Income Tax MCQs 2022-23
Income tax Multiple Choice Questions (MCQs)
with answers
Assessment Year 2022 - 23
Income tax Multiple Choice Questions (MCQs)
with answers
Assessment Year 2022 – 23 (Previous year 2021
– 22)
In this
page you get Income Tax MCQs with answers which are asked
in various exams of Mumbai University, Dibrugarh University, Gauhati University,
Kolkata University and Assam University.
Also,
these questions are useful for B. Com exams of various universities covered
under CBCS pattern.
Also, these income tax objective type questions and answers are also useful for NTA Net Commerce Exam, CMA, CA, CS and other competitive exams.
Income tax Multiple Choice Questions (MCQs)
with answers
Assessment Year 2022 – 23 (Previous year 2021
– 22)
Choose the correct answers from the following
1. Taxable income is determined on the basis of:
a) Residential
Status
b) Total Income
c) Citizenship
Ans: a)
Residential Status (Total income of a person is determined on the basis of his
residential status)
2. Residential status is to be determined for
a) Previous
year.
b) Assessment
year.
c) Accounting
year.
Ans: a)
Previous year
3. Income tax act was passed in the year:
a) 1860
b) 1947
c) 1961
Ans: c) 1961
(Income Tax Act was passed on 1-4-1961)
4. Income tax is treated as:
a) Direct
expenses
b) Indirect
expenses
c) Business
expenses
d) Personal
expenses
Ans: d)
Personal expenses
5. The daily allowance received by a Member of the
Parliament is
a) Taxable.
b) Exempt.
c) Included
in total income for rate purposes.
Ans: b) Exempt.
6. C is entitled to hostel expenditure allowance @
Rs. 600 p.m. per child for 3 children. It will be exempt to the extent of:
a) Rs.
1,800/-
b) Rs.
900/-
c) Rs.
600/- p.m.
Ans: c) Rs.
600/- p.m. (Hostel expenditure allowance is exempted upto R.s 300
per month per child for a maximum of two children)
7. The ceiling limit of deduction u/s 24 (b) in
respect of Interest of Loan taken on 01.06.2014 for construction of a
self-occupied house is:
a) Rs.
1,50,000/-
b) Rs.
30,000/-
c) No
limit.
Ans: a) Rs.
1,50,000/-
8. When
was income tax levied in India for the first time?
a) 1961
b) 1860
c) 1947
Ans: b) 1860 (The income tax
was introduced in India for the first time in 1860 by British
rulers.)
9. For the assessment year 2017-18 rebate under
Section 87A is available in the case of the residential individual, if his
taxable income is:
a) Rs. 3,00,000
or less.
b) Rs. 4,00,000
or less.
c) Rs. 5,00,000
or less.
Ans: c) Rs.
5,00,000 or less.
10. If title of ownership of a house property is
under dispute in a court of law, the decision as to who is the owner rests with?
a) Government
of India.
b) State
Government.
c) Income Tax
Department.
Ans: c) Income
Tax Department.
11. An appeal against the order of the assessing
officer lies with:
a) Commissioner
(Appeals) [Sec 246A].
b) Principal
Commissioner of Income Tax.
c) Joint
Commissioner of Income Tax.
Ans: a)
Commissioner (Appeals) [Sec 246A].
12. As per National Pension System, it is mandatory
for persons entering the government service on or after January 1, 2004 to
contribute:
a) 20% of
salary every month towards NPS.
b) 15% of
salary every month towards NPS.
c) 10% of
salary every month towards NPS. (Salary = Basic +DA)
Ans: c) 10% of
salary every month towards NPS. (Salary = Basic +DA)
13. Perquisites or benefits or any other
remuneration received from other than the employer, would be taxable under the
head:
a) Income from
Salaries.
b) Income from
House Property.
c) Income from
Other Sources.
Ans: c) Income
from Other Sources.
14. Artificial Juridical person’s example is:
a) State Bank
of India, Dibrugarh.
b) Delhi
University.
c) Guwahati
Municipal Corporation.
Ans: b) Delhi
University.
15. Tribal areas/Scheduled areas allowances as
specified in rule 2BB, exemption to State, Assam and other similar States are
subject to limit of:
a) Rs. 500 per
month.
b) Rs. 200 per
month.
c) Rs. 100 per
month.
Ans: b) Rs. 200
per month.
16. Which of the following income is exempted from
tax?
a) Agricultural
income
b) Sum received
by a member from HUF
c) Share of
profit of a partner from a firm
d) All of the
above
Ans: d) All of
the above
17. Which of the following is not taxable under the
head income from other sources?
a) Rent
received from letting business building
b) Sum received
under Keyman insurance policy
c) Gift
received from unrelated persons
d) Gift of
shares received by firm or a closely held company
Ans: a) Rent
received from letting business building
18. Mohan is entitled to education allowance @
6,000 p.a. per child for 3 children. It will be exempted to the extent of:
a) Rs. 4,000.
b) Rs. 2,400.
c) Rs. 1,200.
Ans: b) Rs. 2,400.
19. The contribution made by the Central Government
in the previous year, to the account of an employee under a pension scheme
referred to in:
a) Section 80C.
b) Section
80CCC.
c) Section
80CCD
Ans: c) Section
80CCD
20. Where an assessee uses his property for
carrying on any business or profession, no income is chargeable to tax under
the head:
a) Income from
Salaries.
b) Income
from House Property.
c) Income from
Other Sources.
Ans: b) Income
from House Property.
21. The Appellate Tribunal, constituted by the
Central Government, functions under the Ministry of Law, consists of which of
the following two classes of members?
a) Judicial and
accountant.
b) Commissioners
and accountant.
c) Inspector
of income tax and accountant.
Ans: a)
Judicial and accountant.
22. Statutory Provident Fund is set up under the
provisions of the:
a) Provident
Fund Act, 1952
b) Provident
Fund Act, 1925
c) Income-tax
Act, 1961
Ans: b) Provident Fund Act, 1925
23. If no system of accounting is followed interest
on securities is taxable on:
a) Receipt
basis
b) Due basis
c) Hybrid basis
d) Not taxable
Ans: b) Due
basis
24. If books of accounts are maintained on cash
basis, interest on securities is taxable on:
a) Receipt
basis
b) Due basis
c) Hybrid basis
d) Not taxable
Ans: b) Receipt
basis
Also Read: Income Tax Chapterwise MCQs (2022 - 2023)
1. 700+ Income Tax MCQs 2022-23 [Free PDF], Income Tax Laws and Practice MCQs
2. 50+ MCQ on Residential Status, Income Tax MCQs 2022 - 23 [Free PDF]
3. 100+ MCQs on Income From Salary, Income Tax MCQs 2022 - 23 [Free PDF]
4. 50 Income from House Property MCQ, Income Tax MCQs 2022 - 23 [Free PDF]
6. 50 MCQ on Capital Gains, Income Tax MCQs 2022 - 23 [Free PDF]
8. 25+ Income Tax Deductions MCQs (80C to 80 U), Income Tax MCQs 2022 – 23 [Free PDF]
**********************
25. If books of accounts are maintained on mercantile
basis, interest on securities is taxable on:
a) Receipt
basis
b) Due basis
c) Hybrid basis
d) Not taxable
Ans: b) Due
basis
26. One can deposit in Public Provident Fund
subject to
a) Minimum
Rs. 500 and maximum Rs. 1,50,000 per annum.
b) Minimum
Rs. 600 and maximum Rs. 2,00,000 per annum.
c) Minimum
Rs. 700 and maximum Rs. 2,50,000 per annum.
Ans: a)
Minimum Rs. 500 and maximum Rs. 1,50,000 per annum.
27. Example of an Association of Persons (AOP) is:
a) A
village Panchayat.
b) Mark
fed.
c) Reliance
Industries Limited.
d) Delhi
university
Ans: a) A village Panchayat.
28. Pankaj is entitled to hostel allowance @ Rs.
500 p.m. per child for 3 children. It will be exempted to the extent of:
a) Rs. 7,200.
b) Rs.
12,000.
c) Rs.
16,400.
Ans: a) Rs.
7,200.
29. Income accrued and received outside India is
taxable in the hands of:
a) Resident and
ordinarily resident (ROR)
b)
Not-Ordinarily resident (RNOR)
c) Non-Resident
in India (NRI)
Ans: c)
Non-Resident in India (NRI)
30. Underground allowance granted to an employee
who is working in uncongenial, unnatural climate in underground mines is exempted
to the limit of:
a) Rs. 1,000
per month.
b) Rs. 800
per month.
c) Rs. 600
per month.
Ans: b) Rs.
800 per month.
31. Income tax is applicable to:
a) Whole of
India except the State of Jammu and
Kashmir.
b) Whole of
India.
c) Whole of
India except the State of Sikkim.
Ans: b) Whole
of India.
32. Under the Income-tax Act, the incidence of
taxation depends on:
a) The
citizenship of the tax-payer.
b) The age of
the tax-payer.
c) The
residential status of the tax-payer.
Ans: c) The
residential status of the tax-payer.
33. Embezzlement of cash by a cashier is
a) A revenue
loss.
b) A casual
loss.
c) A capital
loss.
Ans: a) A
revenue loss.
34. Leave travel concession is a tax-free
perquisite:
a) For one
journey in a block of four years.
b) For one journey
per year.
c) For two
journeys in a block of four years.
Ans: c) For two
journeys in a block of four years.
35. Rent received from agricultural land is:
a) Fully
exempted.
b) Partially
exempted.
c) Not
exempted.
Ans: a) Fully
exempted. Because it is an agricultural income
36. An assessee has borrowed money for purchase of
a house, and interest is payable outside India. Such interest shall:
a) Be allowed
as deduction.
b) Not be
allowed as deduction.
c) Be allowed
as deduction, if the tax is deducted at source.
Ans: c) Be
allowed as deduction, if the tax is deducted at source.
37. Total income of a person is determined on the
basis of his:
a) Residential
status in India.
b) Citizenship
in India.
c) Both of the
above.
Ans: a)
Residential status in India.
38. Where the income of an individual includes the
income of minor children, such individual shall be entitled to an exemption of:
a) Rs. 2,000/-
b) Rs. 1,500/-
per minor child.
c) Rs. 1,500/-
per minor child or to the extent of income of the minor child included in the
total income of the assessee, whichever is less.
Ans: c) Rs.
1,500/- per minor child or to the extent of income of the minor child included
in the total income of the assessee, whichever is less.
39. D owns a house in which he lives. His employer
reimburses to him the electricity bill amounting to Rs. 6,000/-. It shall be a
perquisite for:
a) Specified
employee only.
b) Employee
other than specified employees.
c) Both
specified and other employees.
Ans: c) Both
specified and other employees.
40. Which of the following new Income Tax
authorities has been provided w.e.f. 01.06.2013?
a) Principal
Chief Commissioner of Income Tax.
b) Chief
Commissioner of Income Tax.
c) Joint
Commissioner of Income Tax.
Ans: a) Principal
Chief Commissioner of Income Tax.
41. Deduction under Section 80D in respect of medical
insurance premium is allowed to:
a) An individual
b) Any assessee
c) An individual
and HUF
d) AOP and BOI
Ans: c) An
individual and HUF
[Hint: Deduction under Section 80D
Deduction under section 80D is allowed to individuals and HUF
against payment Health insurance premium and medical expenses of family
including parents. Details of deduction under the section 80D are listed below:
|
Situation |
Self,
Spouse and
Children |
Parents |
Preventive
health checkup |
Maximum
Deduction us
80D |
|
All family
member (Self, Spouse and Children) |
25,000 |
|
5,000 |
25,000 |
|
All person
in the family including parents are less than 60 years |
25,000 |
25,000 |
5,000 |
50,000 |
|
All family
members are below 60 years but parents are above 60 years |
25,000 |
50,000 |
5,000 |
75,000 |
|
The eldest
member of the family and parents are above 60 years |
50,000 |
50,000 |
5,000 |
1,00,000 |
42. 41. Deduction under Section 80E in respect of Interest
on Education loan is allowed to:
a) An individual
b) Any assessee
c) An individual
and HUF
d) AOP and BOI
Ans: a) An individual
43. Capital assets include all assets except:
a) Stock in trade
b) Special bearer
bonds
c) All personal effects
except jewellery
d) All of the
above
Ans: d) All of the above
[Hint: Capital asset means property of any kind held by an assessee, whether or not connected with his business or profession. It includes plant and machinery, building – whether business premises or residential, all assets of a business, goodwill, patent rights etc. This definition of a capital asset is very wide and includes all types of properties, whether movable or immovable, tangible or intangible, fixed or floating but does not include the following.
1. Stock-in-trade, consumable stores or raw materials held for business or profession.
2. Personal movable properties viz. furniture, motor vehicles, refrigerators, musical instruments etc. held for the personal use of the assessee or his family. But personal property does not include the following:
Ø Jewellery
Ø Residential house property
Ø Archaeological collections, drawings, paintings, sculptures, or any work of art.
3. Rural Agricultural land:
Ø Land within the jurisdiction of a municipality or cantonment board having a population of 10,000 or more or
Ø Land situated within 8 kilometers from the local limits.
4. 6½ per cent Gold Bonds, 1977 or 7 per cent Gold Bonds, 1980 or National Defence Gold Bonds, 1980 issued by the Central Government.
5. Gold Bonds issued by Government of India including gold deposit bonds issued under the gold deposit scheme, 1999 notified by the central Government.
6. Special Bearer Bonds, 1991 issued by the Government of India.
7. Deposit Certificates issued under the Gold Monetization Scheme, 2016 w.e.f. The assessment year 2017-18]
44. Under the head income from house property the
basis of charge is:
a) Rent received
from house property
b) Annual value of
house property
c) Net profit from
house property
d) None of the
above
Ans: b) Annual
value of house property
45. Income chargeable under income from other sources
as per section:
a) Sec. 56
b) Sec 57
c) Sec. 58
d) Sec. 59
Ans: a) Sec. 56
46. Income which accrue outside India from a business
controlled from India is taxable in case of:
a) Resident and
ordinarily resident
b) Resident but
not-ordinarily resident
c) Both a & b
d) Non-Resident in
India
Ans: c) Both a
& b
47. A short term capital asset means a capital asset
held by the assessee for not more than:
a) For listed
securities 12 months
b) For immovable
property and unlisted securities 24 months
c) For other
capital assets 36 months
d) All of the
above
Ans: d) All of the
above
48. Income of Indian cricketers for playing test match
is taxable under the head:
a) Income from
salary
b) Profits and
Gains from business
c) Profits and
Gains from profession
d) Income from
other sources
Ans: d) Income
from other sources
49. Which method of depreciation is approved by Income
Tax Act:
a) Straight line
Method
b) Written down
value method
c) Both a & b
d) None of the
above
Ans: b) Written
down value method
50. Which of the following incomes from house property
is not exempted from tax:
a) Agricultural
house property
b) House used for
business or profession
c) House held as
stock in trade
d) House let out
for commercial purpose
Ans: d) House let out for commercial purpose
Download PDF File
Income tax Multiple Choice Questions (MCQs)
with answers
Assessment Year 2022 – 23 (Previous year 2021
– 22)
Income Tax MCQs 2022 – 23 (Fill in the blanks)
1) The income
tax was introduced in India for the first time in 1860 by British rulers.
2) Under
Section Sec. 10(16), the
full amount of scholarship granted to meet the cost of education is exempted.
3) The
value of perquisites is chargeable to tax under the head Salaries.
4) Income from
house property held by a local authority shall be exempted.
5) If an HUF is
controlled from India even partially, it will be residential assessee.
6) Unrecognized
Provident Fund is that fund which is not recognized by the commissioner of Income tax.
7) The
rent fixed under the Rent Control Act where so ever applicable is called standard rent.
8) An income
under the head capital gain to a registered Trade Union is taxable.
9) A new
business was commenced on 01.01.2019. The first ‘previous year’ in this case
shall be 01.01.2019 to
31.03.2019.
10) Residential
status is to be determined for income
calculation.
11) Dividend
declared by a domestic company shall be taxable. (TDS @ 10%
deducted by paying company)
12) Deduction
for interest on loan taken for construction of self-occupied house after
01.04.1999 is allowed up to actual amount or Rs. 2, 00,000 whichever is less.
13) Assessee means a person by
whom any tax or any other sum of money is payable under the Income-tax Act.
14) Agricultural income from
land situated in India is fully exempted under Section 10 (1) of the Income-tax
Act.
15) Statutory Provident Fund is
the oldest type of fund.
16) House
Property Income = Annual Value of Building – Specified Deductions u/s 24.
17) The
status of Reserve Bank of India as a person is ROR as per the Income-tax Act.
18) Income
which accrues or arises in London from a business controlled from India is
taxable in the case of Resident
(Ordinarily and not-ordinarily).
19) An income
under the head capital gain to a trade union is taxable.
20) Employer-employee
relationship is necessary to term any receipt as salary.
21) According
to Income-Tax Act, 1961, the previous
year is that year in which year income is earned to be taxable in
the next year.
22) Gross total
income of an assessee consists of income from salaries, income from house
property, profits and gains of business or professions, capital gains and
from other sources.
23) As per
the Income Tax Act, 1961, agriculture income in India is exempted to tax.
24) Capital Gain arises from
the transfer of any capital asset.
25) A new
business was commenced on 11.11.2011. The first previous year in this case
shall be 11.11.2011 to
31.03.2012.
26) Residential
status is to be determined for the
previous year.
27) The income
of previous year is chargeable to tax in the assessment year.
28) Dividend
declared by domestic company shall be exempted.
29) Income-tax
Act, 1961 consists of 298 sections,
sub-sections and rules and total 23 chapters.
30) Agricultural income is
fully exempted from tax u/s 10 (1) and as such does not form part of total
income.
31) For the
assessment year 2020-21 as assessee can avail deduction u/s 80C up to the
extent of 1,50,000.
32) Housing
property income of a local authority is exempt for taxation under income from house property.
33) Distribution
of assets in kind by a company to its shareholders on its liquidation is not as a transfer of
capital assets.
34) Income
received as rent from sub-letting would be taxable under the head Income from other sources.
35) Salary,
bonus, interest, commission or remuneration received by a partner and allowed
as deduction u/s 40(b) is taxable under the head PGBP.
36) Long-term
capital loss can be carried forward for 8 (Eight) succeeding previous years to be set off only
from long-term capital gains.
37) All those
assets to which one rate of depreciation is applicable are known as block of assets.
38) 100% of
advertisement expenses exceeding Rs.
10,000 paid in cash in a single day are disallowed expenses on
computation of profit from business.
39) Payment
exceeding Rs. 10, 000 (Rs. 35,000 in case of transport operator) must be made
by crossed cheque or bank draft.
40) Cost
Inflation Index (CII) for the Assessment Year, 2023 – 23 is 317.
41) Cost
Inflation Index (CII) for the Assessment Year, 2023 – 24 is 331.
42) Speculation
loss to be carried forward for 4
(four) succeeding previous years [Section 73(4)]
43) When total
depreciation is more than available profits, the excess is called unabsorbed depreciation.
44) No loss can
be set off from casual income.
45) Business
loss cannot be set off from salary
income.
46) Short-term
capital loss on particular assessment year can be set off in the same
assessment year from STCG and
LTCG only.
47) Long term
capital loss can be set off only from long
term capital gains and not from any other income.
48) For
claiming exemption under Section 54, the assessee should construct the
residential property within 3
years after the date of transfer.
49) Interest on
units of a Mutual Fund on or after April 1, 2003 shall be exempt. [According to
Sec. 10(35), any income from units of mutual funds are exempted from]
50) Where a
part of the block of assets is sold for a price less than the opening WDV plus
cost of assets, if any, acquired during the year, the balance amount shall be
treated as WDV at the end for
charging depreciation.
51) Wealth tax
is no longer applicable from the assessment year 2016 - 17 onwards.
52) For
claiming exemption u/s 54B, the asset transferred should be rural
agricultural land and should be used for at least 2 (two) years.
53) Loss on
account of owning and maintaining race horses can be carried forward for 4 (four) years and set off
under the same head only.
54) Deduction
under Section 80D for health insurance premium paid can be claimed by an individual
and HUF.
55) Long-term
capital gain = Net transfer price – Indexed
cost of acquisition and Improvement.
56) For
computing depreciation under the Income-tax Act, 1961 intangible assets are
included under 25% block.
57) Salary,
bonus, commission or remuneration due to or received by a working partner from
the firm is taxable under the head Profits and Gains from Business and Profession.
58) Conversion
of debentures into shares shall not be regarded as Transfer for
capital gain purpose.
59) If no
system of accounting is followed, interest on securities is taxable on due basis.
60) Loss under
the head ‘house property income’ can be carried forward for 8 years.
Income tax Multiple Choice Questions (MCQs)
with answers
Assessment Year 2022 – 23 (Previous year 2021
– 22)
True and False Type Questions
1) Tax
liability of an assessee depends upon his residential status.
TRUE
2) Daily
and other allowance received by a Member of Parliament is not considered for
income tax. TRUE
3) Only
Salaries paid to MPs and MLAs are taxable under the head “Income from other
sources.” TRUE
4) Income
from subletting house will be chargeable under the head ‘income from other
sources’. TRUE
5) Municipal
tax is a deduction from net annual
value. FALSE,
FROM GAV
6) Capital
gain arises from the transfer of any capital
assets. TRUE
7) Total
income of a person is determined on the basis of citizenship in India. FALSE,
RESIDENTIAL STATUS
8) Income
Tax is calculated on the basis of residential status of
assessee. True
9) Salary
is taxable on due basis or on receipt basis, whichever is
earlier. True
10) House or property
used by the political party is exempted from House Property
Tax. True
11) An
Income Tax Inspector is appointed by the Central
Government. True
12) Body
of individuals should consist of individuals
only. TRUE
13) A
resident in India cannot become resident in any other country for the same
assessment year. False
14) Casual
income received by the assessee is fully
exempt. False, Fully taxable @30%
15) Municipal
tax due is allowed as deduction for computation of income from house
property. False
16) Total
income of a person is determined on the basis of his citizenship in
India. False, Residential status
17) ‘Leave
Travel Concession’ is a tax-free perquisite for one journey in a block of 4
years. False, two journey
18) Tiffin
allowance is fully exempted
allowance. False,
taxable
19) Capital
gain arises from the transfer of any capital
asset. True
20) Tax is
levied on total income of
assessee. False,
Taxable income
21) The
full form of EPZ is Export Promotion
Zone. False,
Export Processing Zone
22) House
rent allowance is a fully taxable
allowance. False
23) Actual
rent is the rent which is actually received by the owner of the house from the
tenant. True
24) The
income tax was introduced in Indian for the first time in 1860 by
British rulers.
25) Section
10 (10) of the Income-tax Act relates to Gratuity.
26) Advance
salary received shall be taxable in the year of its receipts.
27) Cost
of improvement incurred after acquisition is to be treated as
part of the cost.
28) A
company cannot enjoy the status of not ordinary
resident. True,
only individual and HUF
29) The
full amount of scholarship granted to meet the cost of education is exempted
from tax. True, Sec. 10(16)
30) Taxable
gratuity = Gratuity received –
Arrear. False
31) The
annual value of a house property is to be determined according to the
provisions of Section 32 of the Income-tax
Act. False,
sec. 23
32) The
residential status of an assessee may change from year to
year. True
33) Any
amount withdrawn from the Statutory Provident Fund is exempt from
tax. True
34) Entertainment
allowance is fully taxable irrespective of any expenditure incurred on
entertainment of guests or
customers. True
35) House
Property Income = Annual Value of Building – Specified deductions u/s
22. False
36) Income-tax
Act, 1961 came into force from April 1, 1962 in whole of the
country. True
37) Agricultural
income from land situated in India is fully
taxable. False
38) Recognized
Provident Fund was started in the year
1925. False, SPF was started in 1925
39) Bank
interest is an example of taxable interest u/s 56(1) of the Income-tax Act,
1961. False
40) Taxation
rules and regulations applicable to industries in India.
41) A company
shall be ‘non-resident’ if its place of effective management is situated wholly
or partially outside India during the relevant accounting
year. False, 100% outside India
42) Statutory
Provident Fund is set up under the provision of the Provident Fund Act,
1952. False, 1925
43) Any income
derived by the SAARC fund for regional project is exempt from
tax. True
44) Income is
taxable under the head Income from House Property only if the assessee is not
the owner of a house
property. False
45) The total
income of individual leaving India up to the date of his departure shall be
chargeable to tax in that assessment
year. True
46) Scholarship
received by students must be financed by the
government. False
47) Any income
received by any person for or on behalf of the New Pension System Trust
(established on February 27, 2008) will not be chargeable to
tax. True
48) Interest on
borrowed capital is allowable as deduction if capital is borrowed for the
purpose of purchase, construction, repair, renewal,
etc. True
49) A person
may have dual residential status, i.e., he may be resident of one or more
countries in a relevant previous year. True
50) Salary also
includes income tax of employee paid by
employer. True
51) Fair rental
value is based on the rent prevailing for similar type of accommodation in same
or similar type of
locality. True
52) Public
Provident Fund (PPF) offers self-employed people the benefit to enjoy deduction
u/s 80C. True
53) Indian
income is always taxable in India irrespective of the residential status of the
tax payer. True
54) Scholarship
granted by government to students to meet the cost of education is not exempted
from tax. False , any kind of
scholarship is exempted-10(16)
55) Salary paid
to a partner is chargeable under the head
‘salaries’. False,
56) Employer’s
contribution towards approved superannuation fund is chargeable to tax in the
hands of employees to the extent such contribution exceeds Rs. 1.5 lakh per
assessment year. False, above
100000
57) Capital
receipts cannot be treated as taxable
incomes. True
58) Scholarship
received by a student to meet the cost of education is casual
income. False
59) No person
other than individual or HUF can be ‘not ordinarily resident in
India’. True
60) A has two
house properties. Both are self-occupied. The annual value of both houses will
be nil. True
61) Body of
individuals should consist of individuals
only. True
62) Once a
person is a resident in a previous year, he shall be deemed to be resident for
subsequent previous year
also. False
63) Retrenchment
compensation received by a workman at the time of his retrenchment is exempt
under Section 10 (10B) to the maximum extent of Rs.
5,00,000. True
64) Municipal
tax is a deduction from net annual value. False, from Gross Annual value
65) A resident
in India cannot become a resident in any other country for the same assessment
year. False
66) An income
under the head ‘Capital Gains’ to a trade union is
taxable. True
67) If rent is
paid for a house situated in New Delhi, the house rent allowance shall be
exempted to the maximum extent of 40% of
salary. False, 50%
68) The
circulars issued by the CBDT are binding on the income-tax
authorities. True
69) Once a
person is a resident in a previous year, he shall be deemed to be resident for
subsequent previous year
also. False
70) Scholarship
received by a student to meet the cost of education is casual
income. False
71) Compensation
received at the time of voluntary retirement is exempt to the maximum extent
of Rs. 5,00,000/. True
72) Municipal
tax is a deduction from net annual
value. False, from Gross Annual value
73) Body of individuals
should consist of individuals
only. True
74) No person
other than individual or HUF can be ‘not ordinarily resident in
India’. True
75) Casual
income received by assessee is fully exempt. False, taxed @30%
76) Monthly
pension received by a Government employee is taxable. True
77) A new
business was set up on 15.10.2013 and it commenced its business from
01.12.2013. The first previous year in this case shall be 15.10.2013 to 31.03.2014.
78) Monthly
pension received by a government employee is fully taxable.
79) Dividend
received by a company from a domestic company is taxable. (TDS deducted by paying company)
80) Total
income of a person is determined on the basis of residential status in India.
81) Preliminary
expenditure incurred after 31.03.2008 are allowed deduction in 10 equal
installments. False, Under Sec. 35D preliminary expenses are
allowed deduction in 5 equal installments.
82) Conversion
of debentures into shares shall not be regarded as transfer for capital gain
purpose. True
83) If no
system of accounting is followed, interest on securities is taxable on receipts
basis. False
(Note: Interest on securities may be taxed on due
or receipts basis depending upon the system of accounting. If the assessee
follows cash system of accounting, interest is taxable on receipts basis,
otherwise it shall be taxable on due basis. If no system of accounting is
followed, it will always be taxable on “due” basis.)
84) Loss on
account of owning and maintaining the racehorse can be carried forward
indefinitely. False
(Note: According to provisions of section 74A (3),
the losses incurred by an assessee from the activity of owning and maintaining
race horses can be set-off against the income from the activity of owning and
maintaining race horses only. Such loss can be carried forward for a maximum
period of 4 assessment years for being set-off against the income from the
activity of owning and maintaining race horses in the subsequent years.)
85) Rent paid
by a partnership firm to one of its partners for using his house for the
business of the firm is an admissible deduction. True, allowed
as deduction provided rent is substantial
86) Term Capital
Asset u/s 2(14) includes only tangible
asset. False, it includes both tangible and
intangible assets.
87) With effect
from Assessment Year, 1999-2000 loss under the head house property can be
carried forward for 8 succeeding previous years to be set off from income under
the head house property
only. True
88) Any income
arising from transfer of long-term capital asset, being shares and the
transaction of sale of such securities is entered into a recognised Stock
Exchange in India on or after 01.10.2004 shall be fully
exempted. False
89) Reserve or
Provision for bad and doubtful debt will be fully allowed to be debited u/s
36. False
90) From the
Assessment Year, 2006-07, speculation loss shall be carried forward for 4
succeeding previous years. True
91) Income by
way of Interest on Securities held as stock-in-trade is taxable under the head
income from other sources. False, PGBP
92) Capital
Assets means property of any kind held by an assessee whether or not connected
with his business or
profession. False
93) Provision
for bad and doubtful debts is an allowable deduction in computing business
income. False
94) As per
Section 73(1) of the Income Tax Act, the loss arising out of speculation
business can be set off against profit from non-speculative
business. False, Only speculative gain within 4 years
95) Interest on
capital or loan received by a partner from a firm is taxable under the head
‘income from other
sources’. False
96) Conversion
of personal effect into stock-in-trade shall be subjected to capital
gain. False
97) Winning
from lotteries, cross-word puzzles, horse races and other races, card games,
etc., are casual income and hence
exempt. False
98) Loss under
the head ‘income from house property’ can be carried forward even if the return
is not furnished before the due date prescribed u/s 139
(1). True
99) The income
earned from a smuggling business is taxable under the head of income from
business and profession. True, whether
business is legal or illegal it is taxable
100) Stock-in-trade,
raw materials, consumable stores held by the assessee for his business and
profession is capital asset. False, excluded
from capital asset
101) Short-term
capital loss can be set off from either short-term capital gain or long-term
capital gain. True
102) Income
from card game, horse race, gambling is taxable under the head of income from
other sources. True
103) Business
outside India and business in India stand on the same footing for the purpose
of computation of income from business and profession u/s 28 of the
Act. False
104) Indexation
of cost of capital asset is a must for all types of capital assets in computing
income from capital
gains. False
105) Short-term
capital loss can be set off from short-term as well as out of long-term capital
gains. True
106) The income
earned from a smuggling business is taxable under the head of income from
business and
profession. False, Loss of
illegal business cannot be set off against legal business.
107) The
business of purchase and sale of shares not to be treated as speculation business. True
108) Stock-in-trade,
raw materials, consumable stores held by the assessee for his business and
profession is capital
asset. False
109) Unabsorbed
depreciation which could not be set off in the same assessment year can be
carried forward for 8 years. False, carried forward till complete
absorption and set off from any income
110) Exemption
under Section 54F shall not be allowed if the assessee, on the date of
transfer, owns any residential
house. False, disallowed if assessee owns more
than one residential house
111) Income
under the head ‘income from other sources’ is taxable on due
basis. True
(Note: Income from other sources may be taxed on
due or receipts basis depending upon the system of accounting. If the assessee
follows cash system of accounting, interest is taxable on receipts basis,
otherwise it shall be taxable on due basis. If no system of accounting is
followed, it will always be taxable on “due” basis.)
112) A business
loss can be carried forward and set off in the subsequent assessment year
whether the business on account of which this loss has arisen is continued or
not. True
Mumbai University Solved Question Papers (MCQs only)
2018 (Nov)
DIRECT & INDIRECT TAXATION PAPER-I
CBCGS
(3 Hours)
[Total Marks: 100]
Note:
1) All questions carry equal marks and are compulsory.
2) Figures to the right
indicate maximum marks.
3) Working should form
part of the main answer.
1.
(A) Choose the correct option and rewrite the statements (Any Ten): 10
(1) Income Tax Act
extends to __________.
(i) Whole of India
(ii) India and Pakistan
(iii) Whole of Maharashtra
(2) Income Tax is
a tax on _________.
(i) Goods
(ii) Services
(iii) Income
(3) The Legal
status of Ms. Hima Das, Indian sprint runner is ________.
(i) an individual
(ii) a body of individuals
(iii) a sportsman
(4) Personal 24
carat gold mangalsutra is ________asset.
(i) Fixed
(ii) Capital
(iii) Current
(5) Every assessee
is a person and ________.
(i) Every person is also an assessee
(ii) Every person need not be an assessee
(iii) An individual is always an assessee
(6) Total income
of a person is determined on the basis of his __________.
(i) Citizenship
(ii) Residential Status
(iii) Marital Status
(7) In case of
capital assets acquired on 01-04-1971, Fair Market Value of this capital asset
is determined as on
(i) 01-04-2001
(ii) 01-04-1981
(iii) 01-04-1971
(8) Deduction
under Section 80D in respect of medical insurance premium is allowed to
_______.
(i) An individual
(ii) Any assessee
(iii) An individual and HUF
(9) Share of
profit received by a partner of partnership firm is _____.
(i) Fully exempt
(ii) Fully taxable
(iii) Party taxable
(10) Uncommuted
pension received by a government employee is ________.
(i) Exempt
(ii) Fully Taxable
(iii) 1/3 exempt
(11) The deduction
under Section 80E is allowed for payment of interest to the extent of
_________.
(i) Rs. 25,000
(ii) Rs. 10,000
(iii) any amount (Upto interest paid)
(12) Award
received from the government is __________.
(i) Taxable
(ii) Exempt
(iii) Partly exempt
(B) Re-write following full sentence and state whether
it is True or False (Any Ten):
10
1. Ex-gratia received from employer is taxable as a salary. False
2. When a property is occupied by the owner himself that property is
called let-out house property. False,
Self occupied
3. Expenses on local festival Navaratri puja is allowable business
expenditure. True
4. Previous year can be more than 12 months. False
5. There are total five heads of income. True
6. Salary received by a Member of Parliament is taxable under the
head Income from salaries. False, Income from other sources
7. Cost inflation index is applicable for transfer expenses. False, Applicable to COA and COI
8. The status of Indian origin individual is always a resident. False
9. Ground rent is taxable under the head income from house property. False
10. Gift received by a doctor from his patent is taxable under the
head income from profession. False
11. Interest on Income Tax refund is taxable under the head income
from other sources. True
12. Any sum received under key-man insurance policy is taxable. True
Mumbai University Solved Question Papers (MCQs only)
2019 (April)
DIRECT & INDIRECT TAXATION PAPER-I
CBCGS
(3 Hours)
[Total Marks: 100]
Note:
1) All questions carry equal marks and are compulsory.
2) Figures to the right
indicate maximum marks.
3) Working should form
part of the main answer.
1.
(A) Choose the correct option and rewrite the statements (Any Ten): 10
(1) Assessment year can be ___________.
(i) More than 12 months
(ii) 12 months
(iii) Less than 12 months
(2)
Platinum metal’s necklace is ________asset.
(i) Current
(ii) Fixed
(iii) Capital
(3)
The legal status of Ms. Mona Meshram, Indian cricketer is _______.
(i) an individual
(ii) a body of individuals
(iii) a sportsman
(4) Every
assessee is a person and ___________.
(i) Every person is also an assessee
(ii) Every person need not be an
assessee
(iii) An individual is always an assessee
(5)
The term income includes ________incomes
(i) legal
(ii) illegal
(iii) both of the above
(6)
Commuted pension received by government employee is _______.
(i) Taxable
(ii) Exempt
(iii) Partly taxable
(7)
Fair Market Value on 01-04-2001 is applicable to assets ______.
(i) Acquired prior to 01-04-2001
(ii) Acquired after 01-04-2001
(iii) Sold prior to 01-04-2001
(8)
Deduction under Section 80CCC in respect of contribution to pension fund is
allowed to _________.
(i) an individual
(ii) all assessees
(iii) Individual and HUF
(9)
________tax is allowed while computing the business income.
(i) Goods and Service Tax (GST)
Paid
(ii) Income Tax
(iii) Both the above
(10)
Share of income received by a member of HUF is _______.
(i) Fully exempt
(ii) Fully taxable
(iii) Partly Taxable
(11)
Deduction on account of entertainment allowance is allowed to ________.
(i) Non-government employees
(ii) Government employees
(iii) Both the above
(12)
The payment for medical Insurance premium under Section 80D should be _______.
(i) in cash
(ii) in cash or cheque
(iii) by any mode other than
cash
(B)
Rewrite following full sentence and state whether it is True of False: 10
1. Ex-gratia received from employer is not
taxable. True
2. Wages and salaries are taxable under the
head Income from Salaries. True
3. A person by whom any tax is payable
under the Income Tax Act is known as an assessee. True
4. Amount received from winning of lottery
is an income. True
5. When a property is used by the owner
himself for the purpose of business, annual value of such property is taxable
as income from house property. False,
Not taxable under the head income from house property
6. Transfer expenses are deducted from sale
consideration. True
7. There are total four heads of Income. False
8. Gift received from father is taxable. True
9. Status of Indian citizen is always
resident. False
10. Section 80U is applicable to all
individuals. True
11. Royalty is taxable under the heard
income from other sources. True
12. Previous year is always of 12 months. False, may be less than 12 months but cannot
be more than 12 months
Mumbai University Solved Question Papers (MCQs only)
2019 (Nov)
DIRECT & INDIRECT TAXATION PAPER-I
CBCGS
(3 Hours)
[Total Marks: 100]
Note:
1. All questions are compulsory.
2. Figures to the right
indicate full marks allotted to the question.
3. Working notes should
form part of your answer.
4. Use of simple
calculator is allowed.
Q.1
A) Fill in the blanks with appropriate answer from the bracket and rewrite the
statement (Any 10): (10)
1. _________ is liable to pay income tax on his income received in
India. (Resident / Nonresident / Both Resident and Non-resident)
2. As per Section 24, Standard deduction allowable on Let out house
property is_____. (Rs. 30,000 / Actual amount spent on repairs / 30 percent of NAV)
3. Commuted pension received by a Government employee is _________.
(Taxable / Exempt from tax / 1/3 exempt from tax)
4. Gas, electricity or water supply provided free of cost to an
employee is _________. (exempt from tax / perquisite taxable in case of
‘specified’ employees / perquisite taxable in case of
all employees)
5. Municipal tax is deducted from _________ of the house property.
(Net Annual Value / Gross Annual Value /
Municipal Valuation)
6. Sale of residential House Property is taxable under the head
_________. (income form House Property / Capital gain / Profit
from business or profession)
7. Gift received from father is ________. (Taxable as business
income / Nontaxable / Taxable as other income)
8. Gratuity received by Government employees is _________. (exempt from tax / taxed as capital gain / taxed as profit
and gains of business)
9. Indian citizen leaving India for Employment is considered as
resident in India in any previous year if he stays in India for minimum
________ days. (60 / 182 / 365)
10. Salary received by a partner from his firm is regarded as
________. (Profit and gains of business and profession /
Income from salaries / Income from other sources)
11. If a residential house property is held for more than _________
it is considered as a long term capital asset. (12 months / 24 months / 36 months)
12. Deduction u/s 80 C is allowed to the maximum of _________. (Rs.
50,000 / Rs. 1,50,000 / Rs. 1,00,000)
B. State whether the following statements are True or
False. (Any 10): (10)
1. Income received from smuggling activity is income as per Income
Tax Act. True
2. Avon Private Limited is a Partnership firm under the Income Tax
Act. False, Company
3. Examination fees received by a professor of university of which
he is an employee is taxable as Salary.
True
4. Entertainment Allowance received by Government employee is fully
taxable. False
5. Municipal taxes paid by tenant is allowed as deduction from
income from House Property of the owner. False, not allowed
6. Deduction allowed under section 80 D for medical insurance
premium paid by the assesse for self, spouse and dependent children, none of
whom is senior citizens is Rs. 25,000. True
7. Depreciation is allowed as deduction only when it is claimed as
per Income Tax Act. True
8. Remuneration received by Member of Parliament is taxed as Income
under the head income from salary. False, Income from other sources
9. Past profit which was earned outside India by a non-resident but
brought in India in current year is taxable in India in current year. False
10. Agricultural income derived from cultivation of land in India is
exempt from tax. True
11. Gift received from a friend on Friendship Day of Rs. 49,000
during the year is exempt from tax.
True
12. Brokerage paid on sale of capital asset will reduce the amount of capital gain. True
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