Basic Concepts of Income Tax – CS Executive Tax Laws MCQ

Basic Concepts of Income Tax – CS Executive Tax Laws MCQ

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Going through the Basic Concepts of Income Tax – CS Executive Tax Laws MCQ Questions with Answers you can quickly revise the concepts.

Basic Concepts of Income Tax – Tax Laws CS Executive MCQs

Question 1.
The Income-tax Act, 1961, was effective from
(a) 1.4.1961
(b) 1.4.1962
(c) 1.10.1961
(d) 1.7.1961
Answer:
(b) 1.4.1962

Basic Concepts of Income Tax Questions with Answers

Question 2.
Schedule VII of the Constitution of India gives power to Central Government to impose tax on all income except agriculture income. This power is given under Entry :
(a) 72
(b) 102
(c) 82
(d) 92
Answer:
(c) 82

Basic Concepts of Income Tax

Question 3.
The rates for deduction of tax at source (TDS) from the income earned in FY 2020-21 are given in
(a) Part I of Finance Act, 2021
(b) Part II of Finance Act, 2021
(c) Part II of Finance Act, 2020
(d) Part III of Finance Act, 2020
Answer:
(c) Part II of Finance Act, 2020

Question 4.
The rates for computing advance tax for the income earned in FY 2020-21 are given in
(a) Part I of Finance Act, 2021
(b) Part II of Finance Act, 2021
(c) Part II of Finance Act, 2020
(d) Part III of Finance Act, 2020
Answer:
(d) Part III of Finance Act, 2020

Question 5.
The taxes are charged as per the rates given in Finance Act. These rates are
(a) Normal rates
(b) Special rates
(c) Both (a) and (b)
(d) None of the above
Answer:
(c) Both (a) and (b)

Question 6.
The rates for deduction of T.D.S on Salary for the Financial year 2020-21 are given in the Finance Act, 2020. These rates are given in of the First Schedule.
(a) Part I
(b) Part II
(c) Part III
(d) None of the above.
Answer:
(c) Part III

Question 7.
Normal rates of income-tax are pre-scribed in the ……….
(a) Income-tax Act, 1961
(b) Income-tax Rules, 1962
(c) Finance Act of the current year
(d) CBDT circulars
Answer:
(c) Finance Act of the current year

Question 8.
Amendments made by Finance Act, 2020 generally become applicable from-
(a) 1.4.2020
(b) 1.4.2021
(c) 1.4.2022
(d) None of the above
Answer:
(a) 1.4.2020

Question 9.
The total Income of the assessee for the previous year 2020-21 is calculated in accordance with the provisions of the Income-tax Act, as they stand on:
(a) 1.4.2020
(b) 31.3.2021
(c) (i), (ii) and (iii)
(d) None of the above
Answer:
(c) (i), (ii) and (iii)

Question 9A.
The rule for computation of net agricultural income are given in:
(a) The Income-tax Rules, 1962
(b) The Income-tax Act, 1961
(c) Part IV of First Schedule of the Finance Act.
(d) The Income-Tax Rules as framed by CBDT
Answer:
(c) Part IV of First Schedule of the Finance Act.

Question 10.
As per section 2(31), the following is not included in the definition of ‘Person’.
(a) An Individual
(b) A Hindu undivided family
(c) A company
(d) A minor
Answer:
(d) A minor

Question 11.
“Assessee” includes:
(i) A person in respect of whom any proceedings under the Income-tax Act, has been taken
(ii) A deemed assessee
(iii) A assessee in default
(a) Only (i)
(b) (i) and (ii) both
(c) (i) and (iii) both
(d) (i), (ii) and (iii)
Answer:
(d) (i), (ii) and (iii)

Question 12.
The term ‘Company’ defined under section 2(17) of the Income-tax Act, 1961 includes:
(i) any Indian company
(ii) any Body corporate incorporated by or under the laws of a foreign country i.e. a foreign company.
(iii) any institution, association or body which is under the Indian Income-tax Act, 1922 or which is or was assess-able or was assessed under this Act as a company for any assessment year commencing on or before the 1st day of April, 1970
(a) Only (i)
(b) (i) and (ii) both
(c) (i),(ii) and (iii)
(d) None of the above
Answer:
(c) (i),(ii) and (iii)

Question 13.
The “Person” as defined under section 2(31) of the Income-tax Act includes:
(a) An Individual
(b) A company
(c) A Hindu undivided Family
(d) All of the above
Answer:
(d) All of the above

Question 14.
A municipal committee legally entitled to manage and control a municipal fund is chargeable to income-tax in the status of: ………..
(a) Individual
(b) Association of persons
(c) Local authority
(d) Artificial juridical person
Answer:
(c) Local authority

Question 15.
A local authority means:
(a) Panchayat
(b) Municipality or Municipal Committee
(c) Cantonment Board
(d) All of the above
Answer:
(d) All of the above

Question 16.
Artificial Juridical person includes:
(a) God (donations and offerings taxable in the hands of Priests)
(b) Idols & deities
(c) University
(d) All of the above
Answer:
(d) All of the above

Question 17.
According to Section 2(24) definition of ‘income’ is- ………
(a) Inclusive
(b) Exhaustive
(c) Exclusive
(d) Descriptive
Answer:
(a) Inclusive

Question 18.
Income of the previous year is assessed to tax in the Assessment year. Previous year under section 3 of the Income-tax Act is:
(a) The financial year, immediately preceding the assessment year.
(b) The date on which a new source of income comes into existence and ending with the 31 st March of that financial year, in case of First previous year. The proviso to section 3(1)
(c) Generally, a period of 12 months beginning with 1st April and ending on 31 st March of the next year.
(d) All of the above
Answer:
(d) All of the above

Question 19.
A new business was set-up on 1st July, 2020 and trading activity was commenced from 1st September, 2020, the previous year would be the period commencing from ……….
(a) 1st April, 2020 to 31st March, 2021
(b) 1st July, 2020 to 31st March, 2021
(c) 1st September, 2020 to 31st March, 2021
(d) 1 st October, 2020 to 31 st March, 2021
Answer:
(b) 1st July, 2020 to 31st March, 2021
The first previous year commences on the date of setting up of the business/ Profession, or the date on which the source of income newly comes into existence and ends on the immediately following March 31.

Question 20.
Dr. Shiv commenced medical practice on 1st September 2020. The previous year for the profession for the assessment year 2021-22 would be –
(a) 1st April, 2020 – 31st March, 2021
(b) 1st September 2020 to 31st March 2021
(c) 1st June 2020 to 31st March 2021
(d) 1 st September 2020 to 31 st January 2021
Answer:
(b) 1st September 2020 to 31st March 2021
The first previous year commences on the date of setting up of the business/ Profession, or the date on which the source of income newly comes into existence and ends on the immediately following March 31.

Question 21.
“Assessment Year”, as per Section 2(9) of the Income-tax Act, means the
(a) Period of 12 months, commencing on the first day of April every year.
(b) Year immediately succeeding the Previous year
(c) A year in which income earned in the previous year is assessed to tax.
(d) All of the above
Answer:
(d) All of the above

Question 22.
The exception to the fact that income of the Previous year is taxed in the Assessment year includes:
(a) A non-resident carrying shipping business and earning income from carrying passengers/livestock/ goods from port in India.
(b) If the Assessing Officer is of the opinion that individual may leave India permanently, during the year.
(c) If the Assessing Officer is of the opinion that an Association of person or Body of Individuals is formed for a particular event and is created and dissolved during the year.
(d) All of the above.
Answer:
(d) All of the above.
Exceptions to the Rule that income of the previous year is taxable in the succeeding assessment year as per – Section 172 Section 174 Section 174A

Question 23.
In which of the following cases, income of Previous year is assessable in the previous year itself:
(i) Assessment of person leaving India
(ii) A person who is into illegal business
(iii) A person who is running a charitable institution
(a) Only (i)
(b) (i) and (ii) both
(c) (i), and (id) both
(d) (i), (ii) and (iii)
Answer:
(a) Only (i)
As per section 174, answer is (a)

Question 23A.
The Income of the Previous year is charged to tax in the immediately following Assessment year. There are certain exceptions where the income of the P. Y. is charged in the year itself i.e. in the year in which it is earned. However, the Assessing officer has the discretion to charge in the P.Y. itself or to charge it in the following Assessment year in respect of Income:
(a) of Bodies formed for short duration. (Section 174A).
(b) from discontinued business. (Section 176).
(c) of persons leaving India with no intention of returning to India (Section 174).
(d) of persons likely to transfer property to avoid tax. (Section 175).
Answer:
(b) from discontinued business. (Section 176).

Question 23B.
Mr. Hasan had discontinued business on 30th July 2020. His income from the business shall be taxed :
(a) In the A.Y. 2020-21 as per part III of First Schedule of Finance Act, 2020.
(b) In the A.Y. 2021-22 as per part I of First Schedule of Finance Act, 2021.
(c) both(a)&(b)
(d) Either (a) or (b) as per the discretion of Assessing officer.
Answer:
(d) Either (a) or (b) as per the discretion of Assessing officer.

Question 23C.
Sahil is an association of two individuals Sahil and Anil. The Association was formed on 2nd April 2019 for the purpose of taking up a foreign project likely to be completed within 15 months. They agreed to dissolve the association on 10th July 2020. They filed their return for Assessment year 2020-21. The Assessing officer demanded that they should also file the return for Previous year 2020-21. Choose the correct option.
(a) The income for the period 2.4.2019-31 -3-2020 should be filed for regular assessment and from 1.4.2020 to
10.7.2020 shall be filed separately in the A.Y. 2020-21 itself.
(b) The income for 15 months should be clubbed and a single return must be filed.
(c) The Income for the P.Y. 2019-20 shall be taxed as per the rates applicable for the A.Y. 2020-21 and the income for 1.4.2020 to 10.7.2020 shall be taxed as per part HI of the first schedule to Finance Act, 2020 ie. rates applicable for A.Y. 2021-22.
(d) Both (a) and (c).
Answer:
(d) Both (a) and (c).

Question 24.
‘Income’ u/s 2(24) includes
(i) The profits and gains of a banking business carried on by a co-operative society with its members.
(ii) Any advance money forfeited in the course of negotiations for transfer of capital asset.
Choose the correct option with reference to the above statements
(a) Both (i) and (ii)
(b) Only (i)
(c) Only (ii)
(d) Neither (i) nor (ii)
Answer:
(a) Both (i) and (ii)

Question 25.
Income includes:
i. Receipts due to devaluation of currency
ii. Temporary income
iit. Receipt on account of Dharmada
(a) (i)&(ii)
(b) (i),(ii)&(iii)
(c) (ii) & (iii)
(d) (i)&(iii)
Answer:
(a) (i)&(ii)

Question 26.
The Expenditure incurred in relation to tax free Income is not allowed as deduction under Section:
(a) 12
(b) 13A
(c) 14
(d) 14A
Answer:
(d) 14A

Question 27.
The Assessing officer determines expenditure pertaining to tax-free income in accordance with the method prescribed under Rule:
(a) 9D
(b) 8D
(c) 8C
(d) 10D
Answer:
(b) 8D

Question 28.
Permanent establishment includes:
(a) A person or a place
(b) Construction site
(c) Business preserve
(d) All of the above
Answer:
(d) All of the above

Question 29.
Mr. Sheoran started business on 18.11.2020. His policy is to close his books of account on December 31 st of every year, i.e. he follows calendar year. What will be the Previous year for Income-tax purposes.
(a) 1.4.2020-31.3-2021
(b) 18.11.2020 -31.3.2021
(c) 18.11.2020-31.12.2021
(d) 1.4.2020 -31.12.2020
Answer:
(b) 18.11.2020 -31.3.2021
The first previous year commences on the date of setting up of the business/ Profession, or the date on which the source of income newly comes into existence and ends on the immediately following March 31.

Question 30.
The rate of exchange for the calculation of the value in Rupee, of any income arising in foreign currency shall be the
of such currency adopted by SBI on the relevant date.
(a) Telegraphic transfer buying rate
(b) Telegraphic transfer selling rate
(c) Average of Telegraphic transfer buying and selling rate
(d) Either (a) or (b)
Answer:
(a) Telegraphic transfer buying rate

Question 31.
The following additional conditions are to be satisfied by an individual to be resident and ordinarily resident in India
(a) He is a resident in at least any two out of the ten previous years immediately preceding the relevant previous year
(b) He has been in India for 730 days or more during the seven previous years immediately preceding the relevant previous year
(c) Both (a) and (b) above
(d) None of the above
Answer:
(c) Both (a) and (b) above
As per section 6(6)(a), both the additional conditions must be fulfilled.

Question 32.
X, an Indian citizen, who is living in Delhi since 1985, left for Japan on 1st July, 2020 for employment. He came back to India on 3rd January, 2021 on a visit and stayed for 4 months. His residential status for the AY 2021 -2022 would be …….
(a) Resident and ordinarily resident
(b) Not ordinarily resident
(c) Non-resident
(d) Resident
Answer:
(c) Non-resident
During the previous year 2020-21, X stayed in India up to 1st July, 2020 and then came back on 3rd January 2021.
So his stay in India is from:
1.4.2020 – 1.7.2020 = [30+31+30+1] = 92 days
3.1.2021 – 31.3.2021 = [29+28+31] = 88 days
Total stay =180 days
As Mr. X falls under exception, (An Indian citizen leaving India for employment purpose) his stay for 182 days or more is required so that he is a resident u/s 6(1). This condition is not fulfilled. Therefore, X is non-Resident. Hence (c).

Question 33.
If Karta is resident and ordinarily resident in India but control and management of HUF is situated partly outside India in the previous year, the HUF is ……….
(a) Resident and ordinarily resident
(b) Not ordinarily resident
(c) Non-resident
(d) Resident
Answer:
(a) Resident and ordinarily resident
As per section 6(2), an HUF is resident if management & control of its affairs is wholly or partly in India. In this question the management & control of its affairs is partly outside India, some part is in India. Therefore, HUF is resident. To be an ordinarily resident, the karta should fulfil both the additional conditions. As karta himself is ordinarily resident, it implies that he fulfils both the additional conditions. Hence, HUF is Resident and ordinarily resident

Question 34.
The residential Status of a foreign company is determined on the basis of:
(a) Place of effective management (POEM)
(b) Management and control of affairs
(c) Residential status of Managing Director
(d) both (b) & (c)
Answer:
(a) Place of effective management (POEM)

Question 35.
Atul is a foreign citizen. His father was born in Delhi in 1954 and mother was born in England in 1953. His grandfather was born in Delhi in 1925. Atul visited India to see Taj Mahal and visit other historical places. He came to India on 6th December, 2020 for 200 days. He has never come to India before. His residential status for AY 2021-22 will be –
(a) Non-resident in India
(b) Not ordinarily resident in India
(c) Resident in India
(d) None of the above
Answer:
(a) Non-resident in India
Atul is a foreign citizen of Indian origin. (His grand-father, born in Delhi in 1925.) He comes under exception, therefore, to be resident, he must stay in India during the P.Y. 2020-21 for 120 days or more. He comes on 6th Dec. 2020 for the 1st time therefore, his stay is
From 6.12.2020-31.3.2021
= [26 + 31 +28 + 31]
= 116 days.
He does not fulfil the basic condition, therefore, he is a non-resident.

Question 36.
Paresh, a software engineer at ABC Ltd. left India on 10th August, 2020 for the first time for the treatment of his wife. For income-tax purpose, his residential status for the AY 2021 -22 will be –
(a) Resident and ordinarily resident
(b) Non-resident
(c) Not ordinarily resident
(d) Cannot be determined from the given information
Answer:
(a) Resident and ordinarily resident
Stay in India during the P.Y 2020-21 from 1.4.20 -10.8.2020, i.e. (30+31 +30+31 + 10) = 132 days
He does not fall under exception, and fulfils the second basic condition. As he has left India for the first time on 10.8.2019, he also fulfils both the additional conditions, so he is an ordinarily resident.

Question 37.
Residential status of an Indian company is resident for the year –
(a) If the entire control and management is wholly in India
(b) If part of the control and management is in India
(c) Regardless of the place of control and management
(d) If it is listed on recognised stock exchange
Answer:
(c) Regardless of the place of control and management
An Indian company is always Resident as per section 6(3) (i)

Question 38.
Central Board of Direct Taxes (CBDT) vide Circular No. 8 of 2017 dated 23rd February, 2017 has clarified that the Place of Effective Management (POEM) provision shall not apply to a company having turnover or gross receipts in a financial year of …………
(a) ₹ 30 crore or less
(b) ₹ 10 crore or less
(c) ₹ 50 crore or less
(d) ₹ 5 crore or less
Answer:
(c) ₹ 50 crore or less

Question 39.
HUF of Ashwin consisting of himself, his wife and 2 sons is assessed to income-tax. The residential status of HUF would be non-resident, when –
(a) The management and control of its affairs is wholly in India
(b) The management and control of its affairs is wholly outside India
(c) The status of karta is non-resident for that year
(d) When majority of the members are non-residents.
Answer:
(b) The management and control of its affairs is wholly outside India
A Hindu undivided family is Non-resident if the management & control of its affairs is wholly outside India.

Question 40.
Ram who was born and brought up in India left for employment in Dubai on 20th August, 2020. His residential status in respect of the AY 2021 -22 would be -.
(a) Resident and ordinarily resident
(b) Non-resident
(c) Not ordinarily resident
(d) None of the above
Answer:
(b) Non-resident
Stay of Mr. Ram in India during the P.Y. 2020-21 is from 1.4.2020 – 20.8.2020
= (30+31+30+31+20)
= 142 days, (less than 182 days)
As he left for employment purposes, his stay in India during the P.Y should be for 182 days or more to be a Resident. Therefore, he is a non-resident.

Question 41.
Alpha Ltd. is an Indian company. It carries its business in Delhi and London. Total control and management of the company is situated in London. More than 85% of its business income is from the business in England. If so, its residential status will be –
(a) Resident
(b) Non-resident
(c) Not ordinarily resident
(d) Foreign company
Answer:
(b) Non-resident
An Indian company is always Resident as per section 6(3)(;)

Question 42.
A company incorporated outside India having its place of effective management situated in India in the previous year will be treated as.
(a) Resident
(b) Not ordinarily resident
(c) Non-resident .
(d) None of the above
Answer:
(a) Resident

Question 43.
Ritesh, an Indian citizen, left India for U.K. on 1st September, 2020 to take up a job there. His residential status for the assessment year 2021 -22 would be-
(a) Resident and ordinarily resident
(b) Not ordinarily resident
(c) Non-resident
(d) None of the above
Answer:
(c) Non-resident
Stay of Mr. Ritesh in India during the P.Y 2020-21 is from [1.4.20 – 1.9.2020]
[30 +31+30+31+31+1] = 154 days
As he has gone for employment purposes, he falls in exception and therefore, as his stay in India during the P.Y is less than 182 days, so he is a non-resident.

Question 44.
Mr. Rajiv, born and brought up in India left for employment in Belgium on 15.10.2020. He has never gone out of India, previously. What is his residential status for the assessment year 2021-2022?
(a) Non-resident
(b) Not ordinarily resident
(c) Resident and ordinarily resident
(d) Indian citizen
Answer:
(c) Resident and ordinarily resident
The resident status of Mr. Rajiv is Resident and ordinarily resident. He has left for employment, therefore, he falls under exception and he will be resident if he stays in India for 182 days or more during the RY 2020-21, which he does. His stay in India during the P.Y. is from 1.4.20 – 15.10.2020.
(30 +31+30+31+31+30+15) = 198 days.
As he has never gone out of India before, he fulfills both the additional conditions u/s 6(6). So he is an ordinarily Resident.

Question 45.
Mr. Ramji (age 55) is Karta of HUF doing textile business at Nagpur. Mr. Ramji is residing in Dubai for the past 10 years and visited India for 20 days every year for filing the income tax return of HUF. His two major sons take care of the day to day affairs of the business in India. The residential status of HUF for the assessment year 2021-2022 is:…….
(a) Non-resident
(b) Resident and ordinarily resident
(c) Not ordinarily resident
(d) None of the above
Answer:
(c) Not ordinarily resident
The management and control of HUF is in India hence, it is Resident as per section 6(2) of the Income-tax Act, 1961, but the karta does not fulfil the conditions mentioned in section 6(6) of the Income-tax Act, 1961. Therefore, the HUF is resident but not ordinarily resident.

Question 46.
Mr. Alok Chatterjee born and brought up in India since 1971, left for Singapore on 10.10.2020 for the purpose of employment. His residential status would be: ……….
(a) Resident
(b) Not ordinarily resident
(c) Non-resident
(d) None of the above
Answer:
(a) Resident
Alok Chatterji’s stay in India during P.Y 2020-21 is from [1.4.20 – 10.10.20]
(30 +31+30+31+31+30+10) = 193 days
He fulfils the first basic condition, therefore, he is resident.
Whether ordinarily or not ordinarily depends upon whether or not, he fulfils both the additional conditions.

The question is silent about his stay or residential status in the preceding years. It is neither, said whether he is leaving India for the first time. He is only born and brought up in India which does not imply that he kept staying in India through out the period. So, it can be concluded that he is Resident, but no further. As option (a) does not specify details, (the option is only “Resident”) therefore (a) is the only right option.

Question 47.
Thomas, an Indian citizen is living in Kerala since birth in 1954 and left for UAE on 13th June, 2014 for a salaried employment contract for 4 years and came back on 7th July, 2018 to India and settled at Kerala. His residential status for the Assessment Year 2021-22 shall be: ………….
(a) Resident
(b) Non-Resident
(c) Resident & Not Ordinary Resident
(d) Resident & Ordinary Resident
Answer:
(d) Resident & Ordinary Resident

Question 48.
The Karta of an HUF is non-resident as he left India for the first time during the P.Y. 2005-2006. The HUF is managed from India. The HUF’s Status for the P.Y. 2020-21 is: ……….
(a) Resident
(b) Not ordinarily resident
(c) Non-resident
(d) Cannot be determined
Answer:
(b) Not ordinarily resident
The HUF is managed from India. Therefore, as per section 6(2) of the Income- Tax Act, 1961, HUF is resident, but the karta has left India in 2005-2006, he cannot fulfill the additional conditions, mentioned in 6(6). Hence, HUF is not ordinarily resident.

Question 49.
Mr. X comes to India for the first time on September 1, 2019. On September 3, 2019, he joins a company on monthly salary of ₹ 80,000, as a part-time job. After 3 months, on 1.12.2019, he starts a business. Find out the residential status of Mr. X for the assessment year 2021-22……..
(a) Resident and ordinarily resident
(b) NOR-Not ordinarily resident
(c) NR-Non-Resident
(d) Cannot be determined.
Answer:
(b) NOR-Not ordinarily resident
The resident status of Mr. A, depends upon his stay in India during P.Y. 2020-2021. As per section 6(1) of the Income-tax Act, 1961. He comes to India first time on 1.9.20. Therefore his stay is from 1.9.20-31.3.21 (30 +31+30+31+31+28+30) = 212 days. He fulfills first basic condition, but as he is coming to India for the first time, he cannot fulfil both the additional conditions therefore, he is not ordinarily resident.

Question 50.
Sameer is a foreign citizen (not being a person of Indian origin). During the financial year 2019-20, he came to India for 70 days. Determine his residential status for the assessment year 2020-21 on the assumption that during financial years 2005-06 to 2018-19, he was present in India as follows:
(a) Resident and Ordinarily Resident
(b) NOR-Not ordinarily resident

2018-19 100 days 2011-12 181 days
2017-18 80 days 2010-11 90 days
2016-17 60 days 2009-10 71 days
2015-16 126 days 2008-09 4 days
2014-15 80 days 2007-08 8 days
2013-14 70 days 2006-07 55 days
2012-13 23 days 2005-06 298 days

(c) NR-Non -Resident
(d) Cannot be determined
Answer:
(b) NOR-Not ordinarily resident

As Sameer stays in India during the P.Y 2019-20 for 70 days, he will be resident, if his stay in the preceding 4 P.Y’s is 365 days or more. Therefore, he is resident.
To check additional conditions u/s 6(6)(a) of the Income -tax Act 1961, the first basic condition is never fulfilled in the preceding 10 years, but in the years 2009-10, 2013-14, he is resident by fulfilling the second basic condition.

His stay during P.Y. Days
2018-19 100
2017-18 80
2016-17 60
2015-16 126
Total stay 366 days
P.Y Stav in India in the P.Y. Stay in India in the preceding 4 Previous years
2009-10 71 days 365 days [4+8+55+298]
2013-14 70 days 365 days [23+181+90+71]

Question 51.
Z Ltd. is an Indian company. It has 15 shareholders (2 are Indian citizens and resident in India). The company has active business in Japan. Gross annual turnover of the company for the previous year 2019-20 is ₹48 crore mainly from operations conducted from Japan, Sri Lanka and India. The company is managed by a team of professionals from India. Find out the residential status of Z Ltd. for the assessment year 2021-22.
(a) Resident
(b) Non-Resident
(c) Not ordinarily resident
(d) Cannot be determined
Answer:
(a) Resident

Question 52.
The residential status of a person:
(a) Can be different for different sources of Income.
(b) Can be different for different previous years.
(c) Must be same for all previous years.
(d) None of the above.
Answer:
(b) Can be different for different previous years.

Question 53.
Which of the following person can be ordinarily resident or not ordinarily Resident ?
(a) Individual & Company only.
(b) Firm & Company only.
(c) Individual & HUF only
(d) Individual & firm only
Answer:
(c) Individual & HUF only

Question 54.
Mr. X an Indian citizen has been sent to USA by the employer on 3rd June 2019. He has left India for the first time. What will be the residential status for P.Y. 2019-20.
(a) Resident but Not- ordinarily resident
(b) Resident & ordinarily resident
(c) Non-resident
(d) Cannot be determined
Answer:
(c) Non-resident

As Mr. X is an Indian citizen sent outside India for employment purposes, he falls under exception and will have to fulfil the first basic conditions of stay in India for 182 days or more during the Previous year. He left on 3rd June 2019, therefore his stay is for 64 days only. (April = 30 + May = 31 + June = 3 days). So he is non-resident.

Question 55.
A person is deemed to be of Indian origin if he, or either of his parents or any of his grandparents, was born in
(a) India
(b) India other than J & K
(c) Undivided India
(d) Greater India
Answer:
(c) Undivided India

Question 56.
Shreya was born in Mumbai in the year 1955. Her parents and grand-parents were born in Australia. As per Income-tax Act, Shreya will be:
(a) Of Indian origin
(b) Not of Indian origin
(c) Of Indian as well as of Australian origin
(d) None of the above
Answer:
(b) Not of Indian origin
A person is of Indian origin, if he, either of his parents, or any of his grand-parents are born in undivided India. Here Shreya was born in Mumbai, but in the year 1955 which is after division of India.

Question 57.
Find the stay in India of Mr. X if he comes to India on 17th Dec. 2020 for 150 days only, for the Previous year 2020-21.
(a) 150 days
(b) 104 days
(c) 105 days
(d) 149 days
Answer:
(c) 105 days
Mr. X comes to India on 17th Dec. 2020 for 150 days but for the purpose of P.Y his stay will be from 17.12.20 – 31. 3. 2021Therefore it is [15 + 31+28+ 31]= 105 days.

Question 58.
If the residential status of Mr. X is ordinarily resident for his Salary Income and he started business in USA on 24th Feb. 2021. What will be his residential status for business income for P.Y. 2020-21.
(a) Non-Resident
(b) Resident and ordinarily Resident
(c) Not ordinarily Non-Resident
(d) Resident but not ordinarily resident.
Answer:
(b) Resident and ordinarily Resident

Question 59.
The maximum number of days an Individual can stay in India every year so that he is Not ordinarily resident is:
(a) 91 days
(b) 104 days
(c) 60 days
(d) 182 days
Answer:
(b) 104 days
To be an ordinarily Resident, one of the additional conditions is, his stay in the preceding 7 years should be 730 days or more. Therefore, if he keeps coming every year for 104 days, the total stay in 7 years will be 728 days, which is less than 730 days. In this way he will fulfil the first additional condition but not the second and he will remain not ordinarily resident.

Question 60.
Shreya is an employee of XY Ltd. in India and is sent to Japan for carrying out a project. She leaves India for the first time for the purpose on 4th Jan. 2021. Determine her residential status for the P.Y. 2020-21.
(a) Non-Resident
(b) Resident and ordinarily Resident
(c) A resident of Indian origin
(d) Resident but not ordinarily resident.
Answer:
(b) Resident and ordinarily Resident

Question 61.
Out of the two additional conditions as given in 6(6), that must be satisfied by a resident Individual to be an ordinarily resident:
(a) Only the first condition
(b) either first or second condition
(c) Condition second only
(d) Both the conditions
Answer:
(d) Both the conditions

Question 62.
Mr. X’s parents were born in England. His Grand Father and Grand mother (Mother’s parents) were born in Switzerland. His grand father was born in Peshawar in 1882 and Grand-mother in Italy. His origin shall be :
(a) British
(b) Indian
(c) Swiss
(d) Italian
Answer:
(b) Indian
His grand-father was born in 1882 in Peshawar. Peshawar is currently in Pakistan, but in the year 1882, it was part of undivided India.

Question 63.
John is a foreign citizen born in USA. His father was born in Delhi in 1960 and his grand-father was born in Lahore in 193 5 but his mother was born in UK in 1963. John came to India for the first time on 1st June, 2020 and stayed in India for 183 days and then left for USA. His residential status for the A.Y. 2021-22 shall be :
(a) Resident
(b) Resident but not ordinary resident
(c) Non-resident
(d) Foreign national
Answer:
(b) Resident but not ordinary resident

Question 64.
The income earned during the previous year is subject to tax under the Act on the basis of residential status of an assessee. However, the residential status of an assessee every year.
(a) Will not change
(b) Will certainly change
(c) May change
(d) None of the above
Answer:
(c) May change

Question 65.
Mr. Soloman, a resident in India, aged 70 has the following income for the previous year 2020-21. (All the incomes given below are the computed income):
(i) Pension from employer ₹ 2,30,000
(ii) Rental Income under House Property ₹ 2,00,000
(iii) Agricultural income from a land in Jaipur ₹60,000. His total tax liability for A.Y. 2021-22 is :
(a) ₹ Nil
(b) ₹ 3,240 after rebate u/s 87A
(c) ₹ 8,240
(d) ₹6,760
Answer:
(a) ₹ Nil
The age of Mr. Solomon is 70 years and he is resident, therefore his maximum amount not chargeable to tax is ₹ 3,00,000. In order to calculate his tax liability, his agricultural income which exceeds ₹ 5,000 and non-agricultural income, which exceeds the maximum exemption limit will be clubbed.

Basic Concepts – CS Executive Tax Laws MCQ 1
Basic Concepts – CS Executive Tax Laws MCQ 2

Question 66.
Dividend of ₹ 2,00,000 received in London from UK based company will be taxable in case of :
(a) Resident and ordinarily resident (ROR) only
(b) Not ordinarily resident (NOR) only
(c) Non- resident (NR) only
(d) ROR, NOR, and NR
Answer:
(a) Resident and ordinarily resident (ROR) only
Income which accrues of arises outside India, and is received outside India, is taxable in the hands of ordinarily resident only hence (a)

Question 67.
Profits of ₹ 10,00,000 is earned from a business in UK which is controlled in India, half of the profits being received in India. How much amount is taxable in India for a non-resident individual.
(a) ₹10,00,000
(b) Nil
(c) ₹ 5,00,000
(d) ₹ 2,50,000
Answer:
(c) ₹ 5,00,000
Amount received in India is taxable in the hands of non- resident also,
1/2  x 10,00,000 = 5,00,000
Hence (c)

Question 68.
An Income which accrues or arises in India from a business controlled or profession set-up in India is taxable in case of :
(a) ROR
(b) NOR
(c) NR
(d) All the assessees
Answer:
(d) All the assessees
Income which accrues or arises in India is taxable in the hands of all assessee.

Question 69.
Mr. Rohit, qualifying as ROR in, India during the Financial Year 2019-20, having a taxable income of ₹1,50,000. He owns a house property in UK. Whether Mr. Rony is required to file its return of Income in India for the Financial Year 2019-20?
(a) Yes, as he is ROR in India during the previous year
(b) Yes, as he is ROR in India during the previous year and owns a house property outside India.
(c) No, (as the taxable income does not exceed the maximum amount not chargeable to tax).
(d) None of the above
Answer:
(c) No, (as the taxable income does not exceed the maximum amount not chargeable to tax).

Question 70.
Abhay earns the following income during the previous year ended 31 st March, 2020: Interest on U.K. Development Bonds (1 /4th being received in India): ₹2,00,000; profit on sale a building in India but received in Holland:₹ 2,00,000. The income liable to tax for the AY 2020-21 if Abhay is resident and not ordinarily resident in India, is
(a) ₹ 2,50,000
(b) ₹ 4,00,000
(c) ₹ 2,00,000
(d) ₹ 50,000
Answer:
(a) ₹ 2,50,000
Taxable Income of Mr. Abhay who is resident but not ordinarily resident NOR for the RY. 2019-20:

(₹)
Interest on UK development bonds (1 /4th of ₹ 2,00,000, received in India) 50,000
Profit from sale of building in India (as Income accrues or arises in India) 2,00,000

Question 71.
Income of Non-resident, when attributed from operations in India relating to the following, is taxable in India:
(1) Profits of business
(2) Fee for technical services
(3) Royalty
(4) Income from house property in India
Select the correct answer from the options given below
(a) (1) and (4)
(b) (1), (3) and (4)
(c) (1) and (3)
(d) (1), (2), (3) and (4)
Answer:
(d) (1), (2), (3) and (4)

Question 72.
Satish brought into India, in the previous year, past untaxed income which was earned in U.K. The income will be taxable if Satish is –
(a) An ordinarily resident
(b) A not ordinarily resident
(c) A non-resident
(d) None of the above
Answer:
(d) None of the above
Past income, whether taxed or untaxed, which is later brought into India is not taxable.

Question 73.
When a capital asset located in India is sold by a non-resident to another non-res-ident at a place outside India, the capital gain is taxable:
(a) at the place of transferor
(b) at the place of transferee
(c) at the place of location of asset
(d) at the place of both transferor and transferee
Answer:
(c) at the place of location of asset
As the capital asset is located in India, Income accrues or arises in India and therefore Capital gains are taxable in India i.e. the place of location of asset.

Question 74.
Thomas Inc. of Australia borrowed money from various companies in Australia for doing business in India by name ANS Co. Ltd., Mumbai. Thomas Inc. paid inter-est of ₹500 lakhs (converted) to various lenders. The amount of interest paid:
(a) Has accrued in India
(b) Is exempt from tax
(c) Does not accrue in India
(d) Is taxable in Australia
Answer:
(a) Has accrued in India
When interest is paid by a Non-resident, the same is deemed to accrue or arise in India as per section 9( 1)(v) of the Income-tax Act, 1961, if the money is used in India for business or profession. Hence (a) is the answer.

Question 75.
In the case of an individual being not ordinarily resident the following income is chargeable to tax:
(a) Business income accruing outside India
(b) Property income accruing outside India
(c) Income accruing outside India if it is derived from a business controlled in India
(d) Interest income accruing outside India
Answer:
(c) Income accruing outside India if it is derived from a business controlled in India

Question 76.
Mr. Ajay (age 40) resident of India earned agricultural income of ₹ 1 lakh from land situated in Sri Lanka. His total income in India amounts to ₹7 lakhs. The tax liability would be:
(a) ₹ 77,250
(b) ₹ 75,400
(c) ₹ 74,675
(d) ₹ 56,650
Answer:
(b) ₹ 75,400
Agricultural Income from land situated outside India is not exempt u/s 10(1). Therefore, his total Income is ₹ 8,00,000. And tax liability ₹ 72,500 + 4% H.E.C

Question 77.
Which of the following is a business connection in India and deemed to accrue or arise in India?
(a) Display of uncut & unassorted diamond in a notified special zone
(b) Shooting of cinematograph films in India
(c) Pension received for services reddened in India.
(d) Collection of news & views in India and transmission out of India.
Answer:
(c) Pension received for services reddened in India.

The income from the following activities is not deemed to accrue or arise in India as these operations are not taken as Business connection:

  • Collection of news and views in India and transmission out of India.
  • Shooting of cinematographic film in India
  • Display of uncut and unassorted diamond in a Notified special Zone.

Question 78.
Interest received outside India for a project in Africa from Govt, of India will be taxable in the hands of …………
(a) Resident and ordinarily resident
(b) Non-resident
(c) Not ordinarily resident
(d) All of the above
Answer:
(d) All of the above
Interest paid b Government of India is always deemed to accrue or arise in India as per section 9(1 )( y) of the Act.

Question 79.
Royalty is paid by Resident for use outside India by crediting in the Mumbai Branch of HSBC Bank A/c. It will be taxable in the hands of ………
(a) Resident and ordinarily resident
(b) Not ordinarily resident
(c) Non-resident
(d) All of the above
Answer:
(d) All of the above
Royalty paid by a Resident is not deemed to accrue or arise in India ¡fit is for use outside India. However, here the amount is credited in the Indian branch of the bank hence it is received in India and therefore taxable in the hands of Individual irrespective of residential status.

Question 80.
Profits from Business in Singapore and received their while the business is 98% controlled from Singapore will be taxable in the hands of
(a) Residential and ordinarily resident
(b) Not ordinarily resident
(c) Both OR & NOR
(d) Non-resident
Answer:
(c) Both OR & NOR
Profits from business outside India and received outside India will be taxable in the hands of ordinarily and not ordinarily resident Individual, if the business is controlled from India wholly or even partially.

Question 81.
Agricultural Income from Haryana is taxable in the hands of
(a) Non-resident
(b) Not ordinarily resident
(c) Resident and ordinarily resident
(d) None of the above
Answer:
(d) None of the above
Agricultural Income from land in India is exempt from tax.

Question 82.
Gift received in foreign currency through deposit in Non-resident A/c held in HDFC, Jaipur Branch, equivalent to ₹ 54,000 will be ……
(a) 4000 will be taxable in the hands of OR, NOR, NR.
(b) 54,000 will be taxable in the hands of OR ROR, NR
(c) 54,000 in the hands of OR, NOR only
(d) Gift income is exempt.
Answer:
(b) 54,000 will be taxable in the hands of OR ROR, NR
Gift is received in India in branch located in India, as it exceeds 50,000 the entire sum is taxable in the hands of OR, NOR, NR.

Question 83.
Capital gain on sale of a house situated in Pune (sale consideration is received in Nepal) will be
(a) Exempt income
(b) Taxable in the hands of ROR only
(c) Taxable in the hands of ROR and NOR only
(d) Taxable in the hands of ROR, NOR and NR.
Answer:
(d) Taxable in the hands of ROR, NOR and NR.

Question 84.
Interest received from Government of India ₹80,000 by a non-resident Individual of Indian origin. The interest of ₹ 50,000 was paid to him in Netherlands and the money is utilized by the Government outside India.
(a) 130,000, taxable in the hands of NR
(b) 7 50,000, taxable in the hands of NR
(c) ₹ 80,000, taxable in the hands of NR
(d) Not taxable in the hands of NR
Answer:
(c) ₹ 80,000, taxable in the hands of NR
Interest received from Govt. of India is always deemed to accrue or arise in India.

Question 85.
Royalty is received outside India from a foreign company which is non-resident in India. The royalty is paid for a manufacturing business situated outside India.
(a) Taxable in the hands of NR
(b) Taxable in the hands of ROR and NOR
(c) Taxable in the hands of ROR
(d) Not taxable
Answer:
(c) Taxable in the hands of ROR
Royalty received outside India from Non-resident For use outside India is not deemed to accrue or arise in India. Therefore, it is taxable in the hands of ordinarily resident individual only.

Question 86.
The following income of Ms. Nargis who is a non-resident shall be included in her total income :
(i) Salary for 2 months received in Delhi ₹40,000.
(ii) Interest on Savings Bank Account in Mumbai ₹2,100.
(iii) Agricultural income in Bangladesh and Invested in shares in Bangladesh,
(iv) Amount brought into India out of past non-taxed profits earned in USA.
(a) (i), (iii) and (iv)
(b) (i) and (ii)
(c) (i), (ii) and (iv)
(d) All the four above
Answer:
(b) (i) and (ii)

Question 87.
In the case of a non-resident, which of the following income is not taxable in his hands:
(a) Interest received from Government of India
(b) Capital gain on transfer of capital asset situated in India.
(c) Interest received from a person resident in India on money borrowed and used outside India for carrying a business.
(d) Royalty received from a person resident in India for the patent rights used in India.
Answer:
(c) Interest received from a person resident in India on money borrowed and used outside India for carrying a business.
Interest paid by a Resident is not deemed to accrue or arise in India if it is for use outside India. Hence (e) is answer.

Question 88.
In the case of an Individual who is not an ordinarily resident in India, the Income chargeable to tax in India out of the following shall be:
(a) Rental income in foreign country
(b) Interest income in foreign country
(c) Income from outside India from a business controlled in India
(d) All of the above
Answer:
(c) Income from outside India from a business controlled in India
A Not ordinarily resident (NOR) individual pays tax on income from business or profession outside India which is controlled from India.

Question 89.
The Basic exemption limit applicable to an individual being Super Senior Citizen (Resident in India) during the previous year 2020-21 is:
(a) ₹2,50,000
(b) ₹3,00,000
(c) ₹5,00,000
(d) Nil
Answer:
(c) ₹5,00,000

Question 90.
The basic exemption limit applicable to the Senior Citizen (Resident in India) individual during the previous year 2020-21 is:
(a) ₹ 2,50,000
(b) ₹3,00,000
(c) ₹ 5,00,000
(d) Nil
Answer:
(b) ₹3,00,000

Question 91.
Mr. Raghu, aged 85(ROR), having taxable income of ₹5,00,000 during the previous year 2020-21. The tax amount will be :
(a) 7 25,750
(b) 7 12,875
(c) 7 10,400
(d) Nil
Answer:
(d) Nil

Question 92.
The maximum amount not chargeable to tax for the PY 2020-21, in the case of an Individual who is less than 60 years of age is:
(a) ₹2,50,000
(b) 7 3,00,000
(c) 7 5,00,000
(d) Nil
Answer:
(a) ₹2,50,000

Question 93.
Shyam, a Resident Indian turned 60 years of age on 1.4.2020, His income for the previous year 2019-20 is 7 3,30,000. His tax liability for the AY 2020-21 will be:
(a) 7 1,040
(b) ₹ 1,560
(c) ₹960
(d) Nil
Answer:
(d) Nil
If an individual turns 60 on the 1st das’ of assessment year, he is treated as senior citizen for the previous year. Here, Mr. Shvarn’s exemption limit would be ₹ 3,00,000 therefore, tax liability would be 5% on ₹ 30,000 = ₹ 1500. But he will be eligible for rebate of ₹ 1500 u/s 87A. Therefore, this tax liability will be Nil.

Question 94.
The rate of tax leviable on winnings from lotteries under section 115BB:
(a) 10%
(b) 15%
(c) 20%
(d) 30%
Answer:
(d) 30%

Question 95.
RAJA Ltd. has earned income of ₹ 150 lakh inclusive of income of 7 50 lakh from the transfer of Carbon Credit during the year 2018-19. The company had incurred an amount of ₹ 5 lakhs as transfer expenses on transfer of Carbon Credit. The income received from transfer of Carbon Credit in the A.Y. 2019-20 shall be taxed as per section 115BBG of the Act and the amount of tax on such income payable shall be:
(a) 7 5,82,400
(b) 7 5,56,400
(c) 7 13,00,000
(d) 7 5,00,000
Answer:
(d) 7 5,00,000

Question 96.
The rate of tax leviable on Long term Capital Gains under section 112:
(a) 10%
(b) 15%
(c) 20%
(d) 30%
Answer:
(c) 20%

Question 97.
The rate of tax leviable on Long term Capital Gains under section 112A:
(a) 10% on gains in excess of 7 10,00,000
(b) 10% on gains in excess of 7 10,000
(c) 15% on gains in excess of 7 1,00,000
(d) 10% on gains in excess of 7 1,00,000
Answer:
(d) 10% on gains in excess of 7 1,00,000

Question 98.
The rate of tax leviable on aggregate dividend from domestic companies in the hands of Individual for the AY 2021-22 under section 115BBD A of the Income-tax, Act is:
(a) Nil
(b) 10% on dividend in excess of 7 10,000
(c) 15% on dividend in excess of 7 10,00,000
(d) 10% on dividend in excess of 71,00,000
Answer:
(a) Nil

Question 99.
The rate of tax leviable on dividend from specified foreign companies received by an Indian company for the AY 2020-21 under section 115BBD of the Income-tax is:
(a) 15% on dividend in excess of 7 10,00,000
(b) 15%
(c) 10% on dividend in excess of 7 10,00,000
(d) 10%
Answer:
(b) 15%

Question 100.
Total income of XYZ Limited includes the income of dividend of 7 10 lakh paid by a U.K. base foreign company in which XYZ Limited holds 30% of the equity share capital. The dividend income so received by the company from the U.K. base foreign company in A.Y. 2019-20 shall be:
(a) Taxable @ 15% of such income
(b) Not taxable being exempt u/s 10(34)
(c) Taxable at the normal rate applicable on domestic company
(d) Taxable @ 10% of such income
Answer:
(a) Taxable @ 15% of such income

Question 101.
A domestic company whose turnover for the previous year 2015-2016 ₹ 420 Crore; for previous year 2016-2017 ₹ 80 Crore and for previous year 2017-2018 ₹ 120 Crore. Its total income (computed) for the assessment year 2020-2021 is ₹ 30 Crores. The rate of income tax applicable for such company (without cess) would be:
(a) 30%
(b) 40%
(c) 29%
(d) 25%
Answer:
(d) 25%

Question 102.
ABC Ltd., a domestic company having a turnover of ₹350 crore has computed its total income for the year 2018-19 of ₹102 lakh. The tax payable by the company on such income in A.Y. 2019-20 shall be :
(a) ₹ 34,05,168
(b) ₹29,70,240
(c) ₹ 33,28,000
(d) ₹ 33,30,968
Answer:
(a) ₹ 34,05,168

Question 103.
Mr. Ganapathy a resident individual received 12 lakhs during the financial year 2019-2020 by way of dividend from domestic company. The company have paid dividend distribution tax under Section 115-0 on the dividend declared. The applicable rate of tax Liability on such dividend income in excess of Rs. 10,00,000 would be:
(a) 10.4%
(b) 31.2%
(c) Nil
(d) 15.45%
Answer:
(a) 10.4%

Question 104.
Which of the following is true re-garding the rates of tax on Income of a Co-operative Society for the AY 2019-20?
(a) 10% up-to ₹10,000
(b) 20% on Income from ₹ 10,000 – ₹ 20,000
(c) 30% on Income above ₹ 20,000
(d) All of the above
Answer:
(d) All of the above

Question 105.
Every person being resident Indian who carries-out the business/profession or a non-resident who has a permanent establishment in India shall deduct equalization levy from the amount paid/ payable to a non-resident in respect of specified services @ where the aggregate amount of consideration for specified services in the previous year exceeds X
(a) 8%, ₹ 10,00,000
(b) 8%, ₹ 1,00,000
(c) 6%, ₹ 1,00,000
(d) 10%,₹ 1,00,000
Answer:
(c) 6%, ₹ 1,00,000

Question 106.
In the case of a Co-operative Society, surcharge is levied for the AY 2020-21, where its total income exceeds ₹ ………. crores.
(a) 1
(b) 5
(c) 10
(d) None of the above
Answer:
(a) 1

Question 107.
The presumed income for a non-resident engaged in shipping business in India shall be:
(a) 5%
(b) 7.5%
(c) 10%
(d) 20%
Answer:
(b) 7.5%

Question 108.
The benefit of basic exemption limit applicable to an Individual is available from all Incomes except:
(a) Long term Capital Gains u/s 112
(b) Long term Capital Gains u/s 112A
(c) Short term Capital Gains u/s 111
(d) Winnings from Lotteries and other casual income.
Answer:
(d) Winnings from Lotteries and other casual income.

Question 109.
The rebate of Section 87A is available for the P.Y 2019-20 if income does not exceed ₹5,00,000 on all following Incomes except:
(a) Long term Capital Gains u/s 112
(b) Long term Capital Gains u/s 112A
(c) Short term Capital Gains u/s 111
(d) None of the above
Answer:
(a) Long term Capital Gains u/s 112

Question 110.
Arun, a non-resident of India celebrated his 80th birthday on 10th October 2019. If his total income for the previous year is ₹6,00,000 his income-tax liability for the previous year 2019-2020 is-
(a) ₹33,800
(b) ₹ 41,200
(c) ₹33,475
(d) Nil
Answer:
(a) ₹33,800
Mr. Arun is a non-resident. He will not get the benefit of higher exemption limit. Therefore, his tax liability on income of Rs. 6,00,000 will be 32,500 + 4% HEC

Question 111.
Income Tax Act, 1961 distinguished a closely held company from widely held company significantly from the viewpoint of:
(a) Tax levied at different rates
(b) Section 2(22)(e) where certain payments made to shareholders are treated as deemed dividend
(c) Allowed to carry forward its business losses only if the conditions specified in section 79 are satisfied
(d) Both (b) and (c)
Answer:
(d) Both (b) and (c)

Question 112.
The provisions of “deemed dividend” under section 2(22)(e) of the Income Tax Act, 1961, in respect of advances or loans to shareholders, or any payment on behalf of shareholders or any payment for the individual benefit of a shareholder are applicable to:
(a) A Public Limited Listed Company
(b) A Public Limited Unlisted Company
(c) A Closely held Company
(d) None of the above
Answer:
(c) A Closely held Company

Question 113.
The rate of surcharge applicable in case of Foreign Company having an income below ₹ 900 lakhs during the previous year 2019-20?
(a) 5%
(b) 1096
(c) 12%
(d) 296
Answer:
(d) 296
Rebate u/s 87A is not allowed to a Non-Resident.

Question 114.
The rate of tax leviable on STCG under section 111 A:
(a) 1096
(b) 1596
(c) 2096
(d) 3096
Answer:
(b) 1596

Question 115.
The rate of surcharge applicable to an individual having total income exceeding ₹50 Lakhs and upto ₹ 1 crore is:
(a) 596
(b) 796
(c) 1096
(d) 1596
Answer:
(c) 1096

Question 116.
The rate of surcharge applicable to an individual having total income exceeding ₹1 crore but not exceeding 2 crore is:
(a) 596
(b) 796
(c) 1096
(d) 1596
Answer:
(d) 1596

Question 117.
The rate of surcharge applicable to an individual having total income exceeding ? ₹ crore but not exceeding ₹5 crores is:
(a) 2096
(b) 2596
(c) 3096
(d) 3596
Answer:
(b) 2596

Question 118.
The rate of surcharge applicable to an individual having total income exceeding ₹ 5 crores is:
(a) 2096
(b) 2596
(c) 3096
(d) 3796
Answer:
(d) 3796

Question 118 A.
The Surcharge @ 25% is leviable if income exceeds ₹2 crores but does not exceed ₹5 crores and @ 37% if income exceeds ₹5 crores. This higher rate is not applicable to:
(a) Short term Capital Gains u/s 111A
(b) Long term Capital Gains u/s 112
(c) Long term Capital Gains u/s 112A
(d) Both (a) and (c).
Answer:
(d) Both (a) and (c).

Question 118 B.
The rate of surcharge applicable to an individual having total income of ₹5,60,00,000 by way of Short term capital gains chargeable u/s 111A will be:
(a) 15%
(b) 25%
(c) 30%
(d) 37%
Answer:
(a) 15%

Question 119.
The rate of surcharge applicable to Income under section 115BBE is :
(a) 20%
(b) 25%
(c) 30%
(d) 35%
Answer:
(b) 25%

Question 120.
The rate of surcharge applicable to a domestic company having total income exceeding ₹1 crore and upto ₹10 crore is:
(a) 2%
(b) 5%
(c) 7%
(d) 12%
Answer:
(c) 7%

Question 121.
The rate of surcharge applicable to a domestic company having total income exceeding? 10 crores is:
(a) 2%
(b) 5%
(c) 7%
(d) 12%
Answer:
(d) 12%

Question 122.
A domestic company has total income of ₹ 120 lakhs. The rate of surcharge is applicable on income-tax would be:
(a) 2%
(b) 5%
(c) 7%
(d) 12%
Answer:
(c) 7%

Question 123.
The rate of surcharge applicable to a foreign company having total income exceeding ₹ 1 crore and upto ₹ 10 crore is:
(a) 2%
(b) 5%
(c) 7%
(d) 12%
Answer:
(a) 2%

Question 124.
The rate of surcharge applicable to a foreign company having total income exceeding ₹ 10 crore is:
(a) 2%
(b) 5%
(c) 7%
(d) 12%
Answer:
(b) 5%

Question 125.
Levy of surcharge on Income -tax is wholly assigned to the
(a) Central Government
(b) State Government
(c) CBDT
(d) None of the above
Answer:
(a) Central Government

Question 126.
The rate of surcharge is applied on
(a) Total income
(b) Total tax before Health & Education cess
(c) Total tax after Health & Education cess
(d) None of the above
Answer:
(b) Total tax before Health & Education cess

Question 127.
The rate of tax and the rate of surcharge applicable on a firm including Limited Liability Partnership for AY 2020-21 is:
(a) 30% & 12% respectively
(b) 25% & 10% respectively
(c) 30% & 10% respectively
(d) 25% & 12% respectively
Answer:
(a) 30% & 12% respectively

Question 128.
The rate of tax and the rate of surcharge applicable on a foreign company if its income exceeds ₹1 crore but does not exceed ₹10 crores for AY 2020-21 is:
(a) 40% & 2% respectively
(b) 35% & 2% respectively
(c) 40% & 5% respectively
(d) 30% & 2% respectively
Answer:
(a) 40% & 2% respectively

Question 129.
For a domestic company whose turn-over has never been above ₹250 Crore, the minimum amount of total income liable for surcharge and the rate of surcharge applicable therein are –
(a) ₹ 10 Crore and 10% respectively
(b) ₹ 1 Crore and 7% respectively
(c) ₹ 1 Crore and 12% respectively
(d) ₹ 10 Crore and 5% respectively
Answer:
(b) ₹ 1 Crore and 7% respectively

Question 130.
AB & Co. received ₹ 2,00,000 as compensation from CD & Co. for premature termination of contract of agency. Amount so received is –
(a) Capital receipt and taxable
(b) Capital receipt and not taxable
(c) Revenue receipt and taxable
(d) Revenue receipt and not taxable
Answer:
(c) Revenue receipt and taxable

Question 131.
Arul Industries got a waiver of Goods & Services Tax (GST) of ₹2,20,000 for the Financial year 2019-2020. The amount of waiver is –
(a) Exempt income
(b) Capital receipt
(c) Revenue receipt
(d) None of the above
Answer:
(c) Revenue receipt

Question 132.
The rate of tax and the rate of surcharge applicable on a foreign company if its income exceeds ? 10 crores for AY 2020-21 is:
(a) 40% & 2% respectively
(b) 35% & 2% respectively
(c) 40% & 5% respectively
(d) 30% & 2% respectively
Answer:
(c) 40% & 5% respectively

Question 133.
The maximum limit of rebate allowed under section 87A of the Income-tax Act, 1961 in case of a Non-resident individual whose total does not exceeds ₹5,00,000 during the previous year 2019-20 is
(a) ₹ 2,500
(b) ₹ 5,000
(c) ₹10,000
(d) Nil
Answer:
(d) Nil

Question 134.
Mr. Naren (Aged 81) a resident of India during the previous year 2019-20 rendered services in India and earned a salary income of 14,80,000. Compute the tax liability of Mr. Naren for the FY 2019-20 in India?
(a) ₹ 22,660
(b)₹ 24,720
(c) ₹11,845
(d) Nil
Answer:
(d) Nil

Question 135.
The rebate of Section 87A is available for the P.Y 2019-20 if income does not exceed ₹5,00,000. The amount of rebate is
(a) ₹2500
(b) ₹ 2000
(c) ₹ 12500 or tax liability whichever is less.
(d) ₹ 5000
Answer:
(c) ₹ 12500 or tax liability whichever is less.

Question 136.
The total income of Atul, a resident individual, is ₹2,90,000. The rebate allow-able u/s 87A would be
(a) 12,500
(b) Nil
(c) ₹ 2,000
(d) ₹5,000
Answer:
(c) ₹ 2,000

Question 137.
Marginal Relief is allowed to:
(a) ROR
(b) NOR
(c) NR
(d) All the assessees
Answer:
(d) All the assessees

Question 138.
The Income of Mr. X a resident individual is ₹51,00,000. The amount of Marginal relief will be:
(a) ₹1,64,250
(b) ₹64,250
(c) ₹1,00,000
(d) 113,12,500
Answer:
(b) ₹64,250
Basic Concepts – CS Executive Tax Laws MCQ 3

Question 139.
The Income of Mr. X a resident individual is ₹1,02,10,000. The amount of Marginal relief will be:
(a) ₹3,075
(b) ₹9,625
(c) ₹2,10,000
(d) ₹2,84,325
Answer:
(a) ₹3,075
Basic Concepts – CS Executive Tax Laws MCQ 4

Question 140.
The Income of Mr. Shivam a resident Individual is ₹ 2,04,00,000. The marginal relief available to Mr. Shivam will be:
(a) ₹3,31,250
(b) ₹4,00,000
(c) ₹ 7,31,250
(d) ₹ 3,35,000
Answer:
(a) ₹3,31,250

Question 141.
The Income of X Ltd. a Domestic Co. is ₹ 10,05,00,000. The marginal relief will be:
(a) ₹ 2,10,000
(b) ₹ 5,00,000
(c) ₹11,68,000
(d) ₹11,84,325
Answer:
(c) ₹11,68,000

Question 142.
Health and Education cess is Levied ……….
(a) 4%
(b) 3%
(c) 2%
(d) 2.5%
Answer:
(a) 4%

Question 143.
The total Income is rounded off in multiples of ………. u/s ………. of
the Income-tax Act, 1961
(a) 10.264B
(b) 100, 284B
(c) 10, 288A
(d) 10, 288B
Answer:
(c) 10, 288A

Question 144.
The total tax liability is rounded off in multiples of …… u/s …….. of the Income-tax Act, 1961
(a) 10, 264B
(b) 100, 284B
(c) 10, 288A
(d) 10, 288B
Answer:
(d) 10, 288B

Question 145.
As per the Income-tax Act, 1961, the total tax liability is rounded off:
(a) After calculating tax
(b) After tax & Surcharge/rebate
(c) After tax, Surcharge / rebate & Health & educationcess.
(d) After tax, Surcharge/rebate, Health & educationcess, Tax deducted at source & Advance tax.
Answer:
(c) After tax, Surcharge / rebate & Health & educationcess.

Question 146.
For the PY 2020-21, taxable income of A Ltd., a domestic company is ₹ 10,86,920. Its turnover for PY 2018-19 was below ₹ 400 Crore. Its tax liability would be –
(a) ₹ 2,79,880
(b) ₹ 4,47,811
(c) ₹ 3,35,860
(d) ₹2,82,600
Answer:
(d) ₹2,82,600

Question 147.
Lalit, a resident individual of 81 years works as a consultant. If his taxable income is ₹5,20,000, the tax payable by him would be –
(a) ₹ 22,660
(b) ₹ 4,120
(c) ₹ 2,080
(d) ₹4,160
Answer:
(d) ₹4,160
Tax ability of Mr. Lalit on Income of ₹5,20,000 will be:
= 20% of ₹ 20,000 + 4% HEC = 4000+ 160 = ₹4160
His basic exemption limit will be X 5,00,000 as he is a super senior citizen and a resident individual.

Question 148.
Metro Ltd., a domestic company, is assessed with a total income of ₹ 11.25 Crore. The surcharge payable by the company shall be at the rate of –
(a) 2%
(b) 5%
(c) 10%
(d) 12%
Answer:
(d) 12%

Question 149.
Maruti & Co. is an AOP consisting of 4 members with equal share. None of the member has income exceeding the taxable limit. The total income of the AOP is ₹5 lakhs. The income tax liability of the AOP would be:
(a) ₹ 12,880
(b) ₹ 77,250
(c) ₹ 13,000
(d) ₹20,600
Answer:
(c) ₹ 13,000
The total income will be taxable at the rate of individual, but rebate is not allowed to AOP.
Basic Concepts – CS Executive Tax Laws MCQ 5

Question 149 A.
The special tax rate applicable to a resident Co-operative society u/s 115BAD applicable from AY 2021 -22 at the option of the assessee if some conditions are satisfied is: (ignore surcharge @10% and HEC @4%)
(a) 15%
(b) 18%
(c) 20%
(d) 22%
Answer:
(d) 22%

Question 149 B.
If the Co-operative society fails to satisfy the conditions contained in sub-section (2) of section 115BAD in computing its income in any previous year, the option shall become invalid in respect of:
(a) the assessment year relevant to that previous year.
(b) the assessment year relevant to that previous year and subsequent assessment years.
(c) the subsequent assessment years
(d) None of the above
Answer:
(b) the assessment year relevant to that previous year and subsequent assessment years.

Question 149 C.
The conditions contained in sub-section (2) of section 115BAD, in computing the income of the Co-operative society in any previous year, does not allow the exemptions or deductions under some of the following sections except:
(a) 10AA
(b) 32(i)(iia)
(c) 80JJAA
(d) 33ABA
Answer:
(c) 80JJAA

149 D.
The income-tax payable in respect of the total income of an individual or an HUF may be computed at the option of the assessee at a rate u/s 115BAC for any previous year relevant to the AY 2021-22 or after. The tax rate applicable on income from ₹50,001 to ₹10,00,000 is:
(a) 5%
(b) 10%
(c) 15%
(d) 20%
Answer:
(c) 15%

Question 149 E.
The income-tax payable in respect of the total income of an individual or an HUF may be computed at the option of the assessee at a rate u/s 115BAC for any previous year relevant to the AY 2021-22 or after, if certain conditions are satisfied. One of the condition is that the assessee cannot claim certain exemptions and deductions. However the assessee may claim deduction u/s:
(a) 80CCD(2) .
(b) 80JJAA
(c) 80C
(d) Both (a) & (b)
Answer:
(d) Both (a) & (b)

Question 149 F.
Shanvi did not have any business income. She opted for rates u/s 115BAC for the AY 2021-22 after exercising the option along with filing the return of income but she failed to satisfy the conditions in the previous year, the option exercised shall become invalid in respect of the assessment year relevant to that previous year and other provisions of this Act shall apply, as if the option had not been exercised for
(a) the assessment year 2021-22
(b) the subsequent assessment years
(c) the assessment year 2021 -22 and the subsequent assessment years
(d) None of the above
Answer:
(a) the assessment year 2021-22

Question 149 G.
Shravantika has business income. She opted for rates u/s 115BAC for the AY 2021-22, but she failed to satisfy the conditions in the previous year, the option exercised shall become invalid in respect
of as if the option had not been exercised.
(a) the assessment year 2021 -22
(b) the subsequent assessment years
(c) the assessment year 2021-22 and the subsequent assessment years
(d) None of the above
Answer:
(c) the assessment year 2021-22 and the subsequent assessment years

Question 149 H.
If the person is having income from business or profession, the option to opt for section 115BAC has to be made:
(a) on or before the due date for furnishing the return of income.
(b) Along with the return of income
(c) Before the end of previous year.
(d) None of the above
Answer:
(a) on or before the due date for furnishing the return of income.

Question 149 I.
If the person does not have income from business or profession, the option to opt for section 115BAC has to be made:
(a) on or before the due date for furnishing the return of income.
(b) Along with the return of income
(c) Before the end of previous year.
(d) None of the above
Answer:
(b) Along with the return of income

Question 149 J.
If the person does not have income from business or profession, the option to opt for section 115BAC made is valid for:
(a) The assessment year for which the option is exercised.
(b) The assessment year for which the option is exercised and next two years.
(c) The assessment year for which the option is exercised and all subsequent years.
(d) None of the above
Answer:
(a) The assessment year for which the option is exercised.

Question 149 K.
If the person who has exercised the option to pay tax as per rates given u/s 115BAC has loss from house property, he will:
(a) be able to set off the loss from any head
(b) not be able to set off the loss from other heads.
(c) not be able to set off the loss.
(d) None of the above
Answer:
(b) not be able to set off the loss from other heads.

Question 149 L.
Which of the following is deductible or allowed as an exemption if an individual has opted for tax rates as given under section 115BAC?
(a) Depreciation other than depreciation u/s 32(l)(ua)
(b) Depreciation u/s 32(1 )(na).
(c) Exemption or deduction for allowances or perquisite.
(d) None of the above
Answer:
(a) Depreciation other than depreciation u/s 32(l)(ua)

Question 149 M.
An individual having business in-come opted for tax under section 115BAC for the assessment year 2021-22. He withdrew the option for the AY 2022-23. In the year 2024-25 he wish to again exercise the option under section 115BAC choose the right option.
(a) He will never be eligible to exercise the option.
(b) He can exercise the option as there is no restriction.
(c) He can exercise the option if he ceases to have any income from business or profession.
(d) He can exercise the option after filing form seeking permission.
Answer:
(c) He can exercise the option if he ceases to have any income from business or profession.

Question 149N.
If Domestic company opts for section 115BAA, the rate of tax applicable for the company after surcharge and cess will be:
(a) 25.168% (22% + 10% surcharge + 4% cess).
(b) 28.6% (25% + 10% surcharge + 4% cess).
(c) 22.88% (no surcharge but 4% cess)
(d) 17.16% (15% + 10% surcharge + 4%)
Answer:
(a) 25.168% (22% + 10% surcharge + 4% cess).

Question 149 O.
If Domestic company opts for section 115BAB, the rate of tax applicable for the company on income from manu-facturing after surcharge and cess will be:
(a) 25.168% (22% + 10% surcharge + 4% cess).
(b) 28.6% (25% + 10% surcharge + 4% cess).
(c) 22.88% (no surcharge but 4% cess)
(d) 17.16% (15% + 10% surcharge + 4%)
Answer:
(d) 17.16% (15% + 10% surcharge + 4%)

Question 149 P.
A Domestic company which opts for section 115BAA, is not allowed certain deductions and the MAT credit will also lapse. XYZ Co. wants to avail the benefit of section but it wants to defer for one year so that it can utilize the benefits of deductions and MAT credit. Choose the correct option.
(a) The company cannot defer the option.
(b) The company has the right to defer the option.
(c) The section is compulsory and there is no option.
(d) Half deductions and MAT credit will be allowed if option is deferred.
Answer:
(b) The company has the right to defer the option.

Question 149 Q.
A Domestic company which opts for section 115BAA or section 115BAB shall pay tax @ % on income which
is chargeable to special rates under chapter XII of the Act.
(a) Special rate +10% surcharge + 4% Cess.
(b) 22.88%.
(c) 28.6%.
(d) 17.16%.
Answer:
(a) Special rate +10% surcharge + 4% Cess.

Question 149R.
A Domestic company which opts for section 115BAB, is not allowed certain deductions and the MAT credit will also lapse. XYZ Co. wants to avail the benefit of section but it wants to defer for one year so that it can utilize the benefits of deductions and MAT credit. Choose the correct option.
(a) The company cannot defer the option.
(b) The company has the right to defer the option.
(c) The section is compulsory and there is no option.
(d) Half deductions and MAT credit will be allowed if option is deferred.
Answer:
(a) The company cannot defer the option.

Question 149 S.
MAT provisions or AMT provisions will still be applicable in case the assessee exercises the option u/s
(a) 115BA.
(b) 115BAA.
(c) 115BAB.
(d) 115BAD.
Answer:
(a) 115BA.

Question 149 T.
An individual informed his employer to deduct T.D.S at lower rate as he will exercise the option under section 115BAC. Now the individual-
(a) has to exercise option u/s 115BAC.
(b) has no compulsion to exercise option u/s 115BAC
(c) has to seek permission from employer if he does not want to exercise option u/s 115BAC.
(d) Will have to pay penalty for changing the option later.
Answer:
(b) has no compulsion to exercise option u/s 115BAC

Question 149 U.
The residential status of a citizen of India, or a person of Indian origin, having total income, other than the income from foreign sources, exceeding fifteen lakh rupees during the previous year, who has been in India for a period or periods amounting in all to one hundred and twenty days or more but less than one hundred and eighty- two days will be:
(a) Resident but not ordinarily resident
(b) Resident and ordinarily resident
(c) Non-Resident
(d) Deemed resident
Answer:
(a) Resident but not ordinarily resident

Question 149 V.
The residential status of an individual, being a citizen of India, having total income, other than the income from foreign sources, exceeding fifteen lakh rupees during the previous year and is not liable to tax in any other country or territory by reason of his domicile or residence or any other criteria of similar nature shall be:
(a) Resident but not ordinarily resident
(b) Resident and ordinarily resident
(c) Non-Resident
(d) Deemed resident
Answer:
(a) Resident but not ordinarily resident

Question 149 W.
For the assessment year 2021-22, a Domestic company on exercising option u/s 115BA, 115BAA, and 115BAB, may be taxed at a lower rate of % respectively, (ignoring surcharge and cess)
(a) 25%, 22% and 20%
(b) 25%, 22% and 15%
(c) 30%, 25% and 20%
(d) 30%, 22% and 15%
Answer:
(b) 25%, 22% and 15%

Question 149 X.
For the assessment year 2021-22, a Domestic company on exercising option u/s 115BAB, did not get deduction u/s 35AD. The company will
(a) not be allowed to claim any deduction of depreciation on the expenditure.
(b) be allowed to claim normal and additional depreciation on the expenditure.
(c) be allowed to claim normal depreciation on the expenditure.
(d) None of the above
Answer:
(c) be allowed to claim normal depreciation on the expenditure.

Question 149Y.
X Ltd., a domestic company not opting for the provisions of section 115BAA, has a total income of ₹10,80,00,000 for A.Y. 2020-21. The tax liability of X Ltd. for A.Y. 2021-22 is:
(a) ₹2,53,69,340
(b) ₹ 3,77,39,520
(c) ₹ 3,50,23,600
(d) ₹ 2,54,18,340
Answer:
(b) ₹ 3,77,39,520

Question 149Z.
X Ltd., a domestic company opting for the provisions of section 115BAA, has a total income of ₹ 10,80,00,000 for A.Y. 2020-21. The tax liability of X Ltd. for A.Y. 2021-22 is:
(a) ₹ 2,53,69,340
(b) ₹ 3,77,39,520
(c) 12,71,81,440
(d) ₹ 2,54,18,340
Answer:
(c) 12,71,81,440