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.
1. Taxable income is determined on the basis of:
a) Residential Status
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:
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
c) Included in total income for rate purposes.
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:
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:
Ans: a) Rs. 1,50,000/-
8. When was income tax levied in India for the first time?
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:
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:
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
Ans: b) Due basis
24. If books of accounts are maintained on cash basis, interest on securities is taxable on:
a) Receipt basis
Ans: b) Receipt basis
25. If books of accounts are maintained on mercantile basis, interest on securities is taxable on:
a) Receipt basis
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.
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:
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.
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:
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
c) An individual and HUF
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:
Preventive health checkup
All family member (Self, Spouse and Children)
All person in the family including parents are less than 60 years
All family members are below 60 years but parents are above 60 years
The eldest member of the family and parents are above 60 years
42. 41. Deduction under Section 80E in respect of Interest on Education loan is allowed to:
a) An individual
c) An individual and HUF
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 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:
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
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
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
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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 .
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
DIRECT & INDIRECT TAXATION PAPER-I
[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 _________.
(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.
(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 __________.
(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
(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 ________.
(ii) Fully Taxable
(11) The deduction under Section 80E is allowed for payment of interest to the extent of _________.
(iii) any amount (Upto interest paid)
(12) Award received from the government is __________.
(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 lseinterest paidwed to _______.
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)
DIRECT & INDIRECT TAXATION PAPER-I
[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
(iii) Less than 12 months
(2) Platinum metal’s necklace is ________asset.
(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
(iii) both of the above
(6) Commuted pension received by government employee is _______.
(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
(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 _______.
(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)
DIRECT & INDIRECT TAXATION PAPER-I
[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
