50+ Direct Tax Solved MCQs

1.

Income tax Act extends to ____________

A. Whole of India
B. Whole of India except Jammu & Kashmir
C. Whole of Maharashtra Only
D. Madhya Pradesh
Answer» A. Whole of India
2.

Out of the following which is a revenue receipt _______________-

A. Premium received on issue of new shares.
B. Annuity received from former employer
C. Interest from investments
D. New Shares
Answer» C. Interest from investments
3.

Body of individual should consist of ____________

A. Individual only
B. Persons other than individual only
C. A local authority
D. Income of all persons
Answer» A. Individual only
4.

A new business was set up on 15-11-2017 and it commences its business from 1-12-2017. The first previous year in this case shall be _______________________

A. 15-11-2017 to 31-3-2018
B. 1-12-2017 to 31-3-2018
C. 2017-18
D. 2019-20
Answer» A. 15-11-2017 to 31-3-2018
5.

Shivaji University is assessable under the Income Tax Act as _______________.

A. An Individual
B. An artificial Juridical Person
C. A local Authority
D. Person other than Individual
Answer» B. An artificial Juridical Person
6.

In which year is the income tax liability computed_______________

A. Assessment Year
B. Previous Year
C. Financial Year
D. Calendar Year
Answer» A. Assessment Year
7.

Income earned during what period is taxed____________

A. Assessment Year
B. Previous Year
C. Financial Year
D. Calendar Year
Answer» B. Previous Year
8.

Whose income is chargeable to Income tax _______________

A. Income of only Indian Citizen
B. Income of only residents
C. Income of all persons
D. Income of only assesses
Answer» C. Income of all persons
9.

One who is liable to pay the income tax__________________

A. Indian Citizen
B. Resident in India
C. Any Person
D. An Assessee
Answer» D. An Assessee
10.

Assessment year is the period of twelve months commencing on ________________

A. The first day of March every year
B. The first day of January every year
C. Financial year immediately preceding the previous year.
D. The first day of April every year
Answer» D. The first day of April every year
11.

Previous year means the _____________

A. Financial year immediately after the assessment year
B. The period of twelve months commencing on the first day of April every year
C. Financial year immediately preceding the assessment year.
D. Calendar year immediately preceding the assessment year
Answer» C. Financial year immediately preceding the assessment year.
12.

Mr. Joshi runs a chemist`s shop, accounting year of which is the financial year. On November -9,2017.He sets up a chemical factory. What is the previous year for the assessment year 2018-19 for the above two businesses___________________

A. 1-4-2017 to 31-3-2018 for both
B. 9-11-2017 to 31-3-2018 for both
C. 1-1-2017 to 31-12-2017 for both
D. Shop: 1-4-2017 to 31-3-2018 and factory 9-11-2017 to 31-3-2018
Answer» D. Shop: 1-4-2017 to 31-3-2018 and factory 9-11-2017 to 31-3-2018
13.

A company joining with two other Companies in a Joint venture is treated under Income tax laws as __________.

A. A Company
B. An Association of persons
C. A body of individuals
D. An artificial juridical person
Answer» B. An Association of persons
14.

Residential status is to be determined for ____________

A. Previous year
B. Assessment year
C. Accounting year
D. Resident
Answer» A. Previous year
15.

Income which accrue or arise outside India but are received directly into India are taxable in case of ________

A. Resident only
B. Both ordinarily resident and NOR
C. Non -resident
D. All these assesses
Answer» D. All these assesses
16.

Total income of person is determined on the basis of his ________________

A. Residential Status in India
B. Citizenship in India
C. Citizen
D. Non -resident
Answer» A. Residential Status in India
17.

Income which accrue or arise outside India and also received outside India is taxable in case of __________

A. Resident only
B. Non- resident in India
C. Not ordinarily resident in India
D. Resident
Answer» A. Resident only
18.

Income received in India ____________

A. Is taxable only for Resident
B. Is not taxable only for a non -resident
C. Is taxable for a resident, a resident but only ordinarily resident non -resident
D. Is exempt in all cases.
Answer» C. Is taxable for a resident, a resident but only ordinarily resident non -resident
19.

Income which accrue in India from a business controlled from India _________________

A. Is taxable only for resident
B. Is not taxable only for non – resident
C. Is taxable for resident, a resident but only ordinarily resident non- resident
D. Is exempt in all cases
Answer» B. Is not taxable only for non – resident
20.

Income accruing in Japan and received there is taxable in India in the case of ______________

A. Resident and ordinarily resident only
B. A resident but not ordinarily resident
C. A non -resident
D. Resident
Answer» A. Resident and ordinarily resident only
21.

Mr. Manmohan Sharma goes out to India every year for 274 days. For the assessment year 2018 -19, he is ____________________

A. A resident and ordinarily resident
B. A resident but not ordinarily a resident
C. A non-resident
D. Resident
Answer» B. A resident but not ordinarily a resident
22.

M.a chartered accountant is employed with M ltd, as an internal auditor and requests the employer to call the remuneration as internal audit fee.M. shall be chargeable to tax for such fees under the head __________

A. Income from salaries
B. Profit and gains from business and profession
C. Income from other sources
D. None of these
Answer» A. Income from salaries
23.

M,who is entitled to a salary of Rs.20,000 p.m took an advance of Rs.50,000 against the salary in the month of March ,2018. The gross salary of m for assessment year 2018-19 shall be _________

A. 2,90,000
B. 2,40,000
C. 50,000
D. 60,000
Answer» B. 2,40,000
24.

M, who is entitled to salary of Rs.12,000 p.m. took advantage salary from his employer for the month of March, 2018 on 31-3-2018.The gross salary of M for assessment year 2018-19 shall__________

A. 1,44,000
B. 1,68,000
C. Rs.24,000
D. 2,90,000
Answer» B. 1,68,000
25.

Salary of M becomes due on 1st of next month and it is paid on 7th of that month. For the assessment year 2018-19, the salary of M shall be taken from ________

A. April 2017 to March 2018
B. March 2017 to February 2018
C. April 2018 to March 2019
D. April 2019 to March 2020
Answer» B. March 2017 to February 2018
26.

M.Ltd announced increase in D.A. on 21-03-2017 with retrospective effect from 21-3-2012 and the same were paid on 6-04-2017. The arrears of D.A. shall be taxable in the previous year ________

A. 2016-17
B. 2017-18
C. In respective previous years to which these relate
D. Previous years
Answer» B. 2017-18
27.

Un -commuted pension received by a Government employee is ____________

A. Exempt
B. Taxable
C. 1/3 is exempt
D. Non taxable
Answer» B. Taxable
28.

M.claimed the exemption of gratuity in the past to the extent of Rs.2,50,000.He was entitled to the gratuity from the present employer amounting to Rs.2,00,000 in the previous year 2017-18. M can claim exemption to the maximum extent of ___________

A. Rs.2,00,000
B. Nil
C. Rs.1,00,000
D. Rs.1,50,000
Answer» A. Rs.2,00,000
29.

Employee M is neither a government employee nor covered under payment of gratuity Act, 1972. He has completed 16 years and 8 months of service. The number of completed years considered for gratuity exemption shall be _____________

A. 17 years
B. 16 years
C. 16 years and 8 months
D. 19 years
Answer» B. 16 years
30.

Compensation received on voluntary retirement is exempt under sec.10 (10c) to the maximum extent of ___________

A. Rs.2,40,000
B. Rs.3,00,000
C. Rs.5,00,000
D. Rs.6,00,000
Answer» C. Rs.5,00,000
31.

M is entitled to children education allowance @80 p.m per child for 3 children amounting Rs.240p.m. It will be exempt to the extent of ___________

A. Rs.200 p.m
B. Rs.160 p.m
C. Rs.240 p.m
D. Rs.250 pm
Answer» B. Rs.160 p.m
32.

Entertainment allowance in case of government employee is _________________

A. Fully exempt
B. Fully taxable
C. Exempt up to certain limits mentioned in sec.16
D. First included in full in gross salary and thereafter deduction allowed from gross salary under section 16 (ii)
Answer» D. First included in full in gross salary and thereafter deduction allowed from gross salary under section 16 (ii)
33.

Pension received by an employee of the central or state government who has been awarded “Param Vir Chakra” _____________

A. Is taxable as income from salary
B. Is exempt from tax
C. Is taxed after deducting Rs.15,000 or 1/3 whichever is lower
D. Is taxable as income from other sources
Answer» B. Is exempt from tax
34.

Children education allowance is ____________

A. Exempt upto lower of the amount actually spent or the prescribed limits.
B. Exempt fully to the extent actually spent or the prescribed limits
C. Exempt to the extent of lower of allowance received or the lump sum amount prescribed, irrespective of actual expenditure.
D. Fully taxable
Answer» C. Exempt to the extent of lower of allowance received or the lump sum amount prescribed, irrespective of actual expenditure.
35.

Leave travel concession is _________

A. Exempt up to lower of the amount actually spent or the prescribed limits.
B. Exempt fully to the extent actually spent
C. Exempt to the extent of lower of allowance received or the lump sum amount prescribed, irrespective of actual expenditure.
D. Fully taxable
Answer» A. Exempt up to lower of the amount actually spent or the prescribed limits.
36.

M.has taken a house on rent and sublets the same to A, income of M from such house property shall be taxable under the head _____________

A. Income from house property
B. Income from other sources
C. Business income
D. Income
Answer» B. Income from other sources
37.

Municipal valuation of the house is Rs.1,00,000 fair rent Rs.1,20,000, fair rent Rs.1,20,000, standard rent Rs.1,10,000 and actual rent received or receivable is Rs.1,40,000. The gross annual value in this case shall be ____________

A. 1,30,000
B. 1,25,000
C. 1,40,000
D. 1,35,000
Answer» A. 1,30,000
38.

A has two house properties. Both are self-occupied. The annual value of ____

A. Both houses shall be nil
B. One house shall be nil
C. No house shall be nil
D. Single house
Answer» B. One house shall be nil
39.

Municipal valuation of the house is Rs.1,20,000, fair rent 1,40,000, standard rent Rs.1,30,000 and actual rent received or receivable is Rs.1,25, 000.The gross annual value in this case shall be ______

A. 1,30,000
B. 1,25,000
C. 1,40,000
D. 1,60,000
Answer» C. 1,40,000
40.

A has two house properties. Both are self-occupied. The annual value of _________

A. Both houses shall be nil
B. One house shall be nil
C. No house shall be nil
D. None of the above
Answer» B. One house shall be nil
41.

An assessee has borrowed money for purchase of house and interest is payable outside India. Such as interest shall ____________

A. Be allowed as deduction
B. Not to be allowed as deduction
C. Be allowed as deduction if the tax is deducted at source
D. None of the above
Answer» C. Be allowed as deduction if the tax is deducted at source
42.

Municipal tax is deducted from__________

A. Net annual value
B. Gross annual value
C. Municipal valuation
D. Amount value
Answer» B. Gross annual value
43.

In case the property is owned by co -owners and it is self-occupied by all co -owners. The annual value of such house property ____________

A. Be nil
B. For each co-owner shall be nil
C. Only for co -one owner will be nil
D. None of the above
Answer» B. For each co-owner shall be nil
44.

A house property with fair rent Rs.1,20,000 is neither let out nor self-occupied throughout the previous year. Its annual value shall be ________

A. Rs.1,20,000
B. Nil
C. Rs.60,000
D. None of the above
Answer» A. Rs.1,20,000
45.

Unrealized rent is a deduction from ______-

A. Gross annual value
B. Net annual value
C. Municipal value
D. District
Answer» A. Gross annual value
46.

Dhanesh is a member of house building cooperative society. The society is the owner of the flats constructed by it. One of the flats is allotted to Dhanesh. The income from that flat will be assesses in the hands of ____________

A. Co -Operative Society
B. Dhanesh
C. Neither of the above
D. Society and Dhanesh equally
Answer» B. Dhanesh
47.

Following will be taxable as income from house property_______-

A. Sub -letting of a house
B. Letting of an office building
C. Sale of house at profit
D. Rent from open land used for wedding functions
Answer» B. Letting of an office building
48.

Municipal taxes to be deducted from GAV should be _______

A. Paid by the tenant during the previous year
B. Paid by the owner during the previous year
C. Accrued during the previous year
D. Accrued or paid by owner whichever is lower
Answer» B. Paid by the owner during the previous year
49.

Standard deduction under section 24(a) from income from House property is _______

A. 1/3 rd of NAV
B. Repairs actually incurred by the owner
C. 30% of NAV
D. Rs.30,000
Answer» A. 1/3 rd of NAV
50.

Interest on borrowed capital accrued up to the end of the previous year to prior to the year of competition of construction is allowed__________

A. As a deduction in the year of completion of construction
B. In 5 equal annual installments from the year of competition of construction.
C. In the respective year in which the interest accrues
D. Up to Rs.30,000 on Rs.20,000.
Answer» B. In 5 equal annual installments from the year of competition of construction.
51.

Salary, bonus commission or remuneration due to or received by a working partner from the firm is taxable under the head_______

A. Income from Salaries
B. Other sources
C. Business income
D. Salary
Answer» C. Business income
52.

Perquisite received by the assesses during the course of carrying on his business or profession is taxable under the head _______

A. Salary
B. Other Sources
C. Business / Professional Income
D. Professional income
Answer» C. Business / Professional Income
53.

Interest on capital or loan received by a partner from a firm is __________

A. Exempt u/s 10 (2A)
B. Taxable as business and profession income
C. Taxable as income from other sources
D. None of the above
Answer» B. Taxable as business and profession income
54.

Export incentives received by an assessee are __________

A. Exempt
B. Taxable as business income
C. Exempt up to certain limits
D. Unexempt
Answer» B. Taxable as business income
55.

M.Who was carrying on agency business, received a sum of Rs.5,00,000 from his principal for termination of agency. Compensation so received shall be _________-

A. Exempt as it is capital receipt
B. Fully taxable as business income
C. Taxable as income from other sources
D. Intangible asset
Answer» B. Fully taxable as business income
56.

Depreciation is allowed in case of __________

A. Tangible fixed assets only
B. Intangible assets only
C. Tangible and intangible assets
D. Wasting assets only
Answer» C. Tangible and intangible assets
57.

If the asset of a particular block is acquired and put to use during the previous year for less than 180 days, the assessee shall be entitled to depreciation___________

A. At normal rate
B. At 50% of normal rate
C. No depreciation is allowed
D. Depreciation
Answer» B. At 50% of normal rate
58.

Which of the following tax is allowed as deduction while computing the business income________

A. Wealth Tax
B. Income Tax
C. GST
D. TDS
Answer» C. GST
59.

where the amount of an expenditure claimed as deduction exceeds Rs.10,000, it should be paid by ______

A. Crossed cheque
B. Account payee cheque / draft
C. Cash
D. None of these
Answer» B. Account payee cheque / draft
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