Income Tax MCQ with Answers pdf

Income Tax MCQ with Answers pdf
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Multiple choice questions of Subject Commerce Income Tax MCQ with Answers pdf ( Income Tax MCQ with Answers pdf Quiz ) for Entrances (Entrance Exam) Conducted by different Central and State Universities are given below.

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1. Residential status is to be determined for

(a) previous year

(c) accounting year

(b) assessment year

(d) Any one of them

Ans. a

2. Incomes which accrue or arise outside India but are received directly into India are taxable in the hands of

(a) resident only

(b) both ordinarily resident and NOR

(c) non-resident

(d) all the assesses

Ans. d

3. Income deemed to accrue or arise in India is taxable in case of

(a) resident only

(b) both ordinarily resident and NOR

(c) non-resident

(d) all the assesses

Ans. d

4. Income which accrue outside India from a business head office of which is situated in India is taxable in case of

(a) resident only

(b) not ordinarily resident only

(c) both ordinarily resident and NOR

(d) non-resident

Ans. c

5. Income which accrue or arise outside India and also received outside India taxable in case of

(a) resident only

(b) not ordinarily resident

(c) Both ordinarily resident and NOR

(d) None of the above

Ans. a

6. How many heads of income are there?

(a) Five

(b) Eight

(c) Seven

(d) Six

Ans. a

7. Agricultural income is

(a) fully exempt

(b) partially exempt

(d) partially taxable

(c) fully taxable

Ans. a

8. The partial integration of agricultural income is done to compute tax on

(a) agricultural income

(c) Both ‘a’ and ‘b’

(b) non- agricultural income

(d) None of the above

Ans. b

9. Tl of a person is determined on the basis of his

(a) residential status in India

(b) citizenship in India

(c) Both ‘a’ and b’

(d) None of these

Ans. a

10. Once a person is a resident in a previous year, he shall be deemed to be resident for subsequent previous year

(a) True

(b) False

(c) Partly true

(d) None of these

Ans. b

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11. An Indian company is always resident in India

(a) True

(c) Sometimes it is true

(b) False

(d) None of these

Ans. a

12. Dividend paid by an Indian company is

(a) taxable in India in the hands of the recipient

(b) exempt in the hands of recipient

(c) taxable in the hands of the company and exempt in the hands of the recipient

(d) None of the above

Ans. c

13. Agricultural income is exempt provided the

(a) land is situated in India

(b) land is situated in any rural area India

(c) land is situated whether in India or outside India

(d) All of the above

Ans. a

14. If the assesses is engaged in the business of growing and manufacturing tea in India ,the agricultural income in that case shall be

(a) 40% of the income from such business

(b) 60% of the income from such business

(c) market value of the agricultural produce – expenses on cultivation of such produce

(d) 80% of the income from such business

Ans. b

15. Once a person is resident for a source of income in a particular previous year he shall to be deemed to be resident for all other sources of income in the same previous year.

(b) False

(a) Partly true

(c) True

(d) None of these

Ans. b

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16. R Ltd., is an Indian company whose entire control and management of its affairs is situated outside India. R Ltd. shall be

(a) resident in India

(b) non-resident in India

(c) not ordinarily resident in india

(d) None of the above

Ans. a

17. R Ltd. is registered in UK. The control and management of its affairs is situated in India R Ltd shall be

(a) resident in India

(b) non-resident

(c) not ordinarily resident in India

(d) None of the above

Ans. b

18. There will be no partial integration of agricultural income with non-agricultural income, if the non- agricultural income does not exceed

(a) rs. 2,50,000

(b) rs. 1,00,000

(d) rs. 3,00,000

(c) rs. 1,10,000

Ans. a

19. Income from winning the horse race is taxable under

(a) Capital gain

(c) Business and profession

(d) None of these

(b) Other sources

Ans. b

20. Assessees is always a person but a person may or may o Income from winning the horse race is taxable under the head? 

(a) True

(c) Both ‘a’ and ‘b’

(b) False

(d) None of these

Ans. a

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21. A person may not have assessable income but may still be assessees.

(a) True

(b) False

(c) Both ‘a’ and ‘b’

(d) None of these

Ans. a

22. In some cases assessment year and previous year can be same financial year.

(a) True

(b) False

(d) None of these

(c) Both ‘a’ and ‘b’

Ans. a

23. R transferred his house property to his wife under an agreement to live apart. Income from such house property shall be taxable in the hands of

(a) R as deemed owner

(b) R. However, it will be first computed as Mrs R income and thereafter clubbed in the hands of R

(c) Mrs R

(d) Any one of them

Ans. c

24. Suresh gifted his house property to his married minor daughter. The income from such house property shall be taxable in the hands of

(a) Suresh as deemed owner

(b) Suresh. However, it will be first computed as minor daughters income and clubbed in the income of R

(c) income of married minor daughter

(d) tax free in the hands of both

Ans. c

25. An assessees has borrowed money for purchase of a house and interest is payable outside India. Such interest shall

(a) be allowed as deduction Under Section 24(i)

(b) not to be allowed on deduction

(C) be allowed as deduction if the tax is deducted at source

(d) be allowed as deduction Under Section 16(ii)

Ans. c

26. AOP should consist of

(a) individual only

(b) persons other than individual only

(c) Both ‘a’ and ‘b’

(d) None of the above

Ans. c

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27. Body of individual should consist of

(a) individual only

(b) persons other than individual only

(c) Both ‘a’ and ‘b’

(d) All of the above

Ans. a

28. New business was set up on 15-11-2014 and it commenced its business from 1-12-2014. The first previous year in this case shall be

(a) 15-11-2014 to 31-3-2015

(b) 1-12-2014 to 31-3-2015

(c) 2014-2015

(d) 2015-2016

Ans. a

29. A person leaves India permanently on 15-11-2014. The assessment year for income earned till 15-11-2014 in this case shall be

(a) 2013-14

(c) 2015-16

(b) 2014-15

(d) None of these

Ans. b

30. Surcharge in case of an individual or HUF for assessment year 2014-15 is payable at the rate of

(a) 12% of the income-tax payable provided the total income exceed rs. 60.000

(b) 10% of the income-tax payable provided the total income exceeds rs. 15,00,000

(c) 5% of the income-tax payable if the total income exceeds 78,50,000

(d) 10% of the income-tax payable provided the total income exceeds rs. 10,00,000

Ans. d

31. Surcharge in case of a firm for assessment year 2015-16 is payable at the rate of

(a) 2.5% of the income-tax payable

(b) 5% of the income-tax payable

(c) 10% of the income-tax payable

(d) 12.5% of the income-tax payable

Ans. c

32. The maximum amount on which income-tax is not chargable in case of firm is

(a) rs. 1,00,000

(b) rs. 90,000

(c) rs. 1,00,00,000

(d) Nil

Ans. d

33. The maximum amount on which income-tax is not chargable in case of a co-operative society is

(a) rs. 50,000

(c) Nil

(b) rs. 30,000

(d) None of these

Ans. c

34. A local authority is taxable at flat rate of income-tax. 

(a) True

(b) False

(c) Partly true

(d) None of these

Ans. a

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35. A co-operative society is taxable at flat rate of 30% on TI.

(a) True

(c) Partly true

(b)’False

(d) None of these

Ans. b

36. Education cess is leviable at

(a) 3%

(b) 5%

(c) 2.5%

(d) None of these

Ans. a

37. Deduction under Section 80C is allowed from

(a) gross total income

(b) total income

(c) tax on total income

(d) None of these

Ans. a

38. An assessee has paid life insurance premium of ? 25,000 during the previous year for a policy of 1,00,000, He shall

(a) not be allowed deduction Under Section 80C

(b) be allowed deduction Under Section 80G the extent of 20% of the capital sum assured i.e. 20,000

(c ) be allowed deduction for the entire premium as per the provisions of Section 80C

(d) All of the above

Ans. b

39. For claiming deduction Under Section 80C, the payment or deposit should be made

(a) out of any income

(b) out of any income chargable to income tax

(c) during the current year out of any source

(d) None of the above

Ans. b

40. Deduction Under Section 80C shall be allowed for

(a) any education fee

(b) tution fee exclusive of any payment towards any development fee or donation or payment of similar nature

(c) tution fee and annual charges

(d) None of the above

Ans. b

41. Deduction Under Section 80G on account of donation is allowed to

(a) a business assessee only

(b) any assessee

(c) individual or HUF only

(d) None of these

Ans. b

42. The maximum deduction Under Section 80GG shall be limited to

(a) rs. 1,000 per month

(b) rs. 2,000 per month

(c) rs. 3,000 per month

(d) None of these

Ans. b

43. Deduction Under Section 80C is allowed to the extent of

(a) rs. 2,00,000

(b) rs. 1,00,000

(c) rs. 4,00,000

(d) None of these

Ans. b

44. Deduction Under Section 80D in respect of medical insurance premium is allowed to

(a) any assessee

(b) an individual or HUF

(c) individual or HUF who resident in India

(d) individual only

Ans. b

45. Deduction Under Section 80D is allowed if the premium is paid to

(a) life insurance corporation

(b) general insurance corporation or any other insurer approved by IRDA

(c) life insurance or general insurance corporation

(d) None of the above

Ans. b

46. The payment for insurance premium Under Section 80D should be paid

(a) in cash

(b) by any mode other than cash

(c) cash/by cheque

(d) None of the above

Ans. b

47. The quantum of deduction allowed Under Section 8on shall be limited to

(a) rs. 20,000

(b) rs. 10,000

(c) rs. 15,000

(d) rs. 30,000

Ans. c

48. For an employee in receipt of hostel expenditure allowance for his three children, the maximum annual allowance exempt Under Section 10(14) is

(a) rs. 10, 800

(b) rs. 7, 200

(c) rs. 9,600

(d) rs. 3,600

Ans. b

49. Education cess is leviable in case of

(a) an individual and HUF

(b) a company assessee only

(c) all assesses

(d) only on individual assessee .

Ans. c

50. In case of an individual and HUF education cess is leviable only when the total income of such assessee

(a) exceeds rs. 10,00,000

(b) no income limit.

(c) exceeds rs. 2,50,000

(d) None of the above

Ans. b

51. The TI of the assessee has been computed as rs.  2,83,494,90. For rounding off ,the TI will be taken as

(a) rs. 2,83,495

(c) rs. 2,83,500

(b) rs. 2,83,490

(d) rs. 2,84,000

Ans. c

52. Income tax is rounded off to

(a) nearest hundred rupees

(b) nearest one rupee

(c) arounding off of tax is done

(d) nearest ten rupees

Ans. d

53. A’s TI for the A.Yr.2009-10 is ? 2,50,000. His tax liability shall be

(a) rs. 10,000

(c) rs. 11,330

(b) rs. 10,300

(d) None of these

Ans. b

54. The period of holding of shares acquired in exchange of convertible debentures shall be reckoned from

(a) the date of holding of debentures

(b) the date of when the debentures were converted into shares

(c) Any of the two

(d) None of the above

Ans. b

55. The exemption Under Section 54B, is allowed to

(a) any assessee

(c) individual or HUF

(b) individual only

(d) company

Ans. b

56. For claiming exemption Under Section 54B the assessee should acquire

(a) urban agricultural land

(b) rural agricultural land

(c) any agricultural land

(d) residential Land

Ans. c

57. New assets acquired for claiming exemption Under Section 54, 54B or 54D,if transferred within 3 years, will result in

(a) short-term capital gain

(b) long-term capital gain

(c) ST or LTCG depending upon original transfer

(d) None of the above

Ans. a

58. Prakash, who is entitled to a salary of 15,000 per month took an advance of 20,000 against the salary in the month of March 2014. The gross salary of R for assessment year 2014-15 shall be

(a) rs  1,40,000

(b) rs. 1,20,000

(c) None of these two

(d) rs. 2,00,000

Ans. d

59. Preliminary expenses incurred are allowed deduction in

(a) 10 equal annual installments

(b) 5 equal annual installments

(c) full

(d) 8 equal installments

Ans. b

60. Perquisite received by the assessee during the course of carrying on his business or profession is taxable under the head. (b) Other sources

(a) Salary

(c) Business and profession

(d) None of these

Ans. c

61. Agricultural income in Bangladesh is assessable for

(a) resident

(b) non-resident

(c) not ordinary resident

(d) not taxable to anybody

Ans. a

62. Education allowance is exempted for maximum

(b) two child

(a) one child

(c) three child

(d) no limit

Ans. b

63. In which Section of the income tax act exempted incomes have been mentioned?

(a) Section 80

(c) Section 2

(b) Section 10

(d) Section 88

Ans. b

64. What type of tax is income tax?

(a) Direct tax

(c) Both direct and indirect

(b) Indirect tax

(d) Service tax

Ans. a

65. Income from sub-letting of house is taxable under the head

(a) income from house property

(b) capital gain

(c) other sources

(d) business profession

Ans. c

66. Unabsorbed depreciation which could not be set-off in the same assessment year, can be carried forward for

(a) 8 Years

(b) Indefinitely

(c) 4 Years

(d) 5 Years

Ans. b

67. Under which head pension received is taxable

(a) salary

(c) capital gain

(b) house property

(d) other sources

Ans. a

68. Donation made to prime minister national relief fund is deductible under which Section

(a) Section 80G

(b) Section 80G

(c) Section 80C

(d) Section 80D

Ans. b

69. Deduction Under Section 80 C is available to

(b) HUF

(d) co-operative society

(a) individual

(c) company

Ans. a

70. Loss of speculative business can be set-off against the profit of

(a) normal business

(c) house property

(b) any business

(d) speculative business only

Ans. d

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