined in the following way - Higher of
Municipal Value & Fair Rent subject to maximum of Standard
Rent
69. The amount of interest on borrowed capital allowable as deduction
in case of a let out property is - The actual amount of interest
70. The aggregate amount of deductions under chapter VI-A cannot
exceed - Gross Total Income
71. For a senior citizen the amount of deduction U/s 80D available isThe
CONTACT US - 7310762592
Email- info@diwakareducationhub.in
actual amount of premium paid or Rs.15,000 whichever is
lower
72. If a self-occupied property is converted into HUF property without
adequate consideration then- Entire income from such property
will be clubbed with the income of the transferor
73. TDS, in case of salary should be deposited within - Within 7 days
from the end of the month in which such tax is deducted
74. Income tax is a tax on –Income
75. The Income Tax Act, 1961 has 298 – Sections
CONTACT US - 7310762592
Email- info@diwakareducationhub.in
All in One
Multiple Choice Questions
• Direct Taxation •
• Financial Systems of India, Markets and Services •
(As per the Revised Syllabus of 2016 Pattern of SPPU for MBA, Semester III)
(FINANCE SPECIALIZATION)
Dr. Shriprakash G. Soni
Assiociate Professor and HOD MBA
Suryadatta Institute of Management
Bavdhan, Pune - 411021,
Maharashtra, India.
Prof. Girish A. Bodhankar
Assistant Professor,
Suryadatta Institute of Management
Bavdhan, Pune - 411021,
Maharashtra, India.
ISO 9001:2008 CERTIFIED
©
Authors
No part of this publication may be reproduced, stored in a retrieval system, or transmitted in any form or
by any means, electronic, mechanical, photocopying, recording and/or otherwise without the prior
written permission of the publisher.
First Edition : 2017
Published by
: Mrs. Meena Pandey for Himalaya Publishing House Pvt. Ltd.,
“Ramdoot”, Dr. Bhalerao Marg, Girgaon, Mumbai - 400 004.
Phone: 022-23860170, 23863863; Fax: 022-23877178
E-mail: himpub@vsnl.com; Website: www.himpub.com
Branch Offices
:
New Delhi
: “Pooja Apartments”, 4-B, Murari Lal Street, Ansari Road, Darya Ganj, New
Delhi - 110 002. Phone: 011-23270392, 23278631; Fax: 011-23256286
Nagpur
: Kundanlal Chandak Industrial Estate, Ghat Road, Nagpur - 440 018.
Phone: 0712-2738731, 3296733; Telefax: 0712-2721216
Bengaluru
: Plot No. 91-33, 2nd Main Road, Seshadripuram, Behind Nataraja Theatre,
Bengaluru - 560 020. Phone: 080-41138821; Mobile: 09379847017,
09379847005
Hyderabad
: No. 3-4-184, Lingampally, Besides Raghavendra Swamy Matham,
Kachiguda, Hyderabad - 500 027. Phone: 040-27560041, 27550139
Chennai
: New No. 48/2, Old No. 28/2, Ground Floor, Sarangapani Street, T. Nagar,
Chennai - 600 012. Mobile: 09380460419
Pune
: First Floor, “Laksha” Apartment, No. 527, Mehunpura, Shaniwarpeth (Near
Prabhat Theatre), Pune - 411 030. Phone: 020-24496323, 24496333;
Mobile: 09370579333
Lucknow
: House No. 731, Shekhupura Colony, Near B.D. Convent School, Aliganj,
Lucknow - 226 022. Phone: 0522-4012353; Mobile: 09307501549
Ahmedabad
: 114, “SHAIL”, 1st Floor, Opp. Madhu Sudan House, C.G. Road, Navrang
Pura, Ahmedabad - 380 009. Phone: 079-26560126; Mobile: 09377088847
Ernakulam
: 39/176 (New No. 60/251) 1st Floor, Karikkamuri Road, Ernakulam,
Kochi - 682011. Phone: 0484-2378012, 2378016; Mobile: 09387122121
Bhubaneswar : 5 Station Square, Bhubaneswar - 751 001 (Odisha).
Phone: 0674-2532129; Mobile: 09338746007
Kolkata
:
108/4, Beliaghata Main Road, Near ID Hospital, Opp. SBI Bank,
Kolkata - 700 010. Phone: 033-32449649; Mobile: 07439040301
DTP by
:
Nilima Jadhav
Printed at
:
PREFACE
It gives us an immense pleasure to present this book to the students of Finance Specialization of
Savitribai Phule Pune University. It covers Multiple Choice Questions based on the Syllabus of 2016
Pattern for the two subjects of ‘Direct Taxation’ and ‘Financial Systems of India, Markets and
Services’ of MBA Program offered by Savitribai Phule Pune University. After taking into
consideration, current trends in the present market scenario and acknowledging necessity of studying
various dimensions of Direct Taxation and Financial Systems of India, Markets and Services, the
Savitribai Phule Pune University has included these subjects in the MBA Program for the students of
Finance Specialization.
This book is useful and helpful not only to the PG but also to the UG students of other
universities which have included the same subjects in their curriculum. This book is a sincere and
serious attempt on the part of the authors to provide the students with Multiple Choice Questions in
simple and lucid language. As there are 50 questions on each Unit, if a student would learn all these
questions correctly, no doubt, his conceptual clarity would automatically develop.
Success can never be achieved single handedly. So, it is our duty to express gratitude towards all
those who provided their help and support. We express our special thanks to Prof. Dr. Sanjay B.
Chordiya, Founder President and Chairman of Suryadatta Group of Institutes and Mrs. Sushma
Chordiya, Vice President and Secretary of Suryadatta Group of Institutes for their continuous
motivation in writing the said book. In addition, we would like to express our sincere thanks to the
Publisher of Himalaya Publishing Pvt. Ltd., Mr. S. K. Srivastava, Mr. Abhijit Mane, Mr. Rahgul,
Ms. Lalita and Editorial Team for their willing cooperation and support. Our words fall short to
express our feelings towards our family members, colleagues and friends who extended their
wholehearted best wishes and encouraged us throughout.
Suggestions from Professors and Students are most welcome. They will be appreciated and
implemented in the next edition.
With best wishes.
Dr. Shriprakash Soni
Prof. Girish Bodhankar
SYLLABUS
Syllabus as Per June 2016 Pattern
Semester
III
Specialization
Finance
Course Code
305
Type
Generic Core
Course Title
Direct Taxation
Course Objectives:
1. To Understand the basic concepts in Income Tax Act, 1961
2. To calculate Gross Total Income and Tax Liability of an individual
3. To acquaint with online filing of various forms and returns
Unit No.
Contents
No. of
Sessions
Unit – 1
Introduction: Income Tax Act, 1961 – Definitions and Concepts (Sections 1 to 4), Scope
of Total Income and Residential Status (Sections 5 to 9), Income Do Not Form Part of
Total Income and Tax liability (Sections 14, 14A, 288A and 2888B).
(Hours:
6+2)
Unit – 2
Income under the Head “Salaries” (Sections 15 to 17)
(Hours:
7+2)
Unit – 3
(a) Income under the Head “Income from House Property” (Sections 22 to 27)
(b) Income under the Head “Capital Gain” (Sections 45 to 55A)
(c) Income under the Head “Income from Other Sources” (Sections 56 to 59)
(Hours:
7+2)
Unit – 4
4.1
4.2
4.3
4.4
Income under the Head “Profit and Gains of Business or Profession” (Sections 28 to 44D)
Income of Other Person Included in Assessee’s Total Income (Sections 60 to 65)
Set Off or Carry Forward and Set Off of Loses (Sections 70 to 80)
Agriculture Income and its Tax Treatment (Sections 2(1A) to 10(1))
(Hours:
7+2)
Unit – 5
5.1
5.2
5.3
5.4
5.5
5.6
Deductions to be Made in Computing Total Income (Sections 80A to 80U) (Chapter VI)
Assessment of Individual/Computation of Total Taxable Income and Income Tax
Advance Tax Payment (Sections 207 to 211, 217 and 219)
Deduction of Tax at Source (Sections 190 to 206AA)
Return of Income (Sections 139 to 140A)
E-filling of Income Tax Return
(Hours:
8+2)
Syllabus as Per June 2016 Pattern
Semester
III
Specialization
Finance
Course Code
306
Type
Specialization Core
Course Title
Financial Systems of India, Markets and Services
Course Objectives:
1. To enlighten the students with the concepts and practical dynamics of the Indian financial system, markets,
institutions and financial services.
Unit No.
Contents
No. of
Sessions
Unit – 1
1.1 Financial System – Functions of Financial System – Meaning and Importance –
Role of Financial System in Economic Development – Structure and Components of
Financial System in India – Introduction to Financial Institutions – Banking – Nonbanking Institutions.
1.2 Financial Markets: Money Market and Capital Market – Financial Instruments on
the Basis of Term of instruments – Types of Securities, Financial Services – Fund Based
Services and Fee Based Services.
(Hours:
6+2)
Unit – 2
2.1 Regulators of Financial System in India: The RBI as a Central Bank, Functions
and Working.
2.2 SEBI: Purpose – Objectives, Structure – Functions and Powers of SEBI – SEBI
Guidelines with Respect to IPO, Anti-money Laundering, Listing and Delisting of
Securities, FMC (Forward Market Commission of India) – Structure and Functions.
2.3 PFRDA (Pension Fund Regulatory and Development Authority): Structure and
Functions – National Pension System – Understanding and Benefits, IRDA (Insurance
Regulatory and Development Authority) – Role and Functions.
(Hours:
8+2)
Unit – 3
3.1 Financial Market Functions: Classification – Money Markets – Structure and
Components of Money Market – Participants in Indian Money Market – Money Market
Instruments – Features of the Instruments – Recent Developments in Indian Money
Market.
3.2 Capital Markets: Characteristics – Components of Capital Markets – Primary
Market Operations – Functions – Methods of Raising Funds in Primary Market (viz.,
Public Issue, Offer for Sale, Right Issue, Private Placement of Securities and Other
Methods such as Tender Method, Bonus Shares), Methods of Determining Prices of
New Shares, viz., Fixed Offer Method and Book Building Method, New Instruments in
Capital Market.
3.3 Stock Exchange: Characteristics and Functions of Stock Exchanges, Listing of
Securities, Major Stock Exchanges in India – Important Stock Indices in India, BSE and
NSE Sensex.
(Hours:
6+2)
Unit – 4
4.1 Financial Services: Concept, Nature and Scope of Financial Services – Regulatory
Framework of Financial Services – Growth of Financial Services in India.
4.2 Merchant Banking: Meaning – Types – Responsibilities of Merchant Bankers –
Role of Merchant Bankers in Issue Management – Regulation of Merchant Banking in
India.
4.3 Venture Capital: Growth of Venture Capital in India – Financing Pattern under
Venture Capital.
(Hours:
7+2)
4.4 Factoring, Forfeiting, Securitization (Concepts and Applications): Types of
Factoring Arrangements – Factoring in the Indian Context.
4.5 Mutual Fund: Concept and Objectives, Guidelines for Mutual Funds, Working of
Mutual Funds in India.
4.6 Loan Syndication, Dematerialization of Services: Need and Operations – Other
Types of Funding – Crowd Funding, Asset Backed Finance, Depository Services – Role
of NSDL and CSDL.
Unit – 5
5.1 Financial Institutions in India: Functions and Working of Banking – Commercial
Banks – Cooperative Banks – Urban Cooperative Banks – Post Office Saving Banks,
Functions and Working of Non-banking Companies – Finance Companies Investment
Trusts, Housing Companies, Functions and Working of Development Institutions
NABARD, SIDBI, NHB, EXIM Bank, BIFR and SFCs.
5.2 Credit Rating Agencies: CRISIL and ICRA.
5.3 Insurance Companies in India: LIC and GIC – Features and Functions.
(Hours:
8+2)
CONTENTS
Course Code
Course Name
305
Direct Taxation
306
Financial Systems of India, Markets and Services
Page Nos.
1 – 31
32 – 61
305 Direct Taxation
Chapter 1
Direct Taxation
1. Income tax is collected on all types of income except _______________.
(a) Agricultural Income
(b) Industrial Income
(c) Capital Gain
(d) Household Property
2. The Income Tax Act came into force from _______________.
(a) 1st March 1971
(b) 1st April 1971
(c) 1st March 1961
(d) 1st April 1961
3. The Income Tax Act came into force all over India except _______________.
(a) Andaman & Nicobar
(b) Maldives
(c) Jammu & Kashmir
(d) None of the above
4. As per Income Tax Act, 1961, income tax is charged on the income of _______________ at a
rates which are prescribed by the Finance Act of relevant assessment year.
(a) Current year
(b) One year before previous year
(c) Previous year
(d) None of the above
5. The tax payer liability is determined with reference to his or her _______________.
(a) Financial Status
(b) Residential Status
(c) All of the above
(d) None of the above
6. As per the definition of Income, the income includes the following _______________.
(a) Profits and gains
(b) Dividend declared
(c) Voluntary contribution received by a trust created
(d) All of the above
7. The period of 12 months commencing on the first day of April every year and ending on 31st
March is called as _______________.
(a) Previous Year
(b) Assessment year
(c) Accounting Year
(d) Financial Year
8. Previous year means the financial year immediately preceding the _______________.
(a) Accounting Year
(b) Assessment Year
(c) All of the above
(d) None of the above
2
All in One Multiple Choice Questions
9. Under Income Tax Act, the income liable for tax is classified on the basis of
_______________.
(a) Income from Salaries
(b) Income from House Property
(c) Agricultural Income
(d) Both (a) and (b)
10. Agricultural income is completely exempted for assessment year _______________.
(a) 1974-75
(b) 1985-86
(c) 1975-76
(d) 1978-79
11. The income from foreign companies by providing the services in project connected with
security of India is _______________ from tax liability.
(a) 50% exempted
(b) 20% exempted
(c) 100% exempted
(d) 55% exempted
12. An individual is said to be resident in India if _______________.
(a) It is in India in the previous year for a period of 182 days or more
(b) It is in India for period of 60 days or more during the previous and 365 days or more
during the four years immediately proceeding previous year
(c) All of the above
(d) None of the above
13. The HUF is said to be resident in India if _______________.
(a) The control and management of its affairs is wholly or partly situated in India
(b) The control and management of its affairs is partially situated out of India
(c) The control and management of its affairs is wholly or partly in out of India
(d) None of the above
14. The awards and rewards are exempted from Income Tax if _______________.
(a) Payment is in cash
(b) Payment is in kind
(c) Payment is in cash or in kind
(d) None of the above
15. Income received in India whether occurred in India or outside India, the tax incidence in case
of resident is _______________.
(a) Taxable as per slabs
(b) Exempted from tax
(c) Partly exempted
(d) None of the above
16. Income received in India whether occurred in India or outside India, the tax incidence in case
of resident but not ordinarily resident is _______________.
(a) Taxable as per slabs
(b) Exempted from tax
(c) Partly exempted
(d) None of the above
17. Income received in India whether occurred in India or outside India, the tax incidence in case
of non-resident is _______________.
(a) Taxable as per slabs
(b) Exempted from slab
(c) Partly exempted
(d) None of the above
All in One Multiple Choice Questions
3
18. Income deemed to be received in India whether occurred in India or outside India, the tax
incidence in case of resident is _______________.
(a) Taxable as per slabs
(b) Exempted from slab
(c) Partly exempted
(d) None of the above
19. The income received and accrued outside India from a business controlled or profession set
up in India, the tax incidence in case of resident is _______________.
(a) Taxable
(b) Non-taxable
(c) Partly taxable
(d) None of the above
20. The income received and accrued outside India from a business controlled or profession set
up in India, the tax incidence in case of non-resident is _______________.
(a) Taxable
(b) Non-taxable
(c) Partly taxable
(d) None of the above
21. The tax incidence for company or firm in which income received in India and company is
resident is _______________.
(a) Taxable
(b) Non-taxable
(c) Partly taxable
(d) None of the above
22. The tax incidence for company or firm in which income received in India and company for
non-resident is _______________.
(a) Taxable
(b) Non-taxable
(c) Partly taxable
(d) None of the above
23. The tax incidence for company or firm in which income received outside India from a source
controlled from India for resident is _______________.
(a) Taxable
(b) Non-taxable
(c) Partly taxable
(d) None of the above
24. The tax incidence for company or firm in which income received outside India from a source
controlled from India for non-resident is _______________.
(a) Non-taxable
(b) Taxable
(c) Partly taxable
(d) None of the above
25. _______________ is exempted from income tax.
(a) Interest from Indian company
(b) Dividend from foreign company
(a) Cooperative dividend
(d) Dividend from Indian company
26. Which section of the Income Tax Act exempted incomes have been mentioned?
(a) Section 80C
(b) Section 80DD
(c) Section 10
(d) Section 2
27. _______________ of Income Tax Act is related to residential status.
(a) Section 2
(b) Section 6
(c) Section 5
(d) Section 4
28. Resident of India includes _______________.
(a) Ordinarily resident
(b) Not ordinarily resident
(c) NRI
(d) Both (a) and (b)
4
All in One Multiple Choice Questions
29. The Company may have the residential status as _______________.
(a) Resident or Non-resident
(b) Not ordinarily resident
(c) Non-resident
(d) Resident
30. The meaning of exempted income is _______________.
(a) Not included in total income
(b) Agricultural income
(c) Not taxable under income tax
(d) All of the above
31. The number of income source for a person are _______________.
(a) One head
(b) Two heads
(c) Various heads
(d) Any of the above
32. The sum of various heads is called as _______________.
(a) Taxable income
(b) Total income
(c) Gross total income
(d) Adjusted income
33. The agricultural income includes _______________.
(a) Income from sale of crop
(b) Income from preparation of crop
(c) Income from nursery
(d) All of the above
34. _______________ comes under agricultural income.
(a) Tea garden
(b) Commodity farming
(c) All of the above
(d) None of the above
35. If the agricultural income is _______________, then the agricultural income is considered for
calculating tax.
(a) More than ` 5,000 and total income is exceeding exemption limit
(b) More than ` 5,000
(c) More than ` 10,000
(d) Any amount
36. The Income Tax Act, 1961 broadly covers _______________.
(a) Basic charging income
(b) Rebates and reliefs
(c) Incomes exempted from income tax
(d) All of the above
37. The capital gain is chargeable under _______________ of Income Tax Act.
(a) Section 45
(b) Section 55
(c) Section 56
(d) Section 40
38. The definition of the person includes _______________.
(a) An individual
(b) A company
(c) A Hindu undivided family
(d) All of the above
39. Any rent or revenue derived from land which is situated in India and is used for agricultural
purpose is _______________.
(a) Partially taxable
(b) Fully taxable
(c) Exempted from tax
(d) None of the above
All in One Multiple Choice Questions
5
40. Residential Status of an assesses can be _______________.
(a) Different for different previous year in the same assessment year
(b) Different for different assessment year
(c) None of the above
(d) All of the above
41. The income of previous year is chargeable to tax in the _______________.
(a) Immediately succeeding assessment year
(b) Same previous year
(c) Immediately preceding academic year
(d) None of the above
42. The interest on loan paid by the Government of India to a non-resident outside India is
_______________ in India.
(a) Not taxable
(b) Partially taxable
(c) Taxable
(d) Can’t say
43. An individual is resident and ordinarily resident of India if _______________.
(a) Person had been resident in India at least 2 out of 10 previous years immediately
preceding the relevant previous year
(b) Person been in India for a period of 730 days or more during 7 years immediately
preceding the relevant previous year
(c) All of the above
(d) None of the above
44. The Resident HUF is ordinarily resident in India, if _______________.
(a) He has been resident in India at least 2 years out of 10 previous years immediately
(b) He has been resident in India at least 3 years out of 10 previous years immediately
(c) He has been resident in India at least 2 years out of 5 previous years immediately
(d) None of the above
45. Basic condition will be for a person who leaves India for employment _______________.
(a) At least 182 days in India
(b) At least 60 days in previous year and 365 days in preceding 4 years
(c) At least 730 days in preceding 7 years
(d) All of the above
46. Which of the following is not included in the term Income under the Income Tax Act, 1961?
(a) Reimbursement of travelling expenses
(b) Profits and gains of business or profession
(c) Dividend
(d) Profit in lieu of salary
47. The term income includes the following types of incomes.
(a) Illegal
(b) Legal income from India only
(c) Legal
(d) Legal and illegal both
All in One Multiple Choice Questions
6
48. _______________ is the casual income.
(a) Interest received
(b) Dividend income
(c) Pension received
(d) Winning from lotteries
49. The way of tax liability by taking full advantage provided by the Act is _______________.
(a) Tax management
(b) Tax avoidance
(c) Tax planning
(d) Tax evasion
50. Mr. A, partner of M/s ABC, is assessable as _______________.
(a) Firm
(b) An individual
(c) Body of individual
(d) HUF
Answer Key of Chapter 1
1
(a)
11
(c)
21
(a)
31
(d)
41
(a)
2
(d)
12
(c)
22
(a)
32
(c)
42
(a)
3
(d)
13
(a)
23
(a)
33
(d)
43
(c)
4
(c)
14
(c)
24
(a)
34
(c)
44
(a)
5
(b)
15
(a)
25
(d)
35
(a)
45
(a)
6
(d)
16
(a)
26
(c)
36
(d)
46
(d)
7
(b)
17
(a)
27
(b)
37
(a)
47
(d)
8
(b)
18
(a)
28
(d)
38
(a)
48
(d)
9
(d)
19
(a)
29
(a)
39
(c)
49
(c)
10
(a)
20
(b)
30
(d)
40
(b)
50
(a)
All in One Multiple Choice Questions
7
Chapter 2
Direct Taxation
1. The income is chargeable under the head of salary under _______________ of Income Tax
Act, 1961.
(a) Section 15
(b) Section 20
(c) Section 14
(d) Section 16
2. Pension is _______________ under the salary head.
(a) Fully taxable
(b) Partially taxable
(c) Not taxable
(d) None of the above
3. The salary of Member of Parliament is taxable under the head _______________.
(a) Salary
(b) Income from Other Sources
(c) Income from Business
(d) All of the above
4. The salary, remuneration or compensation received by the partners is taxable under the head
_______________.
(a) Income from Other Sources
(b) Income from Business
(c) Salary
(d) None of the above
5. The death-cum-retirement gratuity received by the Government Employee or employee of
local authority is _______________.
(a) Partially exempted
(b) Fully exempted
(c) Half taxable
(d) None of the above
6. Under Section 15 of Income Tax Act, the salary due in previous years and even if it is not
received is _______________.
(a) Taxable
(b) Not taxable
(c) Partially taxable
(d) None of the above
7. The assesses can claim relief under _______________ for arrears or advance salary.
(a) Section 89(1)
(b) Section 89(2)
(c) Section 89(3)
(d) Section 89(4)
8. The Payment of Gratuity Act came into force in _______________.
(a) 1973
(b) 1980
(c) 1991
(d) 1972
9. X is employed in Complex Ltd. as a Chartered Accountant. The annual membership fees of X
paid by Complex Ltd. is not a perquisite and hence not chargeable to tax.
(a) False
(b) True
10. The salary of non-resident received for the period in which he is working in India is not
taxable.
(a) True
(b) False
11. Which of the following is not taxable under the head Salary?
(a) Remuneration paid to the lecturer of a college for setting a question paper
(b) Salary received by a member of parliament
All in One Multiple Choice Questions
8
12.
13.
14.
15.
16.
17.
18.
19.
(c) Commission received by an employee director of a company
(d) Both (a) and (b)
In accordance with the provisions of Section 17(1) of Income Tax Act, 1961, the term salary
includes _______________.
(a) Any annuity or pension
(b) Any gratuity
(c) Any fees, commission, perquisite or profits in lieu of or in addition to any salary or wages
(d) All of the above
The children education allowance, the amount exempted from taxable income is limited to
______________.
(a) ` 100 per month per child upto 3 children
(b) ` 1,000 per year per child upto 2 children
(c) ` 100 per year per child upto 2 children
(d) None of the above
If the employee receives retirement gratuity from more than one employer, he can claim
exemption in respect of _______________.
(a) Current employer
(b) Previous employer
(c) Both employer
(d) Not from single employer
The family pension received by the family members of armed forces after death of employee
is _______________.
(a) Exempt fully
(b) Exempted after fulfilling of certain conditions
(c) Not exempted
(d) None of the above
The entertainment allowance is applicable to _______________.
(a) Private sector employees
(b) Public sector employees
(c) Government employees
(d) All of the above
The entertainment tax allowed as a deduction under Section 16 of Income Tax Act is the least
of _______________.
(a) Actual amount of entertainment allowance received
(b) 20% of basic salary of the individual
(c) ` 50,00
(d) All of the above
The assessment period for income tax on salary is _______________.
(a) Only more than 12 months
(b) 12 months and less than 12 months
(c) Only 12 months
(d) 12 months and more than 12 months
Total income is to be rounded off to nearest multiple of _______________ and tax is to be
rounded off to nearest multiple of _______________.
(a) Ten rupee
(b) Hundred, ten
(c) Ten, ten
(d) Rupee, rupee
All in One Multiple Choice Questions
9
20. Income accrued outside India and received outside India is taxable in case of
______________.
(a) Resident and ordinary resident (ROR) only
(b) Resident but not ordinary resident (RNOR) only
(c) Non-resident only
(d) ROR, RNOR and Non-resident
21. Gross Total Income is arrived after ______________.
(a) only adding Income under five heads of Income;
(b) adding Income under five heads of Income excluding losses
(c) adding Income under five heads of Income, after applying clubbing provisions and
making adjustment of set off and carry forward of losses
(d) adding Income under five heads of Income, after applying clubbing provisions and
making adjustment of set off and carry forward of losses and after allowing deduction
under section 80C to 80U
22. Salary of S (` 40,000 per month) becomes due on the last day of the month but is paid on 7th
of next month. Also, salary of April, 2017 and May, 2017 is received in advance in March,
2017. What will be his gross income for Assessment Year 2017-18?
(a) ` 5,60,000
(b) ` 4,80,000
(c) ` 4,40,000
(d) ` 5,20,000
23. Calculate the exempt HRA from the following details:
A is entitled to basic salary of ` 50,000 p.m. and dearness allowance of ` 10,000 p.m., 40% of
which forms part of retirement benefits. He is also entitled to HRA of ` 20,000 p.m. He
actually lives with his parents in Mumbai and does not pay any rent. Market rent of that house
is ` 20,000 p.m. in Mumbai.
(a) Nil
(b) ` 1,75,200
(c) ` 64,800
(d) ` 2,40,000
24. Deduction under section 80C to 80U cannot exceed ______________.
(a) Gross Total Income
(b) Total Income
(c) Income from Business or Profession
(d) Income from House Property
25. Employer provides a car (below 1.6 ltr capacity) along with a driver to X partly for official
and partly for personal purpose. The expenses incurred by the company are: running and
maintenance expenses – ` 32,000 and driver’s salary – ` 36,000 .Taxable value of perquisite
is ______________.
(a) ` 21,600
(b) ` 10,800
(c) ` 32,400
(d) ` 39,600
26. The maximum limit for the claim of deduction under salary head Contributions to certain
pension funds of LIC or any other insurer is ______________.
(a) Up to ` 2,00,000
(b) Up to ` 1,50,000
(c) Up to ` 1,75,000
(d) None of the above
10
All in One Multiple Choice Questions
27. Encashment of earned leave is given by ______________ of Income Tax Act, 1961.
(a) Section 10(10AA)
(b) Section 12(10A)
(c) Section 15(10B)
(d) None of the above
28. Compensation received on voluntary retirement is given by ______________ of Income Tax
Act, 1961.
(a) Section 10(10D)
(b) Section 10(10C)
(c) Section 10(10E)
(d) Section 11(10D)
29. The house rent allowance (HRA) under the salary head of Income Tax Act is given by
______________.
(a) Section 10
(b) Sec 10(13A)
(c) Section 11(13B)
(d) Section 11
30. ______________ of Income Tax Act defines the perquisites and their valuation.
(a) Section 18
(b) Section17
(c) Section 18(C)
(d) Section 17(C)
31. The Income tax rate for the financial year 2016-17 for individual is ______________.
(a) ` 5,00,000 to ` 10,00,000 is 20%
(b) ` 5,50,000 to ` 1,50,000 is 20%
(c) ` 5,00,000 to ` 10,00,000 is 30%
(d) ` 5,00,000 to ` 10,00,000 is 10%
32. Income tax rate for the senior citizens for year 2016-17 is ______________.
(a) Upto ` 5 lakh is Nil
(b) Upto ` 10 lakh is 10%
(c) Upto ` 5 lakh is 10%
(d) None of the above
33. For computation for Income tax liability for individual, the Education Cess is
______________.
(a) 3%
(b) 4%
(c) 2.5%
(d) 2%
34. The rate of tax for the financial year 2016-17 for the foreign companies is ______________.
(a) 45%
(b) 30%
(c) 40% flat
(d) None of the above
35. Which of the following are true regarding taxing the rich?
(a) Additional 10% tax on dividends in excess of ` 10 lakh per annum
(b) Surcharge on persons decreased to 12% from 15%
(c) TDS at 1% on purchase of luxury cars exceeding value of ` 10 lakh
(d) All of the above
36. The Secondary and Education Cess on the computation of Income Tax for 2016-17 is
______________.
(a) 1% of Income Tax
(b) 2% of Income Tax
(c) 0.5% of Income Tax
(d) None of the above
All in One Multiple Choice Questions
11
37. Surcharge is levied at the rate ______________ if the income exceeds ` 1 crore of the
financial year 2016-17.
(a) 10%
(b) 12%
(c) 15%
(d) 20%
38. Tax Liability for the individual for 2016-17 who is not the resident of the India whose income
` 2,50,000 to ` 5,00,000 is ______________.
(a) 10% of total income minus ` 2,00,000
(b) 10% of total income minus ` 1,00,000
(c) 15% of total income minus ` 1,00,000
(d) None of the above
39. If an employer transfers second hand motor car to the employee, the perquisite is valued at
______________.
(a) Actual cost less depreciation @ 30% for every completed year under straight line method
(b) Actual cost less depreciation @ 20% for every completed year under WDV method
(c) Actual cost less depreciation @ 30% for every completed year under WDV method
(d) Actual cost less depreciation @ 20% for every completed year under SLM method
40. The following is not taxable as income under the head “Salaries”:
(a) Commission received by a full-time director
(b) Remuneration received by a partner
(c) Allowances received by an employee
(d) Free accommodation given to an employee
41. The following is exempt income from Income Tax:.
(a) Travel concession to employee
(b) Remuneration received for valuation of answer scripts
(c) Encashment of leave salary whilst in service
(d) Perquisites in India
42. Advance salary is taxable and advance against salary is ______________.
(a) Fully taxable
(b) Partially taxable
(c) Not taxable
(d) None of the above
43. If loan granted by employer to employee does not exceed ______________, it is not treated as
perquisite to employee for purpose of income tax.
(a) ` 20,000
(b) ` 40,000
(c) ` 30,000
(d) ` 25,000
44. Death-cum-retirement gratuity received by an employee of Central Government is wholly
exempt up to ______________.
(a) ` 2.5 lakh
(b) ` 4.5 lakh
(c) ` 3.5 lakh
(d) None of the above
All in One Multiple Choice Questions
12
45. Gift to employee up to ______________ p.a. will not be treated as perquisite taxable in the
hands of employee.
(a) ` 4,000
(b) ` 5,000
(c) ` 10,000
(d) ` 2,500
46. Expenditure on free meals to employee in excess of ______________ per meal will be treated
as perquisite of employee.
(a) ` 25
(b) ` 50
(c) ` 100
(d) ` 55
47. Any commission due or received by a partner of a firm from the firm shall not be regarded as
salary income under ______________.
(a) Section 15
(b) Section 20
(c) Section 17
(d) Section 19
48. Proportional tax is based on the principle ‘higher the income, higher the tax’. Statement is
______________.
(a) True
(b) False
49. The tax will be economical if the cost of collection is very small.
(a) True
(b) False
50. Income tax is a form of tax which is levied on individual’s total earnings.
(a) False
(b) True
Answer Key of Chapter 2
1
(a)
11
(d)
21
(d)
31
(a)
41
(d)
2
(a)
12
(d)
22
(a)
32
(a)
42
(c)
3
(a)
13
(c)
23
(a)
33
(a)
43
(b)
4
(b)
14
(c)
24
(a)
34
(c)
44
(c)
5
(b)
15
(b)
25
(c)
35
(d)
45
(b)
6
(a)
16
(c)
26
(b)
36
(a)
46
(b)
7
(a)
17
(d)
27
(a)
37
(c)
47
(a)
8
(d)
18
(c)
28
(b)
38
(a)
48
(b)
9
(a)
19
(c)
29
(b)
39
(d)
49
(a)
10
(b)
20
(a)
30
(d)
40
(b)
50
(b)
All in One Multiple Choice Questions
13
Chapter 3
Direct Taxation
1. The Income from House Property is taxable in the hands of the individual even if property is
not registered in his name ______________.
(a) When the property has been transferred to spouse for inadequate consideration
(b) Where the property is transferred to a minor child for inadequate consideration
(c) Where the individual holds on importable estate
(d) All of the above
2. Under the Head Income from House Property, the basis of charge is the ______________ of
property.
(a) Annual value
(b) Quarterly value
(c) Half-quarterly value
(d) None of the above
3. The following conditions must be satisfied to charge the rental income under the head Income
of House Property:
(a) The property should consist of any buildings or lands
(b) The asssessee should be one of the property
(c) The property should not be used by the owner for the purpose of business or professional
purpose
(d) All of the above
4. Mr. Ram owns a house property. He lent it to Laxman at ` 10,000 p.m. Laxman sublet it to
Mr. Maruti on monthly rent of ` 20,000 p.m. Rental income of Ram is taxable under the head
______________.
(a) Income from Salary
(b) Income from Other Sources
(c) Income from House Property
(d) Income from Business
5. Mr. Ram owns a house property. He lent it to Laxman at ` 10,000 p.m. Laxman sublet it to
Mr. Maruti on monthly rent of ` 20,000 p.m. Rental income of Laxman is taxable under the
head ______________.
(a) Income from Salary
(b) Income from Other Sources
(c) Income from House Property
(d) Income from Business
6. An individual who transfers house property without an adequate consideration to his owner
spouse or to minor child is called as ______________.
(a) Co-owner
(b) Deemed Owner
(c) Owner Himself
(d) None of the above
7. An individual is considered as a owner of the house property for the purpose of charging tax
to ______________.
(a) A member of cooperative society, company or AOP to whom a building or a part thereof
is allotted or leased under a house building scheme of the society.
(b) An individual who transfers house property without an adequate consideration to his
owner spouse or to minor child
(c) The holder of importable estate
(d) All of the above
14
All in One Multiple Choice Questions
8. The rental income of person who is resident of Ladakh is ______________ taxable under
Income from House Property.
(a) Fully taxable
(b) Not taxable
(c) Partially taxable
(d) None of the above
9. If the individual using the property for the business or professional purpose the income
taxable under the _____________ head.
(a) Income from House property
(b) Income from HUF
(c) Income from Other
(d) Income from Business or Proprietorship
10. If the assesses let out the building or staff quarters to the employee of business, the rent
collected from such employees is assessable as income from ______________.
(a) Business
(b) House Property
(c) Other Sources
(d) None of the above
11. The Gross annual value of the property is depends upon the ______________.
(a) Standard rent
(b) Municipal Valuation
(c) Fair rent
(d) All of the above
12. If Anil is entitled to basic salary of ` 50,000 p.m. and dearness allowance of ` 10,000 p.m.,
40% of which forms part of retirement benefits. He is also entitled to HRA of ` 20,000 p.m.
He actually lives with his parents in Mumbai and does not pay any rent. Market rent of that
house is ` 20,000 p.m. in Mumbai, then calculate the exempt HRA for Mr. Anil.
(a) Nil
(b) ` 64,800
(c) ` 2,40,000
(d) ` 1,75,200
13. Calculate the Gross Annual Value from the following details:
Municipal Value ` 45,000
Fair rental value ` 50,000
Standard Rent ` 48,000
Actual Rent ` 42,000
(a) ` 50,000
(b) ` 48,000
(c) ` 45,000
(d) ` 42,000
14. Which of the following is not a case of deemed ownership of house property?
(a) Transfer to a spouse for inadequate consideration
(b) Transfer to a minor child for inadequate consideration
(c) Holder of an importable estate
(d) Co-owner of a property
15. Interest on capital borrowed for acquisition or construction of property is deductible subject to
limit of _______________ per year, if capital is borrowed on or after 1-04-1999. This is
allowable if acquisition or construction is completed within 3 years from end of financial year
in which loan was taken.
(a) ` 1,50,000
(b) ` 2,00,000
(c) ` 1,80,000
(d) ` 2,50,000
All in One Multiple Choice Questions
15
16. For a self-occupied house property occupied on 1.7.2016, for which housing loan was availed,
if the interest up to 31.3.2016 is ` 90,000 and thereafter the interest payable is ` 3,000 p.m.,
the deduction available under section 24 in respect of interest for the year ended 31.3.2017 is
_______________.
(a) ` 50,000
(b) ` 45,000
(c) ` 54,000
(d) None of the above
17. If an assesses earns rent from a sub-tenant in respect to tenanted property let out as a
residence, the said rent is _______________.
(a) Exempted under Section 10
(b) Taxable under the head income from house property
(c) Taxable as business income, as the letting out is a commercial activity
(d) Taxable as income from other sources
18. An assesses, after sale of house property, receiving arrears of rent (is/is not) chargeable to tax;
the same computed in the stipulated manner, is chargeable to tax as _______________..
(a) Income from House Property
(b) Income from Other Sources
(c) Either (a) or (b)
(d) Neither (a) nor (b)
19. Arrear rent is taxable after deducting _______________ as per Section 25B of the Income
Tax Act, 1961.
(a) 30%
(b) 35%
(c) 10%
(d) 20%
20. Monish took a loan of ` 6,00,000 on 1.4.2014 from a bank for construction of a house. The
loan carries an interest @ 10% p.a. The construction is completed on 15.6.2016. The entire
loan is still outstanding. Compute the interest allowable for the assessment year 2016-17.
(a) ` 60,000
(b) ` 1,80,000
(c) ` 84,000
(d) ` 24,000
21. The value of interest-free concessional loans to employees is determined on the basis of
lending rates of _______________ for the same purpose.
(a) SBI
(b) RBI
(c) Central Government
(d) State Government
22. Value of rent-free accommodation in case of Government employee shall be taxable up to
_______________.
(a) 15% of employee’s salary
(b) 8% of employee’s salary
(c) License fee fixed by Government (d) 10% of employee’s salary
23. Value of rent-free accommodation or a house owned by employer in case of non-government
employees with above 25 lakh population is _______________.
(a) 15% of employee salary
(b) 7.5% of employee salary
(c) 20% of employee salary
(d) 10% of employee salary
24. Deduction for other expenses except interest in the computation of income from house
property is allowable to the extent of _______________.
(a) 25% of annual value
(b) 10% of annual value
(c) 30% of annual value
(d) 20% of annual value
16
All in One Multiple Choice Questions
25. Rate of depreciation on residential building is _______________.
(a) 10%
(b) 20%
(c) 25%
(d) 5%
26. House property held for less than 36 months is _______________.
(a) Short-term capital asset
(b) Projected capital asset
(c) Exempted capital asset
(d) Long-term capital asset
27. Mr. Shushant is the owner of a house, the details of which are given below the gross annual
value would be _______________.
Municipal value ` 36,000
Actual rent ` 32,000
Fair Rent ` 36,000
Standard Rent ` 40,000
(a) ` 36,000
(b) ` 35,000
(c) ` 30,000
(d) ` 40,000
28. Sunil purchased a house for his residential purpose after taking a loan in January, 2016.
During the previous year 2016-17, he paid interest on loan ` 1,67,000. While computing
income from house property, the deduction is allowable to the extent of _______________.
(a) ` 30,000
(b) ` 1,00,000
(c) ` 1,67,000
(d) ` 1,50,000
29. Expected rent shall be higher of ______________.
(a) Municipal value and standard rent (b) Fair rent and actual rent received
(c) Standard rent and fair rent
(d) Municipal value and fair rent
30. Municipal Value ` 14,000, Fair rent ` 14,500, Standard Rent ` 14,200, Actual rent as
property let out throughout the previous year ` 16,800 and Unrealized rent of the previous
year ` 7,000. The annual value of the house property shall be ______________.
(a) ` 9,800
(b) ` 14,200
(c) ` 7,200
(d) ` 7,500
31. Interest on capital, borrowed on 10.10.2000, for self-occupied property is deductible up to a
maximum amount of ______________.
(a) ` 50,000
(b) ` 1,50,000
(c) ` 5,000
(d) None of the above
32. Deduction from annual value is allowed under ______________.
(a) Section 24
(b) Section 25
(c) Section 27
(d) Section 28
33. ______________ standard deduction from annual value is allowed.
(a) 10%
(b) 20%
(c) 30%
(d) 15%
All in One Multiple Choice Questions
17
34. Interest on loan for self-occupied house taken before 1st April, 1999 will be allowed up to
______________.
(a) ` 30,000
(b) ` 1,50,000
(c) ` 10,000
(d) ` 50,000
35. Deduction allowed from annual value is ______________.
(a) Interest on loan for constitution
(b) Interest on loan for repair
(c) Statutory deduction
(d) All of the above
36. An individual assesses can show maximum loss of ______________ from a self-occupied
residential house property.
(a) ` 1,50,000
(b) ` 30,000
(c) ` 20,000
(d) ` 5,00,000
37. The Annual Value has been defined under ______________ of Income Tax Act, 1961.
(a) Section 20
(b) Section 22
(c) Section 23(1)
(d) Section 23
38. Mr. Rupesh owns a house property. Municipal value ` 1,50,000, Fair Rent ` 1,25,000 and
Standard Rent ` 1,45,000. It is let out throughout the previous year for ` 10,000 p.m. up to
December 31, 2015 and ` 1,45,000 p.m. thereafter. Find out the Gross Annual Value for the
Assessment Year 2016-17.
(a) ` 1,45,000
(b) ` 1,25,000
(c) ` 1,50,000
(d) ` 1,33,000
39. When the portion of the house is self-occupied for the full year and portion is self-occupied
for the whole year, the annual value of the house shall be determined by ______________.
(a) The full annual value of the house the proportionate annual value of self-occupied portion
for the whole year shall be deducted
(b) Its present standard value
(c) All of the above
(d) None of the above
40. Mr. R owns a house. The Municipal value of the house is ` 50,000. He paid ` 8,000 as local
taxes during the year. He uses this house for his residential purposes but lets out half of the
house @ ` 3,000 p.m. The annual value of the house is ______________.
(a) ` 15,000
(b) ` 16,000
(c) ` 17,000
(d) ` 18,000
41. If fair rent is not gives, then assume ______________ as fair rent.
(a) Actual rent
(b) Standard rent
(c) Average rent
(d) None of the above
42. Rent received by original tenant from sub-tenant is taxable under the head _______________.
(a) Income from House Property
(b) Income from Other Sources
(c) Income from Capital Gain
(d) None of the above
18
All in One Multiple Choice Questions
43. The net annual value of house let out is ` 1,00,000 and actual amount spent by the assessee on
repairs and insurance premium is ` 20,000. The amount of deduction allowed under Section
24(a) shall be _______________.
(a) ` 35,000
(b) ` 45,000
(c) ` 30,000
(d) ` 25,000
44. Rent from House Property let out by an assessee to his employees when such letting is
incidental to his main business will be chargeable to tax under head _______________.
(a) Profit and Gain from Business and Profession
(b) Income from Capital Gain
(c) Income from House Property
(d) All of the above
45. When annual value of one-self occupied house is nil, the assesses will be entitled to the
standard deduction of _______________.
(a) 10%
(b) 20%
(c) Nil
(d) None of the above
46. Gross annual value shall be higher of _______________.
(a) Expected rent
(b) Actual rent received or receivable
(c) All of the above
(d) None of the above
47. Income from property held under trust for charitable or religious purposes is ______________.
(a) Exempted from tax
(b) Taxable @ 10%
(c) Taxable @ 20%
(d) None of the above
48. Mr. Anup owns a house property. Municipal value ` 1,80,000, Fair Rent ` 1,35,000 and
Standard Rent ` 1,65,000. It is let out throughout the previous year for ` 10,000 p.m. up to
December 31, 2015 and ` 1,65,000 p.m. thereafter. Find out the Gross Annual Value for the
Assessment Year 2016-17.
(a) 1,80,000
(b) 1,65,000
(c) 1,55,500
(d) None of the above
49. The assessee lets on hire machinery, plant or furniture belonging to him and also building and
the letting of the buildings is inseparable from the letting of the said machinery, plant and
furniture, the income from such letting is chargeable to tax under the head _______________.
(a) Income from Business
(b) Income from Capital Gain
(c) Income from Other Sources
(d) Profit and Gain from Business or Profession
50. For computation of Gross Annual Value, if actual rent is more than expected rent, then we
select the ______________.
(a) Actual rent
(b) Expected rent
(c) Any of the above
(d) None of the above
All in One Multiple Choice Questions
19
Answer Key of Chapter 3
1
(d)
11
(d)
21
(d)
31
(b)
41
(a)
2
(a)
12
(a)
22
(c)
32
(a)
42
(b)
3
(d)
13
(b)
23
(a)
33
(c)
43
(c)
4
(c)
14
(d)
24
(c)
34
(a)
44
(a)
5
(b)
15
(a)
25
(d)
35
(d)
45
(c)
6
(b)
16
(c)
26
(c)
36
(a)
46
(c)
7
(d)
17
(d)
27
(a)
37
(c)
47
(a)
8
(b)
18
(c)
28
(c)
38
(a)
48
(b)
9
(d)
19
(a)
29
(d)
39
(a)
49
(c)
10
(c)
20
(d)
30
(b)
40
(b)
50
(a)
All in One Multiple Choice Questions
20
Chapter 4
Direct Taxation
1. Under the Income Tax Act, 1961, depreciation on machinery is charged on _______________.
(a) Purchase price of the machinery (b) Written down value of the machinery
(c) Market price of the machinery
(d) All of the above
2. The Depreciation allowance is charged of written down value on intangible assets at the rate
of _______________.
(a) 25%
(b) 15%
(c) 20%
(d) 30%
3. Sunil contributed ` 3,00,000 to an approved institution for research in social science, which is
not related to his business. The amount of deduction eligible under section 35 would be
_______________.
(a) ` 37,500
(b) ` 30,000
(c) ` 45,000
(d) ` 30,500
4. Income of a business commenced on 1st Feb 2016 will be assessed during the assessment
year _______________.
(a) 2014-15
(b) 2015-16
(c) 2016-17
(d) 2015-17
5. The amount of additional depreciation in respect of new building constructed in financial year
2015-16 at a cost of ` 25 lakh for manufacturing garments will be ` _______________.
(a) Nil
(b) ` 10,000
(c) ` 15,000
(d) ` 50,000
6. If an asset is put to use for less than 180 days in the previous year, the depreciation is charged
at _______________ rate.
(a) 30%
(b) 50%
(c) 25%
(d) Nil
7. Deduction for bad debt is allowed to assessees carrying on business in the year in which the
debt is _______________ as bad.
(a) Accrual Basis
(b) Written Basis
(c) All of the above
(d) None of the above
8. Under Section 44AB, specified date means _______________ of the assessment year.
(a) 31st March
(b) 1st April
(c) 30th September
(d) None of the above
9. Income chargeable under the head ‘Profits and Gains from Business or Profession’ is covered
under _______________.
(a) Section 23
(b) Section 28
(c) Section 25
(d) Section 24
10. Business expenses are allowed to be deducted from business income even if they are in the
nature of personal expenditure of the assessee, as long as they are reasonable.
(a) True
(b) False
All in One Multiple Choice Questions
21
11. Where business is carried on, on behalf of the assessee’s minor child (whose income is
clubbed in assessee’s hands), by the assessee, which is besides assessee’s own business, the
gross receipts of both should be reckoned for judging the applicability of Section 44AB of the
Income Tax Act, 1961.
(a) True
(b) False
12. The income charged under the head Business/Profession are _______________.
(a) The profit and gain of any business or profession which was carried on by the assessee at
any time during the previous year
(b) Export incentives available to the exporters under any scheme of Government
(c) Any compensation or other payment due to or received by any person specified by the
Section 28(ii)
(d) All of the above
13. The depreciation on the assets in case of new plant and machinery is _______________.
(a) Depreciation sum equal to 20% of the actual cost of new plant and machinery
(b) Depreciation sum equal to 50% of the actual cost of new plant and machinery
(c) Depreciation sum equal to 30% of the actual cost of new plant and machinery
(d) Depreciation sum equal to 10% of the actual cost of new plant and machinery
14. If the asset is put to use for less than 180 days in the year in which it is acquired, the rate of
depreciation will be _______________.
(a) 20%
(b) 30%
(c) 25%
(d) 50%
15. If the assets falling within a block of assets is acquired during the previous year and it is put
to use for a period of less than 180 day, _______________.
(a) Depreciation should be restricted to 30%
(b) Depreciation should be restricted to 40%
(c) Depreciation should be restricted to 50%
(d) Depreciation should be restricted to 20%
16. The depreciation is allowable expenditure subject to _______________.
(a) The asset must be tangible asset
(b) The asset is used for the business purposes
(c) The assesses is the owner of the assets
(d) All of the above
17. The revenue expenditure on research incurred by the assesses himself is allowed for
deduction only if _______________.
(a) Research is related to business only
(b) Research is related to personal purpose
(c) Research is related the HUI
(d) None of the above
22
All in One Multiple Choice Questions
18. Profits of ` 2,00,000 are earned from a business in USA which is controlled in India. Half of
the profit is being received in India. How much amount is taxable in India of a non-resident
individual?
(a) Nil
(b) ` 2,00,000
(c) ` 1,00,000
(d) ` 3,00,000
19. Which of the following income is not chargeable as income of business or profession?
(a) Profits and gains of business carried by an assessee during the previous year
(b) Income derived by a trade, professional or similar association from specific services
performed for its members
(c) Income from the activity of owning and maintaining race horse
(d) Salary received by a partner of a firm from the firm in which he is a partner.
20. If any expenditure is incurred by an Indian company wholly and exclusively for the purpose
of amalgamation or demerger, the said expenditure is _______________.
(a) Not allowable as a deduction in computing profits and gains of business or profession
(b) Fully deductible as revenue expenditure in the year in which it is incurred
(c) Not deductible but is eligible to be treated as a intangible asset in respect of which
depreciation can be claimed
(d) Allowed as a deduction over five successive previous year in which amalgamation or
demerger takes place
21. The transfer of old movable assets will be tax-free if it is used for _______________.
(a) 1 year
(b) 5 years
(c) 10 years
(d) 15 years
22. The rate of depression on machinery is allowed upto _______________.
(a) 10%
(b) 15%
(c) 2%
(d) 8%
23. Section 45 of Income Tax Act, 1961 is related to _______________.
(a) Capital assets
(b) Assets
(c) Capital expenses
(d) Capital gain
24. Sections 28 to 44D of Income Tax Act, 1961 related to _______________.
(a) Income from House Property
(b) Profit and Loss from Business or Profession
(c) Income from Salary
(d) Income of HUF
25. If any sum of money, the aggregate value of which exceeds fifty thousand rupees, is received
without consideration, by an individual or a Hindu undivided family, in any previous year
from any person or persons on or after the 1st day of April, 2006 but before 1st of October
2009, the whole sum is taxable under the head _______________.
(a) Income from Other Sources
(b) Income from Business and Profession
(c) Income from Capital Gain
(d) None of the above
26. If a money gift is received from _______________, it is not taxable under any head.
(a) From any relatives
(b) On the occasion of the marriage of the individual
All in One Multiple Choice Questions
27.
28.
29.
30.
31.
32.
33.
34.
35.
23
(c) Under a will or by way of inheritance
(d) All of the above
The provision relating to clubbing of income where transfer of income is done without
transferring the assets is given under _______________.
(a) Section 60
(b) Section 62
(c) Section 61
(d) None of the above
The income from the asset would be taxable in the hands of the transferor if _______________.
(a) The taxpayer owns an asset
(b) The ownership of asset is not transferred by him
(c) The income from the asset is transferred to any person under a settlement or agreement
(d) All of the above
The examples of revocable transfers are _______________.
(a) If there is an express clause of revocation in the instrument of transfer
(b) If there is a sale with a condition of repurchase
(c) If the trustees are empowered in sole discretion to revoke the transfer
(d) All of the above
The provision for the set off and carry forward of losses in Income Tax Act, 1961 is given
under _______________.
(a) Sections 65-75
(b) Sections 70-80
(c) Sections 80-90
(d) Sections 75-80
Mr. Rakesh has two properties one occupied by him and the other let out. Mr. Rakesh pays
interest on loan of ` 1.40 lakh on the property occupied and derives net rental income of `
1.40 lakh from the let-out property. In this case, the income chargeable under the head “House
Property” will be _______________.
(a) ` 1,40,000
(b) ` 2,80,000
(c) ` 70,000
(d) Nil
Loss from speculation business cannot be set off against profit from any non-speculation
business, however _______________.
(a) Loss from non-speculative business can be set off against speculation income
(b) Loss from non-speculative business cannot be set off against speculation income
(c) Profit from non-speculative business can be set off against speculation income
(d) None of the above
Long-term Capital Loss can only be set off against _______________.
(a) Long-term capital loss
(b) Short-term capital loss
(c) Long-term capital gain
(d) All of the above
The losses from any casual income cannot be set off against any losses.
(a) True
(b) False
No expenses can be calmed against any casual income.
(a) True
(b) False
24
All in One Multiple Choice Questions
36. If in any year, the tax payer has incurred losses under one head of income and is having
income under other head of income, then he can adjust the losses from one head against
income from other head.
(a) False
(b) True
37. Mr. Anil has only one property, which is occupied by him and the loss is ` 1.50 lakh. He
derives salary of ` 10 lakh during the year. Here, he can set off the loss of ` 1.50 lakh against
his salary income by making appropriate declarations to his employer thereby making his net
taxable income _______________.
(a) ` 10 lakh
(b) ` 8.50 lakh
(c) ` 9 lakh
(d) None of the above
38. The provision for the set off loss from one head against income from another head is given
under _______________ of Income Tax Act, 1961.
(a) Section 70
(b) Section 72
(c) Section 71
(d) Section 73
39. The carry forward of losses is permissible if the return of income for the year in which loss
incurred is _______________.
(a) Filled on time
(b) Not filled on time
(c) Filed in advance
(d) None of the above
40. All income which arises to the minor child shall be clubbed in the income of his/her
_______________.
(a) Parents
(b) Siblings
(c) Friends
(d) Neighbours
41. What are the incomes are considered as an agricultural income?
(a) Any rent received from land which is used for agricultural purpose
(b) Any income derived from such land by agricultural operations
(c) Income attributable to farm house
(d) All of the above
42. _______________ are not treated as a agricultural income.
(a) Income from poultry farming
(b) Income from bee heaving
(c) Purchase of standing crop
(d) All of the above
43. The agricultural income is fully exempt from tax from _______________.
(a) Finance Act, 1973
(b) Income Tax Act, 1961
(c) Agricultural Act, 1981
(d) None of the above
44. If the coffee is grown and cured, then the tax liability on the agricultural income is
_______________.
(a) 75% agricultural and 25% non-agricultural income
(b) 65% agricultural and 35% non-agricultural income
(c) 55% agricultural and 45% non-agricultural income
(d) 35% agricultural and 65% non-agricultural income
All in One Multiple Choice Questions
25
45. The coffee is grown, cured and further processed, then the tax liability for the agricultural
income is _______________.
(a) 60% agricultural and 40% non-agricultural
(b) 50% agricultural and 50% non-agricultural
(c) 40% agricultural and 60% non-agricultural
(d) 65% agricultural and 35% non-agricultural
46. If the agricultural land is used for tea plantation, then the tax liability is _______________.
(a) 65% agricultural and 35% non-agricultural
(b) 50% agricultural and 50% non-agricultural
(c) 70% agricultural and 30% non-agricultural
(d) 60% agricultural and 40% non-agricultural
47. A income by way of rent of agricultural land is _______________.
(a) Business income
(b) Agricultural Income
(c) Income from Other Sources
(d) Casual Income
48. Salary received by the manager of an agricultural farm is _______________.
(a) An agricultural income
(b) A business income
(c) A salary income
(d) A capital income
49. Income from a farm house is _______________.
(a) Agricultural Income
(b) Income from Other Sources
(c) Income from House Property
(d) Income from Business
50. Income from sale of rural agricultural land is _______________.
(a) Taxable capital gain
(b) Taxable income
(c) Exempted capital gain
(d) None of these
Answer Key of Chapter 4
1
(c)
11
(b)
21
(c)
31
(d)
41
(d)
2
(a)
12
(d)
22
(b)
32
(a)
42
(d)
3
(a)
13
(a)
23
(d)
33
(c)
43
(a)
4
(b)
14
(b)
24
(b)
34
(a)
44
(b)
5
(a)
15
(c)
25
(a)
35
(a)
45
(a)
6
(b)
16
(d)
26
(d)
36
(b)
46
(d)
7
(b)
17
(a)
27
(a)
37
(b)
47
(c)
8
(c)
18
(c)
28
(d)
38
(c)
48
(a)
9
(b)
19
(c)
29
(d)
39
(a)
49
(a)
10
(b)
20
(d)
30
(b)
40
(a)
50
(b)
All in One Multiple Choice Questions
26
Chapter 5
Direct Taxation
1. Maximum limit for the deduction of Life insurance premia from the gross total income is
_______________.
(a) ` 2,00,000
(b) ` 1,50,000
(c) ` 1,00,000
(d) ` 1,25,000
2. The deduction of life insurance premia, contribution to provident fund, etc. will is done under
_______________ of Income Tax Act, 1961.
(a) Section 80C
(b) Section 80U
(c) Section 80D
(d) Section 80E
3. Gross Total Income is arrived after _______________.
(a) Only adding Income under five heads of Income
(b) Adding Income under five heads of Income excluding losses
(c) Adding Income under five heads of Income, after applying clubbing provisions and
making adjustment of set off and carry forward of losses
(d) Adding Income under five heads of Income, after applying clubbing provisions and
making adjustment of set off and carry forward of losses and after allowing deduction
under sections 80C to 80U
4. In Income Tax Act, 1961, deduction under sections 80C to 80U cannot exceed
_______________.
(a) Gross total income
(b) Total income
(c) Income from business or profession
(d) Income from house property
5. The maximum aggregate amount of deduction under sections 80C, 80CCC and 80CCD
cannot exceed _______________.
(a) ` 1,10,000
(b) ` 2,00,000
(c) ` 1,50,000
(d) Nil
6. Deduction in respect of contribution to political party will _______________.
(a) Be allowed in respect of sum paid by way of cash
(b) Not be allowed if payment made in cash
(c) This type of deduction is not allowed whether payment is in cash or not
(d) Be allowed if payment made in cash, subject to certain conditions
7. Maximum amount of deduction in case of a person with severe disability under section 80U
will be _______________.
(a) ` 50,000
(b) ` 75,000
(c) ` 80,000
(d) ` 1,00,000
All in One Multiple Choice Questions
27
8. Government’s contribution to the new pension scheme referred to in Section 80CCD is
_______________.
(a) An exempt income
(b) Income chargeable to tax as salaries in full
(c) 50% thereof is income chargeable to tax as Salaries
(d) Income chargeable to tax as income from other sources in full
9. In case of a hospital built in specified area after 31.3.2008 fulfilling the required conditions
laid down in Section 80IB-(11C), the profits and gains derived from running the hospital are
_______________.
(a) Deductible in full
(b) Deduction up to 50%
(c) Taxable in full
(d) Deductible up to 75%
10. Deduction in respect of contribution to pension scheme of central government comes under
_______________ of Income Tax Act, 1961.
(a) Section 80CCD
(b) Section 80U
(c) Section 80EE
(d) Section 80G
11. In case of assessees other than companies, the following is advance tax rate to be payable on
or before of 15th September:
(a) 45%
(b) 30%
(c) 15%
(d) 10%
12. For the purposes of computing minimum alternate tax under Section 115B(a) of the Income
Tax Act, 1961, the book profit need not to be increased by inter alia, the amount of deferred
tax debited to the profit and loss account.
(a) True
(b) False
(c) Can’t say
13. Deduction under Section 80C can be claimed for fixed deposit made in any scheduled bank, if
the minimum period of deposit is _______________.
(a) 10 Years
(b) 5 Years
(c) 12 Years
(d) 8 Years
14. Which of the following is covered under section 80D of the Income Tax Act, 1961?
(a) Medical treatment of handicapped dependent
(b) Medical insurance premium
(c) Reimbursement of medical expenses
(d) Repayment of loan taken for higher education
15. The deduction available under section 80QQB in respect of royalty income of authors shall
not exceed _______________ in previous year.
(a) ` 1,50,000
(b) ` 2,50,000
(c) ` 3,00,000
(d) ` 1,00,000
16. Clubbing of income means _______________.
(a) Addition income of two partners
(b) Inclusion of income of other person in assessee income
All in One Multiple Choice Questions
28
17.
18.
19.
20.
21.
22.
23.
24.
25.
26.
27.
(c) Total of income of various heads
(d) Collection of income
Minors income is clubbed to _______________ .
(a) Father’s income
(b) Mother’s income
(c) Father’s income or mother’s income whichever is greater
(d) Both mother’s and father’s income
The income of minor is not clubbed to the following limit:
(a) ` 1,500
(b) ` 10,000
(c) ` 1,000
(d) Whole amount
_______________ is a section related to clubbing of income
(a) Sections 60-63
(b) Sections 60-69
(c) Sections 60-64
(d) None of the above
Deduction in respect of medical insurance premium is allowed under _______________.
(a) Section 80C
(b) Section 80D
(c) Section 80DD
(d) Section 80U
Maximum deduction allowed for senior citizen under Section 80D is _______________.
(a) ` 5,000
(b) ` 15,000
(c) ` 20,000
(d) ` 25,000
Person with disability is allowed a fixed deduction of _______________.
(a) ` 50,000
(b) ` 20,000
(c) ` 30,000
(d) ` 1,00,000
Expenditure on severe disease under section 80DDB is allowed upto _______________.
(a) ` 40,000
(b) ` 20,000
(c) ` 25,000
(d) ` 30,000
Which of the following donations is eligible for 100% deduction?
(a) Rajeev Gandhi Foundation
(b) J.L. Nehru Memorial Fund
(c) National Children Fund
(d) National Sports Fund
Mr. Sharma contributed to a political party, he can avail deduction under _______________.
(a) Section 80G
(b) Section 80GGB
(c) Section 80GGC
(d) Section 80GGD
Rate of education cess on total income is _______________.
(a) 2%
(b) 3%
(c) 4%
(d) 0.3%
The deduction for donation to National Foundation for Communal Harmony is
_______________.
(a) 50%
(b) 100%
(c) 100% Qualifying Amount
(d) None of the above
All in One Multiple Choice Questions
29
28. Under which section HUF is not entitled to deduction from GTI?
(a) Section 80C
(b) Section 80D
(c) Section 80G
(d) Section 80E
29. The provision regarding TDS is given under _______________ of income tax.
(a) Section 195
(b) Sections 192-206
(c) Sections 190-230
(d) Sections 185-205
30. _______________ is related to self-assessment.
(a) Section 140
(b) Section 140(A)
(c) Section 140(B)
(d) Section 140(C)
31. _______________ deals with PAN.
(a) Section 140
(b) Section 139A
(c) Section 139
(d) Section 154
32. Surcharge on tax on firm’s total income is _______________.
(a) Applicable
(b) Not applicable
(c) Applicable if total income crosses ` 1 crore
(d) Applicable if there is capital gain
33. Interest is paid to partners under _______________.
(a) Section 40A
(b) Section 40B
(c) Section 40C
(d) Section 40D
34. The provision of Section 56(2)(vii) is applicable to _______________.
(a) All assessees
(b) An individual and HUF
(c) Aan individual only
(d) An HUF only
35. On the occasion of marriage of Mr. Rahul, he received a gift of ` 75,000 from a relative. Such
an amount shall be _______________.
(a) Taxable
(b) Non-taxable
(c) Taxable subject to standard deduction of 50%
(d) None of the above
36. In case of winning from horse races, payment exceeding _______________ are subject to tax
deduction at source.
(a) ` 2,000
(b) ` 3,000
(c) ` 5,000
(d) ` 10,000
37. Exemption under section 10(37) is available to _______________.
(a) An individual or an HUF
(b) An individual
(c) HUF
(d) None of the above
30
All in One Multiple Choice Questions
38. Generally, long-term capital gain is charged to tax @ _______________ (plus surcharge and
cess as applicable).
(a) 10%
(b) 15%
(c) 20%
(d) 30%
39. The exemption under section 54 shall be available _______________.
(a) To the extent of capital gain invested in the house property
(b) Proportionate to the net consideration price invested
(c) To the extent of amount actually invested
(d) None
40. For the purpose of deduction under section 80DD, which of the following statements is/are
true?
(a) Assessee is either and individual or a HUF
(b) Assessee is resident of India
(c) Assessee has a dependent disable relative
(d) All of the above
41. The maximum deduction one can clam under section 80D is _______________.
(a) ` 30,000
(b) ` 50,000
(c) ` 40,000
(d) ` 60,000
42. Amount of deduction in case of a person with severe disability under section 80U will be
_______________.
(a) ` 75,000
(b) ` 85,000
(c) ` 1,50,000
(d) ` 1,25,000
43. Aggregate amount of deduction under 80C, 80CCC and 80CCD cannot exceed
_______________.
(a) ` 1,10,000
(b) ` 1,20,000
(c) ` 1,30,000
(d) ` 1,50,000
44. In the case of every senior citizen resident in India, tax rebate under section 87A is
_______________.
(a) ` 5,000
(b) ` 2,000
(c) ` 1,000
(d) Nil
45. The provisions regarding TDS on Salaries are contained in _______________.
(a) Section 190
(b) Section 191
(c) Section 192
(d) Section 193
46. If the payee does not furnish PAN and TDS under section 194, dividends shall be made @
_______________.
(a) 20%
(b) 15%
(c) 10%
(d) Nil
47. Deduction of tax at source for insurance commission is @ _______________.
(a) 10%
(b) 15%
(c) 20%
(d) 12%
All in One Multiple Choice Questions
31
48. Deduction of tax at source under section 1941 is @ _______________.
(a) 10%
(b) 12%
(c) 15%
(d) 5%
49. As per Section 207, _______________ not having any income from business or profession is
not liable to pay advance tax.
(a) A resident individual who is of the age of below 60 years
(b) A resident HUF
(c) A nonresident individual
(d) A resident senior citizen
50. Exemption from payment of advance tax under section 207 is also available to a non-resident
senior citizen (i.e., an individual of the age of 60 years or above) not having any income from
business or profession.
(a) True
(b) False
Answer Key of Chapter 5
1
(b)
11
(b)
21
(c)
31
(b)
41
(d)
2
(a)
12
(b)
22
(a)
32
(c)
42
(d)
3
(c)
13
(c)
23
(a)
33
(b)
43
(d)
4
(a)
14
(b)
24
(d)
34
(b)
44
(d)
5
(c)
15
(b)
25
(c)
35
(b)
45
(c)
6
(b)
16
(b)
26
(b)
36
(c)
46
(a)
7
(a)
17
(c)
27
(b)
37
(a)
47
(a)
8
(b)
18
(c)
28
(d)
38
(c)
48
(a)
9
(d)
19
(c)
29
(b)
39
(a)
49
(d)
10
(a)
20
(b)
30
(b)
40
(c)
50
(b)

School of Distance Education
UNIVERSITY OF CALICUT
SCHOOL OF DISTANCE EDUCATION
B.COM
CORE COURSE
SIXTH SEMESTER
(2011 Admission)
INCOME TAX LAW AND PRACTICE
Question Bank
1. __________ is / are empowered to levy and collect income tax.
A. State governments
C. RBI
B. Central Government
D. local self government department
2. In which year Income Tax was levied in India for the first time?
A. 1960
B. 1961
C. 1860
D. 1857
C. 1956
D. 1962
3. Income Tax Act was passed in the year_____________.
A. 1955
B. 1961
4. CBDT is control by ______________.
A. central Government
C. both (A) and (b)
B. State Government
D. none of this above
5. previous year started from ______________.
A. April
B. March
C. January
D. September
B. Businessman
C. Trust
D. Govt. employee
C. Direct tax
D. Indirect tax
6. Who is Tax payer?
A. Assessee
7. Income tax is a ........................
A. business tax
B. profession tax
8. A person is said to be an ordinarily Resident when the person is satisfying ________________.
A. both basic and additional conditions
C. only additional conditions
B. only basic conditions
D. not basic and additional conditions
9. A person is said to be a non resident when he is _______________.
A. not fulfilling any one of the basic conditions
C. fulfilling only additional conditions
B. fulfilling only basic conditions
D. fulfilling both basic and additional conditions
10. Who is assessee in case of a HUF?
A. Father
Income Tax
B. spouse
C. Karta
D. Deemed Karta
Page 1
School of Distance Education
11. Education cess on tax payable is at.
A. 2%
B. !%
C. 3%
D. 5%
C. partly taxable
D. none of this above
12. Agriculture Income is __________.
A. Taxable
B. not taxable
13. Section 10 0f Income Tax Act deals with _________.
A. Deductions
C. Income from salary
B. Exempted incomes
D. Casual incomes
14. Income Tax Authorities are grouped into two main wings Administrative and.................
A. Judicial.
B. Managerial.
C. Executives.
D. Clerical.
15. The highest Administrative Authority for Income Tax in India is............
A. Finance Minister.
C. President of India.
B. CBDT.
D. Director of Income Tax.
16. What are the exemption limit in Hostel Expenditure Allowance?
A. Rs.200pm
B. Rs.300pm
C. Rs.400pm
D. Rs.500pm
17. Rates of Income tax are fixed under .......................
A. An Ordinance
C. The Finance Act
B. The Income Tax Act
D. Notification of CBDT
18. The number allotted by income tax authorities to assessees for identification and which should be
quoted in all documents and correspondence is.......................
A. I.D. No.
C. Permanent Account Number (PAN).
B. Register No.
D. Licence No.
19. Deduction of tax at source made for incomes which can be calculated in advance is called.......
A. T.D.S.
B. P.A.S.
C. F.A.S.
D. M.A.S.
20. Due date of filing of return by a non business assessee is...................
A. 30th June.
B. 31st August.
C. 31st July.
D. 30th November.
21. Under the income- tax act, the incidence of taxation depends on......................
A. The citizenship of the tax-payer.
C. The residential status of the tax-payer.
B. The age of the taxpayer
D. The gender of the taxpayer
22. Unabsorbed depreciation can be carried forward for set off.......................
A. for a period of four years only.
C. for an unlimited number of years.
B. for a period of eight years only.
D. for a period of eighteen years only.
23. residential status is determined for......................
A. Previous year
B. Assessment year
C. Accounting year
D. Financial year.
24. How many heads of income are there to compute Gross total income.
A. Six.
Income Tax
B. Five.
C. Four.
D. Three.
Page 2
School of Distance Education
25. Income Tax Act came into force on............................
A. 01-04-1961
B. 01-04-1962
C. 01-04-1956
D. 01-04-1965
26. Income by way of rent of agricultural land is ..............
A. Business income
C. Agricultural income
B. Income from other sources.
D. Casual income
27. Receipt of amount on maturity of LIC Policy is.............................
A. A revenue receipt.
B. A capital receipt.
C. A casual receipt.
D. None of these.
28. Which of the following is not a capital receipt?
A. 'Salami' for settlement of Tenancy.
C. Lump sum received on sale of shares.
B. Insurance claim received on machinery lost by fire.
D. Goods sold for cash.
29. Compensation for cancellation of a licence by the government resulting in cessation of business
is...................................
A. a casual receipt.
C. a revenue receipt.
B. a capital receipt.
D. None of the
above.
30. Compensation received for loss of trading asset is a....................
A. Capital receipt.
B. Revenue receipt.
C. a casual receipt.
D. None of these.
31. Salary received by the manager of an agricultural farm is .................................
A. An agricultural income.
C. A business income.
B. A salary income.
D. A capital income.
32. A citizen of India who goes abroad for the purpose of employment, he must stay in India at least for
............................. days to become a resident
A. 90 days
B. 162 days
C. 180 days
D. 182 days
33. Loss due to fire of hired machinery is.............................
A. Capital loss.
C. Capital expenditure
B. Revenue loss.
D. None of the above.
34. Embezzlement of cash by a cashier is.................
A. a revenue loss.
B. a capital loss.
C. a casual loss.
D. None of these.
35. Who among the following may be “not ordinarily resident”
A. Partnership firm.
C. Association of persons.
B. Company.
D. Hindu Undivided Family.
36. Agricultural income in Pakistan is assessable for........................
A. Resident
C. Non-resident
B. Not Ordinarily Resident
D. Not taxable
37. The following is not taxable as income under the head "Salaries".
A. Commission received by a full time director
C. Allowances received by an employee
B. Remuneration received by a partner
D. Free accommodation given to an employee
Income Tax
Page 3
School of Distance Education
38. Section.................. of the Income Tax Act deals with exempted incomes.
A. 2
B. 7
C. 10
D. 80
39. Gratuity received by a government employee is .......................
A. Fully exempted
C. Fully taxable
B. Partly exempted
D. Exempted up to Rs:1,00,000
40. Capital expenditure on scientific research which cannot be absorbed on account of insufficiency of
profit in any accounting year can be carried forward for.....................
A. 16
B. 8
C. indefinite
D. 12
41. The periodic payment of money for the past service is known as ........................
A. Gratuity
C. Commuted pension
B. Pension
D. Leave salary
42. When a receipt is determined as Capital Receipt or Revenue receipt.
A. At the time it is received
C. When the received amount is used.
B. While preparing final accounts.
D. None of the above.
43. Pension is taxable under ..........................head.
A. Salary
B. House property
C. Capital gains
D. other sources
44. Salary received by a partner from the firm in which he is a partner is taxable under the head................
A. Income from salary
C. Profits and gains of business or profession
B. Capital gains
D. Income from other sources
45. Family pension received by the widow of a deceased employee is taxable under the head............
A. Income from salary
C. Profits and gains of business or profession
B. Capital gains
D. Income from other sources
46. Salary paid by an employer out of capital will be................
A. a revenue receipt in the hands of employee
C. a casual receipt
B. a capital receipt in the hands of employee
D. None of the above.
47. Which of the following is not a capital expense?
A. Installation expenditure of plant of a company.
C. Commission to employees to achieve sales Targets.
B. Legal expenses for reduction of capital.
D. Expenses of promoting a company.
48. Salary received by a Member of Parliament is taxable under the head.........................
A. Income from salary
C. Profits and gains of business or profession
B. Capital gains
D. Income from other sources
49. Interest on capital paid by the firm to its partners is allowed up to ...................
A. 6%
B. 12%
C. 15%
D. 16%
50. Under Income Tax Act depreciation is allowed on ..................
A. Purchase price
Income Tax
B. Market price
C. W D V
D. Face value
Page 4
School of Distance Education
51. The rate of depreciation on intangible asset is ......................
A. 5%
B. 15%
C. 20%
D. 25%
52. Residential status of an assessee is ascertained as per the provisions of........................
A. Sec. 6.
B. Sec. 7.
C. Sec. 9.
D. Sec. 11.
53. The income tax rate on long term capital gains for an individual is .................................
A. 10%
B. 15%
C. 20%
D. 25%
54. Residential status of taxable entities is..........................
A. Fixed in nature.
C. Fixed once in 5 years.
B. Can change from year to year.
D. None of these.
55. As per the first basic condition to determine residential status, a person should have been in India
during the previous year concerned for..................
A. 60 days or more
C. 182 days or more.
B. 120 days or more.
D. 240 days or more.
56. An individual who wants to be resident of India must satisfy at least...................
A. One of the Two basic conditions.
B. Both the basic conditions.
C. Both the additional conditions.
D. Both the basic conditions and the additional conditions
57. An individual who wants to be resident of India must stay in India for at least................
A. 730 days in 10 previous years.
C. 365 days in the previous year.
B. 182 days in the previous year.
D. 150 days in the previous year.
58. A person who is of Indian origin visiting India during the previous year to be called resident must stay in
India for at least.....................
A. 60 days in PY.
B. 6 days in PY and 365 days or more during 4 years preceding the PY.
C. 182 days in PY.
D. 730 days during 7 years preceding the PY.
59. As per Second additional condition, a resident will be an ordinarily resident if stay in India for at least
......................... days during the seven previous years preceding the relevant .
A. 182 days.
B. 365 days.
C. 60 days.
D. 730 days.
60. A person is Non resident if he fails to fulfil.....................
A. The additional conditions.
C. Both basic conditions.
B. At least on of the basic conditions.
D. None of thes
61. In case of residential status of HUF ,firm and AOP if control and management are wholly outside India
they are deemed as..................
A. Resident.
C. Non resident
B. Ordinarily Resident.
D. None of these.
Income Tax
Page 5
School of Distance Education
62. An Indian company’s residential status is that it is always.....................
A. Resident.
C. Ordinarily resident.
B. Non resident.
D. None of these.
63. Salary paid by an Indian company to its employees working in one of its branches outside India
is................................
A. Salary accruing in India.
C. Salary accruing outside India.
B. Salary deemed to accrue in India.
D. None of these.
64. Income received in India is taxable in the hands of...........................
A. Resident only.
C. Non-resident only.
B. Resident and ordinarily resident only.
D. All assessees.
65. Income accrued in India is taxable in the hands of............................
A. Non-resident only.
C. All assesses.
B. Resident and not ordinarily resident only.
D. Resident and ordinarily resident only.
66. Income accrued and received outside India is taxable in the hands of...........................
A. Non-resident.
C. Resident and not ordinarily.
B. Resident and ordinarily resident.
D. None of these residents.
67. Past untaxed income brought to India is taxable in the hands of.................
A. Resident and not ordinarily resident.
C. Non-resident.
B. Resident and ordinarily resident.
D. None of these.
68. The CII for the financial year 2012-13 is ..........................
A. 582
B. 852
C. 632
D. 820
69. Income from a farm house is..........................
A. Income from house property
C. Agricultural income
B. Income from business
D. income from other sources
70. Incomes on which Income tax is not charged are called..............
A. Exceptional incomes
C. Exempted incomes.
B. Privileged incomes
D. None of the above
71. Exempted incomes are defined under section................
A. 15 of income tax Act.
C. 10 of income tax Act.
B. 18 of income tax Act
D. 20 of income tax Act.
72. Incomes absolutely exempt from Tax are listed under.............................
A. Sec 2.
B. Sec 10.
C. Sec 38.
D. Sec. 80c.
C. Partly exempted.
D. None of these.
73. Scholarship granted is...................
A. Fully exempted.
B. Fully taxable.
74. Any payments made under and awards instituted by central or state Governments are..............
A. Fully exempted
Income Tax
B. Fully taxable
C. Partly exempted.
D. None of these.
Page 6
School of Distance Education
75. Allowances of MP/M.L.A / or M.L.C are.
A. Fully exempted.
B. Fully taxable.
C. Partly exempted.
D. None of these.
76. Income of political parties is not to be included in total income if certain conditions are satisfied. The
relevant section of IT Act 1961 is.
A. Section 13A .
B. Sec. 10d.
C. Sec. 233B.
D. Sec.88G.
77. Tax Holiday is.
A. Income tax on holiday income.
C. Tax exemption for a specified period.
B. Cancellation of tax for the entire country.
D. None of the above.
78. The existing Maximum Marginal Rate of tax of an individual assessee is.........................
A. 10%
B. 20%
C. 30%
D. 35%
79. Which of the following is not included in salary income.
A. Commuted pension
C. Family pension
B. Un commuted pension
D. Leave salary
80. Share of income from firm is................
A. Taxable in the hands of partner
C. Exempted in the hands of firm.
B. Exempted in the hands of partner.
D. None of these.
81. Casual income is.
A. Fully taxable.
B. Partly taxable.
C. Fully exempted.
D. None of these.
82. In case of Tax free salary, .......................................
A. Tax is to be paid by employer
C. Tax is to be paid by the employee.
B. No tax is payable on such salary
D. Govt, itself pays the tax at a future date.
83. Salary received by a member of parliament is.
A. Taxable as salary income
C. Taxable as income from other sources.
B. Exempt from tax sources.
D. None of these.
84. Allowances received by a government employee posted abroad are.............
A. Fully exempted.
C. Fully taxable.
B. Partly exempted.
D. Taxable by the country where posted.
85. Dearness allowance is taxable in the hands of.................
A. Govt employees
C. All employees.
B. Non Govt employees
D. None of these.
86. House rent allowance is....................
A. Fully exempted.
C. Fully taxable.
B. Partly taxable.
D. Actual rent paid alone is taxable.
87. Exempted limit of HRA in metropolitan cities is.
A. 50% of salary.
Income Tax
B. 40% of salary.
C. 15% of salary.
D. none of these.
Page 7
School of Distance Education
88. Education allowance is exempted for a maximum of...................
A. One child.
B. Two children.
C. Three children.
D. Four children.
89. Children education allowance is exempted up to..................
A. Rs. 200 p.m. per child.
C. Rs. 100 p.m. per child.
B. Rs. 300 p.m. per child.
D. Rs. 400 p.m. per child.
90. Hostel expenditure allowance is exempted up to..................
A. Rs. 300 per month per child.
C. Rs. 150 per month per child.
B. Rs. 200 per month per child.
D. Rs. 250 per month per child.
91. Entertainment allowance to govt. employees is exempted, which is least of 20% of basic salary or
actual allowance or.................
A. Rs. 1,000.
B. Rs. 2,000.
C. Rs. 20,000.
D. Rs. 5,000.
92. A Perk is.........................
A. Cash paid by employer to employee
C. Amount credited to employees.
B. Facility provided by employer to employee
D. None of these accounts.
93. Perquisites to employees are covered in the I.T. Act 1961 under...................
A. Sec 2a.
B. Sec. 17b.
C. Sec 28a.
D. Sec. 36 c.
94. The value of Interest free concessional loans to employees is determined on the basis of lending rates
of ..................... for the same purpose.
A. S.B.I.
B. R.B.I.
C. Central govt.
D. State govt.
95. An employee is deemed as specified employee if he is a director in the company or has substantial in
the company or his chargeable salary per annum exceeds.
A. Rs. 5,00,000.
B. Rs. 2,00,000.
C. Rs. 1,00,000.
D. Rs. 50,000.
96. Value of rent free accommodation in case of Govt. employee shall be taxable up to.......................
A. 15% of employees salary.
C. License fee fixed by Govt.
B. 7.5% of employees salary.
D. 10% of employees salary.
97. Value of rent free accommodation a house owned by employer in case of non- Govt. employees with
above 25 lakhs population is...........................
A. 10% of employees salary
C. 7.5% of employee salary
B. 15% of employees salary
D. 20% of employees salary
98. Interest on RPF balance is exempted up to.......................
A. 9.75%.
B. 9.5%.
C. 10%.
D. 12%.
99. Employers contribution to RPF is exempted up to...................
A. 10% of salary.
B. 13% of salary.
C. 12% of salary.
D. 11% of salary.
100. Commuted value of pension is fully exempted in case of......................
A. an employee of private sector.
C. a Govt. employee.
B. an employee of a public sector undertaking.
D. none of these.
Income Tax
Page 8
School of Distance Education
101. Statutory limit for exemption of compensation received at the time of voluntary retirement (VRS)
is.............................
A. Rs. 5,00,000.
B. Rs. 8,00,000.
C. Rs. 10,00,000.
D. Rs. 15,00,000.
102. Deduction from gross Total income is allowed under Sec. 80C up to lower of the Qualifying amount or
a maximum of.
A. Rs. 50,000.
B. Rs. 80,000.
C. Rs. 1,00,000.
D. Rs. 2,00,000.
103. Profits earned from an illegal business are..........................
A. Taxable.
C. Ignored by Tax Authorities.
B. Tax free.
D. treated as other income.
104. Contribution made to an approved research association is eligible for deduction up to.................
A. 50%.
B. 80%.
C. 100%.
D. 125%.
105. Unabsorbed capital expenditure on scientific research can be carried forward for...............
A. 15 years.
B. 14 years.
C. 8 years.
D. 10
106. Medical reimbursement is exempt upto .................. if treatment is done in a private hospital.
A. Rs: 5,000
B. Rs: 10,000
C. Rs: 15,000
D. Rs: 50,000
107. Excise duty and sales tax are allowed as deduction if paid before......................
A. Late date of filing of return.
C. Before 31 st December of the previous year.
B. Previous year end.
D. after 31 st December of previous year.
108. Technical know-how acquired after 1.4.98 is eligible for depreciation at...............
A. 10% p.a.
B. 20% p.a.
C. 25% p.a.
D. 40% p.a.
109. Which of the following is exempted.
A. C.C.A
C. Foreign Allowance
B. D.A
D. Medical Allowance
110. Free food provided to employees is exempted upto ...................... per meal.
A. Rs: 40
B. Rs: 50
C. Rs: 60
D. Rs: 15
111. The income from the sale of house hold furniture is ......................
A. Taxable income
C. Capital gain
B. Exempted income
D. Business income
112. Deduction for other expenses except interest in the computation of income from house property is
allowable to the extent of .........................
A. 1/5th of Annual Value
C. 25% of Annual Value
B. 30% of Annual Value
D. 20% of Annual Value
113. Preliminary expenses shall be allowed as deduction in...............
A. 5 Instalments.
B. 10 Instalments.
C. 15 Instalments
D. 12 Instalments.
114. Bad debts allowed earlier and recovered latter on is....................
A. Business income.
C. Exempted income.
B. Non business income.
D. Income from other sources.
Income Tax
Page 9
School of Distance Education
115. Under valuation of opening stock is....................
A. Deducted from net profit.
C. Credited to P & L A/c
B. Added to net profit.
D. None of these.
116. Under section 44AB the audit of accounts is compulsory if total sales exceed ..........................
A. Rs: 40 lakhs
B. Rs: 50 lakhs
C. Rs: one crore
D. Rs: five crores
117. Gifts from clients are...................
A. Professional income.
C. Non taxable item.
B. Income from other sources.
D. None of these.
118. Repairs incurred before installation of an assets is..................
A. Capital expenditure.
C. Non business expenditure.
B. Revenue expenditure.
D. None of these.
119. If a depreciable asset is acquired and used for less than 180 days in a financial year, depreciation
allowed on it is..............
A. Normal Rate.
C. Nil.
B. 50% of Normal Rate.
D. None of these.
120. Rate of depreciation on residential building is.................
A. 5%.
B. 10%
C. 15%
D. 20%.
121. Rate of depreciation on non residential building is.......................
A. 10%.
B. 15%.
C. 20%.
D. 25%
C. 10%
D. 20%
122. Rate of depreciation on furniture is........................
A. 5%
B. 15%
123. Additional depreciation is allowed at half the rate, if the asset is used in the initial year
for.................................
A. 195 days.
B. 199 days.
C. 360 days.
D. Less than 180 days.
124. Under section 44AB ‘specified date’ means, ...............................
A. 30th June
C. 30th November
B. 30th September
D. 31st DEcember
125. Income from sale of rural Agricultural land is..................
A. Taxable capital gain.
C. Taxable income.
B. Exempted capital gain.
D. None of these.
126. What is the time limit for holding of a Financial Asset, to be called Short Term Capital Asset?
A. Not more than 6 months.
C. Not more than 24 months.
B. Not more than 12 months.
D. Not more than 36 months.
127. To be a long term capital asset, a non financial asset should be held more than................
A. 12 months.
Income Tax
B. 24 months.
C. 36 months.
D. 60 months.
Page 10
School of Distance Education
128. Shares held for less than 12 months are......................
A. Short term capital asset.
C. Exempted capital asset.
B. Long term capital asset.
D. projected capital asset.
129. House property held for less than 36 months is........................
A. Long term capital asset.
C. Exempted capital asset.
B. Short term capital asset.
D. projected capital asset.
130. Indexation is applicable to.......................
A. Sale of short term capital assets.
B. Sale of long term debentures.
D. Sale of long term capital assets which are not
depreciable assets
C. Sale of depreciable capital assets.
131. Cost of long term debentures are.....................
A. Eligible for indexing.
C. None of these.
B. Not eligible for indexing.
D. All the above.
132. What is the date on which Fair Market Value of capital assets acquired is determined?
A. 1.4.2001.
B. 1.4.1971.
C. 1.4.1981.
D. 1.4.1971.
133. FMV on 1.4.81 is applicable to assets.......................
A. Acquired prior to 1.4.81.
C. Acquired after 1.4.81.
B. Transferred prior to 1.4.81.
D. None of the above.
134. Cost of improvement incurred prior to 1.4.81 is................
A. Indexed separately.
C. Ignored fully.
B. Indexed along with cost of acquisition.
D. None of these.
135. Cost inflation rules for the purpose of long term capital gain has been notified by central government
every year starting from the financial year..................
A. 1991-92.
B. 1985-86.
C. 1981-82.
D. 1975-76.
136. Short term capital gain on sale of unlisted shares are.................
A. Taxable.
C. Partially Exempted.
B. Exempted.
D. Partially Taxable.
137. Long term capital gain on sale of unlisted shares are........................
A. Taxable.
C. Partially Exempted.
B. Exempted.
D. Partially Taxable.
138. Exemption u/s 54 is allowed when a residential house is sold and the investment is made in
.............................
A. Another residential house.
C. Shares.
B. Land.
D. Jewellery.
139. Which one of the following is not an admissible expense
A. Income tax
B. Excise duty
C. Bad debt
D. Sales tax
140. Tax on short-term gain on sale of listed shares is................
A. 20%.
Income Tax
B. 25%.
C. 30%.
D. 15%.
Page 11
School of Distance Education
141. Tax on long term capital gain is..................
A. 10%.
B. 20%.
C. 30%.
D. 25%.
142. Income from other sources is a.................
A. Residuary head of income.
C. Income from a single source.
B. Major head of income.
D. Constant and regular income.
143. Which one of the following is not an income from other sources?
A. Interest on fixed deposit in bank.
C. Gift in excess of Rs.50,000 from an unrelated person.
B. Winnings from cross word puzzles.
D. Profit on sale of building.
144. Which of the following income from other sources is not taxable?
A. Dividend from co-operative society.
C. Dividend from domestic company.
B. Dividend from foreign company.
D. Winnings from lottery.
145. Dividends from co-operative society are........................
A. Exempted.
B. Taxable.
C. Partially Exempted.
D. Partially Taxable.
146. Grossing up of interest on securities is required when...................
A. Interest is received after T.D.S.
C. The interest on bank deposit is less than Rs. 10,000.
B. They are central govt. securities.
D. None of these.
147. Tax is reduced from casual incomes at....................
A. 10% + surcharge and cesses.
C. 30%.
B. 20% + surcharge and cesses.
D. none of these.
148. Interest on Bank Term Deposits is subject to tax deduction at source if the interest amount during the
relevant previous year exceeds................
A. Rs: 2,000.
B. Rs: 5,000.
C. Rs: 10,000.
D. Rs: 30,000.
149. Rate of T.D.S for unlisted securities, including cesses is.................
A. 10.6%.
B. 15.6%.
C. 10%.
D. 30.6%.
150. Speculation Loss can be carried forward for.................
A. 8 years
B. 10years
C. 5years
D. 4years
151. Which of the following is not a capital asset.
A. stock in trade
C. Agricultural land in Mumbai
B. Goodwill
D. Jewellary
152. A partnership firm sold a residential house. The firm will get exemption under section .................... on
capital gains.
A. Sec. 54D
B. Sec. 54E
C. Sec. 54C
D. Sec. 54EC
153. Income of a minor child is included in the total income of ...........................
A. Father
C. Parent whose income is greater
B. Mother
D. Transferor of asset
154. The amount of deduction under section 80DD regarding disability is .....................
A. Rs: 30,000
Income Tax
B. Rs: 50,000
C. Rs: 75,000
D. Actual expense.
Page 12
School of Distance Education
155. Which of the following is eligible for 100% deduction ?
A. National Children Fund
C. National Sports Fund
B. Rajiv Gandhi Foundation
D. Nehru Memorial Fund
156. Section C applies on ...................
A. Individual and HUF
C. Firm
B. Co-operative Society
D. Company
157. Donation on PM’s National Relief Fund is deductible 100% out of the gross total income of the
assessee, under section ...................................
A. 80C
B. 80CC
C. 80G
D. 80GG
158. For the P.Y , 2012-13, the maximum permissible deduction under section 80C is ..............
A. Rs: 80,000
B. Rs: 1,00,000
C. Rs: 2,00,000
D. 1,12,000
159. The rate of surcharge on tax payable is ......................% when taxable income is Rs: 5,57, 500.
A. 3%
B. 5%
C. 10%
D. Nil
160. The basic exemption up to which income is not taxable for an individual resident is ..............
A. Rs: 1,00,000
B. Rs: 2,00,000
C. Rs: 5,00,000
D. None of the above
161. The Total income of an individual is Rs: 3,46,994. The rounded off total income will be........................
A. Rs: 3,46,000
B. Rs: 3,47,000
C. Rs: 3,46,990
D. Rs: 3,50,000
162. The income tax payable by an individual is Rs:8,562.55. The rounded off tax payable will be
.........................
A. Rs: 8,562
B. Rs: 8,563
C. Rs: 8,560
D. Rs: 8,570
163. The maximum tax exemption to a senior citizen for the assessment year is ......................
A. Rs: 3,00,000
B. Rs: 2,00,000
C. Rs: 1,00,000
D. Rs: 2,50,000
164. If STT is paid, then STCG tax on the transfer of capital asset is ..............................
A. 10%
B. 15%
C. 20%
D.25%
C. 10%
D. 15%
165. Education cess for the A.Y is ................................
A. 3%
B. 5%
166. According to section ........................ , TDS shall be payable during the financial year in respect of the
total income of the assessee.
A. 206
B. 207
C. 208
D. 210
167. .................. must be paid according to the provisions of “ Pay As You Earn” Scheme.
A. Income Tax
B. TDS
C. Advance tax
D. Education cess
168.Advance tax is payable when tax payable by an assessee is ........................or more.
A. Rs: 5,000
B. Rs: 10,000
C. Rs: 15,000
D.Rs: 1,00,000
169. The rate of surcharge payable on tax for the A.Y. 2013-14 is ......................
A. 5%
B. 10%
C. 3%
D. Nil
170. The non-taxable income for the woman assessee is .................................
A. Rs: 1,00,000
Income Tax
B. Rs: 1,90,000
C. Rs: 2,50,000
D. Rs: 3,00,000
Page 13
School of Distance Education
171. If S T T is paid, then LTCG tax on the transfer of listed equity shares is ....................
A. 15%
B. 5%
C. 10%
D. Nil
172. Out of income from growing and manufacturing of latex ..................... , is considered as agricultural
income.
A. 40%
B. 45%
C. 60%
D. 65%
173. For SSIs , a deduction of ..................... % of profit is available to individual assessee.
A. 50%
B. 40%
C. 25%
D. Nil
C. 80 E
D. 80 G
174. Donation is deductible u/s .................................
A. 80C
B.80D
175. Tax deduction available to certain industries for the initial few years is called ........................
A. Tax holiday
B. Tax exemption
C. TDS
D. PAYE
C. 80E
D. 80G
176.Contribution to RPF is deducted u/s ..................
A. 80C
B. 80D
177. The maximum amount of deduction under section 80D in the case of a senior citizen is
.........................
A. Rs: 10,000
B. Rs: 15,000
C. Rs: 20,000
D. Rs: 25,000
178. Which among the following deduction is available only to disabled persons :
A. 80 C
B. 80 G
C. 80 Q
D. 80 U
179. Section 80C provides for deduction in respect of tuition fee to ....................... children.
A. One
B. Two
C. Three
D. None
180. The maximum amount deductible u/s 80GG in respect of rent paid is ........................
A. Rs: 10,000
B. Rs: 12,000
C. Rs: 20,000
D. Rs: 24,000
181. The amount deductible for severe disability u/s 80U is ..........................
A. Rs: 1,00,000
B. Rs: 1,20,000
C. Rs: 50,000
D. Rs: 90,000
182. When a loan is taken for the education of a child, the father is entitled to deduction u/s
..........................
A. 80 C
B. 80 G
C. 80 E
D. 80 U
183. Income of a minor child is exempted up to ..........................
A. Rs: 1,000
B. Rs: 1,500
C. Rs: 1,200
D. Rs: 2,000
184. Loss from business can be carried for ...................... years.
A. 6
B.8
C. 12
D. 16
185. Income of Benami transactions shall be included in the income of .........................
A. Real owner
B. Transferor
C. transferee
D. None of these
C. Partly Taxable
D. None of the above
186. Dividend from an Indian company is ......................
A. Fully Taxablbe
B. Fully Exempted
187. The amount received from URPF is ..........................
A. Taxablbe
C. Exempted, subject to certain conditions
B. Exempted
D. None of the above
Income Tax
Page 14
School of Distance Education
188. ............................ section deals with exempted incomes.
A. Section 80
B. Section 17
C. Section 10
D. Section 23
189. There will be no partial integration, if the agricultural income does not exceed ............................
A. Rs: 15,000
B. Rs: 25,000
C. Rs: 50,000
D. Rs: 5,000
190. Salary on which income tax is borne by the employer is called ....................................
A. Foregoing salary
B. Tax free salary
C. Tax holiday
D. None
191. STCL can be set off in the same assessment year from ...............................
A. STCG
B. LTCG
C. both
D. Not possible
192. Maximum amount of deduction allowable under section 80CCF is ......................
A. Rs: 10,000
B. Rs: 20,000
C. Rs: 25,000
D. Rs: 1,00,000
193. Maximum Marginal Rate for the current A.Y. ( 2013-14) is ..................................
A. 25%
B. 20%
C. 30%
D. 35%
194. Income tax is a form of .......................... tax
A. Direct tax
B. Indirect tax
C. Value Added Tax
195. Interest n loan taken before 1-4-1999 for construction or repairs of self occupied house shall be
deducted upto Rs: .......................................
A.Rs: 25,000
B. Rs: 30,000
C. RS: 1,00,000
D. Rs: 1,50,000
196. For claiming exemption u/s 54, the assessee should construct the residential property within
.........................
A. One year before or 2 years after the date of transfer
C. Within 3 years after the date of transfer
B. One year before or 3 years after the date of transfer
D. Within 2 years after the date of transfer.
197. The cost of acquisition of bonus shares allotted on or after 1-4-1981 is ..........................
A. Fair market value of that shares on 1-4-1981
C. Nil
B. Fair market value on the date of issue of shares
D. None of these
198. Any some received under key man insurance policy taken on the life of the employee shall be
..........................
A. Taxable under the head Business or profession
C. Taxable in the hands of employee
B. Taxable under the head income from other sources
D. Exempt from tax
199. The rent fixed as per municipal valuation is called ............................
A. Municipal value
B. Fair rental Value
C. Standard rent
D. Actual rent
200. Rent free accommodation is an example for .....................................
A. Allowance
Income Tax
B. Compensation
C. Perquisite
D. Profit in lieu of salary.
Page 15
School of Distance Education
Answer Key :
Qn.
No.
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
29
30
31
32
33
34
35
36
37
38
39
40
Income Tax
Ans.
B
C
B
A
A
A
C
A
A
C
A
B
B
A
B
B
C
C
A
C
C
C
A
B
B
C
B
D
C
A
B
D
A
A
D
A
B
C
A
C
Qn.
No.
41
42
43
44
45
46
47
48
49
50
51
52
53
54
55
56
57
58
59
60
61
62
63
64
65
66
67
68
69
70
71
72
73
74
75
76
77
78
79
80
Ans.
B
A
A
C
D
A
C
D
B
C
D
A
C
B
C
A
B
C
D
B
C
A
A
D
C
B
D
B
C
C
C
B
A
A
A
A
C
C
C
B
Qn.
No.
81
82
83
84
85
86
87
88
89
90
91
92
93
94
95
96
97
98
99
100
101
102
103
104
105
106
107
108
109
110
111
112
113
114
115
116
117
118
119
120
Ans.
A
A
C
A
C
B
A
B
C
A
D
B
B
A
D
C
B
B
C
C
A
C
A
D
C
C
A
C
C
B
B
B
A
A
A
C
A
A
B
A
Qn.
No.
121
122
123
124
125
126
127
128
129
130
131
132
133
134
135
136
137
138
139
140
141
142
143
144
145
146
147
148
149
150
151
152
153
154
155
156
157
158
159
160
Ans.
A
C
D
B
B
B
C
A
B
D
B
C
A
C
C
A
A
A
A
D
B
A
D
C
B
A
C
C
C
D
A
D
C
B
C
A
C
B
D
A
Qn.
No.
161
162
163
164
165
166
167
168
169
170
171
172
173
174
175
176
177
178
179
180
181
182
183
184
185
186
187
188
189
190
191
192
193
194
195
196
197
198
199
200
Ans.
C
C
D
B
A
B
C
B
D
B
D
D
C
D
A
A
C
D
B
D
A
C
B
B
A
B
A
C
D
B
C
B
C
A
B
C
C
A
A
C
Page 16
16UBI513 - INCOME TAX
MULTIPLE CHOICE QUESTIONS.
K1 - LEVEL
1. Income Tax Act was passed in the year _________.
1947
1950
1961
1991
2. Life Insurance Corporation of India is a _______________.
AOP
Firm
Company
Individual
3. _________ is an artificial person registered under Indian Companies Act 1956.
Individual
Company
Firm
Local Authority
4. Which one of the following taxes is not levied by the State Government?
Entertainment tax
VAT
Professional tax
None of the above
5. The first income tax act was introduced in the year
1918
1861
1860
1886
6. The apex body of Income Tax Department. is
Finance Ministry of Central Govt.
Central Govt. of India.
CBDT
Dept. of Revenue
7. Income received or deemed to be received in India (whether accrued in or outside India)
is taxable in case of
Resident
Not Ordinarily Resident
Non Resident
All of the above
8. The Income Tax Act, which is still in force in India, was enforced in
1922
1961
1860
None of the above
9. Mr. X has started has business from 1st Sept '16 and does not have any other source of
income. His first previous year will start from
1st April '16
1st Sept '16
Any of the above
None of the above.
10. According to Section 2(7) of Income Tax Act "Assessee" means a person
By whom any tax or other sum of money is payable
By whom any proceeding under the Act has been taken
Who is deemed to be an assessee in default under any provision of this Act
All of the above
11. The house rent allowance (HRA) under the salary head of Income Tax Act is given
by_____________.
Section 10
Section 10(13A)
Section11(13B)
Section11
12. Children Education allowance is exempted for ______ child/ children.
One
Two
Three
Four
13. Pension is _______________ under the salary head.
Fully taxable
Partially taxable
Not taxable
None of the above
14. The salary, remuneration or compensation received by the partners is taxable under
the head _______________.
Income from Other Sources
Income from Business
Salary
None of the above
15. The death-cum-retirement gratuity received by the Government Employee or
employee of local authority is _______________.
Partially exempted
Fully exempted
Half taxable
None of the above
16. Under Section 15 of Income Tax Act, the salary due in previous years and even if it
is not received is _______________.
Taxable
Not taxable
Partially taxable
None of the above
17. Provident Fund Act was passed in the year ___________.
1932
1956
1925
1922
18. Rent Free Accommodation given to an employee by the employer is a ____________.
Allowance
Perquisite
Profit in lieu of salary
None of the above
19. The Payment of Gratuity Act came into force in_______________.
1973
1980
1991
1972
20.
The entertainment allowance is applicable to_______________.
Private sector employees
Public sector employees
Government employees
All of the above
21. _______ is the rent fixed under Rent control Act.
Municipal rental value
Fair rental value
Standard rent
Real rent
22. Expected Rent can be determined in the following way
Higher of Municipal Value & Fair Rent
Lower of Municipal Value & Fair Rent
Higher of Municipal Value & Fair Rent subject to maximum of Standard Rent
Any of the above
23. Under the Head Income from House Property, the basis of charge is the ______________
of property.
Annual value
Quarterly value
Half-quarterly value
None of the above
24. Mr. Ram owns a house property. He lent it to Laxman at`10,000 p.m. Laxman sublet it to
Mr. Maruti on monthly rent of`20,000 p.m. Rental income of Ram is taxable under the
head______________.
Income from Salary
Income from Other Sources
Income from House Property
Income from Business
25. Mr. Ram owns a house property. He lent it to Laxman at`10,000 p.m. Laxman sublet it to
Mr. Maruti on monthly rent of`20,000 p.m. Rental income of Laxman is taxable under the
head______________.
Income from Salary
Income from Other Sources
Income from House Property
Income from Business
26. The value of concessional loans to employees is determined on the basis of lending rates
of _______________ for the same purpose.
SBI
RBI
Central Government
State Government
27. Deduction from annual value is allowed under ______________.
Section 24
Section 25
Section 27
Section 28
28. _______% standard deduction is allowed on annual value.
20
30
40
50
29. For computation of Gross Annual Value, if actual rent is more than expected rent, then
we select the ______________.
Actual rent
Expected rent
Any of the above
None of the above
30. Under the Income Tax Act, 1961, depreciation on machinery is charged on
_______________.
Purchase price of the machinery
Written down value of the machinery
Market price of the machinery
All of the above
31. Income chargeable under the head ‘Profits and Gains from Business or Profession’ is
covered under _______________.
Section 23
Section 24
Section 28
Section 27
32. The transfer of old movable assets will be tax-free if it is used for _________ .
1 year
5 years
10 years
15 year
33. _______________are not treated as agricultural income.
Income from poultry farming
Income from bee heaving
Purchase of standing crop
All of the above
34. Section 45 of Income Tax Act, 1961 is related to _______________.
Capital assets
Assets
Capital expenses
Capital gain
35. Long-term Capital Loss can only be set off against _______________ .
Long-term capital loss
Short-term capital loss
Long-term capital gain
All of the above
36. Loss from speculation business cannot be set off against profit from any non-speculation
business, however_______________.
Loss from non-speculative business can be set off against speculation income
Loss from non-speculative business cannot be set off against speculation income
Profit from non-speculative business can be set off againstspeculation income
None of the above
37. In Income Tax Act, 1961, deduction under sections 80C to 80U cannot exceed ________.
Gross total income
Total income
Income from business or profession
Income from house property
38. Gross interest = Net x 100/100 – rate of _______.
Tax
TDS
Deduction
Exempted
39. Payment of LIC premium can be claimed as deduction u/s _______.
80 C
80 CCC
80 D
80 DD
40. Clubbing of income means _______________.
Addition income of two partners
Inclusion of income of other person in assessee income
Total of income of various heads
Collection of income
41. Minors income is clubbed to _______________.
Father ’ s income
Mother ’s income
Father’s income or mother’s income whichever is greater
Both mother’s and father’s income
42. As per Section 207, _______ not having any income from business or profession is not
liable to pay advance tax.
A resident individual who is of the age of below 60 years
A resident HUF
A nonresident individual
A resident senior citizen
43. Generally, long-term capital gain is charged to tax @___________ (plus surcharge and
cess as applicable).
10%
15%
20%
30%
44. Mr. Sharma contributed to a political party, he can avail deduction under ________.
Section 80G
Section 80GGB
Section 80GGC
Section 80GGD
45. Rate of education cess on total income is ___________.
2%
3%
4%
0.3%
46. Section 70-79 deals with _____.
Salary
Capital gain
Clubbing of income
Set off and carry forward
47. Income from horse race falls under the head _____.
Salary
Other sources
Profession
Business
48. Deduction can be claimed for amount
deposited under Suganya Samridhi Account
under___.
80 CC
80 C
80 DD
80 D
49. Deduction on interest on loan taken for studies fall under _____.
80 CC
80 C
80 E
80 D
50. The amount of total income is rounded off to the nearest multiple of ____.
Rs.100
Rs.10
Rs.5
Rs.50
K2 LEVEL
SHORT ANSWERS.
1. Define Tax.
A tax is a mandatory financial charge or some other type of levy imposed upon a taxpayer
(an individual or other legal entity) by a governmental organization in order to fund
various public expenditures
2. Define direct tax.
When the person on whom incidence of tax falls also bears its impact, it is known as
direct tax. Therefore, incidence and impact of tax fall on the same person. e.g. Income
Tax and Wealth Tax
3. Mention any two exempted incomes.
Agriculture income [section 10(1)]
Any sum received by a co-parcener from hindu undivided family [section 10(2)]
Share of income from the firm [section 10(2a)]
Interest paid to non-resident [section 10(4)(i)]
4. Who is a assessee?
Assessee means a person by whom any tax or any other sum of money is Liability as per
the Income Tax Act
5. What are the types of PF?
Recognized Provident fund
Unrecognised Provident fund
Statutory Provident fund
Public Provident fund
6. Who is a deemed assessee?
A person who is deemed to be an assessee for some other person, is called
‘Deemed Assessee’.
7. Who is a assessee in default?
When a person is responsible for doing any duty under the Act and if he fails to do it, he
is called an ‘Assessee in default’.
8. Who is a representative assessee?
Representative assessee means (i) for income of a non-resident the agent of
non-resident, (ii)for income of a Minor, Lunatic or Idiot, the Guardian or manager who is
entitled to receive such income .
9. What is assessment year?
Assessment Year means the period of 12 months commencing on the first day of April
every year. It is, therefore, the period from 1st April every year to 31st of March of next
year.
10. Give the heads of income.
Income from the head salary
Income from the house property
Income from business or profession
Income from capital gains
Income from other sources
11. Define salary.
Salary includes
(a) Wages;
(b) Any Annuity or Pension;
(c) Any Gratuity;
(d) Any fees, commission, perquisites or profits in lieu of salary or wages;
(e) Any advance of salary;
(f) Any payment received by an employee for any period of leave not availed
by
him;
(g)The annual credit to employee account in a Recognised Provident Fund, to
the
extent to which it is chargeable to tax;
(h) Transferred balance of an employee participating in a Recognised
Provident
Fund, to the extent it is chargeable to tax
12. Write a note on entertainment allowance.
It is first included in the gross salary (ignoring the amount of deduction
available) & then a deduction is available u/s 16(ii)
The deduction for entertainment allowance is given only for Government
employees from gross salary and shall be the minimum of the following three amounts:
I. Actual entertainment allowance
II. ` 5,000
III. 20% of basic salary.
13. What is an Allowance ?
Payments in cash made by the employer to his employees monthly, other than basic
salary, are called an allowance. It is a fixed sum of money paid regularly in addition to salary
for the purpose of meeting some particular expenditure(whether personal or official) of an
employee.
14. Write about House Rent Allowance.
House rent allowance is given by employer to the employee to meet the
expenditure in respect of residential accommodation occupied by the employee.
H.R.A to be included under head Salary = HRA received less exemption u/s 10(13A)
Exemption u/s. 10(13A):
Minimum of following is exempt
1. Actual HRA
2. Rent paid less 10% of Salary
3. 50% of Salary : If rented accommodation in Delhi, Mumbai, Kolkata,
Chennai ;
40% of Salary : In other cities
15. Mention four fully taxable allowances.
฀ City Compensatory Allowance
Dearness Allowance/Pay
฀ Medical Allowance
฀ Lunch/ Tiffin Allowance
฀ Overtime Allowance, Night shift allowance
฀ Servant Allowance etc
16. What is perquisites ?
The term ‘perquisite means any benefit, attached to an office or position in addition to
salary or wages. Perquisite denotes a personal advantage. For example, if an employee is
provided with a servant only for helping him in official duties, it is not a perquisite, as there is
no personal benefit to the employee. But if the same servant helps the employee in his
domestic obligations only. Then it is a perquisite, being a personal advantage.Perquisite can
be given in cash or kind. If it is given in kind it should be capable of being measured in terms
of money. Reimbursement of any expenses incurred by the employee, in cash, is also treated
as perquisite and not allowance
17. Write a short note on provision for medical facilities in India ( to employee / family
members).
Medical facilities in India ( to employee / Family Members)
1. Hospital maintained by employer - Fully Exempt
2. In Govt Hospital or local authority hospital or Govt. approved hospital or Hospital
approved by CCIT (For prescribed disease only) - Fully Exempt
3. Premium paid for Health Insurance under approved scheme- Fully Exempt
4. Other case - `15,000/- in P/Y excess if any taxable
18. What are Retirement Benefits?
Retirement benefits consists of following
1. Gratuity
2. Pension
3. Leave salary
4. Compensation on voluntary retirement/Retrenchment compensation
5. Provident fund / Superannuation funds
19. Write a note on pension.
Pension refers to Periodic Payment made by the employer after retirement or death of
the employee as a reward for past services rendered by the employee. Pension can be
Uncommuted or Commuted.
20. Write a note tax treatment of uncommuted pension.
Pension payable to an employee periodically is known as uncommuted pension e.g.
every month, after retirement from service. It is Fully Taxable in the hand of all employees,
whether government or non-government.
21. What is Municipal Value?
Municipalities or Municipal corporations impose property/house tax on properties
which are under their jurisdiction. For the purpose of levying such tax, valuation of the
property is done. The valuation so determined is known as municipal value.
22. What is Standard Rent?
If a property is governed by the provisions of the rent control act, then the rent fixed
under the rent control act is known as Standard Rent.
23. What is standard Deduction?
Standard deduction is applicable to house property. This is allowed at a flat rate of
30% of positive Net annual value. If Net annual value is Negative or Nil then such deduction
is not allowed. Deduction u/s 24(a) is not available from one self occupied property, whose
NAV is taken as NIL
24. What are types of rent?
Real rental value, municipal rental value, standard rent, fair rental value, expected rental
value.
25. What is subletting?
Subletting is letting a house property to another person by the tenant. Income from
subletting falls under income from other source.
26. Define Business.
Business includes any Trade, Commerce or manufacture or any Adventure or
concern in the nature of trade, commerce or manufacture
27. Explain Speculation loss.
Loss arising from speculation Business is called speculation loss.
28. Define Profession.
Profession includes vocation were special skill, knowledge is required, ex. Doctor,
lawyer.
29. Define the term block of assets.
As per section 2(11) of income tax act 1961 block of assets means a group of assets
falling within the same class of assets it contains. a) Tangible assets, being buildings,
machinery and plant or furniture.
30. What is illegal income?
Income derived from illegal activities such as bookie/betting operations, theft,
embezzlement, and from other illegal resources. Regardless of the source of the income,
the money is still considered taxable and must be reported to the Internal Revenue Service
as income earned
31. What is Transfer ?
Transfer Includes (a) Sale, Exchange or Relinquishment of Capital Asset(b)
Extinguishment of any right in a Capital Asset(c) Compulsory Acquisition of Capital Asset
under Any law. (d) Conversion of Capital Asset into Stock in trade of Business (e) Any
transaction in which possession of Immovable Property is givern u/s.53A of Transfer of
Property Act(f) Any transaction (whether by way of tranferring membership/shares in a
Coop. Society, Company ), which has effect of transferring of Immovable Property (g)
Maturity or Redemption of a zero coupon bond
32. What is LTCG?
Long Term Capital Gain (LTCG) .It arises on transfer of Long Term Capital Assets.
33. What is STCG?
Short Term Capital Gain (STCG). It arises on transfer of Short Term Capital Assets.
34. Give the formula for Indexed Cost of Acquisition.
Indexed Cost of Acquisition =
Cost inflation index (of financial year in which asset
transferred)
Cost of Acquisition of Capital Asset X--------- -------------------------------------------------------Cost inflation index (of the 1st financial year in which asset held
by Assessee) or(of financial year 20012002),whichever is later
35. What is Slump Sale?
Slump Sale means
฀ Transfer of one or more Undertaking
฀ As a result of sale for lumpsum consideration
฀ Without values being assigned to individual assets and liabilities
36. Give examples for income from other sources.
Income from sub-letting of house property
Interest on loan/deposits.
Rental Income from vacant land
Agricultural Income outside India
Family pension.
Insurance Commission
Income from Undisclosed sources
Royalty(If not covered under P/G/B/P)
Receipt of LIC money( If not exempt u/s 10(10D)
Director fees/Commission
Director salary if not chargeable under salary
Salary to MP/MLA etc
37. Write a short note on Taxation of Cash Gifts.
Sum of money received by Individual or HUF without consideration in excess of `
50,000/-in a previous year the whole of such sum shall be included in income of
receiver under head I/O/S.
38. Define the term relative.
Relative means
(a) Spouse of the individual
(b) Brother or sister of the individual
(c) Brother or sister of spouse of the individual
(d) Brother or sister of either of the parents of the individual
(e) Any lineal ascendant or descendant of the individual
(f) Any lineal ascendant or descendant of the spouse of the individual
(g) Spouse of the persons referred to in clause (ii) to (vi)
39. What is Family pension?
Family pension is regular amount payable by employer, to legal heir of
deceased employee and is taxable under other sources. Deduction u/s 57 is available
against such pension.
40. What is casual income?
Casual income is a non recurring income that is not likely to occur again in a
year. It is an income which is earned by chance. Such income is neither anticipated nor
provided for in any agreement. Such incomes are received at uncertain times.
41. What is clubbing of income?
While computing the gross total income, if the income of any other person in a family
is included, then its called Clubbing of Income. Section 64 of the Income Tax Act,1961
deals with clubbing of income. Clubbing of income ensures that taxpayers do not
circumvent their tax liability by transferring their incomes and assets within the family.
42. What is set off ?
Set off of losses means adjusting the losses against the profit/income of that particular
year. Losses that are not set off against income in the same year, can be carried forward to
the subsequent years for set off against income of those years
43. What is Carry forward of losses?
After making the appropriate and permissible intra-head and inter-head adjustments,
there could still be unadjusted losses. These unadjusted losses can be carried forward to
future years for adjustments against income of these years.
44. Write a note on Speculative Business Loss.
·
Can be carry forward up to next 4 assessment years from the assessment year in
which the loss was incurred
·
Can be adjusted only against Income from speculative business
·
Cannot be carried forward if the return is not filed within the original due date.
·
Not necessary to continue the business at the time of set off in future years
45. Write a note on Losses from owning and maintaining race-horses :
·
Can be carry forward up to next 4 assessment years from the assessment year in
which the loss was incurred
·
Cannot be carried forward if the return is not filed within the original due date
·
Can only be set off against income from owning and maintaining race-horses only
46. Write a note on Section 80C.
·
Section 80C is the most extensively used option for saving income tax. Here, an
individual or a HUF (Hindu Undivided Families) who invests or spends on stipulated
tax-saving avenues can claim deduction up to Rs. 1.5 lakh for tax deduction. The
Indian government too supports a few as the tax saving instruments (PPF, NPS etc.) to
encourage individuals to save and invest towards retirement.
47. Give any five deductions.
Life insurance premium
Equity Linked Savings Scheme (ELSS)
Employee Provident Fund (EPF)
Annuity/ Pension Schemes
Principal payment on home loans
Tuition fees for children
Contribution to PPF Account
Sukanya Samriddhi Account
NSC (National Saving Certificate)
Fixed Deposit (Tax Savings)
Post office time deposits
National Pension Scheme
48. Write a note on Section 80D.
Section 80D is a deduction you can claim on medical expenses. One could save tax on
medical insurance premiums paid for the health for self, family and dependent parents.
The limit for Section 80D deduction is Rs 25,000 for premiums paid for self/family.For
premiums paid for senior citizen parents, you can claim a deduction up to Rs 50,000.
Additionally, health checkups to the extent of Rs 5,000 are also allowed and covered
within the overall limit.
49. Write a note on Section 80G.
Section 80G of the Income Tax Act, 1961 offers income tax deduction to an assessee,
who makes donations to charitable organizations. This deduction varies based on the
receiving organization, which implies that one may avail deduction of 50% or 100% of the
amount donated, with or without restriction.
50. What is rebate?
Rebate is an amount of money that is returned to you, especially by the government,
for example when you have paid too much tax.
K3 – LEVEL
SECTION B
1. Discuss the features of income tax?
2. Explain the types of assessee?
3. Define the term person.
4. Define the following terms under Income Tax Act. (i) Gross Total Income (ii) Total
Income.
5. Determine the status of the following persons.
Reliance industries limited.
Punjab National Bank
Madras University
Calcutta Municipal Corporation
A partnership firm with A, B and C partners
Kalyani publishers Ltd
A Village panchayat
Mr.Narendra Modi, Prime Minister of India
Reserve Bank of India
Life Insurance Corporation of India
6. From the following details compute taxable income of Mr.Amit.
i)
Share of income from a joint venture in India Rs. 10,000.
ii)
Dividend Rs. 1,000.
iii)
Income from Agriculture in Pakistan Rs.20, 000
iv)
Salary received in India Rs. 9,800(computed) but the services for the same
were rendered in Iran.
v)
Income from business in Pakistan (controlled from India) Rs. 10,000 and
the income remitted to India.
vi)
Income earned and received in Pakistan from bank deposits Rs. 5,000.
vii)
Income accrued in India but received in Iran Rs.10, 000.
7. Which of the following incomes are taxable when the residential status of Mr.Umesh
is:
i)
Resident ii) Not ordinarily resident iii) Non-resident
a) Income accrued in Canada but received in India Rs. 2,000.
b) Rs. 5,000 earned in India but received in Canada.
c) Rs. 10,000 earned and received in Sri Lanka from a business
controlled from India.
d) House property income (computed) from Sri Lanka Rs.2, 000.
e) Profit earned from a business in Kanpur Rs.10, 000. (Or)
8. A person after 26 years stay in India, retired to England in April 2016 and returned to
India on 15th February 2018 to take up a salaried appointment. What is his residential
status for the previous year 2017-18?
9. Mr. B a citizen of India left for Germany for the first time on 15.09.2016 on a business
trip. He returned to India on 05.06.2017. During his absence from India he maintained
a dwelling house for himself in Calcutta. What will be his residential status for the
assessment year 2018-19.
10. Give any five exempted incomes.
11. X receives salary of Rs.40,000 per month and D.A. @ Rs.10,000 per month. His
employer declares half of D.A as pay for Retirement benefits. Compute his Salary.
12. Mr. Sharma gets salary of Rs.40,000 p.m. and is providedwith rent free unfurnished
accommodation at Ludhiana ( population 20 lakhs) whose fair rental value is
Rs.15,000 p.m. He gets leave encashment for the current previous year of RS.20, 000
during the year. His salary is due on 1st day of every month. Calculate the value of rent
free accommodation and gross salary
13. Calculate the taxable amount of annual accretion to R.P.F. if following information is
provided by assessee:
i) Pay @ Rs.24, 500 p.m.
ii) Commission received by him on the basis of turnover achieved by him: Rs.36, 000.
iii) Employer’s contribution to R.P.F. @ 14% of salary.
iv) Interest credited during the year to R.P.F. balance @12% is Rs.24,000. (Or)
14. Mr. Y is employed at Amristar on a salary of Rs.3, 0000 p.m. The employer is paying
the H.R.A of Rs.8,000 p.m. but the actual rent paid by him (employee) is Rs.12,000
p.m. He is also getting 2% commission on turnover achieved by him and turnover is
Rs.50,00,000. Calculate the gross salary.
15. Mr. Ranjan an employee of Govt of India is drawing a salary of Rs.20, 000 p.m
including D.A. of Rs 4,000 p.m. He is drawing Rs.2,500 p.m. as Entertainment
allowance. The other perquisites are of Rs 5,000 p.m. He was getting uniform
allowance @Rs.2, 000 twice a year. It was claimed that whole of it has been spent on
uniform. He received Rs. 15, 000 as bonus during the year. Calculate his taxable
salary.
16. Mr. Hameed gets a salary of Rs. 33,000 p.m. and he has been provided with rent free
furnished accommodation at Karnal (population 7.5 lakhs). The fair rental value of the
unfurnished house is Rs.60, 000 p.a. He gets D.A. @40% of salary which is given as
per terms of employment. He gets education allowance of Rs.500 p.m. for education of
his son. The cost of furnishing of the house is Rs. 2,30,000. The employee has been
provided with hired air conditioner for five months and hire charges of Rs.1,000 p.m.
are paid by the employer. Compute the gross salary of Mr.Hameed.
17. Mr. Senthil, an employee of Govt. of India is drawing a salary of Rs. 30,000 p.m. and
D.A. of Rs.5,000 p.m. From the very beginning he was getting entertainment
allowance, and last year his E.A was doubled. At present he is drawing Rs 2,000 p.m
as Entertainment allowance. The other perquisites are of Rs 4,000 p.m. He was getting
uniform allowance @Rs 3,000 twice in a year. It was claimed that whole of it has been
spent on uniform. He received Rs 20,000 as bonus during the year. Calculate his
taxable salary.
18. Mr. V is working in a Central Government Office at Shimla. His salary particulars
are as follows: Salary Rs.3,60,000; D.A. (fully enters in to pay for retirement
benefits) Rs.96,000; Hill compensatory Allowance Rs.24,000; Transport Allowance
Rs.24,000; Provided with rent free house: Annual License Fee Rs.72,000; Cost of
furnishing Rs.3,00,000. Calculate value of Rent free house.
19. Mr. M was allowed to use a refrigerator by employer. Its cost was Rs.19,000. Calculate
the value of benefit if it is given to employee on a) 1-4-2017 b) 15-06-2017.
20. Mr. Babu retired on 30.11.17 from a coal mine after putting a service of 28 years and
10 months. At the time of his retirement he was getting a salary of Rs.16,000 p.m. and
he use to get an increment of Rs. 500 p. m. on 1st April every year. His D.A was
Rs.2,000 p.m. Gratuity received Rs. 3,40,000. Find out his taxable gratuity, if he is
covered under Gratuity Act 1972.
21. Calculate ARV from the particulars given below:
MRV Rs. 60,000 p.a.
FRV Rs. 66,000 p.a.
If actual rent is Rs. 72,000 p.a. and
Standard rent is Rs. 69,000 p.a.
22. Calculate ARV from the particulars given below:
MRV
Rs. 60,000 p.a.
Actual Rent
Rs. 7,000 p.m.
FRV
Rs. 66,000 p.a.
Standard Rent
Rs. 69,000 p.a.
If the house was vacant for two months during the previous year 2017-18.
23. Compute income from house property from the particulars given below for the
assessment year 2018-19.
Particulars
Rs.
Municipal rental value
24,000 p.a.
Actual rent received
30,000 p.a.
Municipal taxes
2,400 p.a.
Fire insurance premium (due)
400 p.a.
Ground rent (due)
600 p.a.
Interest on loans taken to construct the 15,000 p.a.
house 2011-12 to 2016-17
2017-18
Interest on delayed payment of interest
10,000 p.a.
1,000
Date of completion
31.03.2014
Date of letting
01.04.2014
24. Mr.A has constructed a building at Delhi consisting of 40 flat is let out @ 1,000 per
month. The municipal authorities have fixed the rental value of this property as
Rs.4,50,000 per annum. The owner bears the following expenses: (i) lift
maintenance Rs.12,000 per annum (ii) Pump maintenance Rs.8,000 per annum (iii)
Salary of Gardener and Watchman Rs.3,600 per annum (iv) Swimming pool expenses
Rs.9,000 per annum. Compute the Annual Rental Value for the property.
25. Discuss the different types of rental values in Income from House Property.
26. Calculate taxable profit of the assessee for the assessment year 2018-19 from the
particulars given below:
Particulars
Rs.
Profit for the previous year 2017-18(Before charging the following 2,60,000
amounts)
1. Amount given to Punjab university for research in the field
of social science
20,000
2. Cost of land acquired for constructing research laboratory
1,00,000
3. Cost of building and P & M required for research
3,50,000
4. Amount given as salary to staff engaged in research (relating
to a field not related to assessee’s own business) during
2017-18(business started on 1.04.2017)
30,000
5. Salary given to staff engaged in research within the premises
during 2017-18.
60,000
27. Khushi Ram and sons a partnership firm is running a sweets shop and particular of his
income and expenditure for the previous year 2017-18 are as follows.
Rs.
Total expenditure from sale of sweets ( through electronic clearing system)
85,00,000
Total expenditure on purchase of all materials required to prepare sweets
56,50,000
Salary and wages paid to workers, etc.
15,60,000
Rent of shop, shed etc.
3,40,000
Depreciation
60,000
Interest and Salary to working partners (paid as per sec 40(b))
3,20,000
Compute firm’s total income u/s 44 AD.
28. Mr. A owns commercial vehicles and uses them for carriage of goods. He provides the
following information.
1. On 01.04.2017 he was owner of 8 vehicles out of which 2 were heavy goods
vehicle and 6 other than heavy goods vehicles.
2. On 15th October 2017 he sold 2
other than heavy goods vehicles and purchased
one new heavy goods vehicle on 20.10.2017.
3. He purchased 2 new other than heavy goods vehicles on 10.01.2018.
4. Due to strike he could not use any of the vehicles for full month of February 2018.
Find out his income for the assessment year 2018-19 if opts for scheme given u/s
44AE.
29. State whether the following items are deductible or not and why:
1. Sales tax and wealth tax
2. Donation to a political party
3. Cost of installing a new telephone
4. Fees paid to the lawyer for drafting partnership deed
5. Loss due to embezzlement by an emoloyee.
30. Discuss how the following items are to be dealt with in the income tax assessment of a
company.
a) Capital expenditure on scientific research Rs.4,00,000
b) Expenses by way of brokerage, stamps fees, lawyer’s fees etc amounting to
Rs.90,000 for raising a long term loan of Rs.10,00,000.
c) Preliminary expenses before the commencement of production R.1,60,000.
d) Payment in U.K of salaries and interest amounting to Rs.80,000 and Rs.30,000
respectively without deduction of tax at source.
31. Mr.James is a film producer. During the previous year he sold a film projector of
Rs.1,70,000 which had cost him Rs.1,50,000 and in respect of which Rs 40,000 had
been allowed as depreciation during last two years. Besides, his total income from
business was Rs. 75,000. Expenses on sale amounts to Rs.5, 000. Compute his income.
32. Compute capital gain. (i) Mr.Y sold an asset on 15.8.2017 (C.I.I.272) for Rs.2,50,000.
The cost price of the asset purchased on 11.2.1996 is Rs.20,000. The fair market value
of the same on 1.4.2001 (C.I.I. 100) was Rs.50,000. The income of Mr.Y from other
sources during the previous year was Rs.2,22,700. (ii) Mr.S who inherited building
properties consisting of a residential house and a shop worth Rs.1,38,000; sold on
1.11.2017 residential property for Rs.7,50,000 (C.I.I. 272). The fair market value of
the property sold was Rs.2,60,000 on 1.4.2001 (C.I.I.100). His income from all other
sources was Rs.1,12,000.
33. Find out the indexed cost of following long term capital assets if they are sold during
the previous year 2017-18. C.I.I for 2004-05 is 113, for 2006-07 is 122, for 2010-11 is
167, for 2017-18 is 272.
Jewellery
2004-05
80,000
Bonds
2006-07
2,00,000
House
2010-11
4,00,000
34. Mr.Ghosh sold a house on 1-9-2017 for Rs.15,00,000. This house was inherited by him
during 2001-02 from his father who had constructed it in 1991-92 for Rs.50,000.
Mr.Ghosh spent Rs.50, 000 on renovation of the house in 2006-07. Fair market value
of the house as on 01-04-2001 was Rs.4,50,000. This house was under negotiations for
sale in May, 2010 and he received Rs. 20,000 as advance money. The contract could
not materialize and the advance money was forfeited. Compute the amount of capital
gain assuming that he does not qualify for any exemption.C.I.I for 2001-02 is 100, for
2006-07 is 122 and for 2017-18 is 272.
35. Mr.Yash sold an asset on 15-8-2017 (C.I.I 272) for Rs.2,50,000. The cost price of the
asset purchased on 11.02.96 is Rs. 20,000. The fair market value of the same on 1-42001 (C.I.I :100) was Rs.50,000. The income of Yash from other sources during the
previous year was Rs.2,22,700.
36. Mr.A invested Rs.1,00,000 in 9 percent tax free debentures of a company. What will
be his taxable interest for the previous year ending on 31.3.2018 if rate of deduction of
tax is 10 %, interest accrues on 1st January every year.
37. Mr.Z received the following gifts during the previous year 2017-2018. Compute his
taxable income under the head “Income from other Sources”. (i) Received
Rs.1,00,000 as gift from Y (friend) on 1.6.2017. (ii) Received a Microwave costing
Rs.14,500 as gift from his another friend A. (iii) Received Rs.50,000 as gift from
another friend C on 1.11.2017. (iv) Received Rs.30,000 as gift from his sister on
1.1.2018.
38. Mr. Bedi owns horses at Bombay and Bangalore. These horses run for races at race
course. During the year 2017-18 Mr. Bedi submits the following information:
Rs.
i) Expenses on race horses at Bombay
2,60,000
ii) Expenses on race horses at Bangalore
4,30,000
iii) Stake money earned by horses at
Bombay
1,20,000
Bangalore
5,00,000
iv) Mr.Bedi received Rs.1,05,000 on 1-7-2017 on betting during horse races at
Bombay. Compute his taxable income under other sources.
39. Mr.X has the following incomes during the year ending 31-3-2018.
1. Dividend declared by M. Co on 31.-3-2017 (Indian Co) Rs.6,000
2. Dividend declared by Z. Co on 31.-3-2018 (Indian Co)
Rs.9,000
3. Interim dividend received on 1-5-2017 (Indian Co)
Rs.3,000
4. He won gold worth Rs.10,00,000 from Punjab State Lottery
5. During March 2018 he earned Rs.1,00,000 as prize money on horse races. The
horses are owned by him and expenditure incurred on maintenance of these horses
amounted to Rs.1,60,000. Compute income from other sources for the assessment
year 2018-19.
40. Explain with example the types of income u/s 56.
41. The following are the particulars of income and loss of an individual under different
heads of income. Set – off losses in the assessment year 2018-2019 and find out the
net result: (i) Income from house property A Rs.5.000 (ii) Loss from house property
B Rs.8,000. (iii) Income from interest on securities Rs.20,000 (iv) Loss from a cycle
business Rs.20,000 (v) Profit from speculation business Rs.20,000 (vi) Loss from
short term capital asset Rs.6,000 (vii) long term capital loss Rs.25,000 (viii) Long
term capital gain (investments) Rs.21,000.
42. Mr. D got medical insurance of all family members and paid premium in the previous
year 2017-2018 as total amount allowed as deduction under section 80D.
(i) Medical insurance of self-paid by cheque Rs.10,000 (ii) Medi-claim premium of
wife paid in cash Rs.5,000 (iii) Medical insurance premium of 16 years old son paid
by cheque to a private insurance company approved by Insurance Regulatory
Development Authority Rs.3,000 (iv) Medi-claim premium paid on the medical
insurance of his father and mother Rs.22,000 (v) Medi-claim premium on the policy
of dependent younger brother Rs.4,000 (vi) Preventive medical check-up of a wife
Rs.1,000.
43. Explain the rates of tax for assessment year 2018-19 applicable for an individual.
44. Compute the taxable income and loss to be C/F:
Particulars
Rs.
i)Business profit for the previous year 2017-18
20,000
ii) B/F Business loss of 2015-16
10,000
iii) Capital loss on shares
60,000
iv) Loss from self-occupied house(u/s 24)
5,000
45. If a professional man has his gross taxableincome (i.e income before allowing this
deduction) of Rs.3,60,000 and pays rent of Rs.5,000 p.m at Varanasi, calculate the
amount of deduction u/s 80GG.
46. Discuss about Section 80 C.
47. Gross total income of Mr.P for the year 2017-18 was Rs.3,62,000 which included
Rs.20,000 as 1/4th share from AOP. He made donation to :
a) To P.M National defence fund Rs.20,000
b) To Delhi hospital for promotion of family planning Rs.20,000. Compute his total
income. Mr.P is 64 years old.
48. The income of an individual for the year ended 31st march,2018 consists of the
following :
a) Business profits (after debiting Rs.30,000 paid as donation to a college)
Rs.2,52,000.
b) One fourth share from an association of person in which he was a member
Rs.12,000 (gross).
c) Interest on Government Securities Rs.8000 (gross).
d) Dividend on shares of Indian Companies Rs.6000 (gross).
e) Amount paid as tuition fee of his son Rs.8000.
Compute the total income and amount entitled to rebate of tax u/s 86 for the
assessment year 2018-19.
49. Explain any five deductions u/s 80.
50. Write a short note on rebate.
K4,K5 – LEVEL
SECTION C
1. Explain in detail about the residential status of an individual and its types.
2. The following are the incomes of Shree for the previous year 2017-18.
Rs.
i) Dividend from Indian company.
ii) Profit from business in Japan received in India.
10,000
1, 20,000
iii) Profit for business in Pakistan deposited in a bank there.
This business is controlled from India.
2, 00,000
iv) Profit from business in Indore
(controlled by London head office)
1,10,000
v) Interest received from a non resident Mr. Abdul on the loan
provided to him for a business carried in India.
50,000
vi) Income was earned in America and received there
but brought in India.
80,000
vii) Share of income from Indian partnership firm.
1, 50,000
viii) Income from house property in India received in America.
62,000
ix) Interest on debentures of an Indian company received in Dubai.
25,000
x) Capital gain on sale of agricultural land situated at Ajmer.
48,000
Compute his taxable income, if he is a) resident b) not ordinarily resident c) non resident.
3. Mr. suresh furnishes the following particulars of his income earned during the previous
year relevant to the assessment year 2018-19.
S.No
Particulars
Rs.
1.
Interest on German development bonds(1/3rd received in india)
51,000
2.
Income from agriculture in Bangladesh, remitted to India
31,000
3.
Income from property in Canada received in U.S.A
4.
Income earned form business in Kuwait, business being controlled
from Mumbai (Rs.25000 is received in Kuwait)
1,10,000
65,000
5.
Dividend from an Indian Company
15,000
6.
Royalty received in Singapore from Mr.Gulfam, resident in India,
25,000
for technical services provided for a business carried on in
Singapore
7.
Profit from a business in Chennai, this business is controlled from 1,25,000
Singapore
8.
Profit on sale of a building in India, but received in Nepal
9.
Income from agriculture in Punjab, received in Mumbai
10. Profit from business in Indonesia, this business is controlled from
2,50,000
30,000
40,000
Delhi (60% of the profit deposited in a bank there and 40% is
remitted to India)
11. Interest received from Mr.Shyam, a non- resident, on the loan
28,000
provided to him for a business in India.
Compute his Gross total income, if he is:a) resident b) not ordinarily resident c)
nonresident.
4. Following are the particulars of income of Mr. RTM for the assessment year 2018-19:
S.No
Particulars
Rs.
1. Income from business in Mumbai
80,000
2. Income from house property in pune
20,000
3. Pension from former employer for service rendered in India but
24,000
received in U.K
4. Profit from business in U.K but contolled from Mumbai. Out of this 1,60,000
Rs.20,000 were received in India
5. Dividend from Indian company but received in U.K
18,000
6. Income from agriculture in Nepal, received there but later on remitted
60,000
to India
7. Interest on bonds issued by U.K. Government out of which 50% is
40,000
received in India
8. Past untaxed income of 2014-15 to 2016-17 brought in to India during
4,00,000
2017-18
9. Income from house property in U.K and donated there to a notified
20,000
charitable institution
Compute the total income of Mr.RTM for the assessment year 2018-19 if he is: a)
resident b) not ordinarily resident c) nonresident.
5. For the previous year ended on 31st March 2018 Mr.Z had the following income.
Particulars
Rs.
Honorarium received from Govt. of India (Expenses incurred
10,000
Rs.5,000)
Profits earned from a business in Kerala controlled from Canada
5,000
Profits earned from a business inUSA controlled from West Bengal
6,000
Profit earned from a business in Bangladesh, controlled from Karachi and
4,000
credited to his personal account in the bank there
Dividend from an Italian company credited to his account in Switzerland
2,000
Agricultural income from Thailand not remitted to India
6,000
Compute the total income of Mr. Z for the assessment year 2018-19 if he is: a) resident
b) not ordinarily resident c) nonresident.
6. Mr. M is a production manager of an industrial unit at Chennai. The particulars of his
salary income are as under:
Rs.
Basic salary
40,000 p.m.
Dearness allowance (given under the terms of employment) 15,000 p.m.
Entertainment allowance
Medical allowance
1,000 p.m.
500 p.m.
House rent allowance
12,000 p.m.
Rent paid for the house
15,000 p.m.
Car of 1.2 Lt. capacity provided by employer for private and official use. Employer meets
expenses of car.He and his employer (each) contribute 15% of salary to R.P.F.
Mr. had taken interest free loan of Rs. 15, 000 to purchase refrigerator.
Compute income under the head salary for the assessment year 2018-19.
7. Ms. Deepika is employed with a software company at Hyderabad. She received
following incomes during the year ending 31.3.2018. Calculate her income from salary.
Basic salary- Rs.15, 000 p.m.
D.A. (forming part of pay for superannuation benefits) - 30% of salary.
She gets house rent allowance at the rate of Rs.2, 000 p.m.She pays a rent of Rs.2, 500
p.m.She is provided with a car of 1.5 lt. capacity engine with driver which was used
partly for official and partly for private purpose.The employer also paid the health club
expenses amounting to Rs.7, 000.Ration bill of employee paid by the employer Rs.20,
000.She was provided with air ticket by her employer for her private journey Rs.3, 000.She took
advance salary of 2 months.She contributes 20% of salary to a recognized provident fund and her
employer contributes the same.City compensatory allowance provided to her Rs.1, 500 p.m.She
made a purchase of Rs.15, 000 from her credit card the company provided the same.
8. From the particulars given below compute salary income of Mr. Dave, executive officer
in a company in Mumbai (population above 25 lakhs).
Basic pay @ Rs. 25, 000 p.m.
D.A. @ Rs. 5,000 p.m. (enters into pay for retirement benefits).
Provided with rent free 5 room house fully furnished, the fair rental value being Rs.12, 000
p.m.Cost of furnishing Rs. 1, 30,000 which includes expenditure on furnishing a room
Rs.30,000. Thisroom is used by the officer for his employment purposes only.His and
employer’s contribution to R.P.F. @ 13% of salary. Other benefits are:
1. Telephone bill Rs.2, 500(installed at his residence for his official use).
2. Club bill paid by employer Rs.4, 100.
3. Education allowance Rs.3, 900 (his two children are studying in school)
4. Reimbursement of medical bills (approved hospital) Rs.1, 555.
5. He is provided with a car of 1.4 lt. which he uses exclusively for employment
purposes.
6. Leave travel concession for going to a hill station Rs.26,500. His actual
expenses were
Rs.19,650.
9. Mr.B returned to India after serving a British company form 25 years. He joined service
with an Indian Company at Mumbai (population more than 25 lakhs) during 2015-2016.
He furnishes the following particulars of his income for the year ending 31.3.2018 and
asks you to compute his salary income if he is : (a) ordinary resident (b) Resident but not
ordinarily resident.
(i) Salary (He was on leave for two months and during this period he received his
salary in Britain) Rs.25,000 per month (ii) City Compensatory Allowance Rs.500 per
month (iii) Ration bill paid by employer Rs.14,000 (iv) Fixed Medical allowance Rs.400
per month (v) Education Allowance for his son who is studying in MBA in Mumbai
Rs.1,000 per month (vi) Rent free house hired by employer. Rent paid Rs.2,000 per
month and cost of furnishing is Rs.1,20,000 (vii) He and his employer contribute
Rs.4,000 per month each towards RPF (viii) He was getting a monthly pension of
Rs.15,000 from his British employer which was being credited to his bank account in
London.
10. Mr. Rahul, Manager of a textile company at Bangalore (population 60 lakhs ) submits
the following particulars of his income for the financial year 2017-18.
1. Basic salary Rs.18, 750 p.m.
2. D.A. Rs.4, 000 p.m. (Rs.1,600 p.m. enters into retirement benefits).
3. Education allowance for two children at Rs. 250 p.m. per child and hostel allowance
for two children at Rs . 450 p.m. per child.
4. Commission Rs.40, 000
5. Entertainment allowance Rs.1700 p.m.
6. Travelling allowance for his official tours Rs.30, 000. Actual expenditure on tour
amounted to
Rs.22, 000. During one of the official tours to Bombay, his wife
accompanied him and the expenditure incurred by employer to provide this facility to his
wife is Rs.20, 000 whereas only Rs.8, 000 is recovered from Mr.Rahul.
7. Interest credited to RPF account in the previous year @ 10% amounted to Rs.10, 000.
8. He resides in the bunglow of the company. Its fair rent is Rs. 8,000 p.m. the company
deducted Rs.1,875 p.m. from salary as rent of the bunglow.
9. A watchman and a cook has been provided by the company at the bunglow who were
paid Rs.400 p.m. and Rs.500 p.m. respectively
10. Encashment of earned leave Rs.15, 000.11. He paid professional tax of Rs.250 p.m.
12. Employer’s contribution to RPF Rs. 39,500 in the PY.
Compute his taxable salary income for the assessment year 2018-19.
11. From the following Profit and Loss Account of a manufacturer, calculate the income
under the head ‘Profits and Gains of Business or Profession’ for the year ending on 31st
March.
Particulars
Amount
Particulars
Rs.
Salaries to employees
1,95,000
Rs.
Gross profit
5,80,000
14,000
Advertisement expenses(in cash)
24,000
Interest on securities
General expenses
16,000
Income from house property
Entertainment expenses
22,000
Bad debts recovered
Bad debts
Drawings by the proprietor
1,500
24,000
Sales tax(due and paid on 1.7.2017)
6,000
Interest on proprietor’s capital
7,000
Repairs
2,500
Rent
Legal expenses
21,000
5,000
Depreciation
15,000
Bonus(due)
6,000
Bonus to the proprietor
4,000
Car purchased
72,000
Amount
(allowed earlier)
25,000
2,000
Expenses on car during the year
12,000
Donations
2,000
Provisions of bad debts
6,000
Net profit
1,90,000
6,31,000
6,31,000
From the examination of books of accounts, the following other information are
available:
1. Advertisement expenses were spent on insertions in news papers.
2. Rs.3, 000 were spent on purchase of land and are included in legal expenses.
3. Half of the repair expenses were on let out building.
4. Depreciation allowable on all assets including car is Rs.14, 400.
5. Bonus was paid to employees on 30.06.2018 and date of filing of return is 31.07.18.
12. Profit and Loss Account of M/S R and Company.
Particulars
General Expenses
Fire Insurance Premium
Rs.
1,07,000
2,000
Particulars
Gross Profit
Bad debts, recovered but
Rs.
5,40,000
4,000
disallowed earlier
Bad debts
1,000
Interest from Government
4,000
Securities
Salaries
Advertisement (in cash)
1,65,000
22,250
Rent received from employees
12,000
Interest from debtors for delayed
6,000
payment
Proprietor’s salary
1,12,500
Interest on capital
2,000
Income tax
1,000
Depreciation
2,000
Sales tax (due)
5,000
Advance income tax paid
1,000
Donations
500
Motor car expenses
Municipal taxes of quarters let
750
5,000
to employees
Net profit
1,39,000
5,66,000
5,66,000
General expenses include Rs.4,000 paid as compensation to an old employee whose
services were terminated in the interest of the business and Rs.2,200 by way of help to a
poor student. Depreciation calculated according to the rates comes to Rs.2,900. Sales
tax was paid on 1.5.2018. Date filing of return is 31.7.2018. 50% of Motor Car
expenses are for proprietor’s personal use. Compute business income.
13. From the following statement, compute the income from profession of Dr.S.K.Kapoor if
accounts are maintained on cash/receipt system:
Rs
Rs
To dispensary rent
36,000
By visiting fees
To Electricity and water charges
6,000
By consultation fees
1,25,000
To telephone expenses
6,000
By sales of medicines
72,000
To salary to nurse and compounder
36,000
By dividends
5,000
To depreciation on surgical equipment
6,000
To purchases of medicines
36,000
To depreciation on X-ray machine
4,000
To income tax
5,500
To donation to Rama Krishna Mission
4,000
To Motor car expenses
9,600
To dep on car
4,800
To net income
93,100
2,47,000
45,000
2,47,000
14. Mr. B owns a house property at Cochin. It consists of 3 independent units and
information about the property is given below:
Unit 1: Own residence
Unit 2: Let out
Unit 3: Own business
Rs.
MRV
1,20,000
FRV
1,32,000
Standard rent
1,08,000
Rent
3,500 p. a.
Unrealised rent
for three months
Repairs
10,000
Insurance
2,000
Interest on money borrowed for the construction of property
96,000
Municipal taxes
14,400
Date of completion
1-11-2012
15. Following are the particulars of 2 let out houses of Mr. Ashu Aggarwal, intermine
income from house property.
House A
House B
Municipal Valuation
4,20,000
3,50,000
Fair rental value
3,60,000
3,80,000
Standard rent
4,40,000
3,20,000
Actual rent
4,80,000
4,20,000
Unrealized rent of current year
40,000
35,000
Vacancy
2 months 2 months
Municipal taxes: Actually paid
12,000
25,000
Municipal taxes: Due but not paid
30,000
10,000
Repairs
10,000
8,000
Insurance premium
12,000
6,000
Other expenses
8,000
10,000
Interest on money borrowed for the purchase of house -
60,000
16. From the following particulars of Mr. Edward for the previous year ended 31st
March,2018 compute his income under the head income from other sources for the
assessment year 2018-19
He received:
Particulars
Amount
Rs.
Director’s fee from a company
10,000
Interest on bank deposits
Income from undisclosed sources
3,000
12,000
Winning from lotteries(net)
24,500
Royalty on a book written by him
8,000
By giving lectures in functions
5,000
Interest on loan given to a relative
7,000
Interest on tax free debentures of a company(listed
3,600
in recognized stock exchange)(net)
Dividend on shares
6,400
Interest on post office savings bank A/c
500
Interest on government securities
2,200
He paid Rs.100 for collection of dividend and Rs.1000 for typing the manuscript of book
written
by him.
17. From the following particulars of Mr. A, compute the amount of taxable gifts chargeable
under head income from other sources.
(i) He received a cheque of Rs.1,00,000 as a gift from his grandfather on 15.5.2017.
(ii) He received Rs.21,000 from his friend from Canada as a gift on 31.5.2017.
(iii) He received Rs.5,00,000 under a will from his grandmother on 30.6.2017.
(iv) He received Rs.50,000 from his father’s friend on 30.6.2017.
(v) He received Rs.75,000 as gift from his uncle on 30.9.2017 on his birthday.
(vi) He received Rs.20,000 as gift from his employer on 1.10.2017
(vii) He received a gift of Rs.51,000 from his father’s brother on 30.11.2017
(viii) He received a gift in cash of Rs.20,000 from his uncle on 30.6.2017
(ix) He received a cheque of Rs.30,000 as a gift from his brother on 10.11.2017
(x) He received a gift of Rs.21,000 on his wedding form Mr.E on 1.12.2017.
(xi) He received Rs.25,000 as gift from his non-resident friend Mr.Y 30.12.2017
(xii) He received a gift of Rs.51,000 from his brother in law on 31.1.2018.
(xiii) He received Rs.5,000 from Mr.H, his resident friend on 15.2.2018.
18. From the following particulars of Sita for the previous year ended 31st March, 2018 compute
her income U/H other sources for the assessment year 2018-19. He received ,
Particulars
Rs.
Director’s fee from a company
20,000
Interest on bank deposits
6,000
Income from undisclosed sources
24,000
Winning from lotteries
48,500
Royalty on a book written by her
16,000
By giving lectures in functions
10,000
Interest on loan given to a relative
14,000
Interest on tax free debentures of a company 6,600
Dividend on shares
14,400
Interest on post office savings bank A/c
1000
Interest on government securities
4,200
19. Compute the tax liability of Mr. R from the following particulars:
Rs.
Business income
(+) 2,40,000
Loss from self occupied house
(-) 30,000
Short term capital gain from jewellery
(+) 8,000
Short term capital gain from shares which are subject to STT.
(+) 65,000
20. Mr. H submits the following particulars about sale of assets during the year 2017-18.
Jewellery Plot
Gold
Sale price
5,00,000
20,24,000 2,40,000
Expenses on sale
Nil
24,000
Nil
Cost of acquisition
1,50,000
7,00,000
80,000
Year of acquisition 2007-08
2004-05
2009-10
C.I.I
113
148
129
He has purchased a house for Rs.12,00,000 on 1.3.2018. Calculate the amount of taxable
capital gain if C.I.I for 2017-18 is 272.
21. Mr. B is in service in Calcutta (population above 25 lakhs) drawing a monthly salary of
Rs.15,000 per month. He is also provided with a rent-free unfurnished flat, for which
employer
pays a rent of Rs.2,500 per month.
He contributes 10% of his salary to a
recognised provident fund. The interest at 8% on his provident fund account for the year ended
31.3.2018 amounted to Rs.2,500. He is also the owner of a house which is let out at a monthly
rent of Rs.2,500. His expenses for house were:
(a) Municipal taxes Rs.3,000
(b) Interest on loan for construction of the house Rs.6,600 © Repairs Rs.500
He has also interest on government securities amounting to Rs.14,000 (Gross).
He has also received a share from a firm assessed as firm of Rs.5,000 and his share of
firm’s tax
amounts to Rs.600. He has paid life insurance premium for a policy on his own
life Rs.700. He
paid Rs.200 to P.M. National Relief Fund. Compute the Total Income of
Mr. B.
22. Discuss in detail about any ten deductions u/s 80.
23. Mr. A has business profit of Rs.3, 45, 000 and received Rs.8,000 as 1/8th share of
profits of an association of persons during the year ending on march 31,2018. a)
Calculate his tax liability. b) What difference it will make if total income of A is Rs.2, 47,
000 and his ½ share from AOP ( which has no such member whose individual income
exceeds maximum exempted limit i.e., Rs.2,50,000 is Rs.80,000.
24. Mr. Atul an Indian resident furnishes the following particulars of his income for the
assessment year 2018-19. You are required to deal with set off and carry forward of
losses.
S.No
Particulars
1 Income from securities (gross)
Rs.
10,000
2 Income from residential house(computed) 5,000
3 Profits from rayon business
25,000
4 Income from an agency business
2,000
5 Speculation income
2,000
6 Short term capital gain
4,000
7 Long term capital gain
9,500
The carry forward items from the assessment year 2017-18 are:
S.No Particulars
Rs.
1
Loss from hosiery business(discontinued in 2015-16) 4,000
2
Loss in agency business
3,000
3
Loss from rayon business
3,000
4
Speculation loss
4,000
5
Short term capital loss
6,000
6
Long term capital loss (2015-16)
6,500
Current year’s depreciation for rayon business is Rs.500.
25. Discuss in detail any ten exempted income u/s 10
------------------------------------