Chapter 1st
Basic Concept of Tax Laws
1. Health & Education cess is payable on
a) Income-tax only
b) Income-tax plus surcharge
b) Income Tax minus rebate
d) any of the above, depends on
question
Answer – D
2. The General rates of income tax are mentioned in –
a) Income-tax Act, 1961
b) Annual Finance Acts
c) both Income-tax Act, 1961 and Annual Finance Acts
d) None of the above
Answer – B
3. Which statement is Ture in case of surcharge applicable in the case of an individual is –
a) 2% of tax payable if total income exceeds 100 lakh
b) 10% of tax payable if total income exceeds 100 lakh
c) 25% of tax payable if total income exceeds ` 200 lakh
d) Surcharge not levied on individual
Answer – C
4. As per section 115BAC newly inserted, In respect of a Resident Individual, who is of the age of 60 years or more at any time during the previous year 2020-21
a) Higher basic exemption of ` 2,00,000 is available
b) Higher basic exemption of ` 2,50,000 is available
c) Higher basic exemption of ` 3,00,000 is available.
d) Higher basic exemption of ` 5,00,000 is available.
Answer – B
5. The surcharge applicable to a domestic company for A.Y. 2021-22 is –
a) 2% always irrespective of level of income
b) 10% if total income exceeds ` 1 crore.
c) 5% if total income exceeds ` 1 crore
d) 7% if the total income exceeds ` 1 crore but upto` 10 crore.
Answer – D
6. The surcharge applicable to a foreign company for A.Y. 2021-22 is –
a) Nil
b) 2% if the total income exceeds ` 1crore upto` 10 crore
c) 2.5% if the total income exceeds ` 1 crore upto` 10 crore
d) 5% in all cases
Answer – B
7. A non-resident individual having taxable income in India of ` 5,00,000 shall be allowed rebate of how much under section 87A
a) 2,000
b) 3,000
c) 5,000
d) Nil
Answer – D
8. ABC Inc, a foreign company has a total income of 1 crore. What would be the amount of surcharge applicable?
a) 10%
b) 2%
c) 5%
d) Nil
Answer – D
9. Direct tax is a kind of tax where burden of tax is ………………. on payer.
a) directly
b) indirectly
Answer – A
10. The provision of income tax is governed under which act`
a) Income tax Act, 1961
b) Income tax Act, 1922
c) Direct tax code
d) All of the above
Answer – A
11. Decisions pronounced by …… becomes law.
a) Supreme Court
b) High Court
c) Income tax Appellate Tribunal
d) None of the above
Answer – A
12. …………. capital is that capital which is turned over in business and results in profit or loss
a) fixed
b) circulating
c) any
d) none
Answer – B
13. …… capital is not directly involved in business
a) fixed
b) circulating
c) any
d) none
Answer – A
14. A newly set up business coming into existence, the first previous year will commence from
a) Date of set up of business
b) 1st April of previous year
c) Any date after set up of business
d) one day before date of set up of business
Answer – A
15. Exemption limit of ` 3,00,000 or ` 5,00,000 is applicable for
a) Resident Individual
b) Non-resident Individual
c) Both resident and non-resident Individual
d) none of them
Answer – A
16. A resident individual aged 70 year shall be allowed exemption of
a) ` 2,50,000
b) ` 3,00,000
c) ` 5,00,000
d) Nil
Answer – B
17. A non-resident individual who is 85 years of age shall be allowed exemption of …….. from taxable income
a) ` 5,00,000
b) ` 2,00,000
c) ` 2,50,000
d) Nil
Answer – C
18. Which of the following is not an example of capital receipt?
a) money received on issue of shares
b) money received on sale of land
c) money received on sale of goods
d) none of the above
Answer – C
19. Income tax is charged on the basis of rate prescribed by
a) Income tax Act
b) Finance Act
c) Central Board of Direct Taxes
d) Ministry of Law
Answer – B
20. Income includes
a) only legal income
b) Illegal income
c) both legal and illegal
d) None of them
Answer – C
21. Charging section of income tax is
a) Section 4
b) Section 9
c) Section 15
d) Section 28
Answer – A
22. Rebate under section 87A is allowed to
a) Resident individual
b) any individual (resident or non-resident)
c) Resident individual and HUF
d) all assessee
Answer – A
23. Rebate under section 87A shall be allowed to the maximum extent of
a) ` 2,500
b) ` 12,500
c) ` 5,000
d) tax payable
Answer – B
24. Any rent or revenue derived from land may be treated as agricultural income if
a) It is derived from land
b) the land is used for agricultural purposes
c) the land is situated in India
d) All of the above condition shall be satisfied
Answer – D
25. Which of the following income is an agricultural income
a) Income from brick making
b) Income from agricultural land situated in Pakistan
c) Prize from Government on account of higher crop yield
d) Compensation received from insurance company on account of loss of crop
Answer – D
26. Which of the following income is not included in term income under the Income tax Act, 1961
a) Profit and gains
b) Dividend from foreign company
c) Profit in lieu of Salary
d) Reimbursement of travelling expenses
Answer – D
27. A person includes:
a) Only Individual
b) Only Individual and HUF
c) Individuals, HUF, Firm, Company only
d) Individuals, HUF, Company, Firm, AOP/ BOI, Local Authority, Every Artificial Juridical Person
Answer – D
28. Every assesse is a person, and
a) every person is also an assessee
b) every person need not be an assessee
c) an individual is always an assessee
d) A HUF is always an assessee
Answer – C
29. Describe the status of the following person, X and Y are legal heirs of Z. Z died in 2019 and X and Y carryon his business without entering into a partnership.
a) Firm
b) Limited Liability Partnership
c) Company
d) Body of Individual
Answer – B
30. Assessment year is a period of
a) more than 12 months
b)12 months and less than 12 months
c) 12 months only
d)12 months and more than 12 months
Answer – C
31. All assessee are required to follow
a) uniform previous year which must be calendar year only
b) uniform previous year which must be financial year only
c) any period of12 months
d) Period starting from 1st July to 30th June only
Answer – B
32. First previous year in case of a business/ profession newly set up on 31.3.2021 would:
a) Start from 1st April, 2020 and end on 31st March, 2021
b) Start from 31st March, 2021 and will end on 31st March, 2021
c) Start from 1st January, 2021 and end on 31st December, 2021
d) Start from1st January, 2021 and will end on 31st March, 2021
Answer – B
33. A person follows Calendar year for accounting. For taxation, he has to follow:
a) Calendar year only-1st January to 31st December
b) Financial year only-1st April to 31st March
c) Any of the Calendar or Financial year as per his choice
d) He will have to follow extended year from 1 January to next 31 March (period of15 months)
Answer – A
34. In which of the following cases, income of previous year is assessable in previous year itself:
a) Assessment of persons leaving India
b) A person in employment in India
c) A person who is into illegal business
d) A person who is running a charitable institution
Answer – A
35. As per section 115BAC, In case of female individual, who is of 65 years of age, what is the maximum exemption limit for AY 2021-22
a) ` 2,50,000
b) ` 3,00,000
c) ` 5,00,000
d) Nil
Answer – B
36. Calculate Income-tax payable by an Individual (aged 30 years) for AY 2021-22 if his total income is
1,01,00,000 (not opt out 115BAC):
a) ` 33,21,500
b) ` 28,42,500
c) 30,93750
d) ` None
Answer – A
Solution
PARTICULARS
DIFFERNCE
RATE
1CR
1,01,00,000
UP TO 250K
250K
NIL
250K TO 500K
250K
5%
12500
12500
500K TO 1000K
5,00K
20%
100000
100000
ABOVE 10,00K
90,00K
30%
2700000
91,00K
30%
2730000
TOTAL TAX
2812500
2842500
ADD- SC@10%/15% ON TAX
[10%]
281250
[15%]
426375
= TAX + SC
3093750
3268875
MARGINAL RELIEF
INCOME TAX + SC ON ACTUAL INCOME – INCOME TAX ON 1CR AS THE CASE MAY BE – ACTUAL INCOME – 1CR
[3268875-3093750] – [1.01CR – 1CR]
175125 – 100000
75125
CALCULATION OF TAX LAIBILITY AFTER MARGINAL RELIEF
PARTICULARS
AMOUNT
= TAX PLUS SC ON ACTUAL INCOME
3268875
LESS- MR COMPUTED ABOVE
75125
=TAX
3193750
ADD- H&E CESS @4%
127750
=TAX LIABILITY
3321500
37. Out of the following, which capital receipt is not taxable?
a) Capital gains of ` 10,00,000
b) Amount of` 5,00,000 won by way of lottery, games, puzzles
c) Amount of` 2,00,000 received by way of gift from relatives
d) Amount of` 1,00,000 received by way of gift from a friend on marriage anniversary
ANSWER – D
38. Total income is to be rounded off to nearest multiple of……. and taxis to be rounded off to nearest
multiple of………
a) Ten, Rupee
b) Hundred, Ten
c) Ten,Ten
d)Rupee, Rupee
ANSWER – C
39. Assessee is always a person but a person may or may not be an assessee.
a) True
b) False
c) Partly true
d) None of the above
ANSWER – A
40. A person may not have assessable income but may still be assesse
a) True
b) False
c) Partly true
d) None of the above
ANSWER – B
41. A new business was set up on 15-11-2020 and commenced business from 1-12-2020. The first previous year in this case shall be:
a) 15-11-2020 to 31-3-2021
b) 1-12-2020 to 31-3-2021
c) 2021-2022
d) 2020-21
ANSWER – A
42. Surcharge in case of an individual or HUF for assessment year 2021-22 is payable at rate of:
a) 12% of the income-tax payable provided the total income exceed ` 6,00,000.
b) 10% of the income-tax payable provided the total income exceeds ` 50,00,000
c) 5% of the income-tax payable if the total income exceeds ` 1,80,50,000
d) 15% of the income-tax payable provided the total income exceeds ` 90,00,000
ANSWER – B
43. The maximum amount on which income-tax is not chargeable in case of firm is:
a) ` 2,00,000
b) ` 2,50,000
c) ` 5,00,000
d) Nil
ANSWER – C
44. A co-operative society is taxable at flat rate of 30% on Total Income
a) True
b) False
c) Partly true
d) None of the above
ANSWER – B
45. Health & Education cess is leviable in case of
a) An individual and HUF
b) A company assessee only
c) All assesses
d) Only Individual
ANSWER – C
46. In case of an individual and HUF, H & EC is leviable only when total income of such assessee
a) exceeds ` 10,00,000
b) always levied, irrespective of level of income
c) exceeds ` 7,00,000
d) exceeds ` 1,00,00,000
ANSWER – B
47. The total Income of the assessee has been computed as ` 2,53,494.90. After rounding off, total
Income will be taken as ……….
a) ` 2,53,500
b) ` 2,53,490
c) ` 2,53,495
d) `2,54,000
ANSWER – B
48. A circular of the CBDT u/s 119 of the Income tax Act 1961
a) can override or detract from the Act
b) cannot override or detract from the Act
c) may override the entire act
d) None of the above
ANS – B
49. The circulars issued by CBDT are binding on:
a) Assessee
b) Income-tax Authorities i.e. Assessing Officers
c) Both the above
d) None of the above
ANS – B
50. Decision passed by Supreme Court is binding on
a) All courts and tribunal
b) Income tax authorities
c) Assessee
d) All of the above
ANS – D
51. The amount of Health & Education cess to be collected along with income tax for the assessment
year 2021-22 is
a) 2%
b) 1%
c) 4%
d) Nil
ANS – C
52. Calculate rebate available u/s 87A to resident HUF having total income of` 3,00,000.
a) ` 3,000
b) ` 1,500
c) ` 2,000
d) Nil
ANS – D
53. Calculate rebate available u/s 87A to a resident individual having total income of` 6,00,000.
a) ` 3,000
b) ` 1,500
c) ` 12,500
d) Nil
ANS – D
54. Rebate under section 87A is allowed only on fulfillment of which condition
i) Assessee should be resident individual
ii) the Total Income of assessee is upto` 5,00,000
iii) All assessee
a) (i) and (ii)
b) only (ii)
c) (ii) and (iii)
d) (iii)
ANS – A
55. Income of a business commenced & Set-up on 1stMarch, 2021 will be assessed during the
assessment year…………………….?
a) 2021-2022
b) 2020-2021
c) 2019-2020
d) 2018-2019
ANS – A
56. The maximum exemption limit under the income Tax Act ,1961 in case of a women who is 65 year of age and who is non-resident in India is ` …………………………?
a) 2,00,000
b) 2,50,000
c) 3,00,000
d) 5,00,000
ANS – B
57. The tax payable or refund due to an assessee is to be rounded off to the nearest…………?
a) 10
b) 1
c) 100
d) None of the above
ANS – A
58. Accounting standard notified under section 145 is applicable for ………… system of accounting?
a) Cash
b) mercantile
c) Hybrid
d) None of the above
ANS – B
59. AOP should consist of :
a) Individual only
b) Persons other than individual only
c) Both the above
d) None of the above
ANS – C
60. Body of individual should consist of:
a) Individual only
b) Persons other than individual only
c) Both the above
d) None of the above
ANS – A
61. From which entry does Central Government get power to levy Income tax
a) Entry 97 of Union List
b) Entry 92C of Concurrent List
c) Entry 82 of Union List
d) Entry 92C of State List
ANS – C
62. In case of partnership firm Surcharge is applicable when:
a) if its total income exceeds ` 1 crore
b) if total income exceeds ` 2 crore
c) Surcharge is not applicable on firm
d) its total income exceeds ` 50 lakhs
ANS – A
63. Finance Act is ……………
a) white paper presented for introduction of Income tax act
b) an act containing notifications, circulars issued by CBDT
c) an annual act in which amendment of Income tax, service tax etc. is contained
d) none of the above
ANS – C
64. Aggregate of incomes computed under five heads of income after applying clubbing provisions and making adjustments of set off, carry forward and set off the losses is known as ………
a) Taxable income
b) Gross Total income
c) Total Income
d) Net Income
ANS – B
65. Hindu undivided family (HUF) includes:
a) Family of Muslims, Christians
b) family of Jains, Sikhs, Buddhist
c) Both of the above
d) None of the above
ANS – B
66. Surcharge is calculated as a % of ……….
a) Gross Total income
b) Basic Tax
c) Total Income
d) Tax + Total income
ANS – B
67. A joint family of Mr. Ravi, Mrs. Ravi and their son Raj and daughter Simmy is a
a) HUF
b) Firm
c) BOI
d) Artificial judicial person
ANS – A
68. Rates of tax on ‘Special income’ is:
a) remains same for all type of person
b) vary from person to person
c) Any of the above
d) None of the above
ANS – A
69. A person leaves India permanently on 15-11-2020. The assessment year for income earned till 15-11-2020 in this case shall be:
a) 2019-20
b) 2020-21
c) 2021-22
d) None of the above
ANS – B
70. A local authority is taxable at flat rate of income-tax
a) True
b) False
c) Partly true
d) None of the above
ANS – A
71. Income tax is a form of
a) Direct tax
b) Indirect tax
c) Either a) or b)
d) none of them
ANS – A
72. Which of the following are deducted to compute tax payable
a) Tax deducted and collected at source
b) Advance tax
c) Double Taxation relief
d) All of the above
ANS – D
73. Light Ltd., a domestic company has income of 10 crore, what rate of surcharge is applicable on
same
a) 10%
b) 2%
c) 7%
d) Nil
ANS – C
74. The rate of tax applicable to a firm for A.Y. 2021-22 is –
a) 30%
b) 35%
c) 40%
d) 20%
ANS – A
75. The rate of tax applicable to a domestic company for A.Y. 2021 -22 if company T.O in P.Y 2018-19 was 343 crore is –
a) 30%
b) 25%
c) 40%
d) 45%
ANS – B
76. If a domestic company has income of ` 11 crore, surcharge at the rate of …… is applicable
a) 12%
b) 7%
c) 5%
d) Nil
ANS – A
77. Income of ………… year of an assessee is taxed during ………… year.
a) financial year, previous year
b) assessment year, previous year
c) previous year, assessment year
d) previous year, financial year
ANS – C
78. Corporate society is taxable at the flat rate of 22% under section 115BAD. Is the statement valid
a) valid
b) invalid
c) Partially valid
d) none of them
ANS – A
79. Surcharge @….. shall be levied if total income of Individual exceeds ` 5 crore.
a) 25%
b) 37%
c) 15%
d) Nil
ANS – B
80. Assessment of person leaving India under section 174 is done in relevant …………………..
a) Assessment Year
b) Previous Year
c) Financial Year
d) Exempt
ANS – B
81. Salary received from member of parliament is taxable under the head
a) PGBP
b) Salary
c) Other Sources
d) None of the above
ANS – C
82. Year in which income is taxable is known as …… & year in which it is earned is known as ……
a) Previous year, Assessment year
b) Assessment year, Previous year
c) Assessment year, financial year
d) financial year, Previous year
ANS – B
83. Mrs. V (Age 82 year) is resident in India for the assessment year 2021-22. For the previous year 2020-21, her income chargeable to tax in India is ` 8,30,000. Find out Tax liability as per section 115BAC.
a) 81,640
b)49,500
c) 51,480
d) 78,500
ANS – C
SOLUTON
UP TO 250K = NIL
250K TO 500K = 12500 [5%]
500K TO 750K = 25000 [10%]
750K TO 830K = 12000 [15%]
TOTAL = 12500+25K+12K = 49500 ADD CESS 4% = 51480
84. Mr. V, resident in India for the assessment year 2021-22. For the previous year 2020-21, his income chargeable to tax in India is ` 15,00,000. Find out Tax liability as per section 115BAC if born on (i) 15th Jan, 1941 (ii) 15th Jan, 1961 (without cess)
a) 187500 both case
b) 195000 both case
c) 2,70,400 / 2,60,000
d) None of the above
ANS – B
85. Income-Tax Act Extends to:
a) Whole of India
b) Whole of India except J&K
c) Whole of India except Sikkim
d) Whole of India except J&K and Sikkim
ANS – A
86. Surcharge on Income-Tax is payable by:
a) All Assessee subject to total income
b) Indian Company
c) Foreign company
d) Firm & Company Only
ANS – A
87. The maximum amount on which income tax is not chargeable in case of HUF for assessment year 2021-22.
a) 2,00,000
b) 2,20,000
c) 2,50,000
d) 1,80,000
ANS – C
88. The maximum amount on which income tax is not chargeable in case of AOP/BOI for assessment year 2021-22.
a) 1,00,000
b) 2,50,000
c) 2,00,000
d) Nil
ANS – B
89. The Total Income of the assessee has been computed as ` 2,53,435.80. For rounding off, the total income will be taken as:
a) 2,53,430
b) 2,53,433
c) 2,53,432
d) 2,53,440
ANS – D
90. Rebate u/s 87 is not available to:
a) All Individual & HUF
b) Firm
c) Resident Individual
d) A & B
ANS – D
91. Tax computed is 8,256.12. After rounding off tax payable is:
a) 8,250
b) 8,256
c) 8,257
d) 8,260
ANS – D
92. Marginal relief is allowed in case of individual if Total Income exceeds:
a) 10 Lakhs
b) 50 Lakh
c) 10 Crore
d) 100 Crore
ANS – B
93. Special rate (Flat rate) of Income Tax prescribed by –
a) Finance Act
b) Income Tax Act
d) Both of the above
d) None
ANS – B
94. Newly inserted Special Rate / Specific Rate of Income Tax prescribed ubder –
a) Section 115BAA
b) Section 115BAC
d) Section 115BAB
d) None
ANS – B
95. The tax liability of Mr. Saral, who attained the age of 60 years on 01.04.2021 and does not opt for the provisions of section 115BAC for the P.Y. 2020-21, on the total income of ` 5,60,000,
comprising of salary income and interest on fixed deposits, would be –
(a) 9,880
(b) ` 22,880
(c) ` 25,480
(d) Nil
ANS – B
96. The tax liability of Nirlep Co-operative Society (does not opt to pay tax under section 115BAD) on the total income of ` 90,000 for P.Y. 2020- 21, is –
(a) ` 24,000
(b) ` 28,080
(c) Nil
(d) ` 24,960
ANS – D
97. What is the amount of marginal relief available to Sadvichar Ltd., a domestic company on the total income of ` 10,03,50,000 for P.Y. 2020- 21 (comprising only of business income) whose turnover in P.Y. 2018- 19 is ` 450 crore, paying tax as per regular provisions of Income-tax Act? Assume that the company does not exercise option under section 115BAA.
(a) ` 9,98,000
(b) ` 12,67,600
(c) ` 3,50,000
(d) `13,32,304
ANS – B
98. The tax payable by Dharma LLP on total income of ` 1,01,00,000 for P.Y. 2020-21, is –
(a) ` 35,29,340
(b) ` 32,24,000
(c) ` 33,21,500
(d) ` 31,51,200
ANS – B
99. whether Health & education cess are applicable when tax calculate as per section 115BAC ?
a) Yes @ 4%
b) Not applicable
c)Yes @ 3%
d) None of the above
ANS – A
100. The tax liability of Nirlep Co-operative Society (opt to pay tax under section 115BAD) on the total income of ` 80,000 for P.Y. 2020- 21, is –
a) 20,130
b) 18,300
c) 17,600
d) 20,134
ANS – A
THE END
TEAM – CS ASPIRANT
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