MCQ ON Income Tax Law and Accounts(UNIT 2)
B.COM SEM 6
UNIVERSITY OF LUCKNOW
UNIT 2 MCQ BANK
Q1. 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.
2. 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.
3. 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
4. Perquisites or beets 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.
5. Article Juridical person’s example is
a. State Bank of India, Dibrugarh.
b. Delhi University.
c. Guwahati Municipal Corporation.
6.The maximum deduction of interest on loan is taken for construction of house given on rent is
(A)1,50,000
(B)1,00,000
(C)30,000
(D)No limit
7. Income from the house for self business is:
(A)Net profit
(B)Fair rent
(C)Municipal value
(D)Nil
8.X purchased a house for his residence and borrowed a loan of 9,75,000 in 2011. The deduction for interest when interest payable in P.Y. is 1,50,000 will be:
(A)30,000
(B)1,75,000
(C)1,50,000
(D)45,000
9.The annual value of self-occupied house is:
(A)Municipal valuation
(B)Fair rent
(C)(Nil) Zero
(D)Whichever is less
10.Which house property is not charged to tax?
(A)Farmhouse
(B)Palace of an Ex-Ruler
(C)Business Building
(D)All of these
11.The annual value of a house property is 1,20,000. B and C are equal co-owners of the house. B’s income from house property shall be:
(A)42,000
(B)60,000
(C)80,000
(D)1,20,000
12.The annual value of a house property is 40,000. Standard deduction u/s 24(a) shall be:
(A)8,000
(B)10,000
(C)12,000
(D)15,000
13.Arrears of rent received during the previous year 1,00,000. From this amount deduction shall be allowed:
(A)Zero
(B)20,000
(C)30,000
(D)50,000
14.Unrealised rent subsequent to claiming deduction realised 1,00,000. From this amount deduction shall be allowed:
(A)Zero
(B)20,000
(C)30,000
(D)40,000
Q15. Salary includes:
A.cash received
B.perquisites
C.profit in lieu of salary
d.all of these
Q16. Salary is deemed to accrue at the place where
(a)Payment for services is received
(b)Services are rendered
(c)Either (a) or (b)
(d)None of the above
Q17. Inclusive definition of salary is given u/s:
(a)17(3)
(b)17
(c)17(1)
(d)None
Q18.U/s 15 salary is taxable on basis.
(a)Receipt
(b)Due
C)Due
D)Either of (a) or (b)
Q19.Which of the following allowance is fully Exempt?
(a)Overtime allowance
(b)Medical allowance
(c) Allowances paid by UNO
(d) HRA
Q20. HRA is given u/s,
(a)10(13A) Rule 2A
(b)10(158) Rule 38
(c)20(4) Rule 88
(d)10(14A)
Q21. Salary paid by Government to Citizen of India (R.NR) for services rendered o/s India is deemed to accrue
(a)in India
(b)0/s India
(c)Depends on the discretion of Assessee
(d)None
Q22. Bonus is taxable as salary income on, basis
(a)Due
(b)Receipt
(c)Eaither of (a) or (b)
(d)Anytime at the choice of employer
Q23. Mr. P is entitled to a watchman allowance of Rs. 600 p.m. for the security of his residence. He pays Rs. 500 p.m watchman employed by him. Taxable allowance
(a)500 p.m.
(b)100p.m
(c)600p.m
(d)None
Q24. Medical expenditure reimbursed by the employer to the employee shall be exempt upto
(a)Rs. 15,000 pm
(b)Rs. 1,00,000 pat
(c)Fully Exempt
(d)Fully taxable
Q25.Sport Allowance IS…………………..
a)It is Taxable
(b)Exempt to handicapped Employees upto Rs. 3200 p.m
(c)Always Taxable except to Handicapped employees.
(d)Both (b) & (c)
Q26.Which of the following allowances are fully taxable?
(a)Warden Allowance
(b)Servant Allowance
(c)Non-Practicing Allowance
(d)All of the above
Q27. Which of the following is not the condition for claiming exemption for HRA?
(a)Employee is in receipt of HRA
(b)Location of the employer.
(c)Rent paid by employee > 10% of salary.
(d)Location of the accommodation of employees
Q28. Children education allowance is exempt upto:
(a) Rs. 100 pa for 2 children
(b) Rs. 100 pm for 2 children each
(c) Rs. 300 pm per child for 2 children each
(d) Rs. 100 pa per child for 2 children each
29.150% of weighted deduction for in house research in some cases is allowed to:
(A)Any assessee
(B)Company assessee
(C)A Scientific Research Association
(D)Co-operative society
30.Under which the work of a doctor is covered?
(A)Trade
(B)Business
(C)Profession
(D)None of these
31.Pick out the inadmissible expense:
(A)GST
(B)Expenses on the assessment of Income Tax
(C)Income Tax
(D)Depreciation on machine
32.Allowed item when computing business income is :
(A)Doubtful debts reserve
(B)Actual bad debts
(C)Doubtful debts
(D)All of these
33.X Ltd. spent 1,00,000 as preliminary expenses on 31st March, 2019 deduction allowed is:
(A)10,000
(B)25,000
(C)7,143
(D) 20,000
34.30,000 paid in cash for hire charges of goods carriage, the disallowed expense shall be:
(A) 25% of the amount paid
(B) 20,000
(C) 30,000
(D) Nil
35.A company incurred capital expenses 1,00,000 during the previous year on promotion of family planning amongst its employees. During the previous year deduction shall be allowed to the company:
(A)20,000
(B)50,000
(C)1,00,000
(D)Nil
36.A businessman spent 50,000 on advertisement in a souvenir of a political party. He will get a deduction from:
(A)Profits and gains of business
(B)Income from other sources
(C) Gross total income
(D)None of these
37.Telphone expenditure allowance is exempt upto
A)400 pa for 2 children
(b) Rs. 300 p.m for 2 children
C)Rs 300 p.m per child for 2 children each
(d) Rs. 300 p.a per child for 2 children each
38. Transport allowance is exempt upto Rs. 3,200 pm for.
(a) Govt. employees
(b) Non-Govt. Employees
(c) Handicapped Employee
(d) Mentally handicapped
Q39. Allowance for Transport is exempt upto
(a) 70% of such Allowance;
(b) Rs. 10,000 p.m
(c) Lower of (a) or (b)
(d) Rs. 5,000
Q40. Rent Free Accommodation is covered in.
(a) Sec 17(2)(ii) Rule 3(a)
(b) Sec 17(2)(i) Rule 3(1)
(c) Section 18(i) Rule 3(1)
(d) Section 17(2)(vi)
41. Accommodation at concessional rent is given u/s at 17(2)
(a) Rule 3(1) (top sec 18(1)
b) Rule 5(i)
(c) section 16(ii)
(d) section 16(iii)
Q42. Value of perquisite in case of rent-free accommodation given to government employees will be
(a) 10% of salary
(b) 15% of salary
(c) 7.5% of salary
(d) License fees determined by government.
Q43. Rent-free official residence provided to a Judge of HC.SC is
(a) Taxable
(b) Exempt
(c) Exempt upto Rs. 5,000p.m
(d) Taxable if such judge stays out of India after retirement.
Q44. Rent-free furnished house provided to an Officer of Parliament is an is
(a) Taxable
(b) Exempt
(c) Exempt upto Rs. 5,000 p.m
(d) Taxable if such officer stays o/s India after retirement
Q45. Medical facility to employee in India is exempt if:
(a) al owned/maintained by employer or Government Hospital;
(B) Private Hospital (if recommended by Government for treatment of its employees).
(c) Specified facility for prescribed diseases in hospital approved by PCC/CC
(d) All of the above
Q46. For the purpose of determining the perquisite value of loan at concessional rate given to the employee, the lending rate of State Bank of India as on is required;
(a) 1st day of PY
(b) Last day of PY
(c) Day on which loan is given
(d) 1st day of AY
Q47. In which of the following cases, Interest-free Loan is not treated as perquisite:
(a) If the amount of loans Rs. 20,000.
(b) If Loan is given for Medical Treatment of Prescribed Diseases (Cancer, tuberculosis, etc).
(c) Both (a) & (b)
(d) None of the above
Q48. Training of employees is not a/an perquisite.
(a) Taxable
(b) Exempt
(c) Exempt upto Rs. 10,000
(d) Depends on the discretion of AO
Q49. Exemption from leave Salary is given u/s
(a) 10(10A8)
(b) 10(10AA)
(c) 10(15A)
(d) 10(10A)
Q50. Scholarship given by an employer-company to children of its employees is not a.an perq
(a) Taxable
(b) Exempt
(c) Exempt upto Rs. 10,000
(d) Depends on the discretion of AO.
51.U/s 44AD who is not an eligible assessee?
(A)Individual
(B)Hindu undivided family
(C)Partnership firm
(D)Limited liability partnership firm
52.Presumed percentage of the profit of an eligible business is:
(A)4%
(B)8%
(C)12%
(D)15%
53.Presumed income per month from plying of light goods vehicle is:
(A)3,000
(B)4,000
(C)7,500
(D)6,000
54.If during the previous year the amount of insurance commission does not exceed 60,000 the maximum deduction for expenses shall be:
(A)15,000
(B)20,000
(C)25,000
(D)30,000
55.The total turnover limit of an eligible business is:
(A)40 lakh
(B)50 lakh
(C)two crore
(D)80 lakh
56.Sales limit under section 44AD:
(A)20 lakh
(B)60 lakh
(C)80 lakh
(D)2 crore
57.U/s 44AE the provision of presumptive income is applicable if the assessee does not own more goods carriages at any time during the previous year.
(A)10
(B)12
(C)15
(D)20
Q58. Exemption in respect of Leave Travel Concession is available only for going anywhere with
(a) In India. Outside India; Family
(b) In India; family.
(c) In India; friends or family.
(d) In India; Alone
Q59. Exemption in respect of Leave Travel Concession is available only on
(a) Hotel charges
(b)Boarding expenses
(c) Bus Air Rail Fare
(d) All of the above
Q60. Cash gifts are
(a) Taxable if value is Rs. 6,000 or less
(b) Exempt if value is Rs. 5,000 or less
(c) Always fully taxable
(d) Fully Exempt
Q61. Expenditure pertaining to health club, sports facilities etc. Is
(a) Taxable Perquisite.
(b) Exempt Perquisite.
(c) Partly Exempt.
(d) None of the above
Q62. Employer has given a video camera for the personal use of the employee. The value of this perquisite is:
(a) 10 % pa of historical cost
(b) Nil
(c) 10 % pa of the WDV
(d) Fully Exempt
Q63. Which of the following perquisites will be taxable in the hands of non-specified employees?
(a) Provision of sweeper, gardener, watchman or personal attendant or Use of motor car
(b) Facility of use of gas, electricity or water supplied by employer
(c) Free or concessional educational facilities or Free or concessional tickets
(d) None of the above
Q64. Encashment of leave salary at the period of service is fully taxable in the case of
(a) CG employee
(b) SG employee
(c) Both CG & SG employees
(d) Government employee & Non-Government employee
Q65. Maximum Exemption in case of leave encashment is:
(a) Rs. 2.4 lac
(b) Rs. 3.5 lac
(c) Rs. 3 lac
(d) Rs. 10 lac
Q66. Payment of premium on personal accident insurance policies of the employee by the employer
(a) Taxable perquisite
(b) Exempt Perquisite since no immediate benefit would become payable to the employee
(c) Partly Exempt
(d) None of the above
Q67. Salary for exemption of leave encashment shall be taken as
(a) Last drawn Salary
(b) Average Salary of 10 months immediately preceding the month of retirement
(c) Average Salary of 10 months immediately preceding the date of retirement
(d) Any of the above
68.Which of the following is not chargeable to tax under the head Income from other sources’:
(A)Dividend from a Co-operative society
(B)Prize on Crossword puzzles
(C)Profit on the sale of the goodwill of a business
(D)Interest from Bank
69.An individual received family pension 60,000. How much standard deduction shall be allowed to him:
(A)20,000
(B)25,000
(C)40,000
(D)15,000
70.Under which head the pension is taxable:
(A)Salaries
(B)Income from Other Sources
(C) Capital Gains
(D) None of these
71.Income from sub-letting of House Property is:
(A)Income from Other Sources
(B)Property income
(C)Exempted
(D)Capital Gains
72.Salary of a M.P. will be taxable under the head:
(A)Salaries
(B)Profits from Business and Profession
(C)Capital Gains
(D)Income from Other Sources
73.The deduction allowable in respect of family pension taxable under Sources” is:
(A)33% of the pension
(B)30% of the pension or 15,000, whichever is less 1.
(C) 33% of the pension or 15,000, whichever is less
D)Nil
Q74. Salary for the purpose of exemption of leave encashment shall be taken as
(a) Basic salary+DA (forming part of salary for retirement benefits or not)
(b) Basic salary+DA (forming part of salary for retirement benefits)+ monthly commission
(c) Basic salary+DA (forming part of salary for retirement benefits) commission (on % basis of sales)
(d) Basic salary & commission.
Q75. Which of the following leave salary is exempt?
(a) Leave salary paid to legal heir
(b) Leave salary received by family of government servant who died in harness (on duty)
(c) Both (a) & (b)
(d) None of the above
Q76. Salary for the purposes of exemption of gratuity when employee is covered under Gratuity Act 1972 includes
(a) Basic salary+DA (forming part of salary for retirement benefits or not)
(b) Basic salary+DA (forming part of salary for retirement benefits) monthly commission
(c) Basic salary + DA (forming part of salary for retirement benefits)+ commission on % basis of sales
(d) Basic salary & commission
Q76. An employee is covered under Payment of Gratuity Act, 1972. Salary for purpose of calculating 15 days salary for each completed year of service shall be.
(a) Last drawn Salary
(b) Avg. Salary of last 10 months
(c) Average Salary of last 3 completed years
(d) Average Salary of last 12 months
Q78. The maximum ceiling limit for exemption u/s 10(10) in respect of gratuity for employees covered by the Payment of Gratuity Act, 1972 is:
(a) Rs. 30 lac
(b) Rs. 5 lac
(c) Rs. 3.5 lac
(d) Rs. 20 lac
Q79. An employee is Not Covered under Payment of Gratuity Act, 1972. Maximum exemption of gratuity is:
(a) Rs. 10 lac
(b) Rs. 3.5 lac
(c) Rs. 20 lac
(d) None
Q80. Maximum Standard deduction u/h Salary shall be
(a) Rs. 40,000
(b) Rs. 50,000
(c) Rs. 2.500
(d) Rs. 5,000
Q81. Compensation received an Voluntary retirement is exempt u/s 10(10C) to the maximum extent of
(a) Rs. 2.4 lac
(b) Rs. 3.5 lac
(c) Rs.5 LAC
(d) Rs 3 lac
Q82. Employees own contribution to RPF.PPF shall be
(a) Allowed as deduction u/s 80C
(b) Allowed as deduction u/s BOTTA
(c) Allowed as deduction u/s 10
(d) Allowed as deduction u/s 16(a)
Q83. Employers contribution to RPF shall be
(a) Fully Exempt
(b) Exempt upto 12 % of salary
(d) Fully Taxable
(c) Exempt up to 10% of salary
Q84. Interest credited to RPF shall be
(a) Fully Exempt
(b) Fully Taxable
(c) Exempt up to 8.5 % pa of total contribution
(d) Exempt up to 95% pa of total contribution
85. Embezzlement of cash by a cashier is
a. A revenue loss.
b. A casual loss.
c. A capital loss.
86. 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.
87. Income which accrues or arises outside India and also received outside India is taxable in case of
a. Resident only.
b. Not ordinarily resident.
c. Both ordinarily resident and not ordinarily resident.
88. Rent received from agricultural land is
a. Fully exempted. Because it is an agricultural income
b. Partially exempted.
c. Not exempted.
27. Leave travel concession is a tax-free perquisite.
a. For one journey per year.
b. For one journey in a block of 4 years.
c. For two journeys in a block of 4 years.
89. 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.
90. Total income of a person is determined on the basis of his:
(i) Residential status in India.
(ii) Citizenship in India.
(iii) Both of the above.
91. The basis of chargeability of House Property is
(a) Annual Value
(b) Municipal Value
(c) Standard Ren
t (d) Fair Rent
92. Under the head of house property.
(a) Income from building (a) income is taxable.
(b) income from land
(c) Income from building & land attached to building
(d) None of the above
93. Composite rent of let-out house property is taxable u/h
(a) PGBP
(b) IFOS
(c) Income from HP
(d) (a) or (b) above depending upon certain conditions
94. Mr. PC is the owner of a house property covered under the Rent Control Act. Municipal value Rs. 30,000, actual rent Rs. 25,000; fair rent Rs. 36,000 & standard rent is Rs. 28,000. GAV will be.
(a) Rs. 30,000
(b) Rs. 36,000
(c) Rs. 25,000
(d) Rs. 28,000
95. Where SR is not applicable, GAV shall be higher of:
(a) FR & MV
(b) MV & AR
(c) FR & MV & AR
(d) none of the above
96. Treatment of unrealized rent for determining income from house property
(a) To be deducted from expected rent
(b) To be deducted from actual rent
(c) To be deducted u/s 24 from annual value
(d) To be deducted from both expected rent & actual rent
Q97. Municipal Taxes are deducted from
(a) NAV on payment basis
(b) GAV on accrual basis
(c) GAV on payment basis
(d) not deductible
Q98. A house property whose fair rent is Rs. 1,20,000 is vacant throughout the previous year. Municipal taxes paid for the house property are Rs. 20,000. Its NAV
(a) Rs. 1,20,000
(b) Nil
(c) Rs. 1,00,000
(d) (Rs 20,000)
Q99. The maximum amount of deduction of Interest on borrowed capital in case of one house which is self-occupied shall be (loan was taken on 15.12.1999)
(a) Rs. 2 lacs
(b) Rs. 30.000
(c) Rs. 3 lacs
(d) Nil
Q100.Deduction u/s 24ja) of statutory deduction under the head House Property is % of NAV. of
(a) 35%
(b) 30%
(c) 25 %
(d) 40%
Q101. Which of the following deduction are to be made from income house property?
A. Statutory deduction
B. Interest on borrowed loan
C. Both (a) and (b)
D. Option (a) but not (b)
Q102. Which of the following interests are allowed as deduction while computing Income from HP:
(a) Interest on unpaid interest
(b) Interest on fresh loan taken to repay original loan.
(c) Amount paid as brokerage for arrangement of loan
(d) None of the above
Q103. Mr. PC received Rs. 30,000 as arrears of rent during AY 2019-20.
(a) Rs. 30,000
(b) Rs. 21,000
(c) Rs. 20,000
(d) Rs. 15,000
Q104. Mr. PC has taken a house property on lease for 15 years from Mr. Bharat & let out the same to Mr. Gatti Income from such house earned by Mr. PC is taxable u/h_
(a) IFOS
(b) PGBP
(c) Income from House Property as Mr. PC is the deemed owner of house property.
(d) None
Q105. The concept of Deemed Ownership is given u/s
(a) 24
(b) 25
(c) 29
(d) 27.
Q106. Which out of the following is not a case of deemed ownership of house property?
(a) Transfer of house property to a spouse for inadequate consideration
(b) Transfer of house property to a minor child for inadequate consideration
(c) Individual who is holder of an impartible estate
(d) Co-owner of a house property
Q107. The term business is defined u/s is
(a) 2(36)
(b) 2(13)
(c) 2(14)
(d) Not defined
Q108. The term Profession is defined u/s
(a) 2(36)
(b) 2(13)
(c) 2(14)
(d) Not defined
Q109. The term Profession includes Vocation is given in
(a) 2(36)
(b) 2(13)
(c) 2(14)
(d) 2(47)
Important Points:
1) The income tax was introduced in India for the Ørst 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.
7) The rent Øxed 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 Ørst ‘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 exempted from tax.
12) Deduction for interest on loan taken for construction of self-occupied house after 01.04.1999
Q110. Business includes any
(a) Trade & Commerce
(b) Manufacture
(c) Any Adventure in the nature of Trade, Commerce, Manufacture.
(d) All of the above
Q111. requires some degree of learning.
(a) Business
(B) Profession
(c) Vocation
(d) All of the above
Q112. Export incentives received by an assessee are
(a) Exempt
(b) Taxable u/h PGBP
(c) Exempt up to certain limits & balance is taxable u/h PGBP.
(d) Taxable u/h IFOS
Q113. Any payment received by the employer on the maturity of the Keyman Insurance Policy for which premium was paid by such employer shall be considered to be income of the employer u/h
(a) PGBP
(b) Salary
(c) IFOS
(d) None
Q114. Perquisite received by the assessee during the course of his business/profession is taxable u/h
(a) PGBP
(b) Salary
(c) IFOS
(d) None
Q115. Under the Income-tax Act, 1961 Profit from speculative business is taxable under the head:
(a) PGBP
(b) IFOS
(c) IFOS or PGBP
(d) Not taxable
Q116. Repairs for building are deductible u/s 30.
(a) Capital
(b) Revenue (current)
(c) Both (a) & (b)
(d) None of (a) & (b)
Q118. Which of the following are included in business according to section 2(13):
A, Trade
B. Commerce
C. Manufacture
D. All of the above
Q119. Computation of depreciation is given u/s
(a) 30
(b) 31
(c) 32
(d) 33
Q120. The depreciation is allowed to
(a) Owner of asset
(b) Owner of asset, whether fully owned or partially owned
(c) The lessee of the asset
(d) The tenant of the asset