MCQ - Income Under The Head Salary by CA Kishan Kumar

CA Kishan Kumar MCQs – Salary May/Nov 2020
ICAI Study Material MCQs
1. The maximum ceiling limit for exemption under section 10(10) in respect of gratuity for employees covered by
the Payment of Gratuity Act, 1972 is _____________________.
a) INR 10,00,000
b) INR 5,00,000
c) INR 3,50,000
d) INR 20,00,000
2. The maximum ceiling limit for exemption under section 10(10C) with respect to compensation received on
voluntary retirement is __________________.
a) INR 2,50,000
b) INR 3,00,000
c) INR 3,50,000
d) INR 5,00,000
3. The HRA paid to an employee residing in Patna exempt up to the lower of actual HRA, excess of rent paid over
10% of salary and __________________.
a) 30% of salary
b) 40% of salary
c) 50% of salary
d) 60% of salary
4. Anirudh stays in New Delhi. His basic salary is INR 10,000 p.m. D.A. (60% of which forms part of pay) is INR
6,000 p.m. HRA is INR 5,000 p.m. and he is entitled to a commission of 1% on the turnover achieved by him.
Anirudh pays a rent of INR 5,500 p.m. The turnover achieved by him during the current year is INR 12 lakhs.
The amount of HRA exempt under section 10(13A) is ________________________.
a) INR 48,480
b) INR 45,600
c) INR 49,680
d) INR 46,800
5. Where there is a decision to increase the D.A in March 2020 with retrospective effect from 1.4.2018, and the
increased D.A. is received in April 2020, the increase is taxable _____________________.
a) in the previous year 2018-19

b) in the previous year 2019-20
c) in the previous year 2020-21
d) in the respective year to which they relate
6. Rajesh is provided with a rent-free unfurnished accommodation, which is owned by his employer, XY Pvt. Ltd.
in New Delhi. The value of perquisite in the hands of Rajesh is _____________________.
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a) 20% of salary
b) 15% of salary
c) 10% of salary
d) 7.5% of salary
7. Anand is provided with furniture to the value of INR 70,000 along with house from February 2019. The actual
hire charges paid by his employer for hire of furniture is INR 5,000 p.a. The value of furniture to be included
along with value of unfurnished house for A.Y. 2020-21] is _______________.
a) INR 5,000
b) INR 7,000
c) INR 10,500
d) INR 14,000
8. For the purpose of determining the perquisite value of loan at concessional rate given to the employee, the
lending rate of State Bank of India as on _________ is required.
a) 1st day of the relevant previous year

b) Last day of the relevant previous year
c) The day the loan is given
d) 1st day of the relevant assessment year
9. Mr. Kashyap received basic salary of INR 20,000 p.m. from his employer. He also received children education
allowance of INR 3,000 for three children and transport allowance of INR 1,800 p.m. The amount of salary
chargeable to tax for P.Y. 2019-20 is _____________________.
a) INR 2,62,600
b) INR 2,12,600
c) INR 2,22,200
d) INR 2,07,800
10. The entertainment allowance received by a Government employee is exempt up to the lower of the actual
entertainment allowance received, 1/5th of basic salary and ____________________.
a) INR 4000
b) INR 6000
c) INR 5000
d) INR 10,000
ICAI Sample MCQs
11. For the purposes of computing exemption under section 10(10), in case of Mr. Anand, an employee of ABC Ltd.,
who is covered by the Payment of Gratuity Act, 1972, "salary" includes _______________.
a) only basic pay
b) basic pay and dearness allowance, if provided in the terms of employment

c) basic pay and dearness allowance
d) basic pay, dearness allowance and commission as a fixed percentage of turnover
12. Provision of rent-free accommodation and motor car owned by Beta Ltd. to its employee Mr. Anand, where
motor car is allowed to be used by Mr. Anand both for official and personal purposes, is a ______________.
a) perquisite taxable in case of all employees

b) perquisite taxable only in case of specified employees
c) perquisite of rent-free accommodation is taxable in case of all employees whereas perquisite of motor car
is taxable only in case of specified employees
d) perquisite of rent-free accommodation is taxable only in case of specified employees whereas perquisite of
motor car is taxable in case of all employees
13. A member of parliament is entitled to salary, constituency allowance and daily allowance when the Parliament
is in session. Which of the following statements are correct?
a) His entire income is taxable under the head "Salaries"

b) Only his salary component is taxable under the head "Salaries". Constituency allowance and daily allowance
are exempt.
c) Only his salary component is taxable under the head "Income from other sources". Constituency allowance
and daily allowance are exempt
d) His salary component and constituency allowance are taxable under the head "Income from other sources".
Daily allowance is exempt.
ICAI RTP and MTPs
14. Miss Riya has started working in a reputed company. This is her first job. She earned total income of INR 8
Lakhs in P.Y. 2019-20. While filing her return of income she had a doubt with respect to deduction of transport
allowance. Her father advised her that she cannot claim deduction of transport allowance while her friend told
that maximum deduction of INR 1600 p.m. in respect of the said allowance can be claimed. According to you,
what is the correct treatment for the same?
a. Transport allowance upto a maximum INR 1600 per month can be claimed.
b. Transport allowance upto a maximum INR 800 per month can be claimed.
c. No separate deduction for transport allowance is allowed. However, a standard deduction of 50,000 is
allowed to salaried Assessees.
d. Deduction of transport allowance is allowed without any monetary limit.
15. X is an employee of Z Ltd who receives Rs.1,25,000 as gratuity (he is covered under the Payment of Gratuity Act,
1972). He retires on 31.01.2020 after service of 29 years and 8 months. At the time of retirement, X drew monthly
salary of Rs. 5,200 and monthly bonus of Rs. 2,000. Compute the amount of gratuity exempt from tax in the
instant case u/s 10(10) of the Income-tax Act, 1961.
a. Rs. 90,000
b. Rs. 1,25,000
c. Rs. 78,000
d. Rs. 87,000
16. Mr. Jagat is an employee in accounts department of Bharat Ltd., a cellular company operating in the regions of
eastern India. It is engaged in manufacturing of cellular devices. During F.Y. 2019-20, following transactions
were undertaken by Mr. Jagat:
(i) He attended a seminar on “Perquisite Valuation”. Seminar fees of INR 12,500 was paid By Bharat Ltd.
(ii) Tuition fees of Mr. Himanshu (son of Mr. Jagat) was reimbursed by Bharat Ltd. Amount of fees is INR
25,000.
(iii) Ms. Sapna (daughter of Mr. Jagat) studies in DPS Public School (owned and maintained by Bharat Ltd.).
Tuition fees paid for Ms. Sapna was INR 750 per month. Cost of education in similar institution is INR
5,250 per month.
Compute the amount which is chargeable to tax under the head “Salaries” in hands of Mr. Jagat for AY 2020-21.
a. INR 25,000
b. INR 37,500
c. INR 66,500
d. INR 79,000
MCQs for practice
17. Mr. P is a CA is employee of PC Ltd. and is working as an internal auditor having contract of services with PC
Ltd. Mr. P requests PC Ltd. to show his salary as internal Audit fee. The amount shall be taxed u/h
______________________.
a. Salaries
b. PGBP
c. Income from Other Sources
d. None
18. Income is taxable as salary income when there is employer - employee relationship. However, in one exceptional
case income is taxable as salary even in the absence of employer - employee relationship which is ________.
a. Members of parliament
b. Professors of colleges
c. Partner of a firm
d. Judges of High Court and Supreme Court
19. PC Ltd. is a company paying salary of INR 4,50,000 to its employee Mr. Ram and in addition undertakes to pay
the income tax amounting to INR 10,400 on his behalf during AY 2020-21. What is the salary taxable in the
hands of Mr. Ram?
a. INR 4.3 Lakhs

b. INR 4.5 Lakhs
c. INR 4.604 Lakhs
d. None
20. Read the following statements and state correct answer:
1. Contract between employer and employee is contract of service

2. Contract between employer and employee is contract for service
3. Contract between professional and client is contract of service
4. Contract between professional and client is contract for service
a. 1 and 2 are correct

b. 2 and 3 are correct
c. 3 and 4 are correct
d. 1 and 4 are correct
21. Mr. P who is entitled to a salary of INR 10,000 p.m. took advance of INR 20,000 against salary in the month of
March 2020. Gross salary of Mr. P for AY 2020-21 Shall be ___________________.
a. INR 1,00,000
b. INR 1,20,000
c. INR 1,40,000
d. None of the above
22. Salary u/s 15 salary is taxable on ______________ basis.
a. Receipt
b. Due
c. Earlier of (a) or (b)
d. None
23. Government of India announced increase in DA on 15-03-2019 with retrospective effect from 1.5.2017 and the
same were paid on 8.5.2019. Arrears of DA is taxable in __________________.
a. PY 2018-19
b. PY 2019-20
c. PYs to which these are related to
d. PY as per Assessing Officer
24. Salary paid to partner by the firm is _________________.
a. Taxable u/h Salaries

b. Taxable u/h PGBP
c. Always exempt
d. Always taxable
25. Medical expenditure reimbursed by the employer to the employee shall be exempt upto _____________.
a. INR 15,000 pm
b. INR 1,00,000 pa
c. Fully exempt
d. Fully taxable
26. Mr. P purchased a residential house property in Ahmedabad on loan for which he paid an interest of INR 50,000
during the PY. He is working in Delhi and getting an HRA of 4,000 p.m. He can claim exemption/ deduction for
_________________.
a. Only HRA
b. Only interest paid
c. Either interest or HRA
d. Both HRA and interest paid
27. Children education allowance is exempt upto _____________________.
a. INR 100 pa for 2 children

b. INR 100 pm for 2 children
c. INR 100 pm per child for 2 children each
d. INR 100 pa per child for 2 children each
28. Underground allowance to employee is exempt upto ________________.
a. INR 700 p.m.

b. INR 900 p.m.
c. INR 1,000 p.m.
d. INR 800 p.m.
29. Mr. P received 300 pm as children education allowance for each of his 3 children. The taxable and exempt part
of children education allowance shall be?
a. INR 8,400 and INR 2,400 respectively

b. INR 2,400 and INR 8,400 respectively
c. INR 10,800 and Nil respectively
d. Nil and INR 10,800 respectively
30. Mr. P is entitled to a transport allowance of INR 1,000 p.m. For commuting from his residence to office and
back, he spends INR 600 p.m. The exemption shall be ______________________.
a. INR 1,000 p.m.

b. INR 600 p.m.
c. INR 400 p.m.
d. Nil
31. Children born out of multiple birth after the first child will be treated as __________________.
a. Two child and exemption will be granted only for 1 child

b. One child only and exemption will be granted only for both child
c. On the discretion of Assessing Officer
32. Value of perquisite in case of rent-free accommodation given to government employees will be __________.
a. 10% of salary
b. 15% of salary
c. 7.5% of salary
d. Licence fees determined by Government
33. Mr. P gets salary of INR 12,000 p.m. and is provided with rent free unfurnished accommodation at Bettiah
(which has population of 20 Lakh). House is owned by employer, fair rental value of which is INR 1,400 p.m.
The house was provided from 1st July 2019. Value of the perquisite will be _____________.
a. INR 21,600
b. INR 10,800
c. INR 16,200
d. INR 12,600
34. Mr. P gets salary of INR 25,000 p.m. and is provided with accommodation at Pune on his transfer in hotel for a
week. Value of the perquisite of rent-free accommodation will be ________________.
a. INR 72,000
b. INR 30,000
c. INR 45,000
d. Nil
35. If any employee has been transferred and employer has provided him accommodation at the new place also
while the employee continuing to occupy the house at old place. In such cases _____________.
a. Both houses will be charged to tax as perquisite

b. Only one of the accommodations having lower perquisite value shall be taxable upto 90 days (three months)
and after 90 days, both of the accommodations shall be taxable
c. Depends upon the agreement between employee and employer
d. Depends upon the discretion of Assessing Officer
36. Mr. P is entitled to INR 8,000 p.m. as medical allowance. He spends INR 4,000 p.m. on his medical treatment
and INR 1,000 on the medical treatment of his major son not dependant on him. Exemption= ____________.
a. INR 4,000 p.m.

b. INR 5,000 p.m.
c. Nil
d. INR 8,000 p.m.
37. In which of the following cases, interest-free loan is not treated as perquisite?
a. If the amount of loans < INR 20,000
b. If loan is given for medical treatment of prescribed diseases (cancer, tuberculosis, etc)
c. Both (a) and (b)
38. Employee is on official tour and he takes his family member with him. Value of perquisite = ____________.
a. Amount incurred for employee and such family member

b. Amount incurred for such family member
c. It is illegal to take family member with him since it will distract him
d. He should ask for the permission of Assessing Officer before taking his wife (family member)
39. Cash gifts by employer to employee are ______________.
a. Taxable if value is INR 6,000 or less

b. Exempt if value is INR 5,000 or less
c. Always fully taxable
d. Fully exempt
40. An employee has been provided free meal worth INR 110 per meal for 295 days in the office, during office hours.
Such facility provided to employees shall be taxable for ___________________.
a. INR 60 per day for 295 days

b. INR 110 per day for 295 days
c. INR 50 per day for 295 days
d. Not taxable at all
41. Expenditure pertaining to health club, sports facilities etc is _______________________.
a. Taxable perquisite
b. Exempt perquisite
c. Partly exempt
42. Free or concessional tickets granted to employees of an airline or the railways is _________________.
b. Exempt perquisite
c. Partly exempt
43. A company has provided laptop worth INR 50,000 to its employee for official as well as personal purposes. The
taxable amount of perquisite will be _______________________.
a. INR 5,000
b. INR 25,000
c. INR 10,000
d. Nil
44. Employer has given a video-camera for the personal use of the employee. The value of this perquisite is _____.
a. 10% pa of historical cost

b. Nil
c. 10% pa of the WDV
d. Fully exempt
45. The employer had purchased a car for INR 8,00,000, 2 years and 7 months ago. This car is sold to the employee
for INR 2,02,000. The value of this perquisite shall be _____________________.
a. INR 2,80,00
b. INR 1,20,000
c. INR 8,00,000
d. INR 3,10,000
46. Mr Ram, an employee of Tax Limited, took voluntary retirement in December 2019 and received INR 2,00,000
from NPS Trust. The amount chargeable to tax will be ______________________.
a. Nil as 100% is exempt

b. INR 1,20,000 as 40% is exempt
c. INR 1,00,000 as 50% is exempt
d. INR 80,000 as 60% is exempt
47. Mr. P is an employee of JSPC Ltd. which is an oil manufacturing company. He is provided with free gas for his
personal purpose by the employer. Perquisite value ______________________.
a. Fixed by employee
b. Fixed by the Employer
c. Manufacturing cost per unit
d. Market rate of gas per unit
48. Employer provides a car (below 1600 CC) along with a driver to Mr. P and he uses the car partly for official and
partly for personal purpose. Following expenses are incurred by employer:
1. Running and maintenance expenses of INR 84,000

2. Driver’s salary of INR 1,20,000
Determine the perquisite value.
a. INR 21,600
b. INR 10,800
c. INR 32,400
d. INR 2,04,000
49. Mr. P is employee of PC Ltd. and he is provided with a car of engine of 1.9 litre capacity along with driver. The
expenses of running and maintenance of car are met by Mr. P himself. Besides using the car for official purpose,
Mr. P also uses the car for his personal purpose. Perquisite value. In this case shall be _________.
a. INR 2,400 pm
b. INR 1,800 pm
c. INR 600 pm
d. INR 900 pm
50. Mr. P an employee owns a car which is used for his private purpose. All expense of running and maintenance of
the car are met by the employer. The perquisite shall be ____________________.
a. Be taxable in case of specified employee only

b. Be taxable in case of an employee other than specified employees
c. Be taxable in case of all type of employees
d. Not be taxable at all for any employee
51. Maximum exemption in case of leave encashment is ____________________.
a. INR 2.4 Lakhs

b. INR 3.5 Lakhs
c. INR 3 Lakhs
d. INR 10 Lakhs
52. Payment of premium on personal accident insurance policies of the employee by the employer is ________.
b. Exempt perquisite since no immediate benefit would become payable to the employee
c. Partly exempt
53. Salary for exemption of leave encashment shall be taken as __________________.
a. Last drawn salary

b. Average salary of 10 months immediately preceding the month of retirement
c. Average salary of 10 months immediately preceding the date of retirement
d. Any of the above
54. Salary for the purpose of exemption of leave encashment shall be taken as _________________.
a. Basic salary+ DA (forming part of salary for retirement benefits or not)

b. Basic salary+ DA (forming part of salary for retirement benefits) + monthly commission
c. Basic salary+ DA (forming part of salary for retirement benefits) + commission (on% basis of sales)
d. Basis salary and commission
55. An employee availed the exemption of leave encashment of INR 1,00,000 in the past. He received from the
second employer a sum of INR 2,50,000 as encashment of leave. He will be entitled to exemption to the extent
of _____________________.
a. Nil
b. INR 2.5 Lakhs
c. INR 2 Lakhs
d. INR 1.4 Lakhs
56. An employee is covered under payment of Gratuity Act, 1972. Salary for purpose of calculating 15 days salary for
each completed year of service shall be _______________________.
a. Last drawn salary

b. Avg. salary of last 1o months
c. Average salary of last 3 completed years
d. Average salary of last 12 months
57. The maximum ceiling limit for exemption u/s 10(10) in respect of Gratuity for employees covered by the
Payment of Gratuity Act, 1972 is ____________________.
a. INR 10 Lakhs
b. INR 5 Lakhs
c. INR 3.5 Lakhs
d. INR 20 Lakhs
58. An employee is not covered under Payment of Gratuity Act, 1972. Maximum exemption of gratuity is _______.
a. INR 10 Lakhs
b. INR 3.5 Lakhs
c. INR 20 Lakhs
d. None
59. Mr. P who claimed exemption of Gratuity in past to the extent of INR 2,50,000 was entitled to gratuity from the
present second employer amounting to INR 20,00,000 in AY 2019-20. Both of employers are covered under the
Payment of Gratuity Act, 1972. Exemption to Mr. P shall be _________________.
a. INR 10,00,000
b. INR 15,00,000
c. INR 20,00,000
d. INR 17,50,000
60. A government employee was entitled to Gratuity. He got 50% of his pension commuted and received a sum of
INR 1,00,000 as commuted pension. The exemption shall be ____________________.
a. INR 50,000
b. INR 33,337
c. INR 1,00,000
d. INR 66,667
61. An employee was not entitled to Gratuity. He got 60% of his pension commuted and received a sum of INR
1,20,000 as commuted pension. The exemption shall be _____________________.
a. INR 1,20,000
b. INR 66,667
c. INR 80,000
d. INR 1,00,000
62. Mr. Sagar retired wef. 01.10.2019 receiving INR 5,000 p.m. as pension. On 01.02.2020, he commuted 60% of
his pension and received INR 3,00,000 as commuted pension. You are required to compute his taxable pension
assuming he has not received any gratuity.
a. INR 24,000
b. INR 1,33,333
c. INR 1,57,333
d. INR 74,000
63. Standard deduction is allowed from gross salary u/s __________________.
a. 16(i)
b. 16(ia)
c. 16(ii)
d. 16(iii)
64. The standard deduction is allowed from gross salary to the maximum of INR 50,000 but ____________.
a. Employee has to prove his all expenses to income tax department

b. Employee has to prove his all expenses to the employer
c. Employee has to prove his all expenses to income tax department or employer as per his own discretion
d. Irrespective of any expenses that employee may or may not have incurred
65. Limit u/s 16(ii) for deduction of entertainment allowance in case of government employee is ____% of salary.
a. 12.5%
b. 20%
c. 15%
d. 7.5%
66. The deduction for professional tax u/s 16 (iii) is for ______________.
a. Actual amount paid but max 2500

b. Actual amount paid
c. Actual amount due
d. Always 2,500
67. Employer’s contribution to Statutory Provident Fund shall be _______________.
a. Fully exempt
b. Exempt upto 12% of salary
c. Fully taxable
d. Exempt up to 10% of salary
68. Employer’s contribution to Recognised Provident Fund shall be _________________.
a. Fully exempt
b. Exempt upto 12% of salary
c. Fully taxable
d. Exempt up to 10% of salary
69. Interest credited to Recognised Provident Fund shall be _______________.
a. Fully Exempt
b. Fully Taxable
c. Exempt upto 8.5% p.a. of total contribution
d. Exempt up to 9.5% p.a. of total contribution
70. Payment from Recognised Provident Fund after 5 years of continuous service of employee shall be ________.
a. Fully taxable
b. Fully exempt
c. Taxable to the extent of employer’s contribution and interest thereon
d. Exempt up to INR 10,00,000
71. An employee received payment from Unrecognised Recognised Provident Fund on his retirement. His own
contribution to Unrecognised Recognised Provident Fund and interest on his own contribution will be
_____________.
a. Taxable, Taxable
b. Exempt, Exempt
c. Taxable, Exempt
d. Exempt, Taxable
72. The year in which Unrecognised Recognised Provident Fund is converted in Recognised Provident Fund
________________.
a. The employer’s contribution till date and interest thereon shall be taxable
b. The employer’s contribution till date shall be taxable
c. It will be assumed as if the provident fund was recognized right from beginning and excess amount of
employer’s contribution and interest thereon shall be taxable
73. For PY 2019-20, Mr. P receives a salary of INR 2,80,000. Mr. P’s contribution to employees’ Recognised
Provident Fund account INR 59,000 and matching contribution has been made by employer. Taxable income
of Mr. P will be __________.
a. INR 1,96,400
b. INR 2,46,400
c. INR 3,05,400
d. INR 2,55,400
74. Employer’s contribution to superannuation fund is ________________.
a. Not taxable to employee

b. Fully taxable
c. Taxable to employee provided contribution exceeds INR 1.5 Lakhs
d. Exempt upto 12% of salary
75. Mr. P is employed in PC Ltd. as accounts manager. The employer paid INR 1,60,000 as contribution to approved
superannuation fund for the benefit of Mr. P. The amount of such contribution liable to tax as perquisite is
_____________________.
a. Nil
b. INR 10,000
c. INR 1,60,000
d. INR 60,000
76. Mr. P joins services on 1st April, 2015 in the grade of INR 15,000 - INR 1,000 – INR 18,000 -INR 2,000 - INR
26,000. Total taxable salary for year ended on 31st March, 2020 _______________.
a. INR 2,16,000
b. INR 2,40,000
c. INR 2,00,000
d. INR 1,80,000
77. Statement 1: In case of piece rated employees, salary shall be computed on the basis of average of the total
wages received by them for a period of ten months immediately preceding the termination of their employment.
Statement 2: Official Allowance are exempt irrespective of actual expenditure or saving.
a. Statement 1 is correct
b. Statement 2 is correct
c. Both statements are correct
d. Both statements are incorrect
78. Statement 1: If any employee has passed away and gratuity has been received by the family members,
exemption shall be allowed in the normal manner.
Statement 2: Rent free accommodation provided to Judges of high Court/ supreme Court, union ministers,
leaders of opposition in the parliament, chairman and members of UPSC, etc is exempt from income tax in the
hands of such persons.
79. Statement 1: Gratuity paid by LIC to its insurance agents is exempt from tax.
Statement 2: Rent free accommodation provided to any employee working in a mining site, all exploration site
or project execution site or any other remote area is exempt from income tax in the hands of the employee.
80. The value of any benefit provided by the employer to the employee, other than those specifically mentioned in
Income Tax Act, shall be subject to tax and its perquisite value shall be determined on the basis of
_________________.
a. cost to the employer.

b. Fair market value
c. Either of (a) and (b); whichever is higher
d. Either of (a) and (b); whichever is higher
Answer Key
1. D 2. D 3. B 4. A 5. B 6. B 7. A
8. A 9. B 10. C 11. C 12. C 13. C 14. C
15. A 16. D 17. A 18. D 19. C 20. D 21. C
22. C 23. B 24. B 25. D 26. D 27. C 28. D
29. A 30. D 31. B 32. D 33. B 34. D 35. B
36. C 37. C 38. B 39. C 40. A 41. B 42. B
43. D 44. A 45. D 46. D 47. C 48. C 49. B
50. A 51. C 52. B 53. C 54. C 55. C 56. A
57. D 58. C 59. D 60. D 61. D 62. D 63. B
64. D 65. B 66. A 67. A 68. B 69. D 70. A
71. D 72. C 73. A 74. C 75. B 76. B 77. D
78. C 79. B 80. A

MCQ - Income Under The Head Salary by CA Kishan Kumar

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CA Kishan Kumar MCQs – Salary May/Nov 2020

ICAI Study Material MCQs

a) in the previous year 2018-19

a) 1st day of the relevant previous year

ICAI Sample MCQs

a) only basic pay

b) basic pay and dearness allowance, if provided in the terms of employment

a) perquisite taxable in case of all employees

a) His entire income is taxable under the head "Salaries"

ICAI RTP and MTPs

MCQs for practice

a. INR 4.3 Lakhs

20. Read the following statements and state correct answer:

1. Contract between employer and employee is contract of service

a. 1 and 2 are correct

22. Salary u/s 15 salary is taxable on ______________ basis.

24. Salary paid to partner by the firm is _________________.

a. Taxable u/h Salaries

27. Children education allowance is exempt upto _____________________.

a. INR 100 pa for 2 children

28. Underground allowance to employee is exempt upto ________________.

a. INR 700 p.m.

a. INR 8,400 and INR 2,400 respectively

a. INR 1,000 p.m.

a. Two child and exemption will be granted only for 1 child

d. None of the above

a. Both houses will be charged to tax as perquisite

a. INR 4,000 p.m.

a. If the amount of loans < INR 20,000

a. Amount incurred for employee and such family member

39. Cash gifts by employer to employee are ______________.

a. Taxable if value is INR 6,000 or less

a. INR 60 per day for 295 days

41. Expenditure pertaining to health club, sports facilities etc is _______________________.

a. 10% pa of historical cost

a. Nil as 100% is exempt

1. Running and maintenance expenses of INR 84,000

Determine the perquisite value.

a. Be taxable in case of specified employee only

51. Maximum exemption in case of leave encashment is ____________________.

a. INR 2.4 Lakhs

53. Salary for exemption of leave encashment shall be taken as __________________.

a. Last drawn salary

a. Basic salary+ DA (forming part of salary for retirement benefits or not)

a. Last drawn salary

63. Standard deduction is allowed from gross salary u/s __________________.

a. Employee has to prove his all expenses to income tax department

a. Actual amount paid but max 2500

67. Employer’s contribution to Statutory Provident Fund shall be _______________.

68. Employer’s contribution to Recognised Provident Fund shall be _________________.

69. Interest credited to Recognised Provident Fund shall be _______________.

74. Employer’s contribution to superannuation fund is ________________.

a. Not taxable to employee

Statement 2: Official Allowance are exempt irrespective of actual expenditure or saving.

a. cost to the employer.

8. A 9. B 10. C 11. C 12. C 13. C 14. C

15. A 16. D 17. A 18. D 19. C 20. D 21. C

22. C 23. B 24. B 25. D 26. D 27. C 28. D

29. A 30. D 31. B 32. D 33. B 34. D 35. B

36. C 37. C 38. B 39. C 40. A 41. B 42. B

43. D 44. A 45. D 46. D 47. C 48. C 49. B

50. A 51. C 52. B 53. C 54. C 55. C 56. A