CA SURAJ SATIJA SSGURU SALARY

INCOME UNDER THE HEAD 4 R was employed from 1.8.2017 in the grade
of Rs.1 5,000-400-17,000-500-22,000 and his
“SALARIES” salary was fixed at Rs.1 6,200 from the date of
joining. His gross salary for the assessment
1 R, a chartered accountant is employed with
year 2021-22 shall be:
R Ltd., as an internal auditor and requests the
employer to call the remuneration as internal (A) Rs.1,99,200
audit fee. R shall be chargeable to tax for such (B) Rs.2,04,000
fee under the head:
(C) Rs.2,08,000
(A) Income from Salaries
(D) Rs.2,10,000
(B) Profit and gains from Business and
Profession
5 R, who is entitled to a Salary of Rs.15,000
(C) Income from other Sources
p.m., took an advance of Rs.40,000 against the
(D) Any of the above salary in the month of March 2020, The gross
salary of R for assessment year 2021-22 shall
be:
2 R Ltd, pays a salary of Rs.2,80,000 to his
employee G and undertakes to pay the Income (A) Rs.2,20,000
Tax amounting to Rs.1,560 during the (B) Rs.1,80,000
previous year 2020-21 on behalf of G. The
(C) Rs.2,25,000
gross Salary of G shall be:
(D) none of the above
(A) Rs.2,80,000
(B) Rs.2,81,560
6 R, who is entitled to Salary of Rs.20,000 p.m.
(C) Nil
took advance salary from his employer for the
(D) Rs.2,78,450 months of April and May 2021 along with
Salary of March 2021 on 31.3.2021. The gross
salary of R for assessment year 2021-22 shall
3 R was employed on 1.7.2014 in the grade of
be:
Rs.15,000-400-17,000-500-22,000. His gross
salary for the assessment year 2021-22 shall (A) Rs.2,40,000
be: (B) Rs.2,80,000
(A) Rs.1,99,200 (C) Rs.2,60,000
(B) Rs.2,04,000 (D) none of the above
(C) Rs.2,08,500
(D) Rs.2,10,000 7 R is employed with G Ltd., at a salary of
Rs.25,000 p.m. As G Ltd., was in financial

3.1
CA SURAJ SATIJA SSGURU
crisis, it paid the salary of January 2020 to
March 2021 to R only in July 2021. The gross
salary of R for assessment year 2021-22 shall
be:
(A) Rs.3,00,000
(B) Rs.2,25,000
(C) any of above two, at the option of the
employee.
(D) none of the above
8 Salary of R is Rs.30,000 p.m. R had taken
Salary in advance for the months of April 2020
to June 2020 in March 2020 itself. The gross
salary of R for assessment year 2021-22 shall
be:
(A) Rs.3,60,000
(B) Rs.2,70,000
(C) determined on the basis of option which
he exercised last year
(D) none of the above
9 Salary of R becomes due on 1st of next
month and it is paid on 7th of that month. For
assessment year 2021-22, the salary of R shall
be taken from:
(A) April 2020 to March 2021
(B) March 2020 to February 2021
(C) Any of the above at the option of the
employer
(D) None of these
10 R who was working with another company
joined the present employer w.e.f 1.5.2020 at
SALARY
a Salary of Rs.20,000 p.m. His salary becomes
due on first of next month. He was also
entitled to a pension of Rs.8,000 p.m. from his
former employer as he retired on 31.3.2020.
His pension is taxable on due basis. His gross
salary for assessment year 2021-22 shall be:
(A) Rs.2,20,000
(B) Rs.3,16,000
(C) Rs.2,96,000
(D) none of the above
11 The Government of India announced
increase in the D.A on 15.3.2020 with
retrospective effect from 1.5.2015 and the
same were paid on 6.2020. The arrears of D.A.
shall be taxable in the previous year:
(A) 2019-20
(B) 2020-21
(C) in respective previous years to which
these relate
(D) which the employee may opt.
12 Gratuity shall be fully exempt in the case of:
(A) Central and State Government employee
(B) Central and State Government employees
and employees of local authorities
(C) Central and State Government employee,
employee of local authorities and employee of
statuary corporation
(D) All employees
13 An employee is covered under Payment of
Gratuity Act, 1972:
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CA SURAJ SATIJA SSGURU
(i) Salary for purpose of calculating 15 days
salary for each completed year of service shall
be:
(A) last drawn Salary
(B) average Salary of last 10 months
(C) average Salary of last 3 completed years
(D) average salary of last 12 months
(ii) Salary for the above purpose shall:
(A) include dearness allowance and fixed
percentage of commission on turnover
achieved by the employee
(B) not include Dearness allowance
(C) include dearness allowance to the extent
the terms of employment provide
(D) include dearness allowance but shall not
include commission
(iii) If the employee has completed service of
16 years 6 months and 5 days, the number of
completed years shall be taken as:
(A) 16 years
(B) 17 years
(C) 16 years 6 months and 5 days
(D) 16 years and 7 months
(iv) If he has completed exactly 16 years and 6
months, the completed year shall be:
(A) 16 Years
(B) 17 Years
(C) 16 Years and 6 months
(D) any of the above
(v) For purpose of computing 15 days’ salary,
the number of days in a month shall be taken
as:
SALARY
(A) 30 days
(B) 26 days
(C) 31 days
(D) 24 days
(vi) The maximum exemption of gratuity shall
be:
(A) Rs.10,00,000
(B) Rs.7,00,000
(C) Rs.20,00,000
(D) 20 months Salary
14 An employee is neither a Government
employee nor covered under Payment of
Gratuity Act, 1972.
(i) Salary for purpose of calculating half
month shall be taken as:
(A) last drawn Salary
(B) average salary of 10 months preceding the
month of retirement
(C) average salary of each completed year
(D) average salary of last 3 completed years
(ii) Salary for the above purpose:
(A) shall include dearness allowance and fixed
percentage of commission on turnover
achieved by the employee
(B) shall not include dearness allowance
(C) shall include dearness allowance-to the
extent the terms of employment so provide
and fixed percentage of commission on
turnover achieved by the employee
(D) shall include dearness allowance to the
extent the terms of employment so provide
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CA SURAJ SATIJA SSGURU SALARY

(iii) If the employee has completed 16 years (B) 8 years

and 8 months of service, the number of (C) 9 years
completed years shall be taken as:
(D) 12 years
(A) 17 years
(B) 16 years
17 For purpose of calculating exemption of
(C) 16 years and 8 months gratuity, salary shall include:
(D) any of the above (A) fixed commission
(iv) The maximum exemption of gratuity shall (B) commission if it is a fixed percentage on
be:
turnover
(A) Rs.6,00,000 (C) both fixed commission and commission as
(B) Rs.3,50,000 fixed percentage of turnover
(C) Rs.20,00,000 (D) none of the above three
(D) 20 months salary
18 Un-commuted pension received by a
Government employee is:
15 R, who claimed the exemption of gratuity
in the past to the extent of Rs.3,00,000, was (A) exempt
entitled to the gratuity from the
(B) taxable
present/second employer amounting to
Rs.6,00,000 in the previous year 2020-21 as (C) partially taxable
he retired on 25.10.2020. R shall be entitled to (D) none of the above
exemption to the maximum extent of:
(A) Rs.7,00,000
19 Commuted pension received shall be fully
(B) Nil exempt in case of:
(C) Rs.6,00,000 (A) Government employee
(D) Rs.20,00,000 (B) Government employee or an employee of
local authority

16 R worked with a previous employer for 3 (C) Government employee or an employee of

years but was not entitled to any gratuity. He
worked with the present employer for 8 years
and 7 months. The completed years of service
for calculating exemption of gratuity shall be
taken as:
(A) 11 years
local authority or an employee of statutory
corporation
(D) All employees
20 (i) An employee was also entitled to
gratuity. He got 60% of his pension commuted
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CA SURAJ SATIJA SSGURU SALARY

and received a sum of Rs.12,00,000 as (A) D.A.

commuted pension. The exemption in his case
shall be:
(A) Rs. 12,00,000
(B) Rs.4,00,000
(C) Rs.6,66,667
(D) Rs.10,00,000
(ii) What shall be exemption if he was not
entitled to any gratuity?
21 An employee who was not entitled to
gratuity, got 30% of his total pension
commuted in the past. He wishes to commute
another 25% of his total pension in the
previous year. He shall be allowed exemption
to the extent of:
(A) Nil
(B) Dearness allowance to the extent the
terms of employment so provide
(C) Bonus
(D) Taxable allowance
(E) Fixed commission
(F) Commission if fixed percentage on
turnover
(G) Fixed percentage of commission on net
profits.
24 Salary for exemption of leave encashment
shall be taken as:
(A) last drawn Salary
(B) average Salary of 10 months immediately
preceding the month of retirement

(B) 20% (C) average Salary of 10 months immediately

preceding the date of retirement.
(C) 25%
(D) any of the above
(D) 3.33%

25 The maximum exemption in case of leave

22 Encashment of leave salary at the time of encashment shall be:
retirement is fully exempt in the case of:
(A) Rs.2,40,000
(A) Central Government employee
(B) Rs.3,50,000
(B) State Government employee
(C) Rs.3,00,000
(C) Both Central and State Government
employees (D) Rs.10,00,000

(D) Government employee and employee of

local authority.
23 Tick the incomes which will be included in
the meaning of salary for encashment of leave
salary to other employees.
26 An employee availed the exemption of
leave encashment of Rs.1,00,000 in the past.
He received from the second employer a sum
of Rs.2,50,000 as encashment of leave. He will
be entitled to exemption to the extent of:

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CA SURAJ SATIJA SSGURU SALARY

(A) Nil (E) Dearness allowance to the extent terms of

employment so provide
(B) Rs.2,50,000
(F) Fixed commission
(C) Rs.2,00,000
(G) Commission which is fixed percentage on
(D) Rs.1,40,000
turnover
(H) Fixed percentage of commission on net
27 Compensation received on voluntary profits
retirement is exempt under 10(10C) to the
(I) Bonus (
maximum extent of:
(J) Taxable allowances
(A) Rs.2,40,000
(B) Rs.3,50,000
30 (i) A is entitled to Children education
(C) Rs.5,00,000
allowance @ Rs.80 p.m. per child for 3
(D) Rs.10,00,000 children amounting Rs.240 p.m. It will be
exempt to the extent of:

28 (i) If rent is paid for a house situated in (A) Rs.200 p.m.

Delhi, the house rent allowance shall be (B) Rs.160 p.m.
exempt to the maximum extent of:
(C) Rs.240 p.m.
(A) 40% of salary
(D) Nil
(B) 50% of salary
(ii) What shall be your answer if A exercises
(C) 60% of salary the option u/s 115BAC?
(D) Nil
(ii) What shall be exemption if the rent is paid 31 (i) R is entitled to Hostel expenditure
for a house in Ghaziabad. allowance of Rs.600 p.m. for his 3 children @
(iii) What shall be exemption if the employee Rs.200 per child. The exemption in this case
opts to be taxed u/s 115BAC? shall be:
(A) Rs.600 p.m.

29 Tick the income which will be included in (B) Rs.400 p.m.

the meaning of salary for exemption of H.R.A. (C) Rs.300 p.m.
(A) Basic salary (D) Nil
(B) Advance salary (ii) What shall be your answer if R exercises
(C) Arrears of salary the option u/s 115BAC?
(D) Dearness allowance

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CA SURAJ SATIJA SSGURU SALARY

32 (i) R is entitled to a transport allowance of (ii) What shall be your answer if R exercises
Rs.1,800 p.m. for commuting from his the option u/s 115BAC?
residence to office and back. He spends
Rs.1,400 p.m. The exemption shall be:
35 Match the exemption in the following case,
(A) Rs.1,800 p.m. if option u/s 115BAC is not exercised:
(B) Rs.1,600 p.m.
1. Children 1. Rs.300 per month per
(C) Rs.1,400 p.m.
education child for maximum of
(D) Nil allowance two children
(ii) What shall be your answer if R exercises
2. Hostel 2. Rs.100 per month per
the option u/s 115BAC?
expenditure child for maximum
allowance two children
33 (i) R is entitled to Rs.6,000 as medical
3. Tribal area 3. Rs.2,600 p.m.
allowance He spends Rs.4,000 on his medical
allowance
treatment and Rs.1,000 on the medical
treatment of his major son not dependent on Transport Rs.200 p.m.
him. The exemption in this case shall be: allowance
(A) Rs.4,000
5. Compensatory 5. Nil
(B) Rs.5,000 field area
(C) Nil allowance
(D) Rs.6,000 6. Counter 6. 70% of allowance
(ii) What shall be your answer if R exercises insurgency maximum Rs.10,000
the option u/s 115BAC? allowance p.m.

7. Allowance to 7. Rs.3,900 p.m.

34 (i) R is an employee of a Transport transport
Company. He is entitled to transport employee
allowance of Rs.10,000 p.m. He spends
Rs.4,000 every month. The exemption shall
be: 36 Entertainment allowance in case of
(A) Rs.10,000 p.m. Government employee is:

(B) Rs.4,000 p.m. (A) fully exempt

(C) Rs.7,000 p.m. (B) fully taxable

(D) Nil (C) exempt upto certain-limits mentioned in

section 16(ii)

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CA SURAJ SATIJA SSGURU
(D) first included in full in gross salary and
thereafter deduction allowed from gross
salary under section 16(ii)
(ii) What shall be your answer if the employee
exercises the option u/s 115BAC?
37 For claiming deduction of entertainment
allowance, if option u/s 115BAC is not
exercised, Government employee includes:
(A) Central and Sate Government employee
(B) State Government Employee
(C) Central and State Government Employees
and employees of local authority
(D) Central and State Government employees,
employees of local authority and employees of
statutory corporation
38 (i) During the previous year, the employee
was reimbursed Rs.24,000 as medical
expenses incurred by him which includes
Rs.7,000 spent in Government hospital. The
taxable perquisite in this case shall be:
(A) Rs.1 7,000
(B) Nil
(C) Rs.2,000
(D) Rs.24,000
(ii) What shall be your answer if the employee
exercises the option u/s 115BAC?
39 (i) Mrs. R, wife of R who is employed in G
LTD went for bypass surgery in England
alongwith her husband. Expenses on medical
treatment of wife and stay outside India of
wife and R amounted to Rs.7,00,000 as against
SALARY
Rs.6,50,000 permitted by RBI Guidelines. The
travel expenses amounted to Rs.1,50,000. All
expenses were reimbursed by the employer.
Assume the gross, salary and income from
other sources of the employee are Rs.1,40,000
and Rs.40,000 respectively. The taxable
perquisite in this case shall be:
(A) Rs.Nil
(B) Rs.50,000
(C) Rs.2,00,000
(D) Rs.1,50,000
(ii) What shall be your answer if Mrs. R
exercises the option u/s 115BAC?
40 (i) An employee is entitled to standard
deduction from his gross salary amounting to:
(A) Nil
(B) Rs.50,000
(C) Rs.40,000
(D) 1/3rd of his gross salary subject to the
maximum of Rs.50,000
(ii) What shall be your answer if the employee
exercises the option u/s 115BAC?
41 (i) Leave travel concession is a:
(A) tax free perquisite for one journey in a
block of 4 years
(B) tax free perquisite one journey per year
(C) tax free perquisite two journeys in a block
of 4 years
(D) taxable perquisite
(ii) What shall be your answer if the employee
exercises the option u/s 115BAC?
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CA SURAJ SATIJA SSGURU SALARY

given to employee is Rs.1,30,000. The

valuation of the perquisite of the house
42 Tick the incomes which are included in the
meaning of salary for valuation of rent free (i) In case of Government Employee shall be:
accommodation: (A) Rs.20,000
(A) Basic salary (B) License fee determined by the
(B) D.A Government
(C) D.A which is to be included in salary for (C) Rs.50,000
retirement benefits (D) Rs.1,3 0,000
(D) Bonus
(ii) In case of any other employee:
(E) Commission fixed amount (A) Rs.40,000
(F) Commission fixed percentage on turnover (B) Rs.20,000 v
(G) Taxable allowances, (C) Rs.1,30,000
(H) Entertainment allowance (D) Rs.30,000
(I) Entertainment allowance after allowing
deduction under section 16(ii)
44 The employee is provided with furniture
(J) Employer contribution to recognized costing Rs. 1,50,000 along-with house w.e.f.
provident fund exceeding 12% of salary
1.7.2020. The value of the furniture to be
(K) Interest on recognized provident fund included in the valuation of unfurnished
exceeding 9.5% p.a. house shall be:
(L) All perquisites (A) Rs.11,250
(M) Gas electricity bill paid or reimbursed by (B) Rs.1 5,000
employer
(C) Rs.22,500
(N) Facility of Gas, Electricity, etc. (D) Rs.16,875
(O) Advance Salary
(P) Arrears of salary 45 (i) Salary of an employee is Rs.2,00,000.
(Q) Salary received from second employer Rent paid by the employer for the unfurnished
with whom he is also working on part time house provided to employee at Moradabad is
basis. Rs.3,000 p.m. The employer charges Rs.2,000
p.m. as rent from the employee. The valuation
of this perquisite shall be:
43 Salary of employee is Rs.2,00,000. Fair rent
(A) Rs.1 6,000
of the unfurnished house situated in Delhi
(B) Rs.6,000

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CA SURAJ SATIJA SSGURU
(C) Rs.1 2,000
(D) Nil
(ii) What shall be your answer if the employee
exercises the option u/s 115BAC?
46 (i) A car of 1500 cc is provided by the
employer, to the employee whose salary is
Rs.20,000 p.m. The car is used by him partly
for official and partly for his personal
purposes. The expenses of running and
maintenance for official purpose is met by the
employer and the expenses of running and
maintenance for private use is met by
employee himself. The valuation of this
perquisite shall be:
(A) Nil
(B) Rs.1,800 p.m.
(C) Rs.600 p.m.
(D) Rs.2,400 p.m.
(ii) What shall be your answer if the employee
exercises the option u/s 115BAC?
47 (i) An employer has provided a motor car
of 1.5 liter capacity to his employee which the
employee is allowed to use for official purpose
and for travelling from office to residence and
back. The expenses of running and
maintenance of Motor Car are met by the
employer. The value of this perquisite shall be
(A) Rs.1,800 p.m.
(B) Rs.600 p.m.
(C) Nil
(D) Rs.2,400 p.m.
SALARY
(ii) What shall be your answer if the employee
exercises the option u/s 115BAC?
48 (i) R is provided with a car of 1.6 liter
capacity by the employer X Ltd. Along-with
driver. The expenses of running and
maintenance of car are met by R himself.
Besides using the car for official purposes, R
uses the car for his personal purposes also.
The valuation of the perquisite of car shall be
(A) Rs.7,200
(B) Rs.1 8,000
(C) Rs. 10,800
(D) Nil
(ii) What shall be your answer if R exercises
the option u/s 115BAC?
49 (i) R an employee, owns a car which he uses
for his private as well as official purposes. The
expenses of running and maintenance of the
car is met by the employer. The perquisite
shall—
(A) be taxable in case of specified employee
only
(B) be taxable in case of an employee other
than specified employees
(C) be taxable case of specified and non
specified employee
(D) not be taxable
(ii) What shall be your answer if R exercises
the option u/s 115BAC?
50 (i) R is an employee of Indian Oil
Corporation Ltd. He is provided with free gas
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CA SURAJ SATIJA SSGURU
for his personal purposes by the employer.
The value of this perquisite shall be:
(A) nil
(B) 61/4% of the salary
(C) manufacturing cost per unit
(D) market rate of gas
(ii) What shall be your answer if R exercises
the option u/s 115BAC?
51 (i) R owns a house in which he lives. His
employer reimburses to him the electricity
bill amounting to Rs.5,000. It shall be a
perquisite for:
(A) specified employee only
(B) employee other than specified employees
(C) both specified and other employees.
(D) none of the above
(ii) What shall be your answer if R exercises
the option u/s 115BAC?
52 (i) An employer provides free facility of gas
electricity etc. to his employee which he uses
partly for official and partly for his personal
purposes. The actual amount spent by
employee is Rs.10,000 and the salary of the
employer is Rs.2,00,000. The valuation of this
perquisite shall be:
(A) Rs.10,000
(B) Rs.6,250
(C) proportionate amount for personal use.
(D) Nil
(ii) What shall be your answer if the employee
exercises the option u/s 115BAC?
SALARY
53 (i) The employer provides free facility of
Watchman, Sweeper and Gardner to his
employees. It will be a perquisite for:
(A) specified employee only
(B) employees other thaμ specified employees
(C) specified as well as other employees
(D) none of the above employees
(ii) What shall be your answer if the employee
exercises the option u/s 115BAC?
54 (i) The valuation of the perquisite in the
above case shall be:
(A) actual wages paid to each servant
(B) Rs. 120 p.m. per servant
(C) Rs.60 p.m. per servant
(D) Nil
(ii) What shall be your answer if the employee
exercises the option u/s 115BAC?
55 (i) R Ltd. provides the facility of cook to its
employee for which it paid Rs.1,000 p.m. as
salary to the cook. The valuation of this
perquisite shall be:
(A) Rs.120 p.m.
(B) Rs.1,000 p.m.
(C) Rs.60 p.m.
(D) Nil
(ii) What shall be your answer if the employee
exercises the option u/s 115BAC?
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CA SURAJ SATIJA SSGURU SALARY

56 (i) The Gardner, Sweeper and the 59 (i) Interest credited to statutory provident
watchman are employed by the employee but fund shall be:
their salary of Rs.500 p.m. per person is paid (A) fully exempt
by the employer. The valuation of this
perquisite shall be: (B) exempt upto 8.5% p.a.

(A) Rs.4,320 (C) fully taxable

(B) Rs.1 8,000 (D) exempt upto 9.5%

(C) Rs.1,960 (ii) What shall be your answer if the employee

(D) Rs.6,000
(ii) What shall be your answer if the employee
exercises the option u/s 115BAC?
57 (i) R Ltd. has taken a house on rent which
has been provided to its employee along with
the Gardner. The Gardner salary paid shall be:
(A) tax free perquisite
(B) taxable to the extent of Rs. 120 p.m.
(C) fully taxable
exercises the option u/s 115BAC?
60 (i) Employer’s contribution to recognized
provident fund shall be:
(A) fully exempt
(B) fully taxable
(C) exempt upto 12% of salary
(D) exempt upto 10% of salary
(ii) What shall be your answer if the employee
exercises the option u/s 115BAC?

(D) tax free perquisite but will be added to the

fair rental value 61 (i) Interest credited to recognized
(ii) What shall be your answer if the employee provident fund shall be:
exercises the option u/s 115BAC? (A) fully exempt
(B) fully taxable
58 (i) Employer’s contribution to statutory (C) exempt upto 9.5% p.a.
fund shall be:
(D) exempt upto 8.5% p.a.
(A) fully exempt
(ii) What shall be your answer if the employee
(B) exempt upto 12% of salary exercises the option u/s 115BAC?
(C) exempt upto 10% of salary
(D) Taxable 62 (i) Employer’s contribution to
(ii) What shall be your answer if the employee unrecognized provident fund shall be:
exercises the option u/s 115BAC? (A) fully taxable
(B) fully exempt

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(C) exempt upto 12% of Salary
(D) neither exempt nor taxable in the year of
contribution.
(ii) What shall be your answer if the employee
exercises the option u/s 115BAC?
(B) deduction under section 80CCC
(C) nil deduction
(D) deduction u/s 16 from gross salary
(ii) What shall be your answer if the employee
exercises the option u/s 115BAC?

63 (i) Interest credited to unrecognized
provident fund shall be:
(A) fully taxable
(B) fully exempt
(C) exempt upto 9.5% p.a.
(D) neither exempt nor taxable in the year of
accrual.
(ii) What shall be your answer if the employee
exercises the option u/s 115BAC?
64 (i) Employee’s/assessee’s own
contribution to statutory provident fund or
recognized provident fund or public
provident fund shall be subject to:
(A) deduction under section 80C
66 Payment from statutory fund and public
provident fund shall be:
(A) taxable
(B) fully exempt
(C) taxable to the extent of employer’s
contribution and interest thereon
(D) exempt if received after 5 years of service
67 Payment from recognized provident fund
after 5 years of service shall be:
(A) taxable
(B) fully exempt
(C) taxable to the extent of employer’s
contribution and interest thereon

(B) deduction under section 80CCC (D) exempt upto Rs.10,00,000

(C) deduction under section 16 from gross

salary 68 Payment from recognized provident fund
(D) nil deduction before 5 years shall be:

(ii) What shall be your answer if the employee (A) fully taxable
exercises the option u/s 115BAC? (B) fully exempt
(C) shall be treated as if the fund was
65 (i) Employee’s contribution to unrecognized right from beginning
unrecognized provident fund shall be subject (D) none of the above
to:
(A) deduction u/s 80C

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69 Payment from unrecognized provident
fund shall be:
(A) fully taxable
(B) fully exempt
(C) taxable to the extent of employers
contribution and interest thereon.
(D) same as (c) and the interest employers
contribution shall be taxable under the head
other sources
70 The year in which unrecognized provident
fund is converted in recognized provident
fund:
(A) the employers contribution till date and
interest thereon shall be taxable
(B) the employers contribution till date shall
be taxable
(C) it will be assumed as if the provident fund
was recognized right from beginning and
excess amount of employers contribution and
interest thereon shall be chargeable to tax
(D) none of the above
71 R is entitled to salary of Rs.10,00,000 p.m.
The employer contributes 12% of salary to the
employees recognised provident fund. Such
contribution by the employer shall be:
(A) exempt to the extent of 10% of salary
(B) fully exempt
(C) fully exempt but the contribution by the
employer exceeding Rs.7,50,000 i.e. 6,90,000
shall be taxable as perquisite in the hands of
the employee
SALARY
(D) fully exempt but the contribution by the
employer exceeding Rs.10,00,000 i.e. 4,40,000
shall be taxable as perquisite in the hands of
the employee
72 R is entitled to salary of Rs.10,00,000 p.m.
The employer contributes 14% of salary to the
employees recognised provident fund. Such
contribution by the employer shall be:
(A) exempt to the extent of 10% of salary
(B) exempt to the extent of 12% of salary
(C) exempt to the extent of 12% of salary but
the contribution by the employer exceeding
Rs.7,50,000 i.e. 9,30,000 shall be taxable as
perquisite in the hands of the employee
(D) exempt to the extent of 12% of salary but
the contribution by the employer exceeding
Rs.10,00,000 i.e. 6,80,000 shall be taxable as
perquisite in the hands of the employee
73 (i) R is entitled to a watchman allowance Of
Rs.600 p.m. for the security of his residence.
He pays Rs.500 p.m. to the watchman
employed by him. The taxable allowance shall
be:
(A) Rs.120 p.m.
(B) Rs.100 p.m.
(C) Rs.600 p.m.
(D) Nil
(ii) What shall be your answer if R exercises
the option u/s 115BAC?
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CA SURAJ SATIJA SSGURU
74 (i) R is provided with a rent free
accommodation owned by his employer in
Delhi. The value of this perquisite shall be:
(A) 20% of salary
(B) 15% of salary
(C) 10% of salary
(D) 7.5% of salary
(ii) What will be your answer if the
accommodation is provided in a city having
population of 9 lakhs as per 2001 census?
(iii) What will be your answer if the
accommodation is provided in a city having
population of 15 lakhs as per 2001 census?
75 (i) R is provided with a rent-free
accommodation in Delhi which has been taken
on rent by the employer. The value of this
perquisite shall be:
(A) 15% of salary
(B) 15% of salary or rent paid or payable
whichever is lower
(C) 20% of salary or rent paid or payable
whichever is lower
(D) 7 .5% of salary or rent paid or payable
whichever is less
(ii) What shall be your answer if the
accommodation is provided in a city having
population of 8 lakhs as per 2001 census?
76 (i) R is provided with interest free loan by
the employer for purchase of a house. The
value of this perquisite shall be determined as
the sum equal to:
(A) simple interest computed @ 10% p.a.
SALARY
(B) simple interest computed at the rate
charged by SBI on 1st day of the relevant
previous year on the maximum outstanding
monthly balance
(C) simple interest computed at the rate
charged by SBI on last day of the relevant
previous year on the maximum outstanding
monthly balance
(D) Nil
(ii) What shall be your answer if the loan is
given for purchase of a car?
(iii) What shall be your answer if the loan is
given for marriage of R's son?
(iv) What shall be your answer if the loan is
given for medical treatment of disease
specified in rule 3A?
(v) What shall be your answer if the amount of
loan does not exceed Rs.20,000 in aggregate?
77 (i) Tea and snacks are provided by X Ltd. to
employees in the office during office hours.
The value of this perquisite, if option u/s
115BAC is not exercised, shall be:
(A) Nil
(B) Nil, if it is upto Rs.50 per meal
(C) Actual amount spent by the employer less
amount recovered from employee if any
(D) Nil, if it is upto Rs. 100 per day
(ii) What will be your answer if tea and snacks
are provided in the office after office hours?
78 (iii) What will be your answer if instead of
tea and snacks, meal is provided in the office
or factory?(i) Tea and snacks are provided by
3.15
CA SURAJ SATIJA SSGURU
X Ltd. to employees in the office during office
hours. The value of this perquisite, if option
u/s 115BAC is exercised, shall be:
(A) Nil
(B) Nil, if it is upto Rs.50 per meal
(C) Actual amount spent by the employer less
amount recovered from employee if any
(D) Nil, if it is upto Rs. 100 per day
(ii) What will be your answer if tea and snacks
are provided in the office after office hours?
(iii) What will be your answer if instead of tea
and snacks, meal is provided in the office or
factory?
79 (i) The employer X Ltd. gives a gift (in kind)
on the marriage of the son of the employee.
Gift so made shall not be perquisite if the value
of the gift is:
(A) Rs.6,000 or less
(B) Below Rs.5,000
(C) Rs. 10,000 or less
(D) Below Rs.10,000
(ii) What will be your answer if the gift is made
to the employee on the silver jubilee of the
company?
80 (i) The employer has given a lap top
computer for the personal use of the
employee. The value of this perquisite shall
be:
(A) Nil
(B) 10% p.a. of the cost of the asset
(C) 10% p.a. of the W.D.V. of the asset
SALARY
(D) 15% of the WDV of the asset
(ii) What will be your answer if this lap top is
given for the personal use of the son of the
employee?
(iii) What will be your answer if instead of
computer a video camera is given for the
personal use of employer or any member of
his household?
81 (i) The employer had purchased a car for
Rs.3,00,000 which was being used for official
purposes. After 2 year 6 months of its use, the
car is sold to R, the employee, for Rs.1,20,000.
The value of this perquisite shall be
(A) Rs.72,000
(B) Rs.60,000
(C) Nil
(D) Rs.1,20,000
(ii) What will be your answer if instead of car,
the asset purchased is a computer?
(iii) What will be your answer if the asset is
neither car nor any computer?
82 (i) R is employed with S Ltd. He is provided
with motor car of 1.4 litrs capacity by the
employer which he has used partly for official
purposes and partly for private purposes. The
expenses of running and maintenance of
motor car is also met by employer. Such
facility shall:
(A) be a perquisite in the hands of the
specified employee
(B) not be a perquisite
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CA SURAJ SATIJA SSGURU SALARY

(C) be a perquisite in the hands of both 85 An employer has made a gift of Titan Watch
specified and non-specified employee worth Rs.12,000 to his employee. Such gift
shall:
(D) be a perquisite in the hands of non-
specified employee (A) be a perquisite in the hands of the
employee and the value of such perquisite
(ii) What shall be your answer if R exercises
shall be Rs.1 2,000
the option u/s 115BAC?
(B) be a perquisite and the value of such
perquisite shall be Rs.7,000
83 (i) The value of the above perquisite of
(C) not be a perquisite
motor car taxable in the hands of the
employee shall be: (D) be a perquisite and the value of such
perquisite shall be Rs.2,000
(A) Rs.1,800 p.m.
(B) Rs.600 p.m.
(C) Rs.2,400 p.m.
(D) Nil
(ii) What shall be your answer if R exercises
the option u/s 115BAC?

84 (i) An employer has provided free meal

worth Rs.110 per meal for 300 days in the
office, during office hours, to his employees
who do not exercise option u/s 115BAC. Such
facility provided to the employees shall:
(A) be a perquisite in the hands of the
employees and taxable @ 60 per day for 300
days
(B) be a tax free perquisite in the hands of the
employees
(C) be a tax free perquisite in the hands of the
employees but liable to FBT in the hands of the
employer
(D) fully taxable in hands of employee
(ii) What will be your answer, if option u/s
115BAC is exercised?

3.17
CA SURAJ SATIJA SSGURU SALARY

ANSWERS TO MULTIPLE CHOICE QUESTIONS (v)(B),

(vi)(C)
1 (A) 31 (i) (B), (ii) (D) 60 (i)(C), (ii)(C)
14 (i)(B), 44 (A) 73 (i)(C), (ii)(C)
2 (B) 32 (i)(D), (ii) (D) 61 (i)(C), (ii)(C) (ii)(C),
(iii)(B),
3 (C) 33 (i) (C), (ii) (C) 62 (i)(D), (iv)(C)
(ii)(D)
15 (C) 45 (i)(B), (ii)(B) 74 (i)(B),
4 (C) 34 (i) (C), (ii) (D) 63 (i)(D), (ii)(D), (iii)
(ii)(D) (C)

5 (B) 35 (1&2), (2&1), 64 (i)(A), 16 (A) 46 (i)(C),(ii)(C) 75 (i)(B),

(3&4), (4&5), (ii)(D) (ii)(B)
(5&3), (6&7)
& (7&6) 17 (B) 47 (i)(C), (ii)(C) 76 (i)(B),
(ii)(B),
6 (B) 36 (i)(D), (ii) (B) 65 (i)(C), (ii)(C) (iii)(B), (iv)
(D), (v)(D)
7 (A) 37 (A) 66 (B)
18 (B) 48 (i)(B), (ii)(B) 77 (i)(A),
8 (B) 38 (i) (A), (ii) (A) 67 (B) (ii)(A),
(iii)(B)
9 (B) 39 (i)(C), (ii)(C) 68 (C)
19 (C) 49 (i)(C), (ii)(C) 78 (i)(A),
10 (C) 40 (i)(B), (ii)(A) 69 (D) (ii)(A),
(iii)(C)
11 (B) 41 (i)(C),(ii)(D) 70 (C)
20 (i)(C), 50 (i)(C), (ii)(C) 79 (i)(B),
12 (B) 42 (A), (C), (D), 71 (C) (ii)(D) (ii)(B)
(E), (F), (G),
(H) & (Q) 21 (B) 51 (i)(C), (ii)(C) 80 (i)(A),
(ii)(A),
13 (i)(A), 43 (i)(B), (ii)(D) 72 (C) (iii)(B)
(ii)(A),
(iii)(B),
(iv)(A),

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CA SURAJ SATIJA SSGURU SALARY

22 (C) 52 (i)(C), (ii)(C) 81 (i)(A),

(ii)(C),
(iii)(D)

23 (B) & 53 (i)(A), (ii)(A) 82 (i)(A),

(F) (ii)(A)

24 (C) 54 (i)(A), (ii)(A) 83 (i)(A),

(ii)(A)

25 (C) 55 (i)(B), (ii)(B) 84 (i)(A),

(ii)(D)

26 (C) 56 (i)(B), (ii)(B) 85 (B)

27 (C) 57 (i)(C), (ii)(B)

28 (i)(B), 58 (i)(A), (ii)(A)

(ii)(A),
(iii) (D)

29 (A), 59 (i)(A), (ii)( A)

(E)& (G)

30 (i) (B),
(ii) (D)

3.19