MCQ Direct Tax

Q.
1:- Salary paid by an Indian company to its employees working in one of its branches outside India
is:
a.Salary deemed to accrue in India
b.Salary accruing outside India
c.Salary accruing in India
d.None of the above
Correct Option: C
Q.2:- Income from subletting of house property is taxable under the head :
a) Capital Gain
b) Income from Other Sources
c) Income from House Property
d) Profits & Gains of Business or Profession
Correct Option: B
Q.3:- Mohan Received a gift of Rs.35,000/- each from his 3 friends on 30th March 2019:.
a) 105,000 is taxable
b) 50000 is taxable
c) Not taxable
d) Rs. 55000 is taxable
Correct Option: A
Q.4:- The benefit of exemption under Section 54F is available when following capital asset
transferred
a) Short term capital asset other than residential house property

b) Short term residential house property
c) Long term residential house property:
d) Any long term capital asset other than residential house property
Correct Option: D
Q.5:- Income of minor is clubbed however the clubbing provision is not applicable if:
a) Parents are separated

b) Minor is a married daughter
c) Minor is handicapped as specified u/s 80U
d) None of the above
Correct Option: C
a) Q.6:- In case of revocable transfer of asset, all income arising from such asset to transferee
shall be included
a) income of transferee
b) income of transferor
c) Both transferor and transferee
d) Either transferor or transferee
Correct Option: B
Q.7:- When parent's income is clubbed with minor child income, parent is eligible for exemption
a) Actual income of minor or Rs. 10,000 whichever

b) Actual income of minor or Rs. 1,500 whichever is less
c) Actual income of minor or Rs. 20,000 whichever is less
d) Actual income of minor or Rs. 5,000 is less whichever is less
Correct Option: B
Q.8:- Unabsorbed depreciation can be carried forward for set off:
a) For an unlimited number of years

b) For a period of four years only
c) For a period of eighteen years only
d) For a period of eight years only
Correct Option: A
Q.9:- Which of the following loss can't be carry forward if assessed has not filed his return of income
within time under section 139(1) of the Income-tax Act?
a) Losses under Head Capital gain

b) Losses of owning & maintaining race horses
c) Losses under Head Business/Profession
d) All of the above
Correct Option: A
Q.10:- If Mr. A & Mrs. A both have substantial interest in a concern and both are in receipt of
remuneration from that concern, then what will be the tax consequences?
a) Remuneration shall be clubbed in the total income of Mrs. A

b) Remuneration shall be clubbed in the total of that individual whose total income (before this
clubbing) is higher
c) Clubbing shall not apply
d) Remuneration shall be clubbed in the total income of Mr. A
Correct Option: B
Q.11:- Double taxation relief could be:
a) Unilateral Relief & Bilateral Relief

b) Unilateral Relief
c) Unilateral Relief or Bilateral Relief
d) Bilateral Relief
Correct Option: A
Q.12:- Double taxation relief for incomes taxed in the countries with which no agreement exists is
governed by:
a) Section 93
b) Section 91
c) Section 89
d) None of the above. .
Correct Option: B
Q.13:- Samraat, resident in India, has earned an income of Rs.4 lakh by way of lump sum
consideration for copyright of book from a publisher in Country E, with which India does not have a
DTAA. The same has been taxed at a flat rate of 5% in Country E. In India, his gross total income is
Rs.7 lakhs. The double taxation relief available is
a) Rs.7,725
b) Rs.1,950
c) Rs.20,000
d) Rs.1,931
Correct Option: B
Q.14:- Mr. Harry and Mr. Sujoy, resident and Indian citizens, have been appointed as senior officials
of County A embassy and County B embassy, respectively, in India in October, 2018. Mr. Harry and
Mr. Sujoy are subjects of Country A and County B, respectively, and are not engaged in any other
business or profession in India. The remuneration received by Indian officials working in Indian
embassy in County A is exempt but in County B is taxable. The tax treatment of remuneration
received by Mr. Harry and Mr. Sujoy from embassies of Country A and Country B, respectively, in
India for the P.Y. 2018-19 is:
a) Remuneration received by Mr. Harry is exempt but remuneration received by Mr. Sujoy
istaxable
b) Remuneration received by Mr. Sujoy is exempt but remuneration received by Mr. Harry
istaxable
c) Taxable under the Income-tax Act,1961
d) Exempt from income-tax under section 10
Correct Option: C
Q.15:- Any profits or gains arising from the slump sale effected in the previous year shall be
chargeable to income-taxas:
a) No capital gain but the same will be taxable as business profits.

b) Long term capital gain only
c) Short term capital gains or Long term capital gains depending upon the period of holding of
the undertaking.
d) Short term capital gain only
Correct Option: A
Q.16:- Which of the following transactions shall not be regarded as transfer as per the provisions of
Section 47:
a) compulsory acquisition thereof under any law

b) Any transfer of a capital asset, being share of a special purpose vehicle to a business trust in
exchange of units allotted by that trust to the transferor
c) Conversion of capital asset into stock in trade asset
d) Extinguishment of rights in respect of capital
Correct Option: B
Q.17:- Any profits or gains arising from the slump sale of one or more undertakings held for more
than months, shall be chargeable to income-tax as capital gains arising from the transfer of long-term
capital assets and shall be deemed to be the income of the previous year in which the transfer took
place
a) 24
b) 48
c) 12
d) 36
Correct Option: D
Q.18:- The Finance Act, 2001 introduced law of transfer pricing in India through Sections of the
Income Tax Act, 1961 which guides computation of the transfer price and suggests detailed 1
documentation procedures:
a) 90 to 92
b) 90
c) 92 to 92F :
d) 91
Correct Option: C
Q.19:- GAAR stands for
a) General agreement-avoidance rules

b) Government anti-avoidance rules
c) Government anti-agreement rules.
d) General anti-avoidance rules
Correct Option: D
Q.20:- For accounting purposes, employee share-based payment plans are classified as :
a) Fair value of goods/ services received unless it is not reliably measurable then fair value of
share prices would be used
b) Equity settled, cash settled and employees share based payment plans with cash
alternatives.
c) Equity settled and cash settled.
d) Liability settled and cash settled.
Correct Option: B
Q.21:- _____ occurs when shares are allotted to the employee after he has exercised his option on
completion of the vesting period:
a) Second levy
b) Third levy
c) First Levy
Correct Option: C
Q.22:- When employee opt to sale share previously allotted under the ESOP, profit made by him the
tax as capital gain are calculated by subtracting the _____ as on the exercise date from the
consideration of such shares?
a) Agreed value
b) Face value
c) Fair market value.
d) Fair value
Correct Option: C
Q.23:- Capital Gain on ESOP = Sale proceeds
a) FMV at the time of allotment of shares

b) Face value of share
c) Indexed cost of acquisition
d) Cost of acquisition
Correct Option: A
Q.24:- In case the letting out of property is incidental to the main business, then income from such
property shall be taxable as:
a) Income from Other Sources

b) Capital Gain
c) Profits & Gains of Business or Profession
d) Income from House Property
Correct Option: C
Q.25:- Dividends declared by Indian company are assessable under the head:
a) Fully taxable under the head other source

b) Casual income
c) Income from other source
d) Capital gain
Correct Option: A
Q.26:- Which of the following income is agricultural income-

a) Income from poultry farm
b) Rent received from agricultural land
c) Dividend from a company engaged in agriculture.
d) Income from dairy farm
Correct Option: B
Q.27:- Advance tax is not payable if tax payable after considering TDS and tax relief is:
a) Less than Rs. 25000

b) Less than Rs. 20000
c) Less than Rs. 15000
d) Less than Rs. 10000
Correct Option: D
Q.28:- An individual, being foreign national, came to India first time during the previous year on 01-
01-2019 for 200 days, his residential status for the previous year 2018-19 is:
a) Resident but not ordinarily resident in India

b) Resident in India
c) Non-resident
d) Resident and ordinarily resident in India
Correct Option: C
Q.29:- The basic exemption limit (for the assessment year 2020-21 in case of a HUF is
Rs .....................:
a) Rs. 3,00,000
b) Rs. 5,00,000
c) Rs. 2,50,000
d) Rs. 2,00,000
Correct Option: C
Q.30:- As per the first basic condition to determine residential status, a person should have been in
India during the previous year concerned for:
a) 240 days or more

b) 182 days or more
c) 60 days or more
d) 120 days or more
Correct Option: B
Q.31:- Receipt is determined as Capital Receipt or Revenue receipt:
a) While preparing final accounts

b) At the time it is received
c) When received amount is used
Correct Option: B
Q.32:- Which of the following is not a capital receipt?
a) Lump-sum received on sale of shares

b) 'Salami' for settlement of Tenancy
c) Goods sold for cash under "Patent rights'
d) Insurance claim received on machinery lost by fire
Correct Option: C
Q.33:- Receipt of amount on maturity of LIC Policy is:
a) A casual receipt
b) A revenue receipt
c) A capital receipt
d) None of these.
Correct Option: C
Q.34:- As per section 2(31), the following is included in the definition of 'person'
a) A minor
b) A company
c) A Hindu undivided family
d) An individual
Correct Option: A
Q.35:- Salary under section 17(1) of the Income Tax Act, 1961 does not include:
a) Gratuity
b) Interest
c) Wages
d) Pension
Correct Option: B
Q.36:- If control and management of its affairs was fully in India a foreign company becomes:
a) Ordinarily resident in India

b) Non resident
c) Resident in India
Correct Option: C
Q.37:- …………………………….of an undertaking will entail transfer of the undertaking as a going concern
for a lump-sum consideration, by the seller company to the purchaser company without considering
the individual values of the assets or liabilities contained within the undertaking:
a) Itemized sale
b) slump Sale
c) Wholesale
d) Normal Sale
Correct Option: B
Q.38:- Mr. Dhanush holds shares in both L Ltd., and M Ltd. In the context of transfer
pricingprovisions,
L Ltd. and M Ltd. are deemed associated enterprises if Mr. Dhanush holds totally 52% or more
combined voting power in both thesecompanies.
L Ltd. and M Ltd. are deemed associated enterprises if Mr. Dhanush holds 26% or more of voting
power in L Ltd., which in turn holds 26% or more of voting power in MLtd.
L Ltd. and M Ltd. are associated enterprises if Mr. Dhanush holds 26% or more of voting power in
each of thesecompanies.
L Ltd. and M Ltd. can never be associatedenterprises.
Correct Option: D
Q.39:- As per sec.60, income is clubbed if:
a) Asset yielding income is transferred as irrevocable transfer

b) Asset yielding income is transferred as revocable transfer
c) Income is transferred without transferring asset yielding income
Correct Option: C
Q.40:- Tax haven is a place where?
a) There is no tax on income

b) Tax rates are very high
c) There is no tax on income or tax rates are very low
d) Tax rates are very low
Correct Option: C
Q.41:- Second additional condition for resident to be an ordinarily resident is that he must have
stayed in India during the seven previous years preceding the relevant previous year at least:
a) 730 days
b) 60 days
c) 365 days
d) 182 days
Correct Option: A
Q.42:- Which of the following is not a capital expense?
a) Expenses of promoting a company

b) Commission to employees to achieve sales targets
c) Installation expenditure of plant of a company
d) Legal expenses for reduction of capital
Correct Option: B
Q.43:- Every assessed is a person, and:
a) An individual is always an assessed

b) A HUF is always an assessed
c) Every person need not be an assessed
d) Every person is also an assessed
Correct Option: C
Q.44:- Income Tax Act came into force on:
a) 01.04.1956
b) 01.04.1965
c) 01.04.1961
d) 01.04.1962
Correct Option: D
Q.45:- In which of the following cases, income of previous year is assessable in the previous c itself?
a) A person who is into illegal business

b) A person who is running a charitable institution
c) Assessment of persons leaving India
d) A person in employment in India
Correct Option: C
Q.46:- Agriculture Income from outside India will be:
a) Exempt from tax

b) Taxable under the head Profit and Gains of Business or profession
c) Taxable under the head income from Other Source.
d) None of these.
Correct Option: C
Q.47:- Embezzlement of cash by a cashier is:
a) A casual loss
b) A revenue loss
c) A capital loss
Correct Option: B
Q.48:- Which of the following gifts is taxable?
a) Gift from wife

b) Gift from office college
c) Gift in kind from relatives
d) Gift from son
Correct Option: B
Q.49:- Which sections of the income tax act 1961 deals with income under the head " Income from
House Property"?
a) Sections 22 to 27
b) Sections 61 to 68
c) Sections 6 to 9
d) Sections 38 to 44
Correct Option: A
Q.50:- Indexation is applicable to:
a) Sale of depreciable capital assets

b) Sale of long term capital assets which are not depreciable assets
c) Sale of short term capital assets
d) Sale of long term debentures
Correct Option: B
The nature of revenue must be decided at ___________.

Response: The very time at which money is received
Correct : The very time at which money is received
Score: 1 out of 1 Yes
Question 2
Choose the odd one out:
Response: Providing a boost to the economy – Economic growth objective
Correct : Eliminating regional disparities – Social objective
Score: 0 out of 1 No
Question 3
Which section of the Income Tax Act, 1961 defines the term ‘Income’?
Response: Section 2(24)
Correct : Section 2(24)
Question 4
For charging income tax, the income of an individual or entity can be categorised
into ___________ major heads.
Response: Five
Correct : Five
Question 5
India has a three-tier tax structure which means that the central government, state
governments and local municipal bodies are allowed to levy and collect taxes as per
Article ___________ of the Constitution.
Response: 259
Correct : 256
Question 6
The tax which an assessee can recover from other person(s), but the liability of payment of
which lies with him/her is called ___________.
Response: Indirect tax
Correct : Indirect tax
Question 7
Which of the following is not an objective of taxation?
Response: Increasing the GDP of the country
Correct : Increasing the GDP of the country
Question 8
Which of the following taxes has not been subsumed under the GST?
Response: Entertainment and amusement tax levied by the local bodies
Correct : Entertainment and amusement tax levied by the local bodies
Question 9
Sections 45 to 55A of the Income Tax Act, 1961 relate to ___________.
Response: Profits arising to an assessee from the sale of capital assets
Correct : Profits arising to an assessee from the sale of capital assets
Question 10
Section 111A of the Act prescribes that short-term capital gain on listed shares is to be taxed
at ___________.
Response: 15%
Correct : 15%
Question 11
The fiscal year in which the income is earned is referred to as the ___________.
Response: Previous year
Correct : Previous year
Question 12
Which section of the Income Tax Act, 1961 helps in deciding the scope of the total income
of the assessee in accordance with his/her residential status?
Response: Section 5
Correct : Section 5
Question 13
Which article of the Indian Constitution states that no tax can be collected or levied on any
individual or firm except by the authority of law?
Response: Article 265
Correct : Article 265
Question 14
Tax refers to a kind of ___________ charge that is imposed on an individual or a company
with the government.
Response: Financial
Correct : Financial
Question 15
The HRA paid to a salaried employee is fully taxable if
Response: The employee is living in his relative house
Correct : The employee is living in his own house
Question 16
Which of the following boards oversees the direct taxes in India?
Response: CBDT
Correct : CBDT
Question 17
Both the Central & State Governments can pass legislation on subject matters covered in
the ___________ list.
Response: Concurrent
Correct : Concurrent
Question 18
Section 115 BB of the Act prescribes that the lottery income is to be taxed at a rate
of ___________%.
Response: 30%
Correct : 30%
Question 19
Which of the following taxes has now been abolished?
Response: Wealth tax
Correct : Wealth tax
Question 20
Total income of `25,56,911.89 will be rounded off to ___________.
Response: ₹25,56,910
Correct : ₹25,56,910
Question 21
India has a ___________ tax structure.
Response: Three-tier
Correct : Three-tier
Question 22
Which of the following is not a source of income tax law in India?
Response: Schedule VII of Indian Constitution
Correct : Schedule VII of Indian Constitution
Question 23
Property tax is levied and collected by ___________.
Response: Municipal authority
Correct : Municipal authority
The scope of the total income of an assessee does not depend upon
Response: Legal jurisdiction of the place of accrual
Correct : Legal jurisdiction of the place of accrual
Question 2
As per section 7, the employer’s contribution in excess of _______ of salary to a recognised
Provident Fund shall be deemed to be received in India by the assessee during the previous
year.
Response: 12%
Correct : 12%
Question 3
Gifts received from a person other than relatives is taxable if amount exceeds _______.
Response: ₹50,000
Correct : ₹50,000
Question 4
Manisha was residing in India for 160 days in the previous year 2020-21. During the four
years immediately preceding the previous year 2020-21, she was residing in India for 280
days. She was in India for 800 days during the last 7 years immediately preceding the
previous year 2020-21. Therefore, for purpose of taxation, Manisha is _______.
Response: NR
Correct : NR
Question 5
Which of the following foreign incomes will be excluded from being taxed in India?
Response: Income accruing or arising outside India and received outside India from a
business controlled outside India or profession set up outside India for RNOR
Correct : Income accruing or arising outside India and received outside India from a business
controlled outside India or profession set up outside India for RNOR
Question 6
Different categories of residential status in India have been defined based on the _______
Response: Type of person
Correct : Type of person
Question 7
The scope of tax or incidence of tax is highest in the case of _______.
Response: ROR
Correct : ROR
Question 8
Tamanna has satisfied Basic Condition B of residential status but doe not satisfy either of the
additional conditions of residential status. Therefore, for purpose of taxation, Tamanna
is _______.
Response: RNOR
Correct : RNOR
Question 9
As per additional condition A of residential status, an individual must be resident in India in
minimum _____ out of _____ previous years immediately preceding the relevant previous
year.
Response: 2, 10
Correct : 2, 10
Question 10
According to Section 7, which of the following incomes is not deemed to be received in the
previous year?
Response: Dividend income received by an individual
Correct : Dividend income received by an individual
Question 11
Which of the following options represents foreign income?
Response: Income arising outside India and received outside India
Correct : Income arising outside India and received outside India
Question 12
For a RNOR, who receives foreign income from business controlled outside India or
profession set up outside India, this income is _______.
Response: Fully taxable
Correct : Fully taxable
Question 13
XYZ Motors is an Indian listed company and the control and management of the company
affairs are located in New York. The residential status of the company will be:
Response: Resident in India
Correct : Resident in India
Question 14
For an Ordinarily Resident individual, which of the following incomes are taxable in India?
Response: All Incomes
Correct : All Incomes
Question 15
Chinua is an Ethiopian footballer. He came to India for playing football matches. He has been
visiting India since 2016. His number of days of stay in India for the last five years are as
follows:
Year Number of Days of Stay
2020-21 100
2019-20 110
2018-19 150
2017-18 160
2016-17 170
What is Chinua’s residential status for Assessment Year 2021-2022?
Response: Resident
Correct : Resident
Question 16
Mr. William D’souza is a citizen of New Zealand. He came to India on 1st Jan, 2020 and
after travelling across Goa left for his home country on 3rd March, 2020. What is Mr.
William’s residential status for assessment year 2021-2022?
Response: NR
Correct : NR
Question 17
In India, agricultural income is exempted from being taxed as per Section _______.
Response: 10(1)
Correct : 10(1)
Question 18
From FY 2020-21, a citizen of India or a person of Indian origin who leaves India for
employment outside India during the year will be a resident and ordinarily resident if he stays
in India for an aggregate period of 182 days or more. However, this condition will apply only
if his total income (other than foreign sources) exceeds _______.
Response: ₹15 lakh
Correct : ₹15 lakh
Question 19
Which section of the Income Tax Act, 1961 contains conditions that must be tested to
determine the residential status of various assessees?
Response: Section 6
Correct : Section 6
Question 20
According to the second basic condition of residence in India, an individual must be in India
for a minimum of 60 days in the relevant previous year. In addition, the individual should
have been in India for a minimum of _______ days during the 4 previous years immediately
preceding the relevant previous year.
Response: 365
Correct : 365
Question 21
Which of the following is not a legitimate category?
Response: Not ordinary resident company
Correct : Not ordinary resident company
Question 22
Mr. Mohan was residing in India for 213 days during the previous year 2020-21. During the
four years immediately preceding the previous year 2020-21, he was residing in India for 169
days. Which of the following statements are true in case of Mohan?
Response: Mohan fulfils Basic Condition A but not Basic Condition B
Correct : Mohan fulfils Basic Condition A but not Basic Condition B
Question 23
When the control and management of the affairs of a firm/AOP are situated exclusively in
India, then, _______
Response: Indian firm/AOP is considered as a resident and non-Indian firm/AOP is also
considered as a resident.
Correct : Indian firm/AOP is considered as a resident and non-Indian firm/AOP is also
considered as a resident.
Question 24
Mr. Mathur was residing in India for 120 days in previous year 2020-21. During the four
years immediately preceding the previous year 2020-21, he was residing in India for 680
days. Which of the following statements are true in case of Mohan?
Response: Mr. Mathur does not fulfil Basic Condition A but fulfils Basic Condition B
Correct : Mr. Mathur does not fulfil Basic Condition A but fulfils Basic Condition B
Question 25
Which of the following pairs is matched incorrectly?
Response: Section 9(1)(i) – Royalty payable by Government
Correct : Section 9(1)(i) – Royalty payable by Government
Munni Devi was born on 10 December 1935. What is the basic exemption limit applicable
for her?
Correct : ₹5,00,000
Question 2
In 2018-19, the total turnover of Alka Foods Pvt. Ltd. was ` 9 billion. The tax rate applicable
to Alka Foods is __________.
Response: 30%
Correct : 30%
Question 3
Jeremy and Co. is a foreign company and it earned a total income of `15 crore in the
previous year. What is the rate of surcharge applicable to it?
Response: 5%
Correct : 5%
Question 4
XYZ is a domestic company that is liable for being taxed at 25%. Its total income is `6
crores. What will be its tax amount after adding a surcharge?
Response: ₹1,60,50,000
Correct : ₹1,60,50,000
Question 5
An assessee’s total income is marginally greater than 1 crore. If surcharge
applicable to him is calculated as 80,000 and total income exceeds ` 1 crore by 3
lakhs; then, marginal relief will be __________.
Response: ₹0
Correct : ₹0
Question 6
Marginal relief = Calculated Surcharge – ? (Total Income – ` 50,00,000)] In the given
formula of marginal relief, what will come in place of the question mark?
Response: 70%
Correct : 70%
Question 7
What is the tax rate applicable for a domestic company where it opted for Section 115BAA?
Response: 22%
Correct : 22%
Question 8
Shweta Singh LLP earned a total income of `80,00,000 in the previous year. What is the rate
of surcharge applicable to it?
Response: Nil
Correct : Nil
Question 9
Health and Education Cess is levied at the rate of __________ on tax including surcharge.
Response: 4%
Correct : 4%
Question 10
The total income of Mrs. Chopra is ` 7 lakhs. What is the amount of rebate she can claim u/s
87A?
Response: ₹0
Correct : ₹0
Question 11
As per __________, unexplained amounts treated as income under sections 69C and 69D are
taxed at rate of 60%.
Response: Section 115BBE
Correct : Section 115BBE
Question 12
Mr. Modi was born on 1st September 1962. What is the basic exemption limit applicable for
him?
Correct : ₹2,50,000
Question 13
Cess is calculated on __________.
Response: Income tax + Surcharge – Rebate under Section 87A
Correct : Income tax + Surcharge – Rebate under Section 87A
Question 14
Suraj Kripa is an LLP. Its total income in the previous year was `12 crores. What is its tax
amount before adding a surcharge?
Response: ₹3.6 crores
Correct : ₹3.6 crores
Question 15
Manish won a lottery of ` 2 lakh. What is the tax rate applicable on such lottery winning?
Response: 30%
Correct : 30%
Question 16
A foreign company DuckWorth Pvt. Ltd. runs its operations in India. Tax chargeable on its
income is __________.
Response: 40%
Correct : 40%
Question 17
Section 115BBDA relates to __________.
Response: Income by way of dividends
Correct : Income by way of dividends
Question 18
What is the tax rate applicable to short-term capital gains from the transfer of securities units
on which Securities Transaction Tax (STT) has been charged?
Response: 15%
Correct : 15%
Question 19
Mahaveer and Friends is a BOI and its total income is `1.5 crores. What is the rate of
surcharge applicable to it?
Response: 15%
Correct : 15%
Question 20
Local authorities are taxed at rate of 30% on the __________.
Response: Total income
Correct : Total income
Question 21
The rates at which the income tax is to be levied on income chargeable to tax for Assessment
Year 2021-2022 are mentioned in Section 2 and Part I of the __________ to Finance Act,
2021.
Response: First Schedule
Correct : First Schedule
Question 22
Arunima Foundation received income by way of anonymous donation that was
approximately 20% of the total donation received. What tax rate applies to Arunima
Foundation?
Response: 30%
Correct : 30%
Question 23
What rate of tax is applicable for Ms. Padma aged 72 years whose total income is `8,00,000?
Response: ₹10,000 + 20% of (Total income – ` 5,00,000)
Correct : ₹10,000 + 20% of (Total income – ` 5,00,000)
Question 24
Ritambra Mills Pvt. Ltd. has opted for taxability under Section 115BAA. What is the tax rate
applicable to it?
Response: 10%
Correct : 10%
Question 25
The total income of Sundaram Co-operative Society for the previous year 2020-21 was
`1,20,000. What is its tax amount before adding a surcharge?
Response: ₹33,000
Correct : ₹33,000
The entertainment allowance is applicable to:
Response: Government employees
Correct : Government employees
Question 2
Which of the following is true in relation to taxability under the head ‘salaries?
Response: Salary accrues in India; it will be taxed.
Correct : Salary accrues in India; it will be taxed.
Question 3
Mr. Ansh Gujral works for Fictitious Pvt. Ltd. His company was running into losses and,
therefore, was not able to pay its employees’ salaries including Ansh’s salary. His three
months’ salary for March, April and May 2018 was due with his employer. Which of the
following is true in this case if he is filing the returns for Assessment Year 2018-19?
Response: Due salary of March 2018 will be considered in the total taxable income.
Correct : Due salary of March 2018 will be considered in the total taxable income.
Question 4
ABC Ltd. is a company paying salary of `4,50,000 to its employee Mr. P & in addition
undertakes to pay the Income Tax amounting to ` 10,400 on his behalf during AY 2019- 20.
The gross Salary of Mr. P is:
Response: ` 4.604 lac
Correct : ` 4.604 lac
Question 5
The Payment of Gratuity Act came into force in ________________ .
Response: 1972
Correct : 1972
Question 6
_________________ is the death-cum-retirement gratuity received by the Government
Employee or employee of local authority.
Response: Fully exempted
Correct : Fully exempted
Question 7
Deduction from annual value is allowed under .
Response: Section 24
Correct : Section 24
Question 8
The salary, remuneration or compensation received by the partners is taxable under the
head .
Response: Income from Business
Correct : Income from Business
Question 9
________________ is the rent fixed under Rent control Act.
Response: Standard rent
Correct : Standard rent
Question 10
Income is taxable as Salary Income when there is employer and employee relationship.
However, in one exceptional case, income is taxable as salary even in the absence of
employer employee relationship which is .
Response: Professors of college
Correct : Professors of college
Question 11
Under Section 15 of Income Tax Act, the salary due in previous years and even if it is not
received is .
Response: Not taxable
Correct : Not taxable
Question 12
For calculating half month’s average salary for every completed year of service in case of
employees covered under the Payment of Gratuity Act, we use the formula:
Response: Basic salary + Dearness allowance
Correct : Basic salary + Dearness allowance
Question 13
Mr. P was employed on 1.4.2008 in the grade of ` 15,000 - ` 500 - ` 17,000 - ` 750 - ` 21,500
- ` 1,000 -
` 31,500. His gross salary for AY 2019-20 is .____________________
Response: ` 2.16 lac
Correct : ` 2.16 lac
Question 14
Which of the following incomes are not chargeable to tax under the head ‘salaries?
Response: Rental income from property
Correct : Rental income from property
Question 15
Which of the following is not a characteristic of salary?
Response: Usually paid on a bi-monthly basis
Correct : Usually paid on a bi-monthly basis
Question 16
Mr. Sahil retired on 30th April, 2020. For calculating the encashment value of his leaves, the
accountant of Sahil’s company should calculate the average of salary of months ranging
from_______________to __________
Response: June 2019 to March 2020
Correct : June 2019 to March 2020
Question 17
___________________is a rent free accommodation given to an employee by the employer.
Response: Perquisite
Correct : Perquisite
Question 18
What is the maximum limit of professional tax that can be charged by the State Government
from any person?
Response: ` 2,500/year
Correct : ` 2,500/year
Question 19
Which of the following is not a deduction allowable under Section 16 of the Act?
Response: Standard deduction of ` 20,000
Correct : Standard deduction of ` 20,000
Question 20
Which of the following is not a type of salary covered under the definition of Salary as per
Section 17(1) of the Income Tax Act, 1961?
Response: Employee’s monetary obligation paid by employer
Correct : Employee’s monetary obligation paid by employer
Question 21
Read the following statements & state correct answer:
Response: Contract b/w employer & employee is contract of service
Correct : Contract b/w employer & employee is contract of service
Question 22
Which of the following is true in respect of interest received by an assessee from PPF?
Response: Fully exempt
Correct : Fully exempt
Question 23
Mr. P is working as an internal auditor having a 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:
Response: Salaries
Correct : Salaries
Question 24
Which of the following is not a perquisite as defined under Section 17(2) of the Income Tax
Act?
Response: Gratuity amount
Correct : Gratuity amount
Question 25
Provident Fund Act was passed in the year .
Response: 1932
Correct : 1932
An investment in which of the following is eligible for deduction u/s 80C of Income Tax
Act, 1961?
Response: PPF
Correct : PPF
Question 2
A periodic payment made by Government or a company or other employers to the employee,
which is payable after retirement, considering the past service is termed as:
Response: Pension
Correct : Pension
Question 3
Which of these is a base component for other benefits such as HRA and Provident fund etc.?
Response: Basic salary
Correct : Basic salary
Question 4
All provident funds which are set up under the Provident Funds Act, 1925 are called
Response: Statutory provident fund
Correct : Statutory provident fund
Question 5
Sec 80C provides for the deduction of how much amount to be claimed by the assessee if he
has invested in PPF, LIC, NPS, NSC etc.?
Response: ` 1,50,000/-
Correct : ` 1,50,000/-
Question 6
For a deduction under section 80C, what is the maximum amount qualified for the deduction
as per PPF rules?
Response: ` 1,50,000/-
Correct : ` 1,50,000/-
Question 7
Income tax, as the name implies, is a
Response: Tax on income
Correct : Tax on income
Question 8
The receiver of which of the following is eligible for deduction u/s 10(13A) of the Income
Tax Act, 1961?
Response: House rent allowance
Correct : House rent allowance
Question 9
The benefits received by an employee at the time of retirement are taxable under the head
“Income from Salaries” as which of these?
Response: Profits in lieu of salary
Correct : Profits in lieu of salary
Question 10
The total income of an assessee (subject to statutory exemptions) is chargeable under which
section?
Question 11
The entire commuted portion of pension received by who is entitled to exemption?
Response: Judges of Supreme Court
Correct : Judges of Supreme Court
Question 12
The taxability of income of a person depends on which aspect of such income under the
Income Tax Act, 1961?
Response: Chargeability
Correct : Chargeability
Question 13
Under Article 222(2) of the Constitution, which of these said allowance received by judge is
not taxable as it is neither salary nor perquisite?
Response: Compensatory allowance
Correct : Compensatory allowance
Question 14
All provident funds recognised by the Commissioner of Income Tax under Rule 3 of Part ‘A’
of the Fourth schedule to the Income Tax Act, 1961 are
Response: Recognised provident fund
Correct : Recognised provident fund
Question 15
This is the type of compensation which is paid under Industrial Disputes Act, 1947becomes
exempt u/s 10(10B).
Response: Retrenchment compensation
Correct : Retrenchment compensation
Question 16
What are taxable on due or receipt basis, whichever is earlier, as provided by The Income
Tax Act, 1961?.
Response: Allowances
Correct : Allowances
Question 17
Which of the following is a fully exempt allowance?
Response: Sumptuary allowance
Correct : Sumptuary allowance
Question 18
Which of these terms includes all benefits provided by the employer to the employee in
addition to salary either in cash or in kind which are convertible into money?
Response: Perquisites
Correct : Perquisites
Question 19
The Income Tax Act, 1961 provides for which of these to be available for the assessee under
Section 16.
Response: Deductions
Correct : Deductions
Question 20
In a normal course, the CTC is divided into four components – basic salary, allowances,
perquisites and:
Response: Retirement benefits
Correct : Retirement benefits
Long-term capital gains on zero coupon bonds are chargeable to
Response: @ 20% computed after indexation of such bonds
Correct : @ 20% computed after indexation of such bonds
Question 2
Capital gain arises on:
Response: Land, Building and Shares only
Correct : Land, Building and Shares only
Question 3
Long term capital gains on sale of a long-term capital asset on 15th October, 2020 is Rs. 105
lakhs. The assesses invested Rs. 50 lakhs in RECI bonds on 31s1 March, 2020 and Rs. 55
lakhs in NHAI bonds on 18th May, 2020. The amount of exemption eligible under section
54EC is:
Response: 55 lakhs
Correct : 55 lakhs
Question 4
For claiming exemption under section 54EC, an assessee has to invest the resultant capital
gains within a specified period. Which of the following is not eligible for such investment?
Response: Bonds of NABARD
Correct : Bonds of NABARD
Question 5
Mr. Mayank entered into an agreement with Mr. D for sale of a building for 20 lakh in
June, 2018. Mr. Mayank received advance of 2 lakhs. Subsequently the agreement
was cancelled and Mr. Mayank forfeited the advance money. The advance money is:
Response: Taxable as income under the head income from other sources
Correct : Taxable as income under the head income from other sources
Question 6
In order to enjoy exemption under section 54EC, the resultant long term capital gains should
be invested in specified bonds within a period from the date of transfer
Response: 12 months
Correct : 12 months
Question 7
Mr. v sold a vacant land to Mr. D for 36 lakhs. For stamp duty purpose, the value
of land was 41 lakhs. The indexed cost of acquisition of land was computed at ` 20 lakhs.
The taxable long term capital gain would be:
Response: 21 lakhs
Correct : 21 lakhs
Question 8
GGC Pvt. Ltd. Issued 10,000 equity shares to Mr. Mayank at 18 per share when the
fair market value of each share was determined at 11 per shares.Following
statements are given in this regard:
(1) 70,000 taxable as income for GGC Pvt. Ltd.
(2) 70,000 taxable as income for Mr. Mayank
Response: (1) is incorrect and (2) is correct
Correct : (1) is incorrect and (2) is correct
Question 9
Residential house is sold for 90 lakh and the long-term capital gains computed
are Rs. 50 lakhs. The assesses bought two residential houses for 30 lakh and `
20 lakhs respectively. The amount eligible for exemption under section 54 would be:
Response: 50 lakhs
Correct : 50 lakhs
Question 10
Capital gains is calculated when
Response: any capital asset is transferred
Correct : any capital asset is transferred
Question 11
When shares of a listed company held for more than 36 months are transferred privately
for 8 lakhs, with original cost of acquisition of 1 lakh whose indexed cost of
acquisition is 2 lakhs, the income tax payable would be:
Response: 1,23,600
Correct : 1,23,600
Question 12
On 1/6/2020 Mr. v transferred his vacant land to Mr. D for 12 lakhs. The land was
acquired on 1/9/2017 for 3 lakhs. If indexation is applied, the indexed cost of acquisition
would be ` 3.30 lakhs. The taxable capital gain would be:
Response: Short term capital gain 9 lakhs
Correct : Short term capital gain 9 lakhs
Question 13
Short term capital gains arising from the transfer of listed equity shares in a company
charged with security transaction tax are subject to income tax at the rate of
Response: a. 10%
Correct : a. 10%
Question 14
Cost of acquisition in case of bonus shares allotted before 1/4/2001 will be:
Response: Market value as on 1/4/2001
Correct : Market value as on 1/4/2001
Question 15
Ms. Smita inherited a vacant site land consequent to the demise of her father on 10th June,
2000. The land was acquired by her father on 10th April, 1970 for 40,000. The fair
market value of the land on 1st April, 2001 was 60,000 and on the date of
inheritance i.e., 10th June, 2000 was ` 2,00,000. The cost of acquisition for Ms. Smita is:
Response: 2,00,000
Correct : 2,00,000
Question 16
Under which section the assesses has to reinvest the entire amount of net consideration to
claim full exemption for the long-term capital gains earned during a previous year
Response: Section 54F
Correct : Section 54F
Question 17
Which of the following is not a required for charging income tax on capital gains
Response: Capital gains should not be exempt under section 54EC
Correct : Capital gains should not be exempt under section 54EC
Question 18
Mr. v purchased shares of GCC Pvt Ltd. for 5 lakhs on 3rd April, 2020. The shares
were sold on 5th June, 2020 for 7 lakhs. She paid STT of 700 and brokerage
of 500. The amount chargeable to tax is:
Response: Nil
Correct : Nil
Question 19
Mr. v purchased a car for his personal use for ` 5,00,000 in April, 2020 and sold the same for
5,50,000 in July, 2020. The taxable capital gains would be:
Response: 5,50,000
Correct : 5,50,000
Question 20
In s of section 2(42A), listed securities are treated as long-term capital asset, if they are held
for a period of more than:
Response: 48 months
Correct : 48 months
Question 21
Which of the following is not a capital asset for Mr. v who is employed in a public sector
bank?
Response: Car
Correct : Car
Question 22
Short-term capital gain is gain arising from the transfer of a land and building which is held
by the assessee for not more than:
Response: 24 months from the date of its acquisition
Correct : 24 months from the date of its acquisition
Question 23
Capital asset excludes all assets except
Response: Jewellery
Correct : Jewellery
Question 24
Where the total income of an assesses includes income by way of long-term capital gains
arising from transfer of listed securities (other than listed equity shares) applicable income
tax rate on such income is
Response: Higher of a. or b.
Correct : Higher of a. or b.
Question 25
Mr.V acquired 1,000 equity shares of 10 each in a listed company for 35,000 on 1st
July, 2012. The company issued 1,000 rights shares in April, 2014 at 15 per share. The
company issued 2,000 bonus shares in June, 2020. The market price was 50 per
share before bonus issue. The cost of acquisition of bonus shares would be
Response: 20,000
Correct : 20,000
Profits and gains is one of the most important heads of collection
Response: tax
Correct : tax
Question 2
No expenditure is allowed as a deduction if the expenditure is of__________nature.
Response: Capital
Correct : Capital
Question 3
___________ transactions are carried on by the assessee, which constitute a business, then
such business has to be considered as a distinct and separate business
Response: Speculative
Correct : Speculative
Question 4
__________ of business or profession are an important part of the total income of an
assessee.
Response: Profits and gains
Correct : Profits and gains
Question 5
_____________ of the Act relates to the deductions in respect of expenses incurred on the
repairs and insurance of machinery, plant and furniture used for the purpose of business or
profession
Question 6
As per Section, which of the following deductions are allowed?
Response: all of these
Correct : all of these
Question 7
Under which of the following depreciation is not allowed?
Response: all of these
Correct : all of these
Question 8
Under which head will, value of benefits or perquisites arising from business or profession,
whether such perquisites are convertible into money or not.
Response: Benefits or perquisites from business or profession
Correct : Benefits or perquisites from business or profession
Question 9
Any sum received under Policy including sums allocated by way of bonus.
Response: Keyman Insurance
Correct : Keyman Insurance
Question 10
Section 32 of the Act relates to the deductions in respect of in the value of certain capital
assets.
Response: depreciation
Correct : depreciation
Question 11
Under Sections 28 to 44DB of the____________ Act, 1961, chargeability of profits and
gains of business or profession and the scope of income under this head.
Response: Income Tax
Correct : Income Tax
Question 12
Any sum, whether received or receivable, in relation to a capital asset being transferred,
demolished, destroyed or discarded, for which whole expenditure has been allowed as
deduction under Section 35AD. Will come under which head.
Response: Sum received on capital asset being discarded or demolished.
Correct : Sum received on capital asset being discarded or demolished.
Question 13
If some part of the premises is by the assessee, then the amount of deduction under this
section would be limited to rent paid by the assessee as reduced by rent recovered.
Response: sub-let
Correct : sub-let
Question 14
Any sum, whether received or receivable, in respect of an agreement for not carrying out any
activity related to a business or profession, or for not sharing any know-how, copyright,
patent, commercial right, etc. will come under which head?
Response: Sum received under an agreement for not carrying out an activity
Correct : Sum received under an agreement for not carrying out an activity
Question 15
_____________are chargeable under the head ‘Profits and Gains of Business or Profession’
Response: Incomes
Correct : Incomes
Question 16
____________–refers to a decrease in the value of an asset as a result of normal wear and
tear or due to obsolescence.
Response: Depreciation
Correct : Depreciation
Question 17
Any sum, whether received or receivable, in relation to a capital asset being transferred,
demolished, destroyed or discarded, for which whole expenditure has been allowed as
deduction under
Response: Section 35AD
Correct : Section 35AD
Question 18
Basis of charge is the charging section of profits and gains of business or profession.
Question 19
The assessee has occupied the premises as a_________, then the amount of repair can be
claimed as a deduction only if the assessee has undertaken to bear the cost of such repairs to
the premises.
Response: tenant
Correct : tenant
Question 20
Any interest, bonus, commission, salary or remuneration due to or received by a partner from
a firm is taxable in his hands to the extent it can be claimed as a deduction in the hands of the
firm under .
Response: Section 33D
Correct : Section 33D
Question 21
Any compensation payment due to or received by a person in relation to
termination/modification of his management in the affairs of an Indian company,
termination/modification of his office in the affairs of an Indian company,
termination/modification of conditions of any contract related to his business, etc., will come
under which head.
Response: Compensation due to or received in connection with specified cases under Section
28(ii)
Correct : Compensation due to or received in connection with specified cases under Section
28(ii)
Question 22
Profits and gains of business or profession are an important part of the total income of
an/a ___________ .
Response: assessee
Correct : assessee
Question 23
Any sum, whether received or receivable, in respect of an/a for not carrying out any activity
related to a business or profession, or for not sharing any know-how, copyright, patent,
commercial right, etc.
Response: Agreement
Correct : Agreement
Question 24
Any income derived by a professional, trade or similar association from some specific
services rendered for the members. will come under which head?
Response: Income accrued from disassociated sports
Correct : Income accrued from disassociated sports
Question 25
_____________incentives derived by an assessee carrying on an export business, such as
profit on sale of import entitlements, customs or excise duty repayable as a drawback, cash
assistance against exports, and profit on transfer of duty-free replenishment certificate.
Response: Export
Correct : Export
_____states that current profit would be part of accumulated profits but subsidiary on capital
account cannot be treated as accumulated profits.
Response: Dividends [Section 56(2)(i)]
Correct : Dividends [Section 56(2)(i)]
Question 2
______deduction under ‘Income from Other Sources’ section 57.
Response: Permissible
Correct : Permissible
Question 3
Sections 57 and 58 specify the basis of of such income.
Response: Computation
Correct : Computation
Question 4
Section 10(34) exempts dividend (as defined in Section 115-O) from tax in the hands
of_____.
Response: Recipients
Correct : Recipients
Question 5
_____is thus a residuary head of income under which income can be computed only after
deciding whether the particular item of income is otherwise assessable under any of the first
four heads.
Response: income from other sources
Correct : income from other sources
Question 6
The provisions for computation of income from other sources are covered under
Sections ___to 59.
Response: 56
Correct : 56
Question 7
Transfer of ____assets, whether without consideration or for inadequate consideration, is
covered under the provisions of Profits and Gains of Business or Profession.
Response: capital
Correct : capital
Question 8
Which of the following comer under the head of head ‘Profits and Gains of Business or
Profession’:
Response: All of these
Correct : All of these
Question 9
Amount received under a Keyman insurance Policy, including bonus on each Policy, if it is
not taxable under any other head of____.
Response: Income
Correct : Income
Question 10
____are chargeable to tax under the head ‘Income from Other Sources’.
Response: Dividends
Correct : Dividends
Question 11
Any advance or loan payment made by a closely held company to a beneficial shareholder
holding ______or more of equity shares is deemed as a dividend.
Response: 10%
Correct : 10%
Question 12
Section 56 of the Income Tax Act relates to the provisions of Income from .
Response: Other Sources
Correct : Other Sources
Question 13
______income refers to any income earned by way of winnings from lotteries, races
including horse races etc.
Response: Casual
Correct : Casual
Question 14
Which section states that, Distribution of accumulated profits by a company to its
shareholders, entailing the release of all or some of the company’s assets, is deemed as a
dividend in the hands of the shareholder.
Response: Section 2(22)(a)
Correct : Section 2(22)(a)
Question 15
Income chargeable under Income-tax Act, which does not specifically come under scope
for________.
Response: Assessment
Correct : Assessment
Question 16
________of income not covered by the other heads, Section 56(2) specifically provides
certain items of incomes as being chargeable to tax under the head in every case
Response: Taxation
Correct : Taxation
Question 17
_______chargeable under Income-tax Act, which does not specifically come under scope for
assessment
Response: Income
Correct : Income
Question 18
Income from other sources is thus a residuary head of income under which income can be
computed only after deciding whether the particular item of income is otherwise assessable
under any of the_____heads..
Response: first four
Correct : first four
Question 19
Deemed dividend under is exempted to what extent?
Response: fully exempted
Correct : fully exempted
Question 20
While defines the scope of income chargeable under this head
Response: section 56
Correct : section 56
Question 21
Any winnings from lotteries, crossword puzzles, races including horse races, card games and
other game. Falls under which head?
Response: Winnings from lotteries [Section 56(2)(ib)]
Correct : Winnings from lotteries [Section 56(2)(ib)]
Question 22
Income from other sources is thus a _______head of income under which income can be
computed only after deciding whether the particular item of income is otherwise assessable
under any of the first four heads
Response: residuary
Correct : residuary
Question 23
Taxation of income not covered by the other heads,____specifically provides certain items of
incomes as being chargeable to tax under the head in every case
Question 24
Amount received under a______Policy, including bonus on each Policy, if it is not taxable
under any other head of income.
Response: Keyman insurance
Correct : Keyman insurance
Question 25
Income chargeable under _______assessment Act, which does not specifically come under
scope for assessment
Response: Income-tax
Correct : Income-tax
Whatever income you earn under the five income heads is summed up to arrive at the
____________ Income, which is chargeable to income tax.
Response: Gross taxable
Correct : Gross taxable
Question 2
_________________________of the Income Tax Act predominantly governs with donations
made towards charity, to offer tax incentives to individuals engaged in philanthropic
activities.
Response: Section 80G
Correct : Section 80G
Question 3
The large part of Indian citizens are uncovered under_______________ insurance.
Response: Health
Correct : Health
Question 4
Under Section 80C the amount of deduction is equal to the sums paid or deposited subject to
the Maximum limit of ___________________
Response: ` 1,50,000.
Correct : ` 1,50,000.
Question 5
The government stimulates its nationals to be covered under medical insurance and even
offers on it under Section 80D.
Response: Tax deductions
Correct : Tax deductions
Question 6
The term ___________________ is defined in harmony with conditions laid down under the
Persons with Disability (Equal Opportunities, Protection of Rights and Full Participation)
Act, 1995
Response: Disability
Correct : Disability
Question 7
Whatever income a person earns under the five income heads is summed up to arrive at the
Gross Taxable Income, which is chargeable to ______________ tax.
Response: Income
Correct : Income
Question 8
Deduction under _____________ is allowed to an individual or an HUF for making certain
payments
Response: Section 80C
Correct : Section 80C
Question 9
Tax _____________ help an assessee reduce his or her taxable income and decrease the
overall tax liability to save taxes.
Response: Deductions
Correct : Deductions
Question 10
Deduction under ______________is available to an individual in respect of contribution
made to an approved annuity plan of LIC or certain pension funds.
Response: Section 80CCC
Correct : Section 80CCC
Loss from a speculation business of a particular assessment year can be set-off in the same
assessment year from which of the following:
Response: Income of speculation business
Correct : Income of speculation business
Question 2
Which section of IT Act, 1961 deals with loss from business or profession?
Question 3
Which section of IT Act, 1961 deals with loss from house property?
Response: Section 71B
Correct : Section 71B
Question 4
The process of adjustment of a loss from a source under a particular head of income against
income from some other source under the same head of income is called:
Response: Intra-head adjustment
Correct : Intra-head adjustment
Question 5
Loss from house property can be carried forward for years succeeding the year in which the
loss occurred.
Response: Eight
Correct : Eight
Question 6
Which section of the IT Act, 1961 deals with short-term capital loss?
Question 7
__________________ are not allowed to be set-off against any income other than income
from the speculative business.
Response: Speculative business losses
Correct : Speculative business losses
Question 8
Which of the following statements are correct?
Question 9
Choose the correct statement.
Question 10
The provisions of set-off and carry forward of losses has been made to divide the _______of
the assessee in the case of losses.
Response: Tax burden
Correct : Tax burden
Who is eligible to become TRP?
Response: Government servant
Correct : Government servant
Question 2
EVC stands for which of the following?
Response: Electronic Verification Code
Correct : Electronic Verification Code
Question 3
For PAN card, a person must submit which of the following application to the Assessing
Office with jurisdiction over the applicant?
Response: Form 49A
Correct : Form 49A
Question 4
Which section of the Income Tax Act governs the filing of income tax returns in cases of
loss, which states that if a taxpayer has incurred a loss in the previous year, he is not required
to file an income tax return for that year?
Response: 139(3) Loss Return
Correct : 139(3) Loss Return
Question 5
Which section of Income tax Act explains the verification of return?
Question 6
Who has the authority to notify (for the purpose of collecting any information) anyone who
wishes to apply for a PAN?
Response: Central Government
Correct : Central Government
Question 7
Who is a person who has been trained by the Income Tax Department to assist taxpayers in
the preparation and filing of their income tax returns?
Response: Tax Return Preparer
Correct : Tax Return Preparer
Question 8
When a revised return is filed, which of the following must be considered withdrawn and
replaced by the revised return?
Response: Original return
Correct : Original return
Question 9
A return of loss filed under section 139(3), 139(4A), 139(4B), 139(4C), or 139(4D), is
treated the same as a return filed under which of the following?
Question 10
ITR verification has to be made within what period of filing it either physically or
electronically?
Response: 120 days
Correct : 120 days
The Deductor who is required to deduct tax under section 193 of the Income Tax Act must
file a quarterly return in?
Response: Form 26Q
Correct : Form 26Q
Question 2
If an employee does not have a PAN, TDS will be deducted at what rate?
Response: 20%
Correct : 20%
Question 3
TDS deducted under Section 192 is reflected in which form issued to the employee by the
employer?
Response: Form 16
Correct : Form 16
Question 4
Which section deals with the TDS on salary?
Question 5
Which form should be submitted to the Assessing Officer by an individual who receives a
commission to the Assessing Officer for a certificate authorizing the payer not to deduct any
tax or to deduct tax at a lower rate?
Response: Form 13
Correct : Form 13
Question 6
Which section deals with TDS on the withdrawals of the PF i.e., Provident Fund?
Response: Section 192A
Correct : Section 192A
Question 7
Insurance commission’s TDS comes under which section?
Response: Section 194D
Correct : Section 194D
Question 8
According to section 193 of the Income Tax Act, the Deductor who deducts TDS on interest
on securities must deposit the deducted TDS within how many days of the next month in
which the TDS is deducted?
Response: 7
Correct : 7
Question 9
Which section allows anyone who makes a payment to a resident Indian upon the maturity of
a life insurance policy to deduct the applicable taxes at source?
Response: Section 194DA
Correct : Section 194DA
Question 10
The tax is not deductible when the taxable component of a lump sum payment is less than?
Response: ` 50000
Correct : ` 50000
Unscrupulous citizens perform tax evasion through which way?
Response: Income concealment
Correct : Income concealment
Question 2
Which of the following can be shortly defined as, ‘it is the art of dodging tax without
breaking the law’?
Response: Tax avoidance
Correct : Tax avoidance
Question 3
Which among the following once proved, attract penalties and prosecution?
Response: Criminal offence
Correct : Criminal offence
Question 4
The practical concept of taxation legislation is to do what to the revenue through taxing?
Response: Maximise
Correct : Maximise
Question 5
The major goal of which of the following is to conserve the taxpayer’s hard work so that he
can enjoy the fruits of his income and wealth to the fullest extent feasible?
Response: Tax planning
Correct : Tax planning
Which section was enacted for combating black money and tax fraud?
Response: Section 269 ST
Correct : Section 269 ST
Question 2
What is the Income Tax department’s weapon for detecting tax evasion in the form of hidden
or illegal investments made by the assessee that are not recorded in the assessee’s accounts
books?
Response: Section 69- Unexplained investment
Correct : Section 69- Unexplained investment
Question 3
Which is a payment app that uses the Unified Payments Interface to make simple, easy and
quick transactions (UPI)?
Response: RuPay cards
Correct : RuPay cards
Question 4
According to section 269SS of the Income Tax Act, no loan or deposit of more than how
much can be accepted unless it is in the form of an account payee cheque or account payee
draft?
Response: 20,000
Correct : 20,000
Question 5
Who conceptualised and launched RuPay?
Response: NPCI
Correct : NPCI
Question 6
On which date, rule 119AA came into effect on?
Response: January 1, 2020
Correct : January 1, 2020
Question 7
As per which clause of Form 3CD, the tax auditor must report transactions that have been
affected by Sections 269SS?
Response: 31
Correct : 31
Question 8
Section 271E of the Income Tax Act, 1961, provides that if a loan or deposit is repaid in
violation of the provisions of Section 269T, which may levy a penalty equal to the amount of
such loan or deposit repaid?
Response: Joint commissioner
Correct : Joint commissioner
Question 9
The National Payments Corporation of India (NPCI) conceptualised and launched RuPay on
which of the following date?
Response: March 26, 2012
Correct : March 26, 2012
Question 10
To promote the cashless economy and the use of digital payment methods, the government
enacted Section which of these the Income Tax Act?
Response: 269SU
Correct : 269SU
Taxable on total income under the Act’s regular provisions – Taxable on total income under
section 115JB = .
Response: MAT credit to be allowed
Correct : MAT credit to be allowed
Question 2
The profit computed using the provisions of tax laws is known as .
Response: Regular profit
Correct : Regular profit
Question 3
Any income a company receives or generates from the life insurance business described in
Response: Section 115B
Correct : Section 115B
Question 4
Which section states that if tax is paid in any assessment year on deemed income under
MAT Provisions against Tax Liability under section 115JB, a Tax Credit is allowed in
subsequent years?
Response: Section 115JAA
Correct : Section 115JAA
Question 5
, as well as are used in two sets of accounts to report higher profits to shareholders and lower
profits to tax authorities.
Response: Both a and b
Correct : Both a and b
Question 6
Book profit is calculated using Schedule of the Companies Act, 1956.
Response: VI
Correct : VI
Question 7
refers to the loss in the value of asset due to wear and tear.
Response: Depreciation
Correct : Depreciation
Question 8
Only companies are eligible for MAT
Response: Corporate
Correct : Corporate
Question 9
In which year income Tax Act was enacted?
Response: 1961
Correct : 1961
Question 10
MAT stands for .
Response: Minimum Alternate Tax
Correct : Minimum Alternate Tax

MCQ Direct Tax

Uploaded by

Document Information

Original Title

Copyright

Available Formats

Share this document

Share or Embed Document

Sharing Options

Did you find this document useful?

Is this content inappropriate?

Copyright:

Available Formats

MCQ Direct Tax

Uploaded by

Copyright:

Available Formats

Q.

a.Salary deemed to accrue in India

b.Salary accruing outside India

c.Salary accruing in India

d.None of the above

a) Short term capital asset other than residential house property

a) Parents are separated

a) Actual income of minor or Rs. 10,000 whichever

Q.8:- Unabsorbed depreciation can be carried forward for set off:

a) For an unlimited number of years

a) Losses under Head Capital gain

a) Remuneration shall be clubbed in the total income of Mrs. A

Q.11:- Double taxation relief could be:

a) Unilateral Relief & Bilateral Relief

a) No capital gain but the same will be taxable as business profits.

a) compulsory acquisition thereof under any law

Q.19:- GAAR stands for

a) General agreement-avoidance rules

Q.23:- Capital Gain on ESOP = Sale proceeds

a) FMV at the time of allotment of shares

a) Income from Other Sources

a) Fully taxable under the head other source

Q.26:- Which of the following income is agricultural income-

a) Less than Rs. 25000

a) Resident but not ordinarily resident in India

a) 240 days or more

Q.31:- Receipt is determined as Capital Receipt or Revenue receipt:

a) While preparing final accounts

Q.32:- Which of the following is not a capital receipt?

a) Lump-sum received on sale of shares

Q.33:- Receipt of amount on maturity of LIC Policy is:

a) Ordinarily resident in India

L Ltd. and M Ltd. can never be associatedenterprises.

Q.39:- As per sec.60, income is clubbed if:

a) Asset yielding income is transferred as irrevocable transfer

Q.40:- Tax haven is a place where?

a) There is no tax on income

Q.42:- Which of the following is not a capital expense?

a) Expenses of promoting a company

a) An individual is always an assessed

Q.44:- Income Tax Act came into force on:

a) A person who is into illegal business

Q.46:- Agriculture Income from outside India will be:

a) Exempt from tax

Q.47:- Embezzlement of cash by a cashier is:

Q.48:- Which of the following gifts is taxable?

a) Gift from wife

Q.50:- Indexation is applicable to:

a) Sale of depreciable capital assets

The nature of revenue must be decided at ___________.

You might also like