B.COM - INCOME TAX LAW AND PRACTICE 100 QUESTIONS | CHOOSE THE CORECT ONE | QUESTION BANK

 QUESTION BANK - B.COM  INCOME TAX  LAW AND PRACTICE

1. __________ is / are empowered to levy and collect income tax.

A. State governments

B. Central Government

C. RBI

D. local self government department

2. In which year Income Tax was levied in India for the first time?

A. 1960 

B. 1961 

C. 1860 

D. 1857

3. Income Tax Act was passed in the year_____________.

A. 1955 

B. 1961 

C. 1956 

D. 1962

4. CBDT is control by ______________.

A. central Government

B. State Government

C. both (A) and (b)

D. none of this above

5. previous year started from ______________.

A. April 

B. March 

C. January 

D. September

6. Who is Tax payer?

A. Assessee 

B. Businessman 

C. Trust 

D. Govt. employee

7. Income tax is a ........................

A. business tax 

B. profession tax 

C. Direct tax 

D. Indirect tax

8. A person is said to be an ordinarily Resident when the person is satisfying ________________.

A. both basic and additional conditions

B. only basic conditions

C. only additional conditions

D. not basic and additional conditions

9. A person is said to be a non resident when he is _______________.

A. not fulfilling any one of the basic conditions

B. fulfilling only basic conditions

C. fulfilling only additional conditions

D. fulfilling both basic and additional conditions

10. Who is assessee in case of a HUF?

A. Father 

B. spouse 

C. Karta 

D. Deemed Karta

11. Education cess on tax payable is at.

A. 2% 

B. !% 

C. 3% 

D. 5%

12. Agriculture Income is __________.

A. Taxable
B. not taxable 

C. partly taxable 

D. none of this above

13. Section 10 0f Income Tax Act deals with _________.

A. Deductions

B. Exempted incomes

C. Income from salary

D. Casual incomes

14. Income Tax Authorities are grouped into two main wings Administrative and.................

A. Judicial. 

B. Managerial. 

C. Executives. 

D. Clerical.

15. The highest Administrative Authority for Income Tax in India is............

A. Finance Minister.

B. CBDT.

C. President of India.

D. Director of Income Tax.

16. What are the exemption limit in Hostel Expenditure Allowance?

A. Rs.200pm 

B. Rs.300pm 

C. Rs.400pm 

D. Rs.500pm

17. Rates of Income tax are fixed under .......................

A. An Ordinance

B. The Income Tax Act

C. The Finance Act

D. Notification of CBDT

18. The number allotted by income tax authorities to assesses for identification and which should be quoted in all documents and correspondence is.......................

A. I.D. No.

B. Register No.

C. Permanent Account Number (PAN).

D. Licence No.

19. Deduction of tax at source made for incomes which can be calculated in advance is called.......

A. T.D.S. 

B. P.A.S. 

C. F.A.S. 

D. M.A.S.

20. Due date of filing of return by a non businessassessee is...................

A. 30th June. 

B. 31st August. 

C. 31st July. 

D. 30th November.

21. Under the income- tax act, the incidence of taxation depends on......................

A. The citizenship of the tax-payer.

B. The age of the taxpayer

C. The residential status of the tax-payer.

D. The gender of the taxpayer

22. Unabsorbed depreciation can be carried forward for set off.......................

A. for a period of four years only.

B. for a period of eight years only.

C. for an unlimited number of years.

D. for a period of eighteen years only.

23. residential status is determined for......................

A. Previous year 

B. Assessment year 

C. Accounting year 

D. Financial year.

24. How many heads of income are there to compute Gross total income.

A. Six. 

B. Five. 

C. Four. 

D. Three.

25. Income Tax Act came into force on............................

A. 01-04-1961 

B. 01-04-1962 

C. 01-04-1956 

D. 01-04-1965

26. Income by way of rent of agricultural land is ..............

A. Business income

B. Income from other sources.

C. Agricultural income

D. Casual income

27. Receipt of amount on maturity of LIC Policy is.............................

A. A revenue receipt. 

B. A capital receipt. 

C. A casual receipt. 

D. None of these.

28. Which of the following is not a capital receipt?

A. 'Salami' for settlement of Tenancy.

B. Insurance claim received on machinery lost by fire.

C. Lump sum received on sale of shares.

D. Goods sold for cash.

29. Compensation for cancellation of a licence by the government resulting in cessation of business is...................................

A. a casual receipt.

B. a capital receipt.

C. a revenue receipt. 

D. None of theabove.

30. Compensation received for loss of trading asset is a....................

A. Capital receipt. 

B. Revenue receipt. 

C. a casual receipt. 

D. None of these.

31. Salary received by the manager of an agricultural farm is .................................

A. An agricultural income.

B. A salary income.

C. A business income.

D. A capital income.

32. A citizen of India who goes abroad for the purpose of employment, he must stay in India at least for ............................. days to become a resident

A. 90 days 

B. 162 days 

C. 180 days 

D. 182 days

33. Loss due to fire of hired machinery is.............................

A. Capital loss.

B. Revenue loss.

C. Capital expenditure

D. None of the above.

34. Embezzlement of cash by a cashier is.................

A. a revenue loss.

B. a capital loss.

C. a casual loss. 

D. None of these.

35. Who among the following may be “not ordinarily resident”

A. Partnership firm.

B. Company.

C. Association of persons.

D. Hindu Undivided Family.

36. Agricultural income in Pakistan is assessable for........................

A. Resident

B. Not Ordinarily Resident

C. Non-resident

D. Not taxable

37. The following is not taxable as income under the head "Salaries".

A. Commission received by a full time director

B. Remuneration received by a partner

C. Allowances received by an employee

D. Free accommodation given to an employee

38. Section.................. of the Income Tax Act deals with exempted incomes.

A. 2 

B. 7 

C. 10 

D. 80

39. Gratuity received by a government employee is .......................

A. Fully exempted

B. Partly exempted

C. Fully taxable

D. Exempted up to Rs:1,00,000

40. Capital expenditure on scientific research which cannot be absorbed on account of insufficiency of profit in any accounting year can be carried forward for.....................

A. 16 

B. 8 

C. indefinite 

D. 12

41. The periodic payment of money for the past service is known as ........................

A. Gratuity

B. Pension

C. Commuted pension

D. Leave salary

42. When a receipt is determined as Capital Receipt or Revenue receipt.

A. At the time it is received

B. While preparing final accounts.

C. When the received amount is used.

D. None of the above.

43. Pension is taxable under ..........................head.

A. Salary B. House property C. Capital gains D. other sources

44. Salary received by a partner from the firm in which he is a partner is taxable under the head................

A. Income from salary

B. Capital gains

C. Profits and gains of business or profession

D. Income from other sources

45. Family pension received by the widow of a deceased employee is taxable under the head............

A. Income from salary

B. Capital gains

C. Profits and gains of business or profession

D. Income from other sources

46. Salary paid by an employer out of capital will be................

A. a revenue receipt in the hands of employee

B. a capital receipt in the hands of employee

C. a casual receipt

D. None of the above.

47. Which of the following is not a capital expense?

A. Installation expenditure of plant of a company.

B. Legal expenses for reduction of capital.

C. Commission to employees to achieve sales Targets.

D. Expenses of promoting a company.

48. Salary received by a Member of Parliament is taxable under the head.........................

A. Income from salary

B. Capital gains

C. Profits and gains of business or profession

D. Income from other sources

49. Interest on capital paid by the firm to its partners is allowed up to ...................

A. 6% 

B. 12% 

C. 15% 

D. 16%

50. Under Income Tax Act depreciation is allowed on ..................

A. Purchase price 

B. Market price 

C. W D V 

D. Face value

51. The rate of depreciation on intangible asset is ......................

A. 5% 

B. 15% 

C. 20% 

D. 25%

52. Residential status of an assessee is ascertained as per the provisions of........................

A. Sec. 

6. B. Sec. 

7. C. Sec. 9. 

D. Sec. 11.

53. The income tax rate on long term capital gains for an individual is .................................

A. 10% 

B. 15% 

C. 20% 

D. 25%

54. Residential status of taxable entities is..........................

A. Fixed in nature.

B. Can change from year to year.

C. Fixed once in 5 years.

D. None of these.

55. As per the first basic condition to determine residential status, a person should have been in India during the previous year concerned for..................

A. 60 days or more

B. 120 days or more.

C. 182 days or more.

D. 240 days or more.

56. An individual who wants to be resident of India must satisfy at least...................

A. One of the Two basic conditions.

B. Both the basic conditions.

C. Both the additional conditions.

D. Both the basic conditions and the additional conditions

57. An individual who wants to be resident of India must stay in India for at least................

A. 730 days in 10 previous years.

B. 182 days in the previous year.

C. 365 days in the previous year.

D. 150 days in the previous year.

58. A person who is of Indian origin visiting India during the previous year to be called resident must stay in India for at least.....................

A. 60 days in PY.

B. 6 days in PY and 365 days or more during 4 years preceding the PY.

C. 182 days in PY.

D. 730 days during 7 years preceding the PY.

59. As per Second additional condition, a resident will be an ordinarily resident if stay in India for at least ......................... days during the seven previous years preceding the relevant .

A. 182 days. B. 365 days. C. 60 days. D. 730 days.

60. A person is Non resident if he fails to fulfil.....................

A. The additional conditions.

B. At least on of the basic conditions.

C. Both basic conditions.

D. None of thes

61. In case of residential status of HUF ,firm and AOP if control and management are wholly outside India they are deemed as..................

A. Resident.

B. Ordinarily Resident.

C. Non resident

D. None of these.

62. An Indian company’s residential status is that it is always.....................

A. Resident.

B. Non resident.

C. Ordinarily resident.

D. None of these.

63. Salary paid by an Indian company to its employees working in one of its branches outside India is................................

A. Salary accruing in India.

B. Salary deemed to accrue in India.

C. Salary accruing outside India.

D. None of these.

64. Income received in India is taxable in the hands of...........................

A. Resident only.

B. Resident and ordinarily resident only.

C. Non-resident only.

D. All assessees.

65. Income accrued in India is taxable in the hands of............................

A. Non-resident only.

B. Resident and not ordinarily resident only.

C. All assesses.

D. Resident and ordinarily resident only.

66. Income accrued and received outside India is taxable in the hands of...........................

A. Non-resident.

B. Resident and ordinarily resident.

C. Resident and not ordinarily.

D. None of these residents.

67. Past untaxed income brought to India is taxable in the hands of.................

A. Resident and not ordinarily resident.

B. Resident and ordinarily resident.

C. Non-resident.

D. None of these.

68. The CII for the financial year 2012-13 is ..........................

A. 582 

B. 852 

C. 632 

D. 820

69. Income from a farm house is..........................

A. Income from house property

B. Income from business

C. Agricultural income

D. income from other sources

70. Incomes on which Income tax is not charged are called..............

A. Exceptional incomes

B. Privileged incomes

C. Exempted incomes.

D. None of the above

71. Exempted incomes are defined under section................

A. 15 of income tax Act.

B. 18 of income tax Act

C. 10 of income tax Act.

D. 20 of income tax Act.

72. Incomes absolutely exempt from Tax are listed under.............................

A. Sec 2. 

B. Sec 10. 

C. Sec 38. 

D. Sec. 80c.

73. Scholarship granted is...................

A. Fully exempted. 

B. Fully taxable. 

C. Partly exempted. 

D. None of these.

74. Any payments made under and awards instituted by central or state Governments are..............

A. Fully exempted 

B. Fully taxable 

C. Partly exempted. 

D. None of these.

75. Allowances of MP/M.L.A / or M.L.C are.

A. Fully exempted. 

B. Fully taxable. 

C. Partly exempted. 

D. None of these.

76. Income of political parties is not to be included in total income if certain conditions are satisfied. The relevant section of IT Act 1961 is.

A. Section 13A . 

B. Sec. 10d. 

C. Sec. 233B. 

D. Sec.88G.

77. Tax Holiday is.

A. Income tax on holiday income.

B. Cancellation of tax for the entire country.

C. Tax exemption for a specified period.

D. None of the above.

78. The existing Maximum Marginal Rate of tax of an individual assessee is.........................

A. 10% 

B. 20% 

C. 30% 

D. 35%

79. Which of the following is not included in salary income.

A. Commuted pension

B. Un commuted pension

C. Family pension

D. Leave salary

80. Share of income from firm is................

A. Taxable in the hands of partner

B. Exempted in the hands of partner.

C. Exempted in the hands of firm.

D. None of these.

81. Casual income is.

A. Fully taxable. 

B. Partly taxable. 

C. Fully exempted. 

D. None of these.

82. In case of Tax free salary, .......................................

A. Tax is to be paid by employer

B. No tax is payable on such salary

C. Tax is to be paid by the employee.

D. Govt, itself pays the tax at a future date.

83. Salary received by a member of parliament is.

A. Taxable as salary income

B. Exempt from tax sources.

C. Taxable as income from other sources.

D. None of these.

84. Allowances received by a government employee posted abroad are.............

A. Fully exempted.

B. Partly exempted.

C. Fully taxable.

D. Taxable by the country where posted.

85. Dearness allowance is taxable in the hands of.................

A. Govt employees

B. Non Govt employees

C. All employees.

D. None of these.

86. House rent allowance is....................

A. Fully exempted.

B. Partly taxable.

C. Fully taxable.

D. Actual rent paid alone is taxable.

87. Exempted limit of HRA in metropolitan cities is.

A. 50% of salary. 

B. 40% of salary. 

C. 15% of salary. 

D. none of these.

88. Education allowance is exempted for a maximum of...................

A. One child. 

B. Two children. 

C. Three children. 

D. Four children.

89. Children education allowance is exempted up to..................

A. Rs. 200 p.m. per child.

B. Rs. 300 p.m. per child.

C. Rs. 100 p.m. per child.

D. Rs. 400 p.m. per child.

90. Hostel expenditure allowance is exempted up to..................

A. Rs. 300 per month per child.

B. Rs. 200 per month per child.

C. Rs. 150 per month per child.

D. Rs. 250 per month per child.

91. Entertainment allowance to govt. employees is exempted, which is least of 20% of basic salary or actual allowance or.................

A. Rs. 1,000. 

B. Rs. 2,000. 

C. Rs. 20,000. 

D. Rs. 5,000.

92. A Perk is.........................

A. Cash paid by employer to employee

B. Facility provided by employer to employee

C. Amount credited to employees.

D. None of these accounts.

93. Perquisites to employees are covered in the I.T. Act 1961 under...................

A. Sec 2a. 

B. Sec. 17b. 

C. Sec 28a. 

D. Sec. 36 c.

94. The value of Interest free concessional loans to employees is determined on the basis of lending rates of ..................... for the same purpose.

A. S.B.I. 

B. R.B.I. 

C. Central govt. 

D. State govt.

95. An employee is deemed as specified employee if he is a director in the company or has substantial in the company or his chargeable salary per annum exceeds.

A. Rs. 5,00,000. 

B. Rs. 2,00,000. 

C. Rs. 1,00,000. 

D. Rs. 50,000.

96. Value of rent free accommodation in case of Govt. employee shall be taxable up to.......................

A. 15% of employees salary.

B. 7.5% of employees salary.

C. License fee fixed by Govt.

D. 10% of employees salary.

97. Value of rent free accommodation a house owned by employer in case of non- Govt. employees with above 25 lakhs population is...........................

A. 10% of employees salary

B. 15% of employees salary

C. 7.5% of employee salary

D. 20% of employees salary

98. Interest on RPF balance is exempted up to.......................

A. 9.75%. 

B. 9.5%. 

C. 10%. 

D. 12%.

99. Employers contribution to RPF is exempted up to...................

A. 10% of salary. 

B. 13% of salary. 

C. 12% of salary. 

D. 11% of salary.

100. Commuted value of pension is fully exempted in case of......................

A. an employee of private sector.

B. an employee of a public sector undertaking.

C. a Govt. employee.

D. none of these.