Direct Tax MCQ Questions and Answers Part – 1

Direct Tax MCQ Questions and Answers Part – 1

Direct Tax MCQ Questions and Answers Part – 2

Direct Tax MCQ Questions and Answers Part – 3

1. Which one of the following is/ are features of income tax?
A. Levied as per the constitution
B. Levied by Central Govt.
C. Annual Tax
D. All the above
ANSWER: D
2. _____________ is not a direct taxes.
A. Gift tax
B. Wealth tax
C. Income tax
D. GST
ANSWER: D
3. Income Tax Act was passed
A. 1955
B. 1961
C. 1956
D. 1939
ANSWER: B
4. What are the residential status of an individual?
A. Resident
B. Non-resident
C. Resident but not ordinarily resident
D. all the above
ANSWER: D
5. _____________ is the current assessment year.
A. 2018-2020
B. 2019-2020
C. 2018-2019l
D. 2018-2019
ANSWER: B
6. Normally Previous Year starts from ___________
A. 1st April every year
B. 1st March year
C. 1st Jan. every year
D. none of the above
ANSWER: A
7. Any person on whom some proceeding has been taken under income tax is known as
A. Ordinary Assessee
B. Deemed Assessee
C. Assessee in default
D. Representative assessee
ANSWER: A
8. The person who satisfies any one of two conditions u/s 6(1) + both the additional conditions u/s 6(6)(a)&(b)
A. Resident
B. Non Resident
C. Resident but not ordinarily resident
D. none of this above
ANSWER: A
9. one of the basic conditions under residential Status _____days
A. 186
B. 182
C. 181
D. 180
ANSWER: B
10. Apart from the Individual, Who will have three residential status?
A. Firm
B. AOP
C. Company
D. HUF
ANSWER: A
11. Income received in India is taxable for ____________.
A. Resident
B. Non-resident
C. Resident but not ordinarily resident
D. All the above
ANSWER: D
12. Past untaxed foreign income brought into India is taxable for
A. Resident
B. resident but not ordinarily resident
C. non resident
D. none
ANSWER: D
13. Profit from the business set up outside India but controlled from India is taxable
A. Resident
B. resident but not ordinarily resident
C. non resident
D. A & B
ANSWER: D
14. Rent paid to a partner by a PFAF is.
A. Allowable expense.
B. None business expenditure.
C. Rebate to firm.
D. None of these.
ANSWER: A
15. Share of profits from PFAF of a partner is.
A. Business income.
B. Exempted income.
C. Income from other sources.
D. Capital gain.
ANSWER: B
16. The year in which the income is earned is called_______
A. Previous year
B. current year
C. Assessment year
D. None
ANSWER: A
17. Salary received by partner from firm is _________ income
A. salary
B. business
C. other source
D. professional
ANSWER: B
18. Definition of Assessment year is given in sec. ____________.
A. 2(9)
B. 3(9)
C. 3(10)
D. 4(9)
ANSWER: A
19. Share of income received from AOP is entitled to rebate at.
A. 10%
B. Nil.
C. Average rate.
D. 20%.
ANSWER: C
20. There is no exemption limit and flat rate of tax is applicable to
A. Individuals.
B. Partnership firms.
C. AOP.
D. Companies and partnership firms.
ANSWER: C
21. Agriculture Income is __________
A. Taxable
B. not taxable
C. partly taxable
D. none of this above
ANSWER: B
22. House rent allowances is _________
A. Fully taxable
B. partly taxable
C. fully exempted
D. none of this above
ANSWER: B
23. Income Tax Authorities are grouped into two main wings Administrative and.
A. Judicial.
B. Managerial.
C. Executives.
D. Clerical.
ANSWER: A
24. The highest Administrative Authority for Income Tax in India is.
A. Finance Minister.
B. CBDT.
C. President of India.
D. Director of Income Tax.
ANSWER: B
25. What is the exemption limit for children education allowance?
A. Rs.100 pm per child for two children
B. Rs.200 pm per child for two children
C. Rs.300 pm per child for two children
D. Rs.250 pm per child for two children
ANSWER: A
26. What is the exemption limit for children hostel expenditure allowance?
A. Rs.200 pm per child for two children
B. Rs.300 pm per child for two children
C. Rs.400 pm per child for two children
D. Rs.500 pm per child for two children
ANSWER: B
27. Determination of taxable income and calculation of tax liability is known as
A. Assessment
B. Scrutiny.
C. levy
D. tax calculation
ANSWER: A
28. Which one of the following is not an exempted income?
A. Foreign allowance
B. Perks of employee posted in abroad
C. HRA to supreme court Judge
D. Bonus
ANSWER: D
29. Deduction of tax at source made for incomes which can be calculated in advance is called.
A. T.D.S.
B. PAS.
C. FAS.
D. MAS.
ANSWER: A
30. What is the exempted limit while calculating salary under section 16 ia?
A. Rs. 40,000
B. Rs. 25,000
C. Rs. 30,000
D. Rs. 1,00,000
ANSWER: A
31. For tax deducted at source, employer issues to employee.
A. Form 20.
B. Saral
C. Form 16.
D. Form 31A.
ANSWER: C
32. Advance tax should be paid during a financial year if such advance tax payable by the assessee exceeds.
A. Rs.50,000.
B. Rs. 1,000.
C. Rs.20,000.
D. Rs. 1,00,000.
ANSWER: B
33. Due date of filing of return by company assessee is____.
A. .30th June.
B. 31st August.
C. 31st July.
D. 30th Sep.
ANSWER: D
34. Under the income- tax act, the incidence of taxation depends on
A. The citizenship of the tax-payer.
B. The age of the taxpayer
C. The residential status of the tax-payer.
D. The gender of the taxpayer
ANSWER: C
35. Unabsorbed depreciation can be carried forward for set off.
A. for a period of four years only.
B. for a period of eight years only.
C. for an unlimited number of years.
D. for a period of eighteen years only.
ANSWER: C
36. Contribution of provident fund by employer is exempted upto ____ of Salary.
A. 9.5%
B. 10%
C. 12%
D. 50%
ANSWER: C
37. Interest accumulated to PF a/c is exempted upto _________.
A. 9.5%
B. 10%
C. 12%
D. 15%
ANSWER: A
38. Which of the following is taxable in the hands of specified employee only?
A. Rent free house
B. club facility
C. credit card facility
D. car or other conveyance facility
ANSWER: D
39. Deduction in respect of expenditure on advertisements through articles intended for presentation will be
allowed on the value of each article up to a limit of.
A. fully allowed.
B. Rs. 1,000 per item.
C. Rs. 800 per item.
D. . Rs. 1,800 per item.
ANSWER: A
40. Capital expenditure on scientific research which cannot be absorbed on account of insufficiency of profit
in any accounting year can be carried forward for.
A. 16 years.
B. 8 succeeding previous years.
C. Indefinite period.
D. 12 years.
ANSWER: C
41. Embezzlement of cash in a money lending business shall be treated as.
A. Business expenditure.
B. Revenue loss incidental to business.
C. Capital expenditure.
D. Capital loss.
ANSWER: B
42. Entertainment allowance is fully taxable allowance to _________.
A. private employees
B. Govt. employees
C. foreign employee
D. None of the above.
ANSWER: A
43. Receipt of amount on maturity of LIC Policy is.
A. A revenue receipt.
B. A capital receipt.
C. A casual receipt.
D. None of these.
ANSWER: B
44. Water bill issued in the name of employee but paid by employer is
A. taxable for all employees
B. exempted for all employees
C. partially taxable for all employees
D. taxable for specified employees only
ANSWER: A
45. What is the notified limit for calculation of exemption of gratuity?
A. Rs. 20,00,000
B. Rs. 10,00,000
C. Rs. 5,00,000
D. Rs. 30,00,000
ANSWER: A
46. Deductions out of gross salary under section 16 is/are _______.
A. Standard deduction
B. professional tax
C. both of the above
D. none of the above
ANSWER: C
47. Maximum limit of amount which can be claimed as deductions under section 80C is ______.
A. Rs. 50,000
B. Rs.1,00,000
C. Rs. 2,00,000
D. Rs. 1,50,000
ANSWER: D
48. Rent from a building let out for business purpose is __________ income
A. house property
B. business
C. capital gain
D. other source
ANSWER: A
49. Annual value is dealt in section ______.
A. 23
B. 25
C. 24
D. 26
ANSWER: A
50. The rent fixed under the rent control act is __________.
A. MRV
B. FRV
C. standard rent
D. RRV
ANSWER: C

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Author and Assistant Professor in Finance, Ardent fan of Arsenal FC. Always believe "The only good is knowledge and the only evil is ignorance - Socrates"
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