Income Tax MCQ by CA Kishan Kumar

CA INTER/IPCC (May 2020)
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MCQs
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CA Kishan Kumar May/Nov 2020 Income Tax (CA IPCC/Inter)
INDEX - MCQ
No. of
S No. Topics Page No.
MCQs
1. Residential Status
67 1 - 16
2. Incidence of Tax
3. Income under the head House Property 44 17- 28
4. Income under the head Other Sources

60 29 - 42
5. Taxability of Gift
6 & 16. Agricultural Income 47 43 - 51

Profit and Gain from Business and
7. 101 52 - 75
Profession
8. Income under the head Capital Gains1 - -
9. Advance Tax and Interest 26 76 - 80
10. Tax Deduction at Source (including TCS) 69 81 -93
11. Filing of Return of Income 40 94 - 102
12. Clubbing of Income 34 103 - 110
13. Set-off and Carry Forward of Losses 32 111 – 118
14. Deductions from Gross Total Income 65 119 – 130
15. Income under the head Salary 80 131 – 146
17. Computation of Total Income and Basics 55 147 – 156
Total MCQs 720
1 MCQs of Capital Gain shall be provided shortly

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CA Kishan Kumar MCQs – Residential Status and Incidence of Tax May/Nov 2020
ICAI Study Material MCQs
1. If Anirudh has stayed in India in the P.Y. 2019-20 for 181 days, and he is non- resident in 9 out of 10 years
immediately preceding the current previous year and he has stayed in India for 365 days in all in the 4 years
immediately preceding the current previous year and 420 days in all in the 7 years immediately preceding the
current previous year, his residential status for the A.Y. 2020-21 would be -
a) Resident and ordinarily resident
b) Resident but not ordinarily resident
c) Non-resident
d) Cannot be ascertained with the given information
2. Raman was employed in Hindustan Lever Ltd. He received a salary of INR 40,000 p.m. from 1.4.2019 to 27.
9.2019. He resigned and left for Dubai for the first time on 1.10.2019 and got salary of rupee equivalent of 80,000
p.m. from 1.10.2019 to 31.3.2020. His salary for October to December 2019 was credited in his Dubai bank
account and the salary for January to march 2020 was exactly credited in his Bombay account directly. He is
liable to tax in respect of-
a) Income received in India from Hindustan Lever Ltd;
b) Income received in India and in Dubai;
c) Income received in India from Hindustan Lever Ltd. and income directly credited in India;
d) Income received in Dubai
3. A company would be a resident in India for the P.Y. 2019-20, if

a) it is an Indian company
b) during the year, majority of its directors are resident in India
c) during the year, its Place of Effective Management is in India
d) both (a) and (c)
4. Income accruing in London and received there is taxable in India in the case of-
a) resident and ordinarily resident only
b) both resident and ordinarily resident and resident but not ordinarily resident
c) both resident and non-resident
d) non-resident
5. Incomes which accrue or arise outside India but received directly in India are taxable in case of-
c) non-resident
d) All the above
6. Income earned from a contract negotiated by an agent in India in the name of a non –resident but approved by
such non –resident shall:
a) be taxable in India as such income is deemed to accrue or arise in India
b) not be taxable in India as there is no business connection in India
c) be taxable in India only if it is received in India
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d) be taxable in India as such accrues or arise in India
7. Fees for technical services paid by the Central Government will be taxable in case of –
c) non-resident
d) All the above
8. Short term capital gains on sale of shares of an Indian company received in Australia is taxable in case of –
c) non-resident only
d) All the above
9. Income from a business in Canada, controlled from Canada is taxable in case of –

c) non-resident
d) All the above
10. Dividend Income from Australian company received in Australia in the year 2018, brought to India during the
previous year 2019-20 is taxable in case of –
b) resident but not ordinarily resident
c) non – resident
d) None of the above
ICAI Sample MCQs
11. Mr. Joe, a foreign national, working with Mint Inc., a USA company, came India during the P.Y. 2019-20 for
rendering services on behalf of the employer. He wishes to claim his salary income earned during his stay in
India as exempt. Which of the following conditions are NOT necessary to be fulfilled to claim such remuneration
as exempt income?
a) Mint Inc. is not engaged in a business activity in India.

b) Mr. Joe should be an overseas citizen of India
c) Mr. Joe stay in India should not exceed 90 days during the P.Y. 2019-20
d) Remuneration received by Mr. Joe is not liable to be deducted from Mint Inc.'s income chargeable to tax
under the Act
12. Mr. Warner, an Indian citizen and a Government employee, left India for the first time on 31.01.2019 on account
of his transfer to High Commission in United Kingdom. During P.Y. 2019-20, he visited India only for a week
on occasion of his brother marriage. During F.Y. 2019-20, his income composition includes salary, foreign
allowances, rent from property in Singapore and interest earned from fixed deposits maintained with SBI. His
taxable income for P.Y. 2019-20 will include ________________________.
a) All of them, since Mr. Warner is a resident in India, hence his global income will be taxable
b) Only interest earned from fixed deposits maintained in India
c) No income shall be taxable since Mr. Warner is a non-resident in India for P.Y. 2019-20
d) Salary and interest income of fixed deposits with SBI
13. Which of the following incomes is not deemed to accrue or arise in India under section 9(1)(i) of the Income-tax
Act, 1961?
a) Income from any business connection in India

b) Income through or from any property in India
c) Income arising from transfer of a capital asset situate in India
d) Income relating to operations which are confined to purchase of goods in India for the purpose of export
14. During the P.Y. 2019-20, Mr. Samar, a non-resident, received Rs.75,00,000 on account of sale of agricultural
land in Mauritius. The money was first received in Mauritius and then remitted to his Indian bank account. Is
the sum taxable in India?
a) No, as agricultural income is exempt u/s 10(1).

b) No, as the income has accrued and arisen outside India and is also received outside India.
c) Yes, since it is remitted to India in the same year.
d) Yes, as agricultural income earned outside India is not exempted in India in the hands of a non- resident.
15. Mr. Happy, a US citizen, came to India for an assignment from 11.01.2016 to 09.10.2016 and went back to his
home country on completion of the same. He thereafter, visited India on 05.07.2018 again for an assignment,
which ended on 26.05.2019. What is the latest date by which Mr. Happy should depart from India after
completing the assignment so as to qualify as non-resident for P.Y. 2019-20? (Assume that he shall not be
visiting India again during the year)
a) 29-05-2019
b) 30-05-2019
c) 31-05-2019
d) 28-09-2019
ICAI RTP and MTPs
16. Mr. Sumit is an Indian citizen and a member of the crew of an America bound Indian ship engaged in carriage
of freight in international traffic departing from Kochi on 25 th April, 2019. From the following details for the P.Y.
2019-20, determine the residential status of Mr. Sumit for A.Y. 2020-21, assuming that his stay in India in the
last 4 previous years preceding P.Y. 2019-20 is 365 days and last seven previous years preceding P.Y. 2019-20 is
730 days:
Date entered in the Continuous Discharge Certificate in respect of joining the ship: 25th April, 2019
Date entered in the Continuous Discharge Certificate in respect of signing off the ship: 24 th October, 2019.
Mr. Sumit has been filing his income tax return in India as a Resident for previous 2 years.
What is his residential status for A.Y. 2020-21?
a) Resident and ordinarily resident

b) Resident but not-ordinarily resident
c) Non-resident
d) Non-resident till 24.10.2019 and resident till 31.03.2020
17. Aashish earns the following income during the P.Y. 2019-20:
 Interest on U.K. Development Bonds (1/4th being received in India): INR 4,00,000
 Capital gain on sale of a building in India but received in Holland: INR 6,00,000
If Aashish is a resident but not ordinarily resident in India, then what will be amount of income chargeable to
tax in India for A.Y. 2020-21?
a) INR 7,00,000
b) INR 10,00,000
c) INR 6,00,000
d) INR 1,00,000
18. A, a resident individual, is engaged in the business of money lending. For the purpose of lending money to
various persons, A borrows money from other persons. As a part of his business, A took a loan from B of an
amount of Rs. 10 lacs. B is a non-resident. On the said loan, A paid an amount of Rs.1 lac as interest during the
P.Y. 2019-20 to B in India. A did not deduct tax at source while crediting/paying the interest amount to B. A is
of the view that the amount of Rs.1 lac shall be allowed to him as a deduction under the Income-tax Act, 1961.
Whether A‟s view is correct?
a) Correct, interest expenses incurred for business are allowed as deduction u/s 36(1)(iii).
b) Incorrect, as tax at source has not been deducted by A on the interest amount, full amount of interest of
Rs.1 lac shall be disallowed in A.Y. 2020-21.
c) Incorrect, as tax at source has not been deducted by A on the interest amount, amount of interest of
Rs.30,000 shall be disallowed in A.Y. 2020-21.
d) Correct, interest expenses incurred for business are allowed as deduction u/s 37(1).
19. Which of the following statements is true for companies in the context of the Income-tax Act, 1961?
a. Residential status of a company has an impact on the tax rate of company

b. Tax Rate of a company depends upon the place of incorporation
c. Residential status of a company helps to classify the company as domestic company and foreign company
d. Residential status of company helps classification of closely held company and widely held company.
20. On 31.08.2019, Mr. Kashyap moved to Japan for employment. His family accompanied him, owing to long term
nature of employment. Mrs. Kashyap is also planning to start a fashion boutique in Japan soon, once she gets
settled. Both Mr. & Mrs Kashyap are Indian citizens and have been working in India for more than a decade
now. Comment on their residential status for A.Y. 2020-21, assuming they did not visit India after August 2019.
a. Mr. & Mrs Kashyap will qualify to be non-resident
b. Mr. Kashyap will qualify to be non-resident and Mrs Kashyap will be resident but not ordinarily resident
c. Mr. Kashyap will qualify to be non-resident and Mrs Kashyap will be resident and ordinarily resident
d. Mr. & Mrs Kashyap will qualify to be resident but not ordinarily resident
21. Mr. Vikesh, a US citizen, came to India for an assignment from 11.01.2016 to 09.10.2016 and went back to his
home country on completion of the same. He thereafter, visited India on 05.07.2018 again for an assignment,
which ended on 26.05.2019. What is the latest date by which Mr. Vikesh should depart from India after
completing the assignment so as to qualify as non-resident for P.Y. 2019-20?
(Assume that he shall not be visiting India again during the year)
a. 29-05-2019
b. 30-05-2019
c. 29-09-2019
d. 28-09-2019
MCQs for Practice
22. There are two basic conditions given in Income-tax Act, 1961 to determine whether the individual is resident or
not. How many conditions(s) should be fulfilled by the individual in order to be called resident?
a. Both the basic condition

b. Any one of the basic conditions
c. First basic condition
d. Second basic condition
23. Section 5 of the Income- tax Act, 1961 deals with _____________.
a. Determination of residential status

b. Scope of total income
c. Additional conditions to be fulfilled for determining residential status
d. Income deemed to be received
24. Which of the following basic condition is/are correct for an individual to be considered Resident in India?
1. He must be in India for 180 days or more

2. He must be in India for 60 days or more 0r 365 in last 4 years
Select the correct answer from the options given below.
a. Both (1) and (2)

b. (1) only
c. (2) only
d. Neither (1) nor (2)
25. The total income of any previous year of a person who is a resident includes all income from whatever source
derived which ____________________.
a. is received or is deemed to be received in India in such year by or on behalf of such person

b. accrues or arises or is deemed to accrue or arise to him in India during such year
c. accrues or arises to him outside India during such year

d. all of the above
26. Which of the following section deals with “Income deemed to be received”?
a. Section 6
b. Section 7
c. Section 8
d. Section 9
27. The total income of any previous year of a person who is a non-resident includes all income from whatever source
derived which _______________________.
a. is received or is deemed to be received in India in such year by or on behalf of such person or accrues or
arise to him in India during such year
b. is received or is deemed to be received outside India in such year by or on behalf of such person or accrues
or arises or is deemed to accrue or arise to him outside India during such year
c. both (a) and (b)
d. neither (a) nor (b)
28. Which of the following section deals with “income deemed to accrue or arise in India?
a. Section 10
b. Section 8
c. Section 9
d. Section 11
29. As per explanation to section 6(1), the period of 60 days specified in section 6(1) dealing with second basic
condition is substituted by __________ in certain circumstances.
a. 180 days
b. 190 days
c. 182 days
d. 365 days
30. Which of the following statement is true or false?
1. Once a person is a resident in a previous year, he shall be deemed to be resident for subsequent years also
2. A resident in India cannot become resident in any other country for the same assessment year
3. A foreign company is always non-resident in India
4. Salary payable by government of India to an Indian citizen for services rendered outside India is not taxable
in India
Select the correct answer from the option given below.
1. 2. 3. 4.
a.  x  
b. x  x 
c.    
d. x x x x
31. In which of the following case, as per explanation to section 6(1), the period of 60 days specified in section 6(1)
dealing with second basic condition is substituted by 182 days.
I. Person resident in India, leaves India during the previous year for employment purpose
II. Person resident in India, leaves India during the previous year as a member of crew of an Indian ship.
III. Person resident outside India who is citizen of India comes to visit to India in Previous Year
a. I only
b. I and II only
c. I, II and III
d. None of the above
32. Which of the following type of income is taxable in the hands of person who is ORDINARY RESIDENT?
i. Income received or is deemed to be received in India

ii. Income which accrues or arises or is deemed to accrue or arise in India.
iii. Income received in India from business situated outside India but controlled from India
iv. Income received in India from any source (other than business income) situated outside India.
v. Income which accrue or arise outside India and received outside India during the preceding previous year
and remitted to India during the current previous year.
Select the correct answer from the options given below
i. ii. iii. iv. v.

a.     
b.     X
c.    x X
d.   x x X
33. Which of the following income(s) shall be deemed to be received in the previous year as per section 7 of the
income – tax Act 1961?
I. Annual accretion in the previous year to the balance at the credit of an employee participating in a
recognized Provident fund, to the extent provided in Rule 6 of part A of the Fourth Schedule.
II. Contribution made, by the Central Government or any other employer in the previous year, to the account
of an employee under a pension scheme referred to in section 80CCD.
a. Both (I) & (II)
b. Neither (I) nor (II)

c. (II) only
d. (I) only
34. The facility to substitute period of 182 days in second basic condition instead of 60 days is available to
_____________ who leaves India during the previous year for employment purpose.
a. Indian citizen
b. Person of Indian origin
c. Both (A) and (B)
d. Neither (A) nor (B)
35. In which of the following case, royalty paid outside India will be taxable in India?
i. Income by way of royalty payable by a person who is a resident where the royalty is payable in respect of
any right, property or information used or services utilized for the purposes of a business carried on by such
person outside India
ii. Income by way of royalty payable by a person who is a non-resident, where the royalty is payable in respect
of any right, property or information used or services utilized for the purposes of a business carried on by
such person in India
iii. Income by way of royalty payable by the government
a. i & iii
b. ii & iii
c. ii only
d. i, ii and iii
36. Which of the following day is included (true) or excluded (false) while counting the number of days stay in India?
i. The day of arrival

ii. The day of departure
i. ii.
a. x 
b. x x
c.  x
d.  
37. Which of the following statement is correct in relation to determination of residential status of an individual?
a. The period of stay is compulsorily required to active and continuous

b. Where an individual is in India for a part of the day for less than 12 hours out of 24 hours, he will be
considered to be in stayed in India
c. An Indian citizen is always treated as resident in India
a. (a) &(b)
b. (b) & (c)
c. (a) & (c)
38. Which of the following shall be deemed to accrue or arise in India?
a. Income by way of interest payable by the Government to non-resident

b. Income by way of interest payable by a person who is a resident where the interest is payable in respect of
any debt incurred, or moneys borrowed and used for the purposes of a business in India
c. Income by way of interest payable a person who is a non-resident, where the interest is payable in respect
of any debt incurred or money borrowed and used, for the purposes of a business or profession carried on
by such person outside India.
d. (a) and (b)
39. When an individual be regarded as “Not an ordinary resident”?
a. If he fulfils one of the basic conditions and both of the additional condition
b. If he fulfils both basic condition and both additional condition
c. If he does not fulfil any of the basic condition but fulfils one of the additional conditions
d. If he fulfils one of the basic conditions and one of the additional conditions
40. Rikki Martin, a foreign national comes to India for 91 days in PY 2019-20. He is not a person of Indian origin.
He was present in India for last few years as follows:
Year Days Year Days

2018-19 134 2011-12 362
2017-18 12 2010-11 179
2016-17 67 2009-10 72
2015-16 307 2008-09 40
2014-15 180 2007-08 16
2013-14 359 2006-07 315
2012-13 22 2005-06 48
Determine the residential status of Rikki Martin.
a. Resident but ordinary resident

b. Non-resident
c. Resident but not ordinary
d. Resident
41. Which of the following shall be deemed to accrue or arise in India?
1. Income earned by non-resident engaged in the business of running a news agency or of publishing
newspaper, magazines or journals from activities which are confined to the collection of news and views in
India for transmission out of India
2. Income earned by non-resident engaged in purchase of goods in India for the purpose of export
3. Income from operations which are confined to the shooting of any cinematograph film in India
a. 1, 2 and 3
b. 1 and 3
c. 2 and 1
d. None of the 1, 2 and 3
42. A person is said to be not-ordinary resident in India if such person has been __________________.
a. A non-resident in India in any 9 years out of the total 10 years preceding the previous year
b. In India for a period of 729 days or less during the 7 years preceding the previous year
c. Neither (a) nor (b)
d. Either (a) or (b) or both (a) & (b)
43. A person is said to be ordinary resident in India if such person has been ______________________.
a. Resident in India for 2 years out of the total 10 years preceding the previous year
b. In India for a period of 730 days or more during the 7 years preceding the previous year
c. Both (a) and (b)
d. Either (a) or (b)
44. In which of the following case HUF said to be resident in India?
1. If the control and management of its affairs is wholly situated in India

2. If the control and management of its affairs is wholly situated outside in India
3. If the control and management of its affairs is partly situated in India
Select the correct answer from the options given below-
a. (1) or (2)
b. (2) or (3)
c. (1) or (3)
45. In order to determine whether HUF is not- ordinarily resident _______________________.
a. Additional conditions have to be checked for all adult male members of the family
b. Additional conditions have to be checked for the KARTA of the family
c. HUF can never be not- ordinary resident, hence there is no need to check additional condition for anyone
46. A partnership firm is said to be resident in India _______________________________.
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a. If business is controlled from India for more than 182 days or more
b. If business is controlled from India for more than 182 days or more AND all partners are in India for more
than 365 days or more in 4 years preceding the previous year
c. If the control and management of its affairs is situated partly in India
d. If all the partners fulfil the both basic conditions and any one of the additional conditions
47. A company is said to be resident in India ________________________.
1. If it is Indian company
2. If its place of effective management, in that year, is in India
a. 1 only
b. 2 only
c. Both 1 and 2
d. Either 1 or 2
48. Which of the following company is said to be resident in India?
I. An Indian company having business situated wholly outside India

II. A foreign company having its effective management in India
III. A subsidiary company registered in India having holding company situated outside India and fully
controlled by the holding company from outside India
a. I only
b. I and II only
c. III only
d. I, II and III
49. Dividend payable by an Indian company outside India is ______________________.
a. Exempt in the hands of recipient

b. Taxable in the hands of the recipient
c. Not taxable at all
d. Taxable in the hands of the company and exempt in the hands of the recipient
50. Residential status is determined for ________________________.
a. Accounting year
b. Financial year
c. Previous year
d. Assessment year
51. A person receives INR 5lakh as income from business in France which was controlled from Kanpur (India). It
will be taxable in the hands of that person, if he is __________________.
1. Resident and ordinary resident

2. Non- resident
3. Resident but not-ordinary resident
a. (1) & (2)

b. (2) & (3)
c. (1) & (3)
d. (1), (2), & (3)
52. Interest on UK government bond accrued for the year 2019-20 is INR 40 lakhs and out of it 25% is directly
received in India. Depending upon residential status, how it will be taxed?
Choose the correct option given below,
Ordinary Resident Non-ordinary resident Non-resident

a. 40 lakhs 40 lakhs 40 lakhs
b. 10 lakhs 10 lakhs 10 lakhs
c. 40 lakhs 10 lakhs 10 lakhs
d. 40 lakhs Not taxable Not taxable
53. Past un-taxed profit of INR 1 lakh brought to India during the previous year will be ________________.
a. Taxable in the hands of person if he is ordinary resident or not ordinary resident

b. Taxable in the hands of person if he is ordinary resident only
c. Taxable in the hands person whether he is ordinary resident, not ordinary resident or non-resident
d. Not be taxable in the hand of any person whether he is ordinary resident, not ordinary resident or non-
resident
54. An individual earned profit of INR 15 lakhs on sale of shares in Indian company and received in Germany. This
profit will be _______________________.
a. Exempt in the hands of person whether he is ordinary resident, not ordinary resident or non-resident
b. Taxable in the hands of person if he is not-ordinary resident or non-resident
c. Taxable in the hands of person if he is ordinary resident or not ordinary resident
d. Taxable in the hands of person whether he is ordinary resident, not ordinary resident or non-resident
55. An individual earned dividend of INR 7.5 lakhs from Japanese company and received in japan. Such dividend
will be _______________________.
a. Taxable in the hands of person whether he is ordinary resident, not ordinary resident or non-resident
b. Exempt in the hands of person whether he is ordinary resident, not ordinary resident or non-resident
c. Taxable in the hands of person if he is not ordinary resident or non-resident
d. Taxable in the hands of person if he is ordinary resident.
56. Mrs. Laxmi earned dividend from PR Ltd, an Indian company. Such dividend earned is ______________.
a. Taxable in hands of Mrs. Laxmi if she is ordinary resident

b. Taxable in hands of Mrs. Laxmi if she is ordinary resident or not ordinary resident
c. Taxable in hands of Mrs. Laxmi whether if she is ordinary resident or not-ordinary resident or non-resident
d. Exempt in hands of person weather he is ordinary resident, not resident or non-resident.
57. Umesh was born in 1987 in India. His parents were also born in India in 1950. His grandparents were, however
born in Japan. Umesh was residing in India till 16-3-2017. Thereafter, he migrated to Japan and took citizenship
of that country on 15-3-2019. He visits India during P.Y. 2019-20 for 90 days. Determine the residential status
of Umesh for AY 2020-21.
a. Ordinary resident
b. Non- resident
c. Not- ordinary resident
58. X Ltd. is an Indian company. It carries business in Mumbai and New York. The place of effective management
of X Ltd. is outside India. 98% of total income of the company is from business in New York. X ltd is
____________.
a. Resident
b. Resident but not ordinary resident
c. Non-resident
59. Following are the incomes of Mr. T for the PY 2019-20:
Particulars Amount
Income from profession in Kenya which was set-up in India received there 12 Lakh
Income from agriculture land in Nepal received there and then bought to India 30 Lakhs
Past untaxed profit bought to India during the year 7 Lakhs
What is the gross total income of Mr. T, if he is ordinary resident, not ordinary resident or non-resident?
Ordinary Resident Not-ordinary resident Non-resident

a. 42,00,000 12,00,000 Nil
b. 49,00,000 42,00,000 Nil
c. 49,00,000 42,00,000 7,00,000
d. 12,00,000 30,00,000 7,00,000
60. Following are the incomes of Mr. Q for the PY 2019-20:
Particulars Amount
Profits earned from business in Paris which is controlled in India; half of the profit is 40 Lakhs
being received in India
Income from Agriculture in Bhutan and remitted to India 10 Lakhs
Income from house property in London and received there 8 Lakhs
What is the gross total income of Mr. Q, if he is Ordinary resident, Not ordinary resident or Non-resident?

a. 58,00,000 20,00,000 20,00,000
b. 50,00,000 10,00,000 Nil
c. 58,00,000 40,00,000 20,00,000
d. 58,00,000 40,00,000 Nil
61. XYZ & Co. is partnership firm consisting of three partners X, Y & Z. All the partners equally control the business
of the firm. X resides in Pune while Y & Z resides at New York. During the year 2019-20, Y &Z not come to India
even for single day. For the AY 2020-21, the XYZ & co is _________________.
a. Non-resident
b. Not ordinary resident
c. Resident
d. Extraordinary resident
62. Jenny, a non-resident submits following information for the PY 2019-20:
Particulars Amount
Royalty earned in India, received in Nepal on 3-5-2019 4,60,000
Dividend from foreign company received in Nepal 56,000
Share of profit of a business situated in Nepal received in Burma on 14-6-2019 but 42,000
controlled from India
Total income of Jenny for the PY 2019-20 is ________________________.
a. INR 4,60,000
b. INR 5,16,000
c. INR 5,58,000
d. Nil
63. Following are the incomes of Mr. E for the PY 2019-20.
Particulars Amount
Royalty received from government of India 2,40,000
Income from business earned in Afghanistan out of which 1,50,000 received in India 2,50,000
Fee for technical services received in India for technical services provided to run a 2,00,000
business outside India
What is the gross total income of Mr. E, if he is ordinary resident, not ordinary resident or non-resident?

a. 6,90,000 5,90,000 5,90,000
b. 6,90,000 4,90,000 -
c. 2,40,000 4,50,000 -
d. 6,90,000 3,90,000 6,90,000
64. Head office of NSZ, a HUF, is situated in Singapore since 1980. The family is managed by N who is resident in
India in only 7 out of 10 years preceding the previous year 2019-20. Determine the residential status of HUF, if
the entire family business is controlled from Singapore.
a. Resident
b. Resident but ordinary resident
c. Resident but not ordinary resident
d. Non-resident
65. Head office of NSZ, a HUF is situated in Singapore since 1980. The family is managed by N who is resident in
India in Only 7 out of 10 years preceding the previous year 2019-20. Determine the residential status of HUF, if
the entire family business is controlled partly from Singapore and partly from India.
a. Resident
b. Resident but ordinary resident
c. Resident but not ordinary resident
d. Non-resident
66. Statement 1: Presence of eligible fund manager in India shall not constitute business connection in India of
such eligible investment fund on behalf of which he undertakes fund management activity.
Statement 2: Significant economic presence of a non-resident in India shall also constitute business
connection in India.
a. Statement 1 only is correct
b. Statement 2 only is correct
c. Both Statements are correct
d. None of the Statement is correct
67. Statement 1: Salary accrued to a Non-Resident seafarer for services rendered outside India on a foreign going
ship (with India Flag of Foreign Flag) shall be included in the Total Income if his salary has been credited in the
Non-Resident External Account [NRE Account] maintained by him with an Indian Bank.
Statement 2: Any sum of money paid by a resident Indian to a non-corporate non- resident or foreign company
would be deemed to accrue or arise in India if the same is chargeable to tax under section 56(2)(x).
Answer Key
1. B 2. B 3. D 4. A 5. D 6. A 7. D
8. D 9. A 10. D 11. B 12. D 13. D 14. B
15. A 16. A 17. A 18. B 19. A 20. C 21. A
22. B 23. B 24. D 25. D 26. B 27. A 28. C
29. C 30. D 31. C 32. B 33. A 34. A 35. B
36. D 37. D 38. D 39. D 40. A 41. D 42. D
43. C 44. C 45. B 46. C 47. D 48. D 49. D
50. C 51. C 52. C 53. D 54. D 55. D 56. D
57. A 58. A 59. A 60. C 61. C 62. A 63. A
64. D 65. B 66. C 67. B
CA Kishan Kumar MCQs – House Property May/Nov 2020
1. Vacant site lease rent is taxable as _______________________.
a) Income from house property

b) Business income always
c) Income from other sources or business income, as the case maybe
d) Income from other sources or income from house property, as the case may be
2. Treatment of unrealized rent for determining income from house property.
a) To be deducted from expected rent

b) To be deducted from actual rent
c) To be deducted under section 24 from annual value
d) To be deducted from both expected rent and actual rent
3. Municipal taxes to be deducted from GAV should be ___________________.
a) Paid by the tenant during the previous year

b) Paid by the owner during the previous year
c) Accrued during the previous year
d) Paid during the previous year either by tenant or owner
4. Deduction under section 24(a) is ______________________.
a) 1/3rd of NAV
b) repairs actually incurred by the owner
c) 30% of NAV
d) Interest on borrowed capital
5. Interest on borrowed capital accrued upto the end of the previous year prior to the year of completion of
construction is __________________________.
a) allowed as a deduction in the year of completion of construction

b) allowed in 5 equal annual instalments from the year of completion of construction
c) allowed in the respective year in which the interest accrues
d) not allowed
6. The ceiling limit of deduction under section 24(b) in respect of interest on loan taken on 1.4.2019 for repairs of
a self-occupied house is _________________________.
a) INR 30,000 p.a.

b) INR 1,50,000 p.a.
c) INR 2,00,000 p.a.
d) No limit
7. Where an Assessee has two house properties for self-occupation, the benefit of nil annual value will be available
in respect of _____________________________.
a) Both the properties

b) The property which has been acquired/constructed first
c) Any one of the properties, at the option of the Assessee
d) Any one of the properties and once option adopted cannot be changed in subsequent years
8. Leena received INR 30,000 as arrears of rent during the P.Y. 2019-20. The amount taxable under section 25A
would be _____________________________.
a) INR 30,000
b) INR 21,000
c) INR 20,000
d) INR 15,000
9. Vidya received INR 90,000 in May, 2019 towards recovery of unrealized rent, which was deducted from actual
rent during the P.Y. 2017-18 for determining annual value. Legal expense incurred in relation to unrealized rent
is INR 20,000. The amount taxable under section 25A for A.Y.2020-21 would be ____________________.
a) INR 90,000
b) INR 63,000
c) INR 60,000
d) INR 49,000
10. Ganesh and Rajesh are co-owners of a self-occupied property. They own 50% share each. The interest paid by
each co-owner during the previous year on loan (taken for acquisition of property during the year 2004) is INR
2,05,000. The amount of allowable deduction in respect of each co-owner is ________________.
a) INR 2,05,000
b) INR 1,02,500
c) INR 2,00,000
d) INR 1,00,000
ICAI Sample MCQs
11. Mr. P has a house property in Delhi whose Municipal value is Rs.1,00,000 and the Fair Rental Value is
Rs.1,20,000. The standard rent is fixed at Rs.1,08,000. It was self-occupied by Mr. P from 01.04.2019 to
31.07.2019. With effect from 01.08.2019, it was let out at Rs. 10,000 per month. Compute the net annual value
of the house property for A.Y. 2020-21 if the municipal taxes paid by him during the year were Rs. 20,000.
a. Rs. 1,00,000
b. Rs. 88,000
c. Rs. 60,000
d. Rs. 1,08,000
12. Mr. Sujal and his brother jointly own a bungalow. They had taken a housing loan to purchase the bungalow. The
loan is sanctioned in the name of Mr. Sujal and his brother in the year 2015. Interest on housing loan for the P.Y.
2019-20 amounted to Rs. 5,00,000 which is paid by Mr. Sujal (Rs. 2,50,000) and his brother (Rs. 2,50,000).
The bungalow is used by them for their residence. In this case, what will be the amount of deduction available
under section 24(b) to Mr. Sujal and his brother?
a. Rs. 30,000 each

b. Rs. 2,00,000 each
c. Rs. 2,50,000 each
d. Rs. 5,00,000 each
13. Mr. Agarwal moved to Mumbai. He took a property on rent for his residential purpose. However, the property
was not fully occupied by him. He let out the property to his friend at Rs.15,000 p.m. from 01.04.2019 to
31.03.2020. Mr. Agarwal is of the view that income from subletting of property is taxable as Income from House
Property. As tax advisor of Mr. Agarwal, find out whether his view is correct.
a. Correct, as any income from a house property is taxable under the head Income from House Property.
b. Incorrect, as Mr. Agarwal is not the owner of the property let out by him. The income from subletting shall
be taxable under the head Profits and Gains of Business or Profession.
c. Incorrect, as Mr. Agarwal is not the owner of the property let out by him. The income from subletting shall
be taxable under the head Income from other sources.
d. Correct, as income from subletting of a property is directly attributable to the property itself and hence,
chargeable to tax as income from house property.
ICAI RTP and MTPs
14. In respect of loss from house property, which of the following statements are correct?
a. While computing income from any house property, the maximum interest deduction allowable under
section 24 is INR 2 lakhs
b. Loss from house property relating to a particular year can be set-off against income under any other head
during that year only to the extent of INR 2 lakhs
c. The loss in excess of INR 2 lakh, which is not set-off during the year, can be carried forward for set-off
against any head of income in the succeeding year(s)
d. All the above
15. Which of the following details/evidences are required to be furnished by an employee to his/her employer in
respect of deduction of interest under the head "Income from house property", when the employer is estimating
the total income of the employee for the purpose of tax deduction at source u/s 192?
(i) Amount of Interest payable or paid

(ii) Rate of interest payable or paid
(iii) Name of the lender
(iv) Address of the lender

(v) PAN of the lender
(vi) TAN of the lender
a. (i), (iii), (v)

b. (i), (iii), (iv), (v)
c. (ii), (iv), (v), (vi)
d. (i), (ii)
MCQs for practice
16. During the PY 2018-19, municipality has charged taxes INR 30,000 but the Assessee has paid
INR 20,000. In the PY 2019-20, municipality has charged taxes of INR 50,000 and the Assessee paid INR
65,000 which includes INR 10,000 for the earlier year and INR 5,000 for the subsequent year. What is the
amount of municipal tax allowed for PY 2018-19 and PY 2019-20?
a. 20,000 and 65,000

b. 30,000 and 65,000
c. 30,000 and 50,000
d. 20,000 and 50,000
17. What will be the annual value of a newly constructed house building which is being held as stock in trade and is
vacant?
a. Annual Value
b. Nil for the year in which construction has been completed and annual value from the next year onwards
c. Nil for a period of two years from the end of the year construction has been completed and annual value
from the subsequent years
d. Nil
18. If a house is self-occupied as well as vacant, its income shall be computed as if it is _______________.
a. self-occupied house
b. Vacant house
c. Partly self-occupied house and partly Vacant house
d. Any of the above as per option of Assessee
19. Which of the following statement is True?
I. As per section 56(2)(iii), if letting of property is inseparable from letting of other assets then entire income
is taxable as ‘income from house property’
II. If the main intention of the house property is to exploit the immovable property by way of complex
commercial activities, then composite rent will be taxable under the head ‘income from house property’
III. In case of a house property let out to carry out business more efficiently the rental income shall be taxable
under the head Business/ Profession.
Select the correct answer from the option given below
a. (I), (II), (III)

b. (II), (III)
c. (III)
d. (I), (III)
20. Interest on loan taken from outside India is deductible u/s 24(b) if
a. the Assessee has deducted tax on interest paid.

b. the person receiving the interest has an agent in India.
c. The House is residential property
a. (a), (b) or (c)

b. (b) and (c)
c. (a) or (c)
d. (a) or (b)
21. Which of the following can be treated as self- occupied property?
1 Property let out by the Assessee to his employer and employer allot such property to employee as a rent-
free accommodation.
2 House property which cannot be occupied by the owner by reason of the fact that owing to employment or
business carried on at any other place, he has to reside at that other place in a building not belonging to
him.
a. 1 only
b. 2 only
c. Both 1 and 2
d. Neither 1 nor 2
22. If the property is let out throughout the year deduction of interest from NAV is __________________.
a. Maximum INR 2,00,000 or INR 30,000 as case may be depending upon some conditions
b. Interest actually paid during the year to the bank
c. Interest of any amount due whether paid or not to the bank
d. None of the above is correct
23. Which of the following statement is correct?
a. Service fee and other charges in respect of borrowed money is treated as ‘interest’ and hence allowed to be
deducted from NAV while calculating income from house property.
b. Interest on unpaid interest is allowed to deducted from NAV while calculating income from house property.
c. Unrealized rent when received is liable to tax after deduction of 30% of such amount.
a. (a) and (c)

b. (b) and (c)
c. (a) and (b)
d. (c) only
24. If the property remains vacant for the whole year then _______________________.
a. Annual value of such property shall be equal to ‘expected rent’

b. Annual value of such property shall be equal to ‘municipal value’
c. Annual value of such property shall be equal to ‘expected rent’ or ‘municipal value’ whichever is less subject
to ‘standard rent’
d. Annual value of such property shall be nil.
25. Which of the following statement (s) is/ are false in relation to property owned by co-owners?
I. Where share of each co-owner in property is not definite and ascertainable then such person shall be
assessed as ‘body of individuals’ or ‘firm’ at the option of assessing officers
II. In case of self-occupied property, annual value of each co-owner shall not be NIL and deemed to be let out
and taxed accordingly.
a. Both (I) & (II)

b. (II)
c. (I)
d. Neither (I) nor (II)
26. Which of the following can have negative annual value?
1. Let out property

2. One self-occupied property
3. Deemed let out property
4. One property which could not be occupied due to employment elsewhere
5. Property which is party let out and partly self-occupied
a. 5, 3, 1
b. 2, 4, 1
c. 2&5
d. All of the above
27. In which of the following cases transferor deemed to be owner of the house property?
i) Transfer of house to minor married daughter

ii) Transfer of house to spouse in agreement to live apart
iii) Transfer of house on lease for 20 years. However, lease is to be renewed every year
a. (i), (ii) and (iii)

b. (i) and (ii)
c. (iii) only
d. (i) only
28. After allowing deductions u/s 24 of the Income tax act, 1961 which of the following type of property may have
loss under the head house property?
1) One property which could not be occupied due employment elsewhere

2) Let out property
3) Deemed let out property
4) One self-occupied property
5) Property which is partly let out and partly self-occupied
a. (5), (3), (1)

b. (1), (2), (4)
c. (3), (4), (2), (1)
d. (5), (3), (1), (4), (2)
29. In which of the following cases, municipal tax is allowed to be deducted?
a. Self-occupied house property

b. Vacant house property
c. Partly Vacant and partly Self-occupied house property
a. (a) & (b)

b. (a) & (c)
c. (b) only
d. All of the above
30. Which of the following is taxable under the head income from house property?
1) Rent from vacant land

2) Rent received by sub-letting property
3) Notional rent of own shop
4) Rent received outside India by ordinary resident for a property located outside India
a. (2), (3) & (4)

b. (4) only
c. (1) & (4)
31. Match the following
1. Property used for own business I. Income from other sources

2. Income from sub-letting of house II. Income under the head PGBP
3. Standard deduction III. 50%
4. Letting of property incidental to main business IV. Depreciations can be claimed
V. 30%
1. 2. 3. 4.
a. (iv) (ii) (v) (i)
b. (ii) (i) (iii) (iv)
c. (iv) (i) (v) (ii)
d. (iv) (ii) (iii) (i)
32. Mr. Suresh owns a big house property which is divided in 4 parts equally. Part I (25%) is self-occupied, part II
(25%) is used by him for his profession, part III (25%) is let out to Mandar for running grocery shop and part IV
let to Mustafa for residential purpose. In relation to these facts which of the following statement is correct.
a. Out of the total property, 75% portion of the property is taxable under head ‘Income from House Property’
b. Out of the total property, 25% portion of the property is taxable under head ‘Income from House Property’
c. Out of the total property, 50% portion of the property is taxable under head ‘Income from House Property’
d. Out of the total property, 100% portion of the property is taxable under head ‘Income from House Property’
33. Which of the following cases, persons, though not legal owners of a property, are deemed to be the owners of
House Property?
1) The lessee of a building shall be deemed to be the owner if the building is leased out for 10 years or more.
2) A person who has purchased the property through power of attorney
3) In housing scheme of the Co-operative society, Company or any other association, the person to whom
building has been allotted on account of being member.
4) Holder of impartible estate.
a. (2), (3) & (4)

b. (1), (2), (3) & (4)
c. (1) & (4)
34. Which of the following statement is true?
I. In case of transfer of any house property other than for adequate consideration to Spouse (except where
they agree to live apart) and Minor married daughter, the transferor shall be the deemed owner.
II. If the title of the ownership is disputed, the income shall be taxable in the hands of recipient i.e. the
beneficial owner of house property.
a. Statement I is correct while statement II is incorrect

b. Statement II is correct while statement I is incorrect
c. Statement I and II both are correct
d. Statement I and II both are incorrect
35. Which of the following condition is required to be fulfilled for deduction of interest paid on money borrowed
outside India?
1. Money is borrowed for construction of self-occupied house

2. Tax is deducted at source on such interest
3. There is regular payment of loan instalment by the Assessee
a. 1&3
b. 2 only
c. 3&2
d. 1, 2 & 3
36. Mr. Z took loan from Bank for INR 12,75,000 @ 8% on 1 st July 2015. Construction of house was completed in
May 2018. Entire loan is still outstanding. Calculate pre-construction interest to be deducted for PY 2019-20.
a. 56,100
b. 61,200
c. 58,400
d. 62,200
37. Ravi started construction of house on 1.11.2017. He raised loan of INR 10,00,000 at 12% on the same date. He
took further loan on 1.10.2019 for INR 12,00,000 at same rate of interest. What is the interest allowable u/s 24
of the Income tax Act, 1961 for PY 2019-20 if construction was completed by 31.3.2020?
a. INR 2,02,000
b. INR 1,92,000
c. INR 2,42,000
d. INR 2,00,000
38. From the following details calculate the income/loss from house property:
Expected rent for year 1,05,000

Annual rent 90,000
Unrealized rent 7,500
Period of vacancy 3 months
Municipal taxes paid by tenant 4,450
Municipal taxes paid by owner 3,000

Interest on money borrowed 13,560
a. Income INR 57,840

b. Income INR 39,465
c. Income INR 42,090
d. Income INR 8,640
39. Karan owns a house in Delhi. The house has two identical units. First unit is self-occupied by the Karan while
other is rented at INR 12,000 p.m. The rented unit remained vacant for 3 months. The standard rent, municipal
value and fair rent was INR 2,20,000 2,44,000 and 2,35,000 p.a. respectively for the entire house. Karan paid
municipal taxes which was 12% of municipal value. Interest on borrowed capital was INR 2,000 p.m. Compute
income from house property.
a. 53,352
b. 41,352
c. 50,452
d. 42,652
40. Utkarsh owns a house, half of which is let out at a monthly of INR 10,000. However, this half portion remained
vacant for 3 months. 25% portion of the house was use by Utkarsha for residence and 25% for professional
purpose. Other details; Municipal taxes INR 20,000 Repairs INR 16,000 interest on loan taken for construction
INR 10,000 Fire insurance premium INR 6,000.
Income from house property =?
a. INR 51,000
b. INR 48,500
c. INR 50,500
d. INR 55,000
41. Zahir was allowed deductions of unrealized rent of INR 80,000 in past out of total unrealized rent INR 1,20,000.
During the current PY, he recovered INR 90,000 from the defaulting tenant. State how much amount of
recovered unrealized rent will be liable to tax?
a. INR 80,000
b. INR 1,20,000
c. INR 90,000
d. INR 50,000
42. From the following data calculate the GAV:
Annual fair rental value (FRV) = 4,80,000

Annual municipal value (MV) = 4,56,000
Annual standard rent (SR) = 4,68,000
Annual rent (AR) = 4,92,000
Period of vacancy = 2 months

Unrealized rent = 41,000
Municipal taxes= 55,700
a. INR 4,68,000
b. INR 3,90,000
c. INR 4,51,000
d. INR 3,95,300
43. During the current previous year income from house property of Kapil was INR 1,44,000 before considering the
following data:
Kapil recovered unrealized rent of INR 16,000 out of total unrealized rent of INR 22,00o. In past he was allowed
deduction of 10,000 on account of unrealized rent. He also received arrear of rent from another house property
amounting to INR 55,450. What is Kapil’s income from house property?
a. INR 71,450
b. INR 50,015
c. INR 50,815
d. INR 1,85,615
44. Statement 1: If a newly constructed house building, being held as stock in trade, is vacant, annual value of such
building would be treated as Nil for a period of one year from the end of the financial year in which completion
certificate is obtained from competent authority.
Statement 2: Assessee having more than Two house which are self-occupied (deemed to be let out property)

Answer Key
1. C 2. B 3. B 4. C 5. B 6. A 7. A
8. B 9. B 10. C 11. B 12. B 13. C 14. B
15. B 16. A 17. C 18. A 19. C 20. D 21. B
22. C 23. D 24. D 25. A 26. A 27. C 28. D
29. C 30. B 31. C 32. A 33. A 34. B 35. B
36. A 37. D 38. A 39. B 40. B 41. D 42. A
43. D 44. B
Hint:
Question 43
Particulars Amount
Income from House Property 1,44,000
Unrealized Rent 4,000
(-) Deduction @ 30% u/s 24(a) (1,200) 2,800
Arrear of Rent 55,450
(-) Deduction @ 30% u/s 24(a) (16,635) 38,815
Net taxable income from House Property 1,85,615
Total unrealized was INR 22,000 out of which Assessee was allowed deduction of INR 10,000. Thus INR 12,000
was already taxed in past. Now Assessee recovered unrealized rent of INR 16,000 and thus INR 4,000 will be
taxable (16,000 – 12,000)
CA Kishan Kumar MCQs – Other Source & Gift May/Nov 2020
1. Income from letting of machinery, plant and furniture is ________________________.
a. always chargeable to tax under the head “Profits and Gains of Business and Profession”
b. always chargeable to tax under the head “Income from Other Sources”
c. chargeable under the head “Income from Other Sources” only if not chargeable under the head “Profits and
Gains of Business and Profession”.
d. chargeable to tax under the head “Income from House Property”
2. In respect of winnings from lottery, crossword puzzle or race including horse race or card game etc. ________.
a. No deduction under Chapter VI-A is allowed and basic exemption limit cannot be exhausted.
b. No deduction under Chapter VI-A is allowed but unexhausted basic exemption can be exhausted.
c. Both deduction under Chapter VI-A and basic exemption are allowed.
d. Deduction under Chapter VI-A is allowed but basic exemption limit cannot be exhausted.
3. The deduction allowable in respect of family pension taxable under “Income from Other Sources” is _______.
a. 33-1/3% of the pension

b. 30% of the pension or INR 15,000, whichever is less
c. 33-1/3% of the pension or INR 15,000, whichever is less
d. 30% of the pension
4. Mr. Kashyap has acquired a building from his friend on 10.10.2019 for INR 15,00,000. The stamp duty value of
the building on the date of purchase is INR 15,70,000. Income chargeable to tax in the hands of Mr. Kashyap is
a. INR 70,000
b. INR 50,000
c. Nil
d. INR 20,000
5. Ganesh received INR 60,000 from his friend on the occasion of his birthday.
a. The entire amount of INR 60,000 is taxable.

b. INR 50,000 is taxable.
c. The entire amount is exempt.
d. 10,000 is taxable
6. Mr. X aged, 61years, received dividend of INR 12,00,000 from a domestic company in P.Y. 2019-20. Tax
chargeable under section 115BBDA is @10% on __________________.
a. The entire amount of INR 12,00,000

b. INR 2,00,000
c. Nil
d. INR 9,00,000
7. In respect of dividend received from domestic companies in excess of INR 10,00,000 by an individual _____.
a. No deduction under Chapter VI-A is allowed but loss under other heads can be set-off against such income.
b. No deduction under Chapter VI-A is allowed and no loss can be set-off against such income.
c. Both deduction under Chapter VI-A and set-off of losses against such income are allowed.
d. Deduction under Chapter VI-A is allowed but set-off of losses under other heads against such income is not
allowed.
8. Mr. Y has received a sum of INR 51,000 on 24.10.2019 from relatives on the occasion of his marriage.
a. Entire INR 51,000 is chargeable to tax.

b. Only INR 1,000 is chargeable to tax
c. Entire INR 51,000 is exempt from tax
d. Only 50% i.e., INR 25,500 is chargeable to tax
9. Mr. Mayank has received a sum of INR 75,000 on 24.10.2019 from his friend on the occasion of his marriage
anniversary.
a. Entire INR 75,000 is chargeable to tax.

b. Entire INR 75,000 is exempt from tax
c. Only INR 25,000 is chargeable to tax
d. Only 50% i.e., INR 37,500 is chargeable to tax
10. The deduction in respect of interest on enhanced compensation of INR 1,50,000 received during the previous
year 2019-20, would be ____________.
a. INR 1,50,000, being 100% of INR 1,50,000

b. INR 75,000, being 50% of INR 1,50,000
c. INR 45,000, being 30% of INR 1,50,000
d. Nil
ICAI RTP and MTPs
11. Mrs. Gupta, resident in India, holds many equity shares of reputed domestic companies. During the previous
year 2019-20, total dividend earned by her is Rs.11,00,000. She is of the belief that dividend income earned by
her is tax free. She approaches you to assist her in filing her income tax return. As her tax consultant, will you
advise her that any dividend income earned by her is tax free?
a. Yes, as dividend earned by her is fully exempt from tax u/s 10(34).
b. No, as any dividend income earned by an individual is fully chargeable to tax.
c. No, as dividend income earned above Rs.10,00,000 is chargeable to tax in her hands.
d. Yes, as dividend income above Rs.10,00,000 is chargeable to tax only in the hands of the companies and
not in her hands
12. Mr. X receives the following gifts during the previous year 2019-20:
i. On 20.09.2019, he gets a gift of Rs. 7,00,000 from his grandmother.

ii. On 30.12.2019, he gets by way of gift a commercial flat from the elder brother of his father-in-law (stamp
duty value is Rs. 25,00,000).
iii. On 20.01.2020, he gets a wrist watch by gift from his friend B (Fair market value: Rs. 1,00,000).
iv. On 10.02.2020, he gets by way of gift a plot of land in Pune from a partnership firm. The partnership firm
has only two partners- father of Mr. X and Mrs. X. The stamp duty value of the plot of land is Rs. 19,00,000
Compute the amount chargeable to tax in the hands of X under the head “Income from other sources” for the A.Y.
2020-21.
a. Rs. 25,00,000
b. Rs. 44,00,000
c. Rs. 45,00,000
d. Rs. 52,00,000
13. A member of parliament is entitled to salary, constituency allowance and daily allowance when the Parliament
is in session. Which of the following statements are correct?
a. His entire income is taxable under the head "Salaries".

b. Only his salary component is taxable under the head "Salaries". Constituency allowance and daily
allowance are exempt.
c. Only his salary component is taxable under the head "Income from other sources". Constituency
allowance and daily allowance are exempt.
d. His salary component and constituency allowance is taxable under the head "Income from other sources".
Daily allowance is exempt.
14. Neeraj was working as an accountant with the company Ujala Ltd. He died on 30.04.2019 and on account of his
death, his wife Neha started receiving a pension of Rs. 10,000 per month w.e.f. 01.06.2019. Determine under
which head of income, the pension received by Neha during F.Y. 2019-20 shall be taxable. Also, compute the
taxable amount in her hands.
a. Income from other sources: Rs. 1,00,000

b. Income from other sources: Rs. 85,000
c. Income from Salary: Rs. 1,00,000
d. Income from Salary: Rs. 85,000
15. Mr. Ajay is found to be the owner of two gold chains of 50 gms each (market value of which is INR 1,45,000
each) during the financial year ending 31.3.2020 but he could offer satisfactory explanation for INR 50,000
spent on acquiring these gold chains. As per section 115BBE, Mr. Ajay would be liable to pay tax of –
a. INR 1,87,200
b. INR 2,26,200
c. INR 1,49,760
d. INR 1,80,960
16. Mr. Suhaan (aged 35 years), a non-resident earned dividend income of INR 12,50,000 from an Indian Company
which is credited directly to its bank account in France and INR 15,000 as interest in Saving A/c from State Bank
of India during the previous year 2019-20. Assuming that he has no other income, what will be amount of income
chargeable to Tax in his hands in India for A.Y. 2020-21?
a. INR 2,55,000
b. INR 2,65,000
c. INR 15,000
d. INR 5,000
17. APM Ltd. is a pioneer company in textile industry. At the end of F.Y. 2019-20, it decided to distribute deposit
certificates (without interest) to its shareholders (preference as well as equity shareholders). Total value of
accumulated profits of APM Ltd. was INR 25 lakhs. Mr. A is an equity shareholder of APM Ltd. holding 10% of
share capital. During F.Y. 2019-20, Mr. A received deposit certificates (without interest) valuing INR 5,00,000
from APM Ltd. Comment upon taxability of receipt of deposit certificates in the hands of Mr. A.
a. Deposit Receipts (without interest) are taxable to the extent of INR 2,50,000 under Income from Other
Sources.
b. Deposit Receipts (without interest) are fully taxable under Income from Other Sources.
c. Deposit Receipts (without interest) are exempt since DDT is payable by the company.
d. Deposit Receipts (without interest) are fully taxable and shall be included in Gross total income. But such
receipt shall be allowed as deduction under Chapter-VI A.
MCQs for practice
18. Which of the following is/are essential condition(s) for taxability of any income under the head Income from
Other Sources?
1. There must be income

2. Income is exempt under the provisions of Income tax Act 1961
3. Income is not chargeable to tax under any other heads
a. (1) only
b. (3) only
c. (1) & (3) only
d. (1), (2) & (3)
19. Which of the following incomes are normally included under the head ‘Income from Other Sources’?
1. Income from sub-letting of a house property

2. Gifts received by individual from employer
3. Examinership fees received by a teacher from University
4. Agricultural income from agricultural land situated outside India
5. Remuneration received by MLAs or MPs
6. Compensation received in connection with the termination of employment
a. (1) & (4) only

b. (2), (3), (4) & (5)
c. (4), (3), (1), (5) & (6)
d. (3) & (4) only
20. Ex-gratia payment made to the widow or other legal heirs of an employee who dies while still in active service,
will not be taxable as income under the Income tax Act 1961, if it is paid by ________.
a. Central Government
b. Local Authority
c. Public Sector Units
d. Any of the above
21. Dividend u/s 2(22) (a) to 2(22) (d) shall be ________.
a. Liable to tax @ 15% on the gross amount of dividends + 12% surcharge + 4% HEC in hands of company
b. Exempt in the hands of shareholders
c. Both (a) and (b)
d. Either (a) or (b)
22. Which of the following is/are exempted income and hence cannot be taxed under the head ‘Income from Other
Sources’?
P. Interest on 6% National Plan Paper

Q. 9% tax free government loan of Uttar Pradesh
R. Interest on National Saving Certificate
S. Dividend from UTI
a. P, Q &S
b. Q&P
c. Q&S
d. P&S
23. Which of the following expense is /are not allowed while calculating ‘Income under the head Other Sources’?
I. Interest paid outside India on which TDS is deducted

II. Excessive expenditure or unreasonable payment to certain specified persons as provided in section 40A(2)
III. Income tax
IV. Expenditure incurred by the Assessee for the activity of owing and minting race horses
a. (I) & (III)
b. (II) & (IV)

c. (III) & (II)
d. (IV), (II), (III)
24. In which of the following case(s) deemed dividend is/are taxable in relation to bonus issue u/s 2(22)(b)?
a. Issue of bonus share to equity shareholder

b. Sale of bonus shares by equity shareholder to third person
c. Redemption of bonus equity shares by the company
d. All of the above
25. Which of the following is deemed dividend within the meaning of section 2(22) of the Income tax Act 1961?
a. Distribution by a company of deposit certificates of its shareholders

b. Issuance of bonus share to its preference shareholders
c. Both (A) and (b)
d. Neither (a) nor (b)
26. Which of the following is/are exempted income and hence cannot be taxed under the head ‘Income from Other
Sources’?
P. Gifts received by individual of INR 49,000

Q. Agricultural income of India
R. Interest on bonds of notified public sector companies
S. Preference dividend of Indian companies
a. Q&S
b. Q, R & S
c. P, Q, R & S
d. S, P
27. Which of the following amounts to deemed dividend u/s 2(22)(e) of the income tax Act 1961?
a. Any payment by private company by way of advance to the extent of accumulated capitalized profits to
equity shareholders who is beneficial holding is less than 10% of the voting power
b. Any distribution to its shareholders by a company on the reduction of its capital, to the extent to which the
company possessed accumulated profits, whether capitalized or not
c. Both (a) and (b)
d. Neither (a) and (b)
28. Interest on Post Office Saving bank account shall be exempt from tax to the extent of __________ in case of
joint account
a. INR 10,500
b. INR 7,000
c. INR 15,000
d. INR 20,000
29. Which of the following income will be taxable as Income from Other Sources?
a. Purchase of house from husband for inadequate consideration

b. Purchase of painting from registered dealer at invoice value less than fair market value
c. Cash gift from a non-resident friend on marriages anniversary
d. All of the above
30. A shareholder holding 15% shares in a closely held company received 12 lakhs as loan from the company. The
amount taxable in the hands of shareholder u/s 2(22)(e) is _____________________.
a. 2 lakhs
b. 12 lakhs
c. Nil
d. None of the above.
31. Following is not considered as deemed dividend u/s 2(22)(e):
1) loan granted in the ordinary course of its business and lending of money is a substantial part of the
company’s business,
2) Trade Advances
3) Loan or advance given by the company and it was considered to be dividend and subsequently the company
has distributed dividends and it was deposited in the loan account
4) Any payment made by a company on purchase of its own shares from a shareholder in accordance with the
provisions of section 77A of the Companies Act, 19563
Select the correct answer.
a. (1), (2)
b. (1), (2), (3)
c. (1), (2), (3), (4)
d. (1)
1) Income from owning and maintaining race horses is taxable as Income from Other Sources at slab
2) Income from owning and maintaining race horses is taxable as Income from Other Sources at 30%
3) Income from owning and maintaining race camels is taxable as Income from Other Sources at slab
4) Income from owning and maintaining race camels is taxable as Income from PGBP at slab
a. (1), (3), (4)

b. (1), (2), (3)
c. (2), (3), (4)
d. (1), (4)
33. In which of the following cases, section 56(2)(viib) is not applicable?
1) Shares issued by a widely held company.

2) Shares issued by a venture capital company or a venture capital fund. Venture capital undertaking,
3) Shares issued by a closely held company to a Resident.
4) Shares issued at premium
Select the correct answer
a. (1), (3), (4)

b. (1), (2), (3)
c. (1), (2)
d. (1), (2), (4)
34. The effective tax rate applicable in case of income u/s 68, 69, 69A, 69C, 69D including surcharge and cess is
__________________.
a. 60%
b. 75%
c. 78%
d. 30%
35. Income under the head “Income from Other Sources” shall be computed in accordance with ___________.
a. Cash system of accounting.

b. Mercantile system of accounting.
c. Cash system or Mercantile system at the option of Assessee
d. Cash system or Mercantile system at the option of Assessing officer
36. In respect of an eligible Assessee earning Income by way of royalty in respect of a patent developed and registered
in India, state which of the following are correct u/s 115BBF.
1) Rate of tax is 10% of Royalties

2) Rate of tax is 10% of Royalties after deduction of expenses
3) Option can be exercised on or before the due date specified u/s 139 (1) for furnishing the return of income
4) Where the Income has not been offered by Assessee as per the provision of the section in any previous year,
the Assessee shall not be eligible to claim the benefit of this section for the next 4 succeeding assessment
years.
a. (1), (3),
b. (1), (3), (4)
c. (2), (3) and (4)
d. (2), (3)
37. Which of the following incomes are normally included under the head ‘Income from Other Sources’?
1) Advance money received for sale of capital asset and forfeited by seller from 01.04.2014
2) Advance money received for sale of capital asset and forfeited by seller before 01.04.2014
3) Maturity amount on keyman insurance received by employer
4) Maturity amount on keyman insurance received by employee
5) Sitting fee or commission to Directors
6) Dividend Income earned by a person who is a dealer in shares.
a. (1), (4), (5)

b. (2), (5), (6)
c. (1), (5), (6)
d. (1) & (5) only
38. Which of the following is liable to tax under Section 56(2)(viib) as ‘Income from Other Sources’?
a. Issue of shares by private company at premium which exceeds fair market value of shares and fair market
value is more than face value
b. Issue of shares by private company at discount which exceeds fair market value of shares and fair market
value is less than face value
c. Issue of shares by private company at premium which exceeds fair market value of shares and fair market
value and issue price both are less than face value
d. Both (a) and (b)
39. Income by way of interest received on compensation or enhanced compensation is taxable under the head
__________ and a deduction of sum equal to __________ of such interest income shall be allowed.
a. ‘Income from Other Sources’; 25%

b. ‘Capital Gain’; 50%
c. ‘Income from Other Sources’; 50%
d. ‘Capital Gain’; 25%
40. If a person buys securities __________ before the record date sales it within __________ after the record
date, then loss on sale of securities to the extent of dividend income shall be ignored.
a. 3 months; 3 months
b. 3 months; 9 months;
c. 9 months; 3 months
d. 3 months; 6 months
41. Which of the following statement is/are false?
(A) Deemed dividend u/s 2 (22) (e) is taxable to the extent of accumulated profit excluding capitalized profits
(B) Interest on securities is always taxable under the head ‘Income from Other Sources’
(C) Dividend declared by UTI is exempt up to INT 10,000
a. (A) only
b. (B) only
c. (A), (B) and (C)
d. (B) and (C) only
42. An income which does not fall under any first four head of income ____________________.
a. shall always be exempted income

b. is taxable under the head ‘Income from Other Sources’
c. is taxable under the head ‘Income from Other Sources’ if not otherwise exempt
d. is taxable under the head ‘Income from Other Sources’ only if it is covered by Section 56.
43. Anil let house to Sunil at monthly rent of INR 12,000 which Sunil sub-let to Mohan at monthly rent of INR
15,000. Sunil’s income is ________________________.
a. INR 1,80,000 taxable under the head ‘Income from House Property’.
b. INR 1,80,000 taxable under the head ‘income from Other Sources’.
c. INR 36,000 taxable under the head ‘Income from House Property’.
d. INR 36,000 taxable under the head ‘Income from Other Sources’.
44. Anil entered into agreement to sale his house with Mahesh on 1.4.2019 and received advance of INR 3,75,000.
However, Mahesh made default and Anil forfeited Advance money. What are the tax implications?
a. Advance money forfeited will be reduced from cost of acquisition while calculating income chargeable to
tax under the head ‘Capital Gain’.
b. Advance money forfeited is not chargeable to tax under any head of income.
c. Advance money forfeited will be taxable under the head ‘Income from Other Sources’
d. Advance money forfeited will be taxable under the head ‘Income from House Property’
45. M (Pvt.) Ltd. issued 10,000 each to its five shareholders. Accumulated profit of the company on that date was
INR 1,00,000.
a. INR 10,000 is taxable in the hands of each shareholder as deemed dividend u/s 2(22)(a)
b. INR 50,000 is deemed dividend u/s 2(22)(a) and not taxable in the hands of shareholder
c. INR 50,000 is deemed dividend u/s 2(22)(a) and taxable in the hands of company
d. (B) and (C)
46. PQR (Pvt.) Ltd. issued 1,00,000 shares of INR 100 each at INR 120 per share. Fair value of shares is INR 130
per shares. Which of the following is correct tax implication of this transaction?
a. The provisions of section 56 (2) (viib) is not attracted at all.

b. The provisions of section 56 (2) (viib) is attracted and INR 10 per share i.e. INR 10,00,000 is taxable
under the head ‘Income from Other Sources’
c. The provisions of section 56 (2)(viib) is attracted since shares are issue at premium. However, no sum is
chargeable to tax under the head ‘Income from Other Sources’ as issue price is less than fair market value.
d. The provisions of section 56 (2)(viib) is not attracted at all and no sum is chargeable to tax under the head
‘Income from Other Sources’
47. Rakhi won lottery and received INR 14,000 from the lottery company. How much amount will be included as
income while calculating total income of Rakhi?
a. INR 14,000
b. INR 20,000
c. INR 17,500
d. INR 15,555
48. A private Ltd. company engaged in manufacturing activity had general reserve of INR 4,00,000. It granted a
loan of INR 5,00,000 to a director who held 13% shareholding cum voting rights in the company. The said loan
was repaid by him before the end of the year. The amount of deemed dividend arising out of the above
transaction is _____________________.
a. INR 2,60,000
b. INR 2,40,000
c. INR 5,00,000
d. INR 4,00,000
49. Sunita receives gift of INR 51,000 from her friend Babita on her birthday. Sunita spent INR 1,000 on the
birthday. Amount taxable as per section 56 (2) (x) shall be ________________________.
a. INR 50,000
b. Nil
c. INR 51,000
d. INR 49,000
50. Arun receives gift of immovable property on his birthday from his friend Varun. Stamp duty value of immovable
property is INR 75,000. However, market value of the property on the date of gift is INR 90,000. Amount taxable
per section 56 (2)(x) shall be _______________________.
a. INR 40,000
b. INR 90,000
c. INR 75,000
d. INR 25,000
51. Maya gifts kitchen appliances of INR 51,000 to her friend Mrs. Malini Gupta on her birthday. Amount taxable
per section 56(2)(x) shall be __________________________.
a. INR 1,000
b. INR 51,000
c. INR 50,000
d. Nil
52. Mr. A receives gift of INR 30,000 from B and INR 21,000 from C on his passing CA Inter exams. Amount taxable
per section 56 (2)(x) shall be _______________________.
a. INR 1,000
b. INR 21,000
c. INR 50,000
d. INR 51,000
53. Mrs. Rameshwari receives following gifts during the PY 2019-20
a. INR 90,000 on her marriages out of which INR 70,000 is received from relatives
b. INR 18,000 from cousin of her mother
c. A cell phone worth INR 21,000 from her employer
d. INR 25,000 from elder brother of her grandfather
e. INR 2000 from her friend
Amount taxable per section 56 (2)(x) shall be ________________.
a. INR 65,000
b. INR 86,000
c. Nil
d. INR 45,000
54. Mrs. Gita receives following gifts during the PY 2019-20 on her wedding anniversary
a. Cash gifts of INR 51,000 on her 25th birthday

b. Diamond necklace of INR 2,00,000 from her sister living in London.
Amount taxable per section 56(2)(x) shall be __________________.
a. INR 51,000
b. INR 2,51,000
c. INR 2,01,000
d. Nil
55. Mrs. Amruta receives cash gift of INR 1,02,000 from her friend on occasion of marriage of her son. How much
amount will be included in Total Income of Mrs. Amruta as “Income from Other Sources”?
a. INR 52,000
b. INR 50,000
c. Nil
d. INR 1,02,000
56. Ram received two plots of land as gift from Shyam and Mohan having stamp value of INR 4,00,000 and INR
50,000 respectively. How much will be taxable under the head Income from Other Sources?
a. INR 4,00,000
b. INR 4,50,000
c. INR 3,50,000
d. Nil
57. Gupta received gift of sculpture and jewellery worth INR 45,000 and INR 30,000 from Sharma and Verma?
How much income will be taxable under the head Income from Other Sources?
a. INR 25,000
b. INR 30,000
c. INR 75,000
d. Nil
58. Mulchand received a painting of famous artist from his nephew on his wedding anniversary. Value of painting
is INR 2,10,000. He incurred expense of INR 10,000 in framing of painting. Amount taxable under the head
income from Other Sources shall be ___________________.
a. INR 2,10,000
b. INR 2,00,000
c. INR 1,60,000
d. Nil
59. Ram received a land from his friend for INR 25,00,000. Stamp duty value of the land is INR 24,00,000. Amount
taxable under the head income from Other Sources shall be ___________________.
a. INR 1,00,000
b. INR 50,000
c. INR 1,25,000
d. Nil
60. Ram received a land from his friend for INR 23,50,000. Stamp duty value of the land is INR 25,00,000. Amount
taxable under the head income from Other Sources shall be ___________________.
a. INR 1,50,000
b. INR 50,000
c. INR 1,25,000
d. Nil
Answer Key
1. C 2. A 3. C 4. C 5. A 6. B 7. B
8. C 9. A 10. B 11. C 12. B 13. C 14. B
15. A 16. D 17. C 18. C 19. C 20. D 21. C
22. D 23. C 24. C 25. C 26. C 27. D 28. B
29. C 30. C 31. C 32. D 33. C 34. C 35. C
36. A 37. C 38. A 39. C 40. B 41. D 42. C
43. D 44. C 45. C 46. C 47. B 48. D 49. C
50. C 51. D 52. D 53. C 54. A 55. D 56. A
57. C 58. A 59. D 60. A
CA Kishan Kumar MCQs – Exempt & Agricultural Income May/Nov 2020
1. The concept of partial integration of agricultural income with non-agricultural income is applicable to
__________________.
a. only individuals and HUF

b. only firms and companies
c. Individuals, HUF, AOP/BOI and Artificial person
d. All persons
2. Which of the following would be agricultural income?
a. Income from breeding of livestock

b. Income from poultry farming
c. Rent received from land used for movie shooting
d. Rent received from land used for grazing of cattle required for agriculture activities
3. Which of the following income would be exempt in the hands of a Sikkimese Individual?
a. only income from any source in the State of Sikkim

b. only income by way of dividend
c. only income from interest on securities
d. All the above
4. The proportion of agricultural and business income in case of income derived from the sale of coffee grown and
cured by the seller in India is ______________.
a. 65% and 35%, respectively

b. 75% and 25%, respectively
c. 60% and 40%, respectively
d. 70% and 30%, respectively
5. The proportion of agricultural and business income in case of income derived by the Assessee from growing of
tea leaves in India and manufacturing of tea is ________________.
a. 65% and 35%, respectively

b. 75% and 25%, respectively
c. 60% and 40%, respectively
d. 70% and 30%, respectively
6. In case of an individual aged 61 years, partial integration of agricultural income is not required if his ______.
a. Net agricultural income does not exceed INR 5,000.

b. Non-agricultural income does not exceed INR 2,50,000.
c. Non-agricultural income does not exceed INR 3,00,000.
d. Both (a) and (c) above.
7. In case of a Member of Parliament ______________.
a. Daily allowance is exempt but constituency allowance received as per applicable rules is taxable
b. Constituency allowance received as per applicable Rules is exempt but daily allowance is taxable.
c. Both daily allowance and constituency allowance received as per applicable Rules are taxable.
d. Both daily allowance and constituency allowance received as per applicable Rules are exempt.
8. The quantum of deduction available under section 10AA in respect of profit and gains derived by a SEZ unit from
export of articles is ______________.
a. 100% of export profits for first 10 consecutive AYs and 50% for next 5 consecutive AYs.
b. 100% of export profits for first 5 consecutive AYs and 50% for next 10 consecutive AYs.
c. 100% of export profits for first 15 consecutive AYs.
d. 100% of export profits for first 5 consecutive AYs, 50% for export profits for next 5 consecutive AYs and
50% of export profits for next 5 consecutive AYs, as is credited to Special Reserve Account.
9. Which of the following income is not exempt under section 10?
a. Share income of a member from a HUF.

b. Share income of a partner from a firm.
c. Salary received by a partner from a firm.
d. Both (b) and (c).
10. Which of the following is an agricultural land assuming that crops are being cultivated on such land and such
land is situated in __________________?
a. an area within 3 kms from the local limits of a municipality and has a population of 80,000 as per last
census.
b. an area within 1.5 kms from the local limits of a municipality and has a population of 12,000 as per last
census.
c. an area within 2 kms from the local limits of a municipality and has a population of 11,00,000 as per last
census.
d. an area within 8 kms from the local limits of a municipality and has a population of 10,50,000 as per last
census
ICAI Sample MCQs
11. Mr. Harish, aged 40 years, earned income of Rs.15,000 during P.Y. 2019-20 from post office savings bank
account. What portion of such income would be ultimately included in his total income?
a. Rs.15,000
b. Rs.5,000
c. Rs.1,500
d. Nil
12. Mr. X, a resident employee of Hindustan Company established in India, received a scholarship of Rs. 5,00,000
from his employer to meet the cost of education of his children. X actually spent an amount of Rs. 4,50,000 on
education of his children. What will be the amount of income exempt in the hands of X?
a. Nil
b. Rs. 4,50,000
c. Rs. 50,000
d. Rs. 5,00,000
ICAI RTP and MTPs
13. Mr. Anay (aged 25) has agricultural income of INR 2,10,000 and business income of INR 2,35,000. Which of
the following statement is correct?
a. Agricultural income always has to be aggregated with business income for rate purposes
b. No aggregation is required since business income which constitutes his total income, is less than basic
exemption limit
c. No aggregation is required since agricultural income is less than basic exemption limit
d. Agricultural income is exempt under section 10(1) but the same has to be aggregated with business income,
since it exceeds INR 5,000
14. Mr. Devansh has agricultural income of Rs. 2,30,000 and business income of Rs. 2,45,000. Which of the
following statements are correct?
a. Agricultural income has to be aggregated with business income for tax rate purposes.
b. No aggregation is required since agricultural income is less than basic exemption limit.
c. No aggregation is required since business income is less than basic exemption limit.
d. Agricultural income is exempt under section 10(1) but the same has to be aggregated with business income,
since it exceeds Rs. 5,000
15. Which of the following incomes are exempt incomes as per the provisions of Income-tax Act, 1961?
i. Allowance paid by Government to a citizen of India for rendering services outside India
ii. Death-cum-retirement gratuity received by a government employee
iii. Any sum received under a life insurance policy taken on 01.05.2016, if the premium payable for any of the
years exceeds 10% of the actual capital sum assured.
iv. Any payment from National Pension System Trust to an employee on account of closure of his NPS account.
a. (i), (ii), (iii), (iv)

b. (i) & (ii)
c. (i), (ii) & (iv)
d. (ii) & (iv)
16. XYZ Ltd. has two units, one unit at Special Economic Zone (SEZ) and other unit at Domestic Tariff Area (DTA).
The unit in SEZ was set up and started manufacturing from 12.3.2013 and unit in DTA from 15.6.2016. Total
turnover of XYZ Ltd. and Unit in DTA is INR 8,50,00,000 and 3,25,00,000, respectively. Export sales of unit in
SEZ and DTA is INR 2,50,00,000 and INR 1,25,00,000, respectively and net profit of Unit in SEZ and DTA is
INR 80,00,000 and INR 45,00,000, respectively. XYZ Ltd. would be eligible for deduction u/s 10AA for -
a. INR 38,09,524
b. INR 19,04,762
c. INR 23,52,941
d. INR 11,76,471
MCQs for practice
17. Interest on any money standing to any individual’s credit in Non-resident external A/c in any bank in India is:
a. Exempt to person in whose name A/c is being operated

b. Exempt to person in whose name A/c is being operated if authorised by RBI
c. Taxable to person in whose name A/c is being operated
d. Exempt to person who withdraws amt from such A/c
18. Exemption is available on interest received by Non-resident on money standing in Non-resident External A/c
only if_______________ to maintain such account.
a. Such Non-resident person is permitted by AO

b. Such Non-resident person is permitted by RBI
c. Such Non-resident person is permitted to CG, SG
d. No such permission is required
19. Any amount received from Central Government, State Government or Local Authority by individual or his legal
heir as compensation for any disaster is _____.
a. Taxable
b. Fully exempt
c. Exempt upto INR 10 lakhs
d. Exempt except to the extent of amount received or receivable which has been allowed as deduction for any
loss damage caused by such disaster
20. Tax paid by the employer on non-monetary perquisites provided to the employee is exempt u/s _____.
a. 17(2)
b. 10(14)
c. 10(10CC)
d. None
21. Which of the following payment received from Sukanya Samriddhi Scheme is are exempt?
a. Interest
b. Maturity amount (withdrawals)
c. Both (a) and (b)
22. Amount payable at the time of closure or opting out of National Pension Scheme referred to in section 80CCD
shall be exempt to the extent of _______ of total amount payable.
a. 40%
b. 100%
c. 60%
d. 25%
23. Amount payable at the time of partial withdrawal out of National Pension Scheme referred to in section 80CCD
shall be exempt to the extent of _____ of total amount payable.
a. 30%
b. 100%
c. 40%
d. 25%
24. Amount received by the nominee at the time of closure/opting out of National Pension Scheme referred to in
section 80CCD due to death of Assessee is exempt upto _____ of total amount payable.
a. 30%
b. 40%
c. 100%
d. 25%
25. An author was awarded by CG INR 10 lakhs for writing a book. Such award given by CG in public interest is _.
a. Causal income
b. Fully exempt
c. Fully taxable
d. Income under the head Other Source
26. Where the income of an individual includes the income of minor children, such individual shall be entitled to an
exemption of ______________.
a. INR 1,500
b. INR 1,500 per minor child
c. Lower of INR 1,500 per minor child or income of minor child included in the total income of the Assessee
d. INR 1,500 per minor child upto maximum of 2 children
27. Dividend received by shareholder from a domestic company is __________.
a. Fully exempt u/s 10(34)

b. Taxable u/h Income from Other Sources
d. Exempt upto INR 5 lakhs
28. Dividend received by shareholder from a foreign company is _______________.
a. Exempt u/s 10(34)

d. Taxable @ 15%
29. Income from units of UTI mutual fund notified u/s 10(23D) is __________ and income on transfer of units of
UTI mutual fund ______________.
a. Exempt; Exempt
b. Taxable; Exempt
c. Exempt; Taxable
d. Taxable; Taxable
30. Capital gain arising from compulsory acquisition of urban agricultural land shall be ____________.
a. Taxable u/h Capital Gains

c. Exempt
d. Exempt u/s 10(37) if certain conditions are satisfied
31. Income from LTCG from transfer of equity shares is _________________.
a. Fully exempt if shares are sold through National Stock Exchange

b. Fully exempt if shares are sold through Bombay Stock Exchange
c. Fully exempt if such shares are sold through any RSE in India and such transaction is subject to STT
d. Taxable at special rate u/s 112A
32. No deduction u/s 10AA is available if available if business is formed by ________________.
a. Splitting up of business
b. Reconstruction of business already in existence
c. Both (a) and(b)
d. Deduction is always available
33. Agricultural income is ____________ in India.
a. Exempt
b. Taxable
c. Partly exempt
d. Fully exempt but it is to be aggregated with Non-agricultural income for determining the rate of tax
34. Agricultural Income is exempt in India provided _________________.
a. Land is situated in anywhere in India

b. Land is situated in any rural area in India
c. Land is situated in any urban area in India
d. Land is situated whether inside/outside India
35. Any rent/revenue derived from land may be treated as agricultural income and will be fully exempt u/s 10(1) if
___________.
a. It is derived from land

b. Land is situated in India
c. Land is used for agricultural purpose
d. All the above conditions are satisfied
36. If any person earns income from allied activities like animal husbandry, dairy farming, fishery etc. then it is
____________________.
a. Agricultural income
b. Income of PGBP
c. Both (a) and (b)
d. None of (a) and(b)
37. If any partner has received share of profits from a firm having agricultural income, such share is _________.
a. Agricultural Income and exempt

b. PGBP
c. PGBP and exempt from tax u/s 10(2A)
d. Fully Taxable
38. X is employed in an agricultural university and getting a Basic pay of INR 20,000 p.m. and claims that it is his
agricultural income? It is _____________.
a. Exempt as agricultural income

b. Salary
c. Taxable u/h PGBP
d. None
39. Income derived from sugarcane plantation in US but received in India shall be treated as _____________.
a. Agricultural income and hence exempt

b. Agricultural income but taxable u/h “Income from Other Sources”
c. Exempt as earned outside India
d. Taxable as income from business and profession
40. LTCG on sale of urban agricultural land is his ______________ income and thus _____________.
a. Agricultural; exempt
b. Agricultural; taxable
c. Non-agricultural; exempt
d. Non-agricultural; taxable u/h Capital Gains
41. If the Assessee uses its own agricultural produce for manufacturing certain products other than tea, rubber or
coffee, cost of such agricultural produce for the purpose of computing business income of manufacturing shall
be____________.
a. Cost of producing such agricultural produce

b. FMV of such agriculture produce as on the date of use
c. Any suitable method which Assessee wants to adopt
42. If the Assessee is engaged in the business of manufacturing of rubber, the agricultural income shall be
_____________% of the income from such business.
a. 40%
b. 60%
c. 65%
d. 75%
43. If a company declares dividend out of agriculture income, such dividend declared by the company shall be
_________________.
a. Exempt in the hands of the shareholder but dividend tax will be payable by the company
b. Not be subject to any income tax, either in the hands company or in the hands of shareholders
c. Exempt in the hands of the company but taxable in the hands of shareholders
44. As per the Supreme Court judgement in the case of Raja Benoy Kumar Sahas Roy v CIT (SC), an activity shall be
called agriculture if a person has performed __________________.
a. Basic Operation
b. Subsequent Operation
c. Either (a) and (b)
d. Both (a) and (b)
45. Income from letting out farm house shall be treated as ___________________.
a. Agricultural Income
b. Income under the head House Property
c. Either of (a) or (b) as decided by Assessee
d. Either of (a) or (b) as decided by Assessing Officer
46. Any remuneration received by a member of HUF as a partner/director in a Company in which the investment is
made out of the funds of HUF shall be taxable in the hands of ___________.
a. HUF
b. Member
c. Either of (a) or (b) having higher income
d. Exempt
47. Where any salary or interest on capital is paid by a partnership firm earning income through agricultural
operations to its partners, such salary/ interest on capital would be treated as _____________________.
a. Agricultural Income
b. Profit and gain from Business and Profession
c. Income from Salary
d. Income from Other Source
Answer Key
1. C 2. D 3. D 4. B 5. C 6. D 7. D
8. D 9. C 10. A 11. C 12. D 13. B 14. C
15. B 16. B 17. B 18. B 19. D 20. C 21. C
22. C 23. D 24. C 25. B 26. C 27. C 28. B
29. C 30. D 31. D 32. C 33. D 34. A 35. D
36. B 37. C 38. B 39. B 40. D 41. B 42. C
43. A 44. D 45. B 46. A 47. A
CA Kishan Kumar MCQs – PGBP May/Nov 2020
1. An Assessee uses plant and machinery for the purpose of carrying on his business under section 31. He shall be
eligible for deduction on account of ______________________.
a. Both capital and revenue expenditure on repairs

b. Current repairs
c. Current repairs plus 1/5th of capital expenditure on repairs
d. Both (a) & (b)
2. An electricity company charging depreciation on SLM on each asset separately sells one of its machinery in April,
2019 at INR 1,20,000. The WDV of the machinery at the beginning of the year i.e. on 1 st April 2019 is INR
1,35,000. No new machinery was purchased during the year. The shortfall of INR 15,000 is treated as
_____________________.
a. Terminal depreciation
b. Short term capital loss
c. Normal depreciation
d. Any of the above at the option of the Assessee
3. Mr. X acquires an asset which was previously used for scientific research for INR 2,75,000. Deduction under
section 35(1)(iv) was claimed in the previous year 2015-16. The asset was brought into use for the business of
Mr. X after the research was completed. The actual cost of the asset to be included in the black of assets is
________________.
a. Nil
b. Market value of the asset on the date of transfer to business
c. INR 2,75,000 less notional depreciation under section 32 upto the date of transfer
d. Actual cost of the asset i.e., INR 2,75,000
4. A Ltd. has unabsorbed depreciation of INR 4,50,000 for the P.Y 2019-20. This can be carried forward
_____________________.
a. For a maximum period of 8 years and set-off against business income.

b. Indefinitely and set-off against business income
c. Indefinitely and set-off against any head of income
d. Indefinitely and set – off against any head of income except salary
5. Mr. X, a retailer acquired furniture on 10th May 2019 for INR 10,000 in cash and on 15th May 2019, for INR
15,000 and INR 20,000 by a bearer cheque and account payee cheque respectively. Depreciation allowable for
A.Y 2020-21 would be __________________________.
a. 2,000
b. 3,000
c. 3,500
d. 4,500
6. XYZ Ltd. incurred capital expenditure of INR 1,50,000 on 1.4.2019 for acquisition of patents and copyrights.
Such expenditure is ________________________.
a. Eligible for deduction in 14 years from A.Y 2020-21

b. Eligible for deduction in 5 years from A.Y. 2020-21
c. Subject to depreciation @ 25% under section 32
d. Subject of depreciation @ 15% under section 32
7. Under section 44AE, presumptive taxation is applicable at a particular rate provided the Assessee is the owner
of a maximum of certain number of goods carriages. The rate per month or part of the month relevant for A.Y.
2020-21 and the maximum number specified under the section are ________________________.
a. INR 7,500 for each goods carriage in the case of an Assessee owning not more than 10 goods carriages at
any time during the year
b. INR 7,500 for each goods carriage in the case of an Assessee owning less than 10 goods carriages at any
time during the year
c. INR 3,500 per carriage for an Assessee owing not more than 10 goods carriages at the end of the previous
year
d. INR 1,000 per ton of gross vehicle weight or unladen weight, as the case may be, for every month or part of
a month for heavy goods vehicle and INR 7,500 for every month or part of a month for other goods vehicle
for an Assessee owning not more than 10 goods carriages at the end of the previous year
8. Where the total turnover of an Assessee eligible for presumptive taxation u/s 44AD is received entirely by
account payee cheque during the previous year 2019-20, the specified rate of presumptive business income is
___________________.
a. 5% of total turnover
b. 6% of total turnover
c. 7% of total turnover
d. 8% of total turnover
9. The WDV of block (plant and machinery rate of depreciation 15%) as on 1.4.2019 is INR 3,20,000. A second-
hand machinery costing INR 50,000 was acquired on 1.9.2019 but put to use on 1.11.2019. During Jan 2019,
part of this block was sold for INR 2,00,000. The depreciation for A.Y. 2020-21 would be ______________.
a. INR 21,750
b. INR 25,500
c. INR 21,125
d. INR 12,750
10. Employer’s contribution to provident fund/superannuation fund/gratuity fund is allowed as deduction in

computing income under the head “Profits and gains of business or profession”, provided it has been paid
______________.
a. Before the end of previous year

b. On or before the due date by which the employer is required to credit an employee’s contribution to the
employee’s account in the relevant fund.
c. On or before the due date for filing the return of income under section 139(1)
d. Before the end of relevant assessment year
ICAI Sample MCQs
11. The benefit of payment of advance tax in one instalment on or before 15th March is available to Assessees
computing profits on presumptive basis ________________.
a. under section 44AD

b. under section 44AD and 44ADA
c. under section 44AD and 44AE
d. under section 44AD, 44ADA and 44AE
12. M/S Thakural & Sons, paid Rs. 11,00,000 as remuneration to its partner. The same was in accordance with
partnership deed. Partners are also entitled to interest on capital @ 11% as per partnership deed. Total interest
paid during the year is Rs. 1,30,000. The book profit before interest on capital and remuneration is Rs.
37,00,000. The salary allowable as deduction to M/S Thakural & Sons is _________________.
a. Rs. 22,62,000
b. Rs. 11,00,000
c. Rs. 23,10,000
d. Rs. 22,32,000
13. An Assessee purchases furniture worth Rs. 80,000 on 05.09.2019 and makes the payment of Rs. 45,000 by
account payee cheque and Rs. 20,000 in cash on the same date. The balance of Rs. 15,000 is paid by the Assessee
by bearer cheque on 06.09.2019 when the furniture is delivered in his office. Compute the amount of actual cost
of furniture to the Assessee.
a. Rs. 45,000
b. Rs. 80,000
c. Rs. 60,000
d. Rs. 65,000
14. Sumit acquired a building for Rs. 15 lakhs in June, 2017 in addition to the cost of Rs. 3 lakhs in respect of the
land on which the building is situated. It was used for personal purposes until he commenced business in June,
2019 and since then it was used for business purposes. The amount of depreciation eligible in his case for the
A.Y. 2020-21 would be _________________.
a. Rs. 1,50,000
b. Rs. 1,45,800
c. Rs. 1,80,000
d. Rs. 1,21,500
15. M/s Unnati Group, a proprietorship firm following cash system of accounting incurred the following expenditure
during the P.Y. 2019-20:
 Customs duty of A.Y. 2020-21: Rs. 75,000 paid on 15.5.2020
 Income tax paid for A.Y. 2019-20: Rs. 84,000 paid on 16.6.2019
Calculate the amount of expenditure allowable while computing business income for AY 2020-21.
a. Rs. 1,59,000
b. Rs. 75,000
c. Nil
d. Rs. 84,000
ICAI RTP and MTPs
16. M/s ABC, an eligible Assessee, following mercantile system of accounting, carrying on eligible business under
section 44AD provides the following details:
♦ Total turnover for the financial year 2019-20 is INR 130 lakh
♦ Out of the above:
 INR 25 lakh received by A/c payee cheque during the financial year 2019-20;
 INR 50 lakh received by cash during the financial year 2019-20;
 INR 25 lakh received by A/c payee bank draft before the due date of filing of return;
 INR 30 lakh not received till due date of filing of return.
Compute the amount of deemed profits of M/s ABC under section 44AD(1) for A.Y. 2020-21.
a) INR 10.4 lakh

b) INR 7.0 lakh
c) INR 5.5 lakh
d) INR 9.4 lakh
17. Which of the following persons are compulsorily required to get their accounts audited u/s 44AB of the Income-
tax Act, 1961?
(i) An Assessee, who has not opted for presumptive taxation and his turnover during the P.Y. is Rs.2 crore.
(ii) A professional whose gross receipts during the previous year amounts to Rs.50 lakh, who declares his profits
and gains from profession u/s 44ADA.
(iii) An Assessee having turnover of Rs.1.5 crore, who declares his profits and gains from business u/s 44AD.
(iv) A lawyer having gross receipts of Rs.40 lakhs during the P.Y. who claims his profits and gains from the legal
profession to be 40% of the gross receipts.
(v) An individual who opts out of the presumptive taxation scheme u/s 44AD during the P.Y., however, his total
income for the said year is Rs.2,00,000.
a) (i), (iv)
b) (i), (iv), (v)
c) (i), (ii), (iv)
d) (iv), (v)
18. Mr. Kunal is a doctor by profession engaged in his medical practice from last 15 years. His gross receipts from
the profession in FY 2016-17, 2017-18, 2018-19 were Rs. 2,00,000, Rs. 16,00,000 and Rs.18,50,000 respectively.
Further, Kunal follows cash system of accounting. Determine which of the following books of accounts and
documents are required to be kept and maintained by Kunal.
i. Cash Book
ii. Journal
iii. Inventory of the stock of drugs, medicines, etc.
iv. A daily case register
a. (i) and (ii)

b. (i), (ii), (iii) & (iv)
c. (i), (iii) & (iv)
19. Mr. Shahid, a wholesale supplier of dyes, provides you with the details of the following cash payments he made
throughout the year –
- 12.06.2019: loan repayment of Rs. 27,000 taken for business purpose from his friend Kunal. The repayment
also includes interest of Rs.5,000.
- 19.08.2019: Portable dye machinery purchased for Rs. 15,000. The payment was made in cash in three
weekly instalments.
- 26.01.2020: Payment of Rs. 10,000 made to electrician due to unforeseen electric circuit at shop
- 28.02.2020: Purchases made from unregistered dealer for Rs. 13,500
What will be disallowance under 40A(3), if any, if Mr. Shahid opts to declare his income as per the provisions of
section 44AD?
a. Rs. 18,500
b. Rs.28,500
c. Rs.13,500
d. NIL
MCQs for Practice
20. Which of the following income is chargeable to tax under the head PGBP?
i. Gift in connection with business/profession

ii. Payments for not pursuing any business activity or profession/non-compete fee
iii. Payment under Keyman Insurance Policy received by employee
iv. Profit on sale of Duty Entitlement Pass Book (‘DEPB’).
v. Any interest, salary, bonus, commission or remuneration, by whatever name called, received by a partner
of a Firm.
a. i, ii, iii, iv, v

b. i, ii, iv, v
c. i, ii, iv, v
d. ii, iii, iv, v
21. Which method of depreciation is normally followed under Income Tax Act for Assessees?
a. Written Down Value method

b. Straight line method
c. Either of (a) or (b) at the option of Assessee
d. Either of (a) or (b) at the option of Assessing Officer
22. Match the following to their respective rate of depreciation.
P. MOTOR CAR RUNNING ON HIRE 1. 15%

Q. BUILDING (residential) 2. 25%
R. PLANT & MACHINERY 3. 30%
S. INTANGIBLE ASSETS 4. 5%
5. 30%
Select the correct answer from the options given below:
P. Q. R. S.
a. 2 1 4 3
b. 5 1 2 4
c. 3 4 1 2
d. 2 4 3 1
P. ENERGY SAVING DEVICE 1. 30%

Q. SHIPS 2. 100%
R. MOTOR BUS & TAXI 3. 20%
S. FURNITURE & FITTING 4. 10%
5. 40%
P. Q. R. S.
a. 2 1 4 3
b. 5 3 1 4
c. 3 4 1 2
d. 2 4 3 1
P. POLLUTION CONTROL EQUIP 1. 10%
Q. BUILDING (commercial) 2. 40%

R. AEROPLANE 3. 60%
S. OIL WELLS 4. 15%
5. 100%

P. Q. R. S.
a. 2 1 2 4
b. 4 2 1 3
c. 5 4 1 2
d. 5 1 4 3
P. GOODWILL 1. 10%
Q. PRINTER 2. 40%
R. ELECTRICAL FITTING 3. 60%
S. COMPUTER 4. 15%
5. 25%
P. Q. R. S.
a. 4 2 3 3
b. 4 2 1 3
c. 5 4 1 4
d. 5 2 1 2
26. Which of the following will be added to the net profit while calculating income under the head PGBP?
I. Expenses debited to profit and loss a/c but not allowed

II. Income not credited to profit and loss a/c but taxable under PGBP
a. (I) only
b. Both (I) and (II)
c. (II) only
d. Neither (I) nor (II)
27. Which of the following statement (s) is true and which is false?
1) Profit and gains of illegal business are not taxable as business income
2) If the business never started or has ceased with no intention to be resumed, then letting income will be
taxable as income for other sources
3) The loss from speculation business can carried forward for 8 years
4) Only revenue loss is allowed to be deducted from business income
1 2 3 4
a.  X  x
b.  X X 
c. X  X 
d. x   x
28. Which of the following section of the Income tax Act, 1961 deals with method of computing business income?
a. Section 143
b. Section 144
c. Section 145
d. Section 146
29. Which of the following method of accounting is allowed for computing business income?
a. Accrual system of accounting

b. Cash system of accounting
c. Either (a) or (b)
d. Hybrid system of accounting
30. Which of the following category of Assessee can claim deduction of investment allowance u/s 32AD?
a. Individual
b. Partnership firm
c. Company
d. Any of the above
31. Which of the following is speculative transaction?
a. Transaction in which a contract for the purchase or sale of any commodity is periodically or ultimately settled
otherwise than by the actual delivery or transfer of the commodity
b. Transaction in respect of trading of in derivative in a recognized stock ex-change
c. Both (a) and (b)
32. Which of the following statement(s) is/are true?
1. Even notional loss relating to business is allowed to be deducted in some cases.

2. Only revenue loss is deductible and not capital loss.
3. Burden of proof to prove admissibility of expenditure lies on department.
4. Any expenditure incurred before commencement of business is allowed immediately in year in which
business is actually commenced
a. 2 only
b. 3 & 4 only
c. 2 & 4 only
d. 4 only
33. Who will be allowed depreciation in case the Assessee has acquired building on lease basis?
a. Lessor as he is the real owner

b. Lessee treating as deemed owner
c. Partly to lessor partly to lessee
d. Lessor or lessee at the option of assessing officer
34. Where any building, plant partly is used for business or profession and partly for other purpose, then_______.
a. The deduction shall be registered to 50% of total amount eligible for deduction
b. The deduction shall be restricted to fair propionate part thereof
c. The deduction shall be restricted to amount as agreed by the assessing officer
d. No deduction is available under the provisions of the Income tax Act, 1961
35. Deduction in respect of Notified Skill Development project is available u/s ________________.
a. 35DCC
b. 35CDC
c. 35CCD
d. 35ADD
36. Deduction in respect of amortization of certain Preliminary Expenses as provided in Section 35D is available to
____________________.
a. Any company
b. Any company and any resident person other than company
c. Indian company and any resident person other than company
d. Company, Firm including LLP
37. Which of the following statement (s) is/are true?
a. Depreciation is allowed to owner of the asset

b. Depreciation is allowed in respect of fractional ownership
c. Depreciation is allowed co-owner also
d. All of the above
38. In which of the following case 100% depreciation is allowed?
a. If asset is held by Assessee more than 180 days and put to use for less than 180 days
b. If asset is held by Assessee more than 180 days and put to use for more than 180 days
c. If asset is held by Assessee more than 180 days and put to use for 180 days or more
d. If asset is held by Assessee more than 260 days and put to use for more than 180 days
39. If deduction in respect of investment allowance is claimed in earlier year and said asset is sold within
________________ of acquisition then deduction claimed earlier is treated as income in year of sale.
a. 3 years
b. 2 years
c. 10 years
d. 5 years
40. Which of the following is added while calculating “Actual cost” of asset as per section 43 (1) of the Income tax
Act, 1961?
1. Cost attributable to bring asset to its present location and condition

2. Amount of GST in respect of which credit has been allowed
3. Interest on capital borrowed on a period before asset put to use
4. Decrease in cost due to exchange fluctuations
a. 2 and 3
b. 1 and 4
c. 4 and 2
d. 3 and 1
41. For which of the following revenue expenditure on scientific research incurred within 3 years immediately
preceding commencement of business 100% deduction is available?
1. Purchase of material
2. Basic salary & allowance
3. Expenditure for providing perquisites
a. 1 only
b. 1 and 2 only
c. 2 and 3 only
42. As per section 35(1)(ii) of the Income Tax Act, 1961 in respect of expenditure on scientific research, the
deductions shall be allowed an amount equal to _______ of any sum paid to research association which has as
its object the undertaking of scientific research or to a university, college or other institution to be used for
scientific research.
a. 100%
b. 125%
c. 175%
d. 150%
43. When scientific asset is used for business after it ceases to be used for scientific business; WDV is taken at____.
a. Actual cost less depreciation allowed

b. Actual cost as reduced by deprecation allowed u/s 35A (i)(d)
c. Actual cost as determined by assessing officer with previous approval of Joint Commissioner
d. Actual cost as reduced by depreciation allowed u/s 35(1)(iv)
44. As per section 35(1)(iia) of the Income Tax Act, 1961, in respect of expenditure on scientific research, the
deductions shall be allowed an amount equal to _______ of any sum paid to an Indian company to be used for
scientific research.
a. 100%
b. 150%
c. 175%
d. 125%
45. Statement I: If asset is acquired by way of gift or inheritance then Actual Cost in the hands of Assessee is taken
at ZERO as Assessee has not incurred any actual expenses.
Statement II: If previously used motor car is brought to use in business actual cost of the motor car is taken at
cost to Assessee as reduced by an amount of depreciation at the rate in force on the respective year before motor
car is put to use.
a. Statement I is true but statement II is false

b. Statement II is true but statement I is false
c. Both Statement I and statement II are true
d. Both Statement I and statement II are false
46. In case of individual Assessee, deduction in respect of preliminary expense as provide in section 35D is available
to the extent of ____________________.
a. 5% of cost of project of 5% of capital employed whichever is less

b. 10% of cost of project or 10% of capital employed whichever is less
c. 5% of cost of project
d. 10% of capital employed
47. Assertion (A): In case of asset first time acquired by the Assessee, Actual Cost to Assessee has to be taken as
reduced by the portion of cost met directly or indirectly by any person or authority.
Reason (R): In some cases, Actual Cost is taken at notional figures e.g. when asset transferred to other is
reacquired again lower of the following is taken actual cost:
- WDV at the time of transfer

- Price paid for reacquiring
a. A is true but R is false

b. A is false but R is true
c. Both A and R are true but R is not correct explanation of A
d. Both A and R are true and R is correct explanation of A
48. Which of the following Assessee can claim deduction in respect of amortization of expenditure incurred under
Voluntary Retirement Scheme u/s 35DDA?
a. Resident individual
b. Any company
c. Any person
d. Any firm
49. On which of the following assets, additional deprecation u/s 32(1) (iia) is available?
i. New machinery
ii. New ship
iii. New aircraft
iv. New office appliance
v. New road transport vehicle
Select the correct answer from the options given below –
a. (i) only
b. (i), (ii) & (iii) only
c. (i), (iii), (iv) & (v) only
50. Match the following:
P. Bonus or commission paid to an employee 1. No deduction

Q. Provision for bad and doubtful debt 2. 100% deduction
R. Revenue expenditure by a company for 3. Deduction is subject to the provisions
promoting family planning of section 43B
S. Expenditure on issue of bonus shares 4. 1/5 of expenditure in 5 successive year
5 Revenue in nature, hence deductible
P. Q. R. S.
a. 3 1 4 5
b. 3 1 2 5
c. 5 1 4 3
d. 2 4 3 1
51. If new plant is purchased in current year and put use less than 180 days, then _________________.
a. Additional deprecation @ 10% is available and remaining 10% cannot be claimed in next year as additional
depreciation is available in year of purchase only.
b. Additional depreciation @ 10% is available and remaining 10% can be claimed in next year
c. Additional depreciation @ 20% is available whether asset is used 180 days more or not
52. Maximum deduction admissible in relation to expenditure incurred on eligible projects or scheme u/s 35AC is
________________________.
a. 75% of expenditure incurred

b. 100% of expenditure incurred
c. 50% of expenditure incurred
d. 120% of expenditure incurred
53. Which of the following expenditure is/are deductible under the PGBP?
1. CSR expenditure
2. Advertisement expenditure in magazine published by political party
a. 2 only
b. Both 1 and 2
c. 1 only
d. Neither 1 nor 2
54. As per section 35AD, deduction is available to a hospital with at least ____________________ for patient if
its operations are commenced on or after 1-4-2011.
a. One hundred beds

b. Two hundred beds
c. Three hundred beds
d. Five hundred beds
55. As per section 35AD deduction is available to a hotel of _________________ as classified by central
government if its operations are commenced on or after the 1.4.2011.
a. Three star or above category

b. Five star or above category
c. Two star or above category
d. Four star or above category
56. Which of the following expenditure is/are allowed under the head PGBP?
a. Expenditure on issue of shares

b. Expenditure on issue of bonus shares
a. Both 1 and 2
b. 1 only
c. Neither 1 nor 2
d. 2 only
57. Match the following:
In case a block is transferred in succession of business and profession, WDV shall be _______________.
P. WDV in the hands of successor 1. WDV in the hands of demerged company

Q. WDV in the hands of amalgamated company 2. WDV in the hands of holding company
R. WDV of asset transferred to resulting company 3. WDV in the hands of amalgamating company
S. WDV in the hands of subsidiary company 4. WDV in the hands of amalgamated company
5. WDV in the hands of predecessor
P. Q. R. S.
a. 5 4 1 2
b. 5 3 2 1
c. 3 5 2 1
d. 5 3 1 2
58. As per section 43B, if the sum relates to any previous year for which payment has been made on or before the
due date of furnishing the Return of Income of that year then deduction is allowed in the _____________.
a. Previous year to which it relates

b. Nest previous year
c. Next assessment year
59. A company has WDV of block of asset on 1.4.2019 INR 30,00,000. Rate of depreciation is 15%. Asset falling in
block are purchased during the year for INR 10,00,000. Entire block sold for INR 17,60,000. What is the tax
consequence?
Select the correct answer from the options given below ______________________.
a. No depreciation is admissible as block cease to exist and there is STCG INR 22,44,000
b. Depreciation admissible INR 3,36,000 and block will continue at WDV of INR 19,04,000 after claiming
depreciation
c. Depreciation admissible INR 3,36,000 and block cease to exist
d. No depreciation is admissible as block cease to exist and there is STCL INR 22,40,000
60. Deduction for expenditure by way of payment to associations and institution for carrying out Rural Development
Programmes is available u/s ______________________.
a. 35CC
b. 35CCB
c. 35CCA
d. 35CCC
61. ___________ of the Income tax Act, 1961 deals with the provisions relating to maintenance of books of
account by certain persons carrying on business or profession.
a. Section 44AB
b. Section 44 AAA
c. Section 44AA
d. Section 44 AAB
62. Deduction for expenditure incurred on notified Agricultural Extension Project is available u/s ________ to the
extent of ________ of prescribed expenditure.
a. 35CCB; 100%
b. 35CCC; 150%
c. 35CE; 100%
d. 35CD; 150%
63. As per section 44AA, maintenance of books of account is compulsory for specified professions if _________.
a. Gross receipt exceeds INR 1,50,000 in all of the 3 immediately preceding previous year
b. Profession is newly setup and the gross receipts are likely to exceeds INR 1,50,000 during current previous
year
c. Both (a) and (b)
d. Gross receipt exceeds INR 10,00,000 in all of the 3 immediately preceding previous years
64. An individual or HUF carrying on any business is required to keep books of account if ____________.
a. Sales/ turnover/ gross receipt thereof exceeds INR 25,00,000 in any of the three previous years immediately
preceding the previous year
b. Gross receipts exceeds INR 1,50,000 in all of three immediately preceding previous years
c. His income from business exceeds INR 2,50,000
d. A or C
65. In case of person carrying on any specified profession tax audit is compulsory if __________.
a. His gross income exceeds INR 25 lakhs in any previous year

b. His gross receipts exceeds INR 50lakhs in any previous year
66. Which of the following type of Assessee can opt scheme u/s 44AD?
1. Individual
2. LLP
3. Hindu undivided family
4. Partnership firm
5. Company
a. 1 only
b. 3 and 1 only
c. 1,3, and 4 only
d. 5, 1, 4, 3, 2
67. Raja purchased house property on 1.12.2016 for INR 10,00,000 and the same was self-occupied as residence.
On 1.12.2019 the said house was brought into use for his Chartered Accountancy Profession. Rate of depreciation
at the time of purchase of house was 15%. Rate of deprecation for AY 2020-21 is 10%. Compute the WDV of
assets on 31.3.2020.
a. INR 7,69,500
b. INR 7,86,250
c. INR 8,10,000
d. INR 7,22,500
68. AB Ltd. has disclosed net profit of INR 12.50 Lakhs. It has debited INR 60,000 (paid in cash) as advertisement
to sister concern of a director, fair value of which is INR 52,000. Taxable income of AB Ltd. shall be ______.
a. INR 13,10,000
b. INR 12,58,000
c. INR 12,50,000
d. INR 13,02,000
69. Net profit of retail trader is INR 50,000. It was found that some stock omitted to be included in both opening
and closing stock, the value of which are INR 9,000 and INR 18,000 respectively. Business income shall be
_______.
a. INR 41,000
b. INR 77,000
c. INR 23,000
d. INR 59,000
70. A retail trader has reported sales of INR 12,11,500 and net profit of INR 1,30,900. Total turnover or gross receipts
is received by an account payee cheque. If he opts for presumptive income scheme u/s 44AD, his income under
the head PGBP will be ______________________.
a. INR 72,690
b. INR 96,920
c. INR 90,862.50
d. INR 1,21,150
71. The business income of X Ltd. before claiming deduction on account of following expenditure on family planning
is INR 6,00,000
Revenue expenditure = INR 7,00,000
Capital expenditure = INR 10,00,000
What are the tax implications? Select the correct answer from the options given below ________________.
a. Unabsorbed family planning expenditure INR 3,00,000

b. Income chargeable under the head PGBP will be ZERO
c. Loss under the head PGBP= INR 3,00,000
d. A & B
72. Rahul is a Practicing Chartered Accountant (FCA). His gross receipt and income under the head PGBP for the
PY 2018-19 and PY 2019-20 are INR 9,18,340 and INR 5,40,122 respectively. What are the obligations of Rahul?
Select the correct answer from the option given below __________________.
a. Rahul compulsorily required to maintain books of account u/s 44AA.

b. Rahul has to get his accounts audited u/s 44AB
c. Both (a) and (b)
d. Neither (A) NOR (B)
73. GST debited to Profit and Loss A/c for the P/Y 2019-20 is INR 50,000 out of which INR 20,000 paid on
14.7.2020 and INR 30,000 paid on 15.10.2020. No tax audit is required. Amount of expenditure allowed for GST
for the PY 2019-20 is _________________________.
a. INR 50,000
b. INR 30,000
c. INR 20,000
d. Nil
74. Net profit of Mr. A is INR 93,950 after debiting interest of INR 12,000 payable to resident Indian on which no
TDS has been deducted and penalty INR 24,000 for contravention of CGST Act. His income chargeable under
the head PGBP shall be ________________________.
a. INR 1,21,550
b. INR 66,350
c. INR 1,29,950
d. INR 57,950
75. RPL Ltd. paid INR 240 lakhs as a compensation as per approved VRS during PY 2019-20. How much is
deductible u/s 35DDA while calculating income under the head PGBP?
a. INR 48 Lakhs
b. INR 24 Lakhs
c. INR 60 Lakhs
d. INR 40 Lakhs
76. From the following details, compute the deduction available u/s 35D to the company.
Eligible expenditure – INR 22,00,000

Cost of the project – INR 60,00,000
Capital employed – INR 80,00,000
Net profit – INR 28,32,735
a. INR 80,000
b. INR 4,40,000
c. INR 30,000
d. INR 5,66,547
77. XYZ Ltd. incurred INR 25,55,000 on Skill Development Project in accordance with prescribed guidelines. Its
net profit before deduction of above expenditure is INR 75,87,850. Income chargeable under the head PGBP
______________.
a. INR 37,55,350
b. INR 38,32,500
c. INR 1,14,20,350
d. INR 50,32,850
78. Star Ltd. has WDV of machinery INR 40Lakhs on 1.4.2019. It purchased another machine on 1.11.2019 for INR
14.40 Lakhs and put to use on same date. Star Ltd. was amalgamated with Universe Ltd. with effect from
1.1.2020. How much normal depreciation can be claimed by Star Ltd. for the PY 2019-20?
a. INR 4,95,397
b. INR 4,94,161
c. INR 7,08,000
d. INR 4,95,684
79. Notional profit from speculative business is ____________________.
a. Taxable under the head “Income from profits and gains of business and profession”
b. Taxable under the head “Income from other sources”
c. Taxable either as income from other sources or as income from profits and gains of business and profession
d. Not taxable
80. If a Block of assets ceases to exist on the last day of the previous year, depreciation admissible for the block of
assets will be ___________________________.
a. Nil
b. 50% of the value of the block of assets on the first day of the previous year
c. The total value of the block of assets on the first day of the previous year
d. 50% of the value of the block of assets on the last day of the previous year
81. Sameer sold goods worth INR 50,000 at credit on 1 st April, 2017. However, he has written off INR 10,000 of it
as bad debts and claimed deduction for the same during the year 2017-18. On 4th April 2019, the defaulting
debtor made payment of INR 45,000. The taxable amount of bad debts recovered for PY 2019-20 would be
___________________________.
a. INR 5,000
b. INR 50,000
c. INR 45,000
d. INR 10,000
82. Under the Income Tax Act, 1961, which of the following outlays incurred by Sun Ltd. during the previous year
ended 31st march 2020 will not be admissible as deduction while computing its business income.
a. Contribution to a political party in cash

b. Interest on loan taken for payment of income tax
c. Capital expenditure on advertisements
d. All of the above
83. Vaibhav, deriving business income, owns a car whose WDV as on 1st April 2018 was INR 3,00,000. This is the
only asset in the block of assets with rate of 15%. It is estimated that one-third of the total usage of the car is for
personal use in both years. The WDV of the block of assets as on 1st April 2020 would be ___________.
a. INR 2,16,750
b. INR 2,43,000
c. INR 2,55,000
84. Sunil acquired a building for 15 lakhs in June, 2017 in addition to cost of land beneath the building of INR 3
lakhs. It was used for personal purpose until he commenced business in June 2019 and since then it was used
for business purposes. The amount of deprecation eligible in his case for the AY 2020-21 would be _______.
a. INR 1,50,000
b. INR 75,000
c. INR 37,500
d. INR 1,21,500
85. Saraswath Ltd. made provision of 12 lakhs for bonus payable for the year ended 31st march 2020. It paid INR 7
lakhs on 31st July 2020; 3 lakhs on 30th September 2020 and INR 2 lakh on 15th December 2020. The amount
eligible for deduction u/s 43B would be ___________________.
a. INR 10 Lakh
b. INR 12 lakh
c. INR 7 lakh
d. INR 3 lakh
86. The maximum penalty leviable for failure to get accounts audited or to furnish report u/s 44AB is _______.
a. INR 75,000
b. INR 1,00,000
c. INR 1,50,000
d. INR 3,00,000
87. Ram incurred capital expenditure of INR 15,000 on his business of bee keeping. State the deduction allowed.
a. INR 15,000
b. INR 2,250
c. INR 1,500
d. Nil
88. If deduction is claimed u/s 35AD in earlier year and said asset is sold within _________ of acquisition then
deduction claimed earlier is treated as income in year of sale.
a. 3 years
b. 5 years
c. 10 years
d. 8 years
89. Which of the following sentences are true?
i. Premium paid for medi claim policy taken in the name of employees is allowed to be debited to profit and
loss account
ii. Provision for expenses made on basis of last year’s trend is allowed as deduction
iii. KSA & Co has incurred capital expenditure of 2 lakhs on promotion of family planning and such expenses
shall be allowed in the year of expense
iv. Commodities Transaction Tax paid as a part of his business is allowed to be debited to the profit and loss
account.
Select the correct statements
a. i, ii, iii, iv
b. i, iii, iv
c. i, iv
d. i
90. Which of the following are allowed as allowed to be debited in profit and loss account as per Income Tax Act?
i. Interest on the loan taken for payment of Income tax.

ii. Interest on delay in payment of GST, custom duty etc
iii. Penalty in relation to GST
iv. Expenses on income tax assessments.
a. i, ii, iii, iv
b. ii, iii, iv
c. ii, iii, iv
d. ii, iv
91. Which of the following are allowed to be debited in profit and loss account as per Income Tax Act?
i. Expenditure in connection with opening ceremony (Mahurat) of the business/profession.

ii. Expenditure on carpets.
iii. Demurrage charges.
iv. Cost of production of abandoned feature film.
v. Expenditure on corporate social responsibility

b. i, ii, iii, iv
c. ii, iii, iv, v
d. i, ii, iv
92. In case of non-deduction or non -deposit of tax while making payment to a Resident and Non-Resident, the
expense is disallowed to the extent of _________ in case of Resident and ______ in case of Non - Resident.
a. 100% expense is disallowed in both cases

b. 30% in case of residents and 100% in case of Non-resident
c. 100% in case of residents and 30% in case of Non-resident
d. 30% in case of both
93. Maximum amount of salary, bonus, commission etc. allowed to a partner in case of a partnership firm whose
book profit is 5,00,000 shall be _____________.
a. 4,50,000
b. 5,00,000
c. 3,00,000
d. 3,90,000
94. What is limit of cash payment prescribed under section 40(3)? Also, it is applicable on which expenditure?
a. 20,000; Revenue expenditure

b. 10,000; Capital Expenditure
c. 10,000; Both
d. 20,000; Both
95. Which of the following is included in the Actual Cost as per section 43(1)?
i. Transportation, Loading and unloading expenses

ii. Payment for the expert staff to install the plant and machinery
iii. Interest on loan taken for purchase of machinery till it is installed

iv. Interest on loan taken for purchase of machinery after it is installed
v. Subsidy

b. i, ii, iii, iv
c. i, ii, iii, v
d. i, ii, iii
96. Ram, a real estate agent, sold a land for INR 24,00,000. Stamp duty value of the land is INR 25,00,000. Sale
value under section 43CA shall be ___________________.
a. INR 24,00,000
b. INR 25,00,000
c. INR 1,00,000
d. Either of a or b at the option of Assessing Officer
97. Ram, a real estate agent, sold a land for INR 23,50,000. Stamp duty value of the land is INR 25,00,000. Sale
value under section 43CA shall be ___________________.
a. INR 23,50,000
b. INR 25,00,000
c. INR 1,50,000
d. Either of a or b at the option of Assessing Officer
98. Failure to maintain books of accounts etc. in accordance with section 44AA will attract a penalty of _______.
a. 20,000
b. 50,000
c. 25,000
d. 1,50,000
99. Limit of turnover for opting presumptive taxation u/s 44AD and presumptive income is as follows:
a. 100 lakhs; 8% (6% in few cases)

b. 100 lakhs; 8%
c. 200 lakhs; 8% (6% in few cases)
d. 200 lakhs; 6% in few cases
100. An Assessee opting for presumptive taxation is required to pay advance tax under which section.
i. 44AD
ii. 44ADA
iii. 44AE
a. i, ii
b. i
c. i, ii, iii
101. Which of the following statement is true in case of section 44AD?
i. A partnership firm is allowed to deduct salary and interest paid to the partner under section 40(b).
ii. Such option is allowed only to Resident Individual/ HUF / Firm / LLP but not to Company.
iii. The Assessee shall be exempt from maintaining books of accounts or audit.
iv. All expenses including brought forward depreciation shall not be allowed to be adjusted but brought
forward business loss shall be allowed to be adjusted.
v. The Assessee is required to pay advance tax by March 15 of the Previous Year.
a. i, ii, iii, iv
b. iii, iv, v
c. ii, iii, iv, v
d. i, ii, iii, iv, v
Answer Key
1. B 2. A 3. A 4. D 5. B 6. C 7. D
8. B 9. A 10. C 11. B 12. B 13. A 14. D
15. C 16. D 17. A 18. C 19. D 20. B 21. A
22. C 23. B 24. A 25. D 26. B 27. C 28. C
29. C 30. D 31. A 32. A 33. A 34. B 35. C
36. C 37. D 38. C 39. D 40. D 41. B 42. D
43. D 44. A 45. D 46. C 47. D 48. C 49. A
50. B 51. B 52. B 53. D 54. A 55. C 56. D
57. D 58. A 59. D 60. C 61. C 62. B 63. C
64. D 65. B 66. C 67. A 68. A 69. D 70. A
71. D 72. A 73. C 74. A 75. A 76. A 77. A
78. B 79. D 80. A 81. A 82. D 83. B 84. D
85. A 86. C 87. A 88. D 89. C 90. D 91. B
92. B 93. D 94. C 95. D 96. A 97. B 98. C
99. C 100. C 101. B
CA Kishan Kumar MCQs – Advance Tax May/Nov 2020
1. Advance tax will not be paid if tax payable after TDS is not more than or equal to-
a) INR 10,000
b) INR 15,000
c) INR 20,000
d) INR 25,000
2. For non-payment or short payment of advance tax -

a) interest is payable under section 234A
b) interest is payable under section 234B
c) interest is payable under section 234C
d) interest is payable under all the three sections 234A, 234B and 234C
3. For deferment of advance tax -

a) interest is payable under section 234A
b) interest is payable under section 234B
c) interest is payable under section 234C
d) interest is payable under all the three sections 234A, 234B and 234C
4. An interior doctor has opted for presumptive taxation scheme under section 44ADA for A.Y.2020-21.
a) He is liable to pay advance tax on or before 15.3.2020
b) He is not liable to advance tax
c) He is liable to pay advance tax in three instalments i.e., on or before 15.9.2019, 15.12.2019 and 15.3.2020
d) He is liable to pay advance tax in four instalments i.e., on or before 15.6.2019, 15.9.2019, 15.12.2019 and
15.3.2020.
5. Mr. A, whose total sales is INR 201 lakhs, declares profit of INR 10 lakhs for the F.Y. 2019-20. He is liable to
pay advance tax -
a) in one instalment
b) in two instalments
c) in three instalments
d) in four instalments
ICAI Sample MCQs
6. Mr. Dinesh owns 7 goods vehicle and declares profit on presumptive basis under section 44AE for A.Y. 2020-
21. He is ____________.
a) liable to pay advance tax in four instalments in June, September, December and March
b) liable to pay advance tax in three instalments in September, December and March
c) liable to pay advance tax in one instalment in March
d) not liable to pay advance tax since he is declaring profit on presumptive basis.
7. Mr. Raj (a non-resident and aged 65 years) is a retired person, earning rental income of Rs. 40,000 per month
from a property located in Delhi. He is residing in Canada. Apart from rental income, he does not have any
other source of income. Is he liable to pay advance tax in India?
a) Yes, he is liable to pay advance tax in India as he is a non-resident and his tax liability in India exceeds Rs.
10,000.
b) No, he is not liable to pay advance tax in India as his tax liability in India is less than Rs. 10,000.
c) No, he is not liable to pay advance tax in India as he has no income chargeable under the head “Profits
and gains of business or profession”.
d) Both (b) and (c)
8. Which of the following persons is/are liable to pay advance tax as per the provisions of Income-tax Act, 1961?
I. A resident individual aged 62 years having only income from capital gains of Rs.20,00,000 (estimated)
during P.Y. 2019-20.
II. A resident individual aged 58 years having only income from other sources of Rs.2,00,000 (estimated)
during P.Y. 2019-20.
III. A private company having estimated total income of Rs.1,00,000 during P.Y. 2019-20.
IV. A partnership firm which has estimated its total income to be Nil for P.Y. 2019-20.
V. A HUF having estimated total income of Rs.6,00,000 during P.Y. 2019-20.
a) I, III, V
b) I, II, III, IV, V
c) III, V
d) III, IV, V
ICAI MTP and RTP
9. Mr. Kabir (a non-resident and aged 70 years) is a retired person, earning rental income of INR 45,000 per
month from a property located in Mumbai. He is residing in Canada. Apart from rental income, he does not
have any other source of income. Is he liable to pay advance tax in India?
a. Yes, he is liable to pay advance tax in India as he is a non-resident and his tax liability in India exceeds
INR 10,000.
b. No, he is not liable to pay advance tax in India as his tax liability in India is less than INR 10,000.
c. No, he is not liable to pay advance tax in India as he is a senior citizen and has no income chargeable
under the head “Profits and gains of business or profession”.
d. Both (b) and (c)
10. Mr. Jha, an employee of FX Ltd, attained 60 years of age on 15.05.2019. He is resident in India during F.Y.
2019-20 and earned salary income of INR 5 lacs (computed). During the year, he earned INR 7 lacs from
winning of lotteries. Compute his advance tax liability for A.Y. 2020-21:
a. INR 2,20,000 + Cess INR 8,800 = INR 2,28,800, being the tax payable on total income of INR 12 lacs
b. INR 2,10,000 + Cess INR 8,400 = INR 2,18,400, being the tax payable on lottery income of INR 7 lacs
c. INR 10,000 + Cess INR 400 = INR 20,400, being the tax payable on salary income, since tax would have
been deducted at source from lottery income.
d. Nil
MCQs for Practice
11. Scheme of advance tax is known as ____________________.
a. Step towards nation building

b. Earn more pay more
c. Pay as much as you can
d. Pay as you earn
12. How advance tax shall be computed?
a. Tax on Total Income – Rebate + TDS

b. Tax on Total Income - Rebate - TDS
c. Tax on Total Income – Rebate x TDS
d. Tax on Total Income - TDS
13. Statemen 1: Assessee opting for presumptive scheme u/s 44AD shall be liable to pay advance tax in 4
instalments.
Statemen 2: Assessee opting for presumptive scheme u/s 44AE shall be liable to pay advance tax in one
instalment.
a. Only Statement 1 is correct

b. Only Statement 2 is correct
d. Both Statements are incorrect
14. Advance tax to be paid upto 15th Dec of FY is _____________________.
a. 75%
b. 100%
c. 30%
d. 45%
15. Advance tax can be paid____________________.
a. After 15th March of relevant FY

b. Cannot be paid after 15th March of relevant FY
c. Be paid after 15th March but by 31st March of the FY
16. Tax liability of Assessee is INR 11,000. This sum is deposited on 16th March in lumpsum. This is treated as
________________________.
a. Self-assessment tax
b. Advance tax but subject to interest
c. Advance tax
17. If casual income or capital gain arises _______________ of any instalment then entire tax payable on such
income should be paid in the ______________ of advance tax which are due.
a. After due date, last instalment

b. Before due date, last instalment
c. After due date, Remaining instalment
d. Before due date, Remaining Instalment
18. Mr. P submitted his Return of Income for PY 2019-20 on 15.12.2020. Due date of filling ROI was 30.9.2020.
Mr. P shall have to pay interest u/s 234A @ ___________ for ___________ months.
a. 1%; 3
b. 2%; 3
c. 1%; 2
d. 2%; 2.5
19. In what case, interest u/s 234B is attracted?
a. Non- payment of advance tax

b. Payment of advance tax of < 90% of Assessed Tax
d. None
20. Interest u/s 234B is calculated on difference between ___________________.
a. Advance tax paid & assessed tax

b. Advance tax paid & 90% of the assessed tax
c. Assessed by tax & advance tax paid
21. Interest u/s 234B for default in payment of advance tax is payable at ________ for period starting
from____________.
a. 1% per month or part of the month; Due date of return to the date of assessment
b. 1% per month or part of the month; 1st April of relevant AY to the date of assessment
c. 1.5% per month or part of the month; 1st April of relevant AY to the date of assessment
d. 1% per month or part of the month; 1st April of relevant AY to date of submission of ROI
22. In case of company, if advance tax payable in 1st instalment is _____________, no interest u/s 234C shall be
payable.
a. 12% or less
b. 10% or more
c. 12% or more
d. 36% or more
23. In case of company, if advance tax payable in second instalment is _________________, no interest u/s
234C shall be payable.
a. 36% or less
b. 36% or more
c. 12% or more
d. 12% or less
24. An Assessee who is not liable to pay advance tax will not be liable to pay interest under sections __________
and ___________ for defaults in payment of advance tax. However, the consequences under section
______ regarding interest for belated filing of return would be attracted.
a. 234A; 234B; 234C

b. 234A; 234C; 234B
c. 234B; 234C; 234A
25. If any Assessee is eligible for income tax refunds, he will be allowed interest under section 244A @
___________ from the ____________ upto the date on which the refund is granted.
a. 0.5% per month or part of the month; 1st April of the assessment year
b. 1% per month or part of the month; 1st April of the assessment year
c. 1% per month or part of the month; Due date of filing of return
d. 2% per month or part of the month; 1st April of the assessment year
26. Statement 1: A senior citizen who does not have income under the head business/profession is not liable to
pay advance tax.
Statement 2: No interest is payable u/s 244A if the amount of refund is 10% or less of the tax liability.

Answer Key
1. A 2. B 3. C 4. A 5. D 6. A 7. C
8. C 9. B 10. D 11. D 12. B 13. D 14. A
15. C 16. B 17. C 18. A 19. C 20. 21. B
22. C 23. B 24. C 25. A 26. C
CA Kishan Kumar MCQs – TDS & TCS May/Nov 2020
1. Any person responsible for paying a resident any sum exceeding INR 2.5 lakhs towards compensation for
compulsory acquisition of urban industrial land under any law has to deduct income-tax at the rate of _____.
a. 10%
b. 15%
c. 20%
d. 2%
2. The rate of TDS on rental payments of plant, machinery or equipment is _________.
a. 2%
b. 5%
c. 10%
d. 1%
3. Mr. X, a resident Indian, wins INR 10,000 in a lottery. Which of the statement is true?
a) Tax is deductible u/s 194B @ 30%
b) Tax is deductible u/s 194B @ 30.9%
c) No tax is deductible at source
4. Mr. X paid fees for professional services of INR 40,000 to Mr. Y, who is engaged only in the business of operation
of call centre on 15.7.2019. Tax is to be deducted by Mr. X at the rate of –
a) 1%
b) 2%
c) 10%
d) 20%
5. Mr. A, a salaried individual, pays rent of INR 51,000 per month to Mr. B from June, 2019. Which of the statement
is true?
a. No tax is deductible at source since Mr. A is not liable to tax audit u/s 44AB
b. Tax is deductible at source every month @ 10% on rent paid to Mr. B
c. Tax is deductible at source every month @ 5% on rent paid to Mr. B
d. Tax is deductible at source @ 5% on annual rent from the rent paid for March 2019
ICAI Sample MCQs
6. Rajan, a resident Indian, has incurred Rs.15,000 for medical treatment his dependent brother, who is a person
with severe disability and has deposited Rs.20,000 with LIC for his maintenance. For A.Y.2020-21, Rajan would
be eligible for deduction under section 80DD of an amount equal to _______________.
a. Rs. 15,000
b. Rs. 35,000
c. Rs. 75,000
d. Rs. 1,25,000
7. A registered firm pays salary and interest on capital to its resident partners. The salary and interest paid fall
within the limits specified in section 40(b). Which of the following statements is true?
a. Tax has to be deducted u/s 192 on salary and u/s 194A on interest
b. Tax has to be deducted u/s 192 on salary but no tax needs to be deducted on interest
c. No tax has to be deducted on salary but tax has to be deducted u/s 194A on interest
d. No tax has to be deducted at source on either salary or interest
8. Mr. X, a resident, is due to receive Rs. 4.50 lakhs on 31.3.2020, towards maturity proceeds of LIC policy taken
on 1.4.2016, for which the sum assured is Rs. 4 lakhs and the annual premium is Rs. 1,25,000. Mr. Z, a resident,
is due to receive Rs. 95,000 on 1.10.2019 towards maturity proceeds of LIC policy taken on 1.10.2012 for which
the sum assured is Rs. 90,000 and the annual premium is Rs. 10,000.
a. Tax is required to be deducted on maturity proceeds payable to Mr. X and Mr. Z

b. Tax is required to be deducted on maturity proceeds payable to Mr. X
c. Tax is required to be deducted on maturity proceeds payable to Mr. Z
d. No tax is required to be deducted on maturity proceeds payable to either Mr. X or Mr. Z
9. M/S Mohan & Sons paid Rs. 35,000 to Mr. Goel on 01.05.2019 towards fee for legal advisory services without
deduction of tax at source. Another payment of Rs. 47,000 was due to Mr. Goel on 31.07.2019 and TDS on entire
amount (i.e. Rs. 35,000 plus Rs. 47,000) was deducted and then the net amount was paid. However, the total
tax deducted was deposited on 15.11.2019. The interest chargeable under section 201(1A) will be:
a. Rs. 650
b. Rs. 433
c. Rs. 486
d. Rs. 597
10. ABC Ltd. wants 400 customized backpacks which will be distributed by the company to its employees on the
annual event. ABC Ltd. hires a local vendor for this task and ABC Ltd. informs the local vendor about its
specifications for the backpacks. The local vendor procures its own raw material and supplies the required
backpacks to the Company. He charges Rs. 1,00,000 for the backpacks from ABC Ltd. While making payment
to the vendor, at what rate ABC Ltd. is required to deduct tax at source?
a. 1%
b. 2%
c. 10%
d. No tax is required to be deducted at source.
ICAI RTP and MTPs
11. Mr. P is a professional who is responsible for paying a sum of INR 2,00,000 as rent for use of building to Mr.
Harshit for the month of February, 2019. The gross receipts of Mr. P are as under:
From 01.04.2017 to 31.03.2018: INR 55,00,000
From 01.04.2018 to 28.02.2019: INR 45,00,000
Find out whether Mr. P is responsible for deducting any tax at source from the rent of INR 2,00,000 payable to
Mr. Harshit.
a. Tax at source is required to be deducted u/s 194-I at the rate of 10%.
b. Tax at source is required to be deducted u/s 194-IB at the rate of 5%.
c. Tax at source is required to be deducted u/s 194-IB at the rate of 10%.
d. No tax is required to be deducted at source.
MCQs for practice
12. TDS from salary u/s 192 shall be @ ___________________.
a) 10% of salary
b) Average rate of Income tax including health and education cess
c) Maximum marginal rate of tax
d) Average rate of Income tax excluding health and education cess
13. In which of the following cases, employer requires the employee to furnish evidence for the purpose of estimating
his income or computing the tax deduction of tax at source u/s 192?
a) House Rent Allowance

b) Leave Travel Concession or Assistance
c) Deduction under Chapter VI-A
d) All of the above
14. If employee receives accumulated amount out of recognised provident fund, which is taxable due to non-
fulfilment of conditions given u/s 10(12), then TDS shall be deducted u/s ______________.
a) 192
b) 192A
c) 194A
d) 197A
15. If employee receives accumulated amount out of recognised provident fund and does not submit PAN, then TDS
shall be deducted @ _______.
a) 10%
b) 20%
c) 30%
d) Maximum Marginal Rate
16. TDS is not deducted from premature withdrawals from recognised provident fund if the accumulated amount
received is less than ___________________.
a) 10,000
b) 20,000
c) 30,000
d) 50,000
17. No tax shall be deducted on interest payable for ____________________.
a) 7-year NSC or National Development Bond/Notified Debentures

b) Interest on Securities of CG/SG/Listed Securities held in DEMAT form
c) Payable to LIC/GIC/Any Insurance company on any securities owned by it
d) All of the above
18. Under section 194A, limit of Rs. 10,000 is computed with reference to _________.
a) Whole bank
b) Each branch of bank
c) Whole bank if CBS is adopted
d) Both (b) and (c)
19. Tax is not required to be deducted by a banking company u/s 194A if aggregate amount of interest paid or
payable on time deposits to resident senior citizen if it does not exceed ________.
a) 40,000
b) 50,000
c) 20,000
d) None
20. In case of Interest on compensation awarded by Motor Accidents Claims Tribunal and paid by Insurance
company, what is the treatment of TDS?
a) No TDS at all
b) No TDS at time of credit
c) No TDS at time of payment if payment is not exceeding Rs. 50,000 in FY
d) Both (b) and (c)
21. In case of winnings from horse races, payments exceeding _______ are subject to tax deduction at source @
_____ %
a) Rs. 5000, 30%

b) Rs. 10000, 30%
c) Rs. 5000, 10%
d) Rs. 1000, 10%
22. What shall be the rate at which TDS on payment to contractor/sub-contractor be deducted u/s 194C when the
payment is made to Individual or HUF?
a) 1%
b) 2%
c) 10%
d) 5%
23. What is rate at which TDS on payment to contractor/sub-contractor be deducted u/s 194C when payment is
made to any person other than Individual or HUF?
a) 1%
b) 2%
c) 10%
d) 5%
24. As per section 194C, tax is not required to be deducted at source if the amount credited/paid to the contractor
during the relevant previous year does not exceed ______.
a) Rs. 30,000
b) Rs. 1,00,000
c) Rs. 1,30,000
d) Rs. 30,000 at one time or Rs. 1,00,000 in aggregate during FY
25. A person makes payment of Rs. 35,000 to contractor who is a transport operator is not subject to TDS if
________.
a) The recipient owns 10 or less than 10 goods carriages at any time during the previous year
b) The recipient is engaged in the business of plying, hiring or leasing of goods carriage
c) The recipient has furnished declaration to this effect along with his PAN to the payer
d) All of the above
26. Mr. P an individual, whose turnover of the business for preceding year exceeded Rs. 100 lakhs, has engaged a
contractor Mr. A for building his residential house. On 30.11.2019, he has made a payment of Rs. 10,00,000 to
the contractor. Mr. P should deduct TDS of __________________.
a) Rs. 20,800
b) Rs. 10,400
c) Rs. 20,000
d) Nil
27. What shall be the rate at which TDS on insurance commission shall be deducted u/s 194D when the payee is a
person other than a domestic company?
a) 20%
b) 10%
c) 30%
d) 5%
28. What shall be the rate at which TDS on commission on sale of lottery tickets shall be deducted u/s 194G?
a) 5%
b) 10%
c) 20%
d) 30%
29. What is maximum amount upto which TDS on commission on sale of lottery tickets shall not be deducted?
a) 5,000
b) 20,000
c) 1,000
d) 15,000
30. Who shall not be liable to deduct TDS u/s 194H?
a) Any individual
b) Any HUF
c) Any Individual and Any HUF whose accounts were not liable to audit in preceding FY
d) Any Individual and Any HUF whose accounts were liable to audit in preceding FY
31. The rate of TDS on rental payments of plant and machinery u/s 194I is __________________.
a) 2%
b) 5%
c) 10%
d) 1%
32. What is the total amount during previous year upto which TDS on rent u/s 194-I shall not be deducted?
a) Rs. 90,000
b) Rs. 1,80,000
c) Rs. 2,00,000
d) Rs. 2,40,000
33. Who shall not be liable to deduct TDS u/s 194I?
a) Any Individual
b) Any HUF
c) Any Individual and HUF whose accounts were not liable to audit in preceding FY
d) Any Individual and HUF whose accounts were liable to audit in preceding FY
34. In case of rent paid to government, tax is deductible at source @ _________
a) 2%
b) 5%
c) 10%
d) Nil
35. The provisions of 194-I are not applicable to:
a) Cooling charges paid by the customers of cold storage

b) Payment of PSF by an airline to Airport operator
c) Rent paid to REIT
36. The provisions of 194-I are not applicable to ________.
a) Rent paid to any person is less than or equal to Rs. 2,40,000 during PY
b) Rent paid to the government
c) ‘Lump sum lease premium’ or ‘one-time upfront lease charges’ paid by an Assessee for acquiring long-
term leasehold rights for land or any other property
d) All of the above
37. In case of payment on transfer of immovable property, tax shall be deductible u/s 194IA @ ________.
a) 2%
b) 5%
c) 1%
d) Nil
38. If PAN is not provided by the land lord, the tenant is required to deduct tax at source u/s 194-IB which shall not
exceed the _______________________.
a) 20%
b) 30%
c) 5%
d) Rent payable for the last month of PY or last month of the tenancy, as the case maybe
39. Sec 194-IC casts responsibility on any person responsible for paying to resident any sum by way of consideration,
not being consideration in kind, under a specified agreement u/s 45(5A), to deduct tax @ ________.
a) 2%
b) 5%
c) 1%
d) 10%
40. Who shall not be liable to deduct TDS u/s 194J?
a) Any individual
b) Any HUF
c) Any Individual and Any HUF whose accounts were not liable to audit in preceding FY
d) Any Individual and Any HUF whose accounts were liable to audit in preceding FY
41. What shall be rate of TDS on fees for professional or technical service u/s 194-J?
a) 20%
b) 10%
c) 30%
d) 15%
42. The limit of Rs. _______ u/s 194J is applicable separately for fees for professional services, fees for technical
services, royalty and non-compete fees referred to in section 28(VA).
a) Rs. 10,000
b) Rs. 20,000
c) Rs. 30,000
d) Rs. 40,000
43. Section _____ provides for TDS by a person responsible for paying to resident any sum in nature of
compensation or enhanced compensation or the consideration or the enhanced consideration on account of
compulsory acquisition, under any law for the time being in force, of any immovable property (other than
agricultural land).
a) 194LA
b) 194LB
c) 194LC
d) 194LD
44. Certificate for lower deduction of TDS u/s 197 is issued by ______ after receiving an application from
_______.
a) Assessing Officer, Assessee

b) Assessee, Assessing Officer
c) Commissioner of Income Tax, Assessing Officer
d) Assessing Officer, Commissioner of Income Tax
45. No declaration u/s 197A shall be _______ unless the person furnishes his _______.
a) Valid, PAN
b) Invalid, PAN
c) Valid, TIN
d) Valid, PIN
46. Which of the following are correct due dates for deductor other than government for filling TDS returns?
a) 31st July; 31st Oct; 31st Jan; 31st May

b) 15th July; 15th Oct; 15th Jan; 15th May
c) 15th July; 31st Oct; 31st Jan; 15th May
47. An Assessee is deemed to be Assessee in default u/s 201 if __________.
a) Deductor has deducted but not deposited the tax deducted at source
b) Employee has failed to pay the tax wholly or partly, u/s 192(1A)
c) If a Resident Payee has filed ROI u/s 139 and has included such sum in computing his total income in ROI
and has paid tax on such sum
d) Both (a) and (b)
48. A person deemed to be an Assessee-in-default u/s 201(1), for failure to deduct tax or to pay the tax after
deduction, is liable to pay simple interest @ ______% for every month or part of month on the amount of such
tax from the date on which tax was deductible to the date on which such tax was actually deducted.
a) 2
b) 5
c) 1
d) 1.5
49. A person deemed to be an Assessee-in-default u/s 201(1), is liable to pay simple interest @ _______% for every
month or part of month on the amount of such tax from the date on which tax was deducted to the date on which
such tax is actually paid [Section 201(1A)].
a) 2
b) 5
c) 1
d) 1.5
50. Form 16 is issued by the employer _______________.
a) Annually
b) Quarterly
c) Half yearly
d) Monthly
51. TDS certificate issued in cases other than salary income is in form _______.
a) 16A
b) 16B
c) 15
d) 15H
52. Due date of furnishing of TDS certificate in case of salary is ______ of the following relevant financial year.
a) 30th May
b) 15th May
c) 15th June
d) 30th June
53. If PAN is not submitted, TDS will be deducted at _______.
a) 20%
b) 30%
c) Maximum marginal rate
d) Higher of Rate specified in Act or 20%
54. Surcharge and Health and Education Cess is not added in rate of TDS in case of ________.
a) Resident Company
b) Non-Resident company
c) Both (a) and (b)
55. Surcharge and Health and Education Cess is added in rate of TDS in case of ________.
a) Foreign Company
b) Any Non-Resident Assessee
c) Indian Company
56. Rate of TCS u/s 206C for alcoholic liquor for human consumption is @ ______%.
a) 2
b) 5
c) 1
d) 2.5
57. Rate of TCS u/s 206C for tendu leaves is @ _____%.
a) 2
b) 5
c) 1
d) 2.5
58. Rate of TCS u/s 206C for timber obtained under a forest lease is @ ______%.
a) 2
b) 5
c) 1
d) 2.5
59. Rate of TCS u/s 206C by every person who grants a lease or a license or enters into a contract or otherwise
transfers any right or interest in any parking lot or toll plaza or a mine or a quarry to another person (other than
a public sector company) for the use of such parking lot or toll plaza or mine or quarry for purpose of business
at ______%.
a) 2
b) 5
c) 1
d) 2.5
60. Sec 206C provides that every person, being a seller, who receives any amount as consideration for sale of motor
vehicle of value exceeding Rs. 10 lakhs shall collect tax from buyer @ _______________ % of the sale
consideration.
a) 2
b) 5
c) 1
d) 2.5
61. Person responsible for collecting tax u/s 206C(1) other than government shall deposit TCS on _________.
a) The same day

b) Within 7 days from the end of the month in which the collection is made
c) Within 1 week from the end of the month in which the collection is made
d) Within 30 days from the end of the month in which the collection is made
62. TDS u/s 194C is deductible on
a. Contract for work

b. Contract for sale
c. Either of (a) or (b)
63. Which of the following are not subjected to TDS u/s 194H?
i) Commission to employees
ii) Commission for rendering professional services or commission to director
iii) Trade discount on sale is not a commission and hence no tax is deductible.
iv) Bank Guarantee commission.
a) (i), (ii)
b) (i), (ii), (iii),
c) (i), (ii), (iii), (iv)
d) (i)
64. Statement 1: Tax is deducted on value including reimbursement as per section 194C and 194J
Statement 2: Tax is not deductible as per section 194C and 194J if it is for personal purpose.

65. Every person, deducting tax at source except ____________ shall apply for tax deducting account number
within ___________ in which tax was deducted for the first time.
a. 194IA and 194IB; one month from the end of the month
b. 194IA and 194IB; one week from the end of the month
c. 194IA and 194IC; one month from the end of the month
d. 194IA, 194IB and 194IC; one month from the end of the month
66. The person deducting tax at source u/s 194 IA shall be required to deposit the tax so deducted within
__________________ in which deduction is made.
a. 15 days from the end of the month

b. 30 days from the end of the month
c. 45 days from the end of the month
d. 60 days from the end of the month
67. An individual employee avails services of an individual contractor to construct his personal house and the
aggregate amount of payments is INR 51 lakhs, then _____________
a. No TDS is required to be deducted as service is availed for personal use

b. No TDS is required to be deducted as payer is not liable for tax audit
c. TDS is required to be deducted 1%.
d. TDS is required to be deducted 5%.
68. What are the conditions for deduction of tax under section 194M?
i) Deductor is Individuals and HUF who are not subjected to tax audit
ii) Value of payment exceeds INR 50 lakhs in aggregate during the year
iii) Services are utilized for personal purpose only
Select the correct answers
a. i, ii, iii
b. i, ii,
c. i
d. ii, iii
69. Ram withdraws 50 lakhs in cash from SBI, 1 crore in cash from PNB, 1.4 crore in cash and 50 lakhs through
cheque from Indian Bank. Which of the following is correct in following cases?
a. Since cumulative cash withdrawal exceeds 1 crore, SBI, PNB and Indian Bank will each deduct tax @ 5%
b. Since cumulative cash withdrawal exceeds 1 crore, SBI, PNB and Indian Bank will each deduct tax @ 2%
c. Indian Bank will deduct tax @ 2% on 1.4 crores
d. Indian Bank will deduct tax @ 5% on 1.4 crores
Answer Key
1. A 2. A 3. C 4. B 5. D 6. D 7. D
8. B 9. D 10. D 11. D 12. B 13. D 14. B
15. D 16. D 17. D 18. NA 19. B 20. D 21. B
22. A 23. B 24. D 25. D 26. D 27. D 28. A
29. D 30. C 31. A 32. D 33. C 34. D 35. D
36. D 37. C 38. D 39. D 40. C 41. B 42. C
43. A 44. A 45. A 46. A 47. D 48. C 49. D
50. A 51. A 52. C 53. D 54. A 55. B 56. C
57. B 58. D 59. A 60. C 61. C 62. A 63. C
64. C 65. A 66. B 67. D 68. B 69. C
CA Kishan Kumar MCQs – Filing of Return May/Nov 2020
1. Akash, who is 32 years old, has long-term capital gains of INR 25,000 which is exempt under section 112A,
deduction of INR 80,000 under section 80C and claimed capital gain exemption of INR 30,000 under section
54. He has to file a return of income for A.Y. 2020-21, only if his total income exceeds ________________.
a) INR 1,40,000
b) INR 1,15,000
c) INR 1,20,000
d) INR 2,20,000
2. The due date for filing of a return of income for a company for Assessment Year 2020-21 is ____________.
a) 31st July, 2020

b) 30th September, 2020
c) 31st October, 2020
d) 31st August, 2020
3. For filing returns of income in respect of various entities, the Income-tax Act, 1961 has prescribed _______.
a) One due date

b) Two due dates
c) Three due dates
d) Four due dates
4. The return of a company has to be verified by ______________.
a) the Managing Director or Director

b) the General Manager
c) the Secretary
d) the Manager
5. An Assessee can file a revised return of income at any time before the completion of assessment or before
expiry of the following period, whichever is earlier.
a) one year from the end of the relevant assessment year

b) two years from the end of the relevant assessment year
c) six months from the end of the relevant assessment year
d) end of the relevant assessment year
6. As per section 139(1), filing of returns is compulsory irrespective of whether profit is earned or loss is incurred,
in case of __________________.
a) companies only
b) firms only
c) both companies and firms
d) All assesses
7. Mr. X has a total income of INR 7 lakhs for A.Y. 2020-21. He files his return of income for A.Y. 2020-21 on 13th
January, 2021. He is liable to pay fee of __________________.
a) INR 1,000 under section 234F

b) INR 5,000 under section 234F
c) INR 10,000 under section 234F
d) Not liable to pay any fee
8. Mr. Y has a total income of INR 4,50,000 for A.Y. 2020-21. He furnishes his return of income for A.Y. 2020-21
on 2nd December, 2020. He is liable to pay fee of ____________________.

c) INR 10,000 under section234F
9. Mr. Z, a salaried individual, has a total income of INR 8 lakhs for A.Y. 2020-21. He furnishes his return of
income for A.Y. 2020-21 on 28th August, 2020. He is liable to pay fee of __________________.

c) INR 10,000 under section234F
10. The due date of filing of return for a company with a business loss of INR 1,30,000 for A.Y. 2020-21 is _____.
a) 31st July, 2020

b) 30th September, 2020
c) 31st October, 2020
d) 31st August, 2020
ICAI Sample MCQs
11. Who can verify the return of income of a non-resident company?
a) Managing Director of the company

b) Any director of the company
c) Both (a) and (b)
d) A person who holds a valid power of attorney from such company to do so
12. Which of the following returns can be revised under section 139(5)?
a) Only a return of income filed u/s 139(1)

b) A return of income filed u/s 139(1) or a belated return filed u/s 139(4)
c) A return of income filed u/s 139(1) or a return of loss filed u/s 139(3)
d) A return filed u/s 139(1) or u/s 139(3) or u/s 139(4)
13. Mr. Kapoor is a partner in Sai baba Enterprises. The turnover of the firm for the financial year 2019-20
amounted to Rs. 1,96,00,000. The firm has declared income @ 8% on presumptive basis under section 44AD
of the Act. Apart from remuneration, interest and share of profit from the firm of Rs. 30 lakhs, Mr. Kapoor is
not having any other source of income. What will be the due date of filing of return of income by the
partnership firm and by Mr. Kapoor for the P.Y. 2019-20?
a) Due date of filing return of income by the partnership firm shall be 30.09.2020 and due date of filing
return of income by Mr. Kapoor shall be 30.09.2020.
b) Due date of filing return of income by the partnership firm shall be 30.09.2020 and due date of filing
c) Due date of filing return of income by the partnership firm shall be 31.07.2020 and due date of filing
d) Due date of filing return of income by the partnership firm shall be 31.07.2020 and due date of filing
14. Iskon Pvt. Ltd., a foreign company and non-resident in India for A.Y. 2020-21, engaged in the business of
trading of tube-lights outside India. The principal officer of the company has approached you to enlighten him
regarding the provisions of the Income-tax Act, 1961 pertaining to the person who is required to verify the
return of income in case of Iskon Pvt. Ltd. Advise him.
I. The return of income in case of Iskon Pvt. Ltd. can be verified by the managing director.
II. The return of income in case of Iskon Pvt. Ltd. can be verified by any director.
III. The return of income in case of Iskon Pvt. Ltd. may be verified by a person who holds a valid power of
attorney from such company to do so.
a) I or II or III
b) Only I
c) I or II depending upon the availability of the managing director
d) Only III
15. In which of the following transactions, quoting of PAN is mandatory by the person entering into the said
transaction?
I. Opening a Basic savings bank deposit account with a bank.

II. Applying to a bank for issue of a credit card.
III. Payment of Rs. 40,000 to mutual fund for purchase of its units.
IV. Cash deposit with a post office of Rs. 1,00,000 during a day.
V. A fixed deposit of Rs. 30,000 with a NBFC registered with RBI.
VI. Sale of shares of an unlisted company for an amount of Rs. 60,000.
a) II, IV
b) II, III, IV
c) I, II, III, V, VI
d) II, IV, VI
16. Mr. Pawan is engaged in the business of roasting and grinding coffee beans. During F.Y. 2019-20, his total
income is INR 4.5 lacs. Mr. Pawan filed its return of income for A.Y. 2020-21 on 3rd March, 2021. Compute fee
payable for default in furnishing in return of income for PQ & Associates for A.Y. 2020-21:
a. INR 5,000
b. Not exceeding INR 1,000
c. INR 10,000
d. No fees payable as total income is below INR 5,00,000
MCQs for Practice
17. Mr. P dies on 15.11.2019 and his total income till his date was INR 2,55,000. Thereafter the business of Mr. P
was inherited by his son Mr. P and his total income from such business was INR 2,88,000. The son does not
have any other income. In this case, the son _____________________.
a. Has to file a consolidated income tax return for the amount of INR 5,43,000
b. Has to file separate income tax returns one on behalf of his father for INR 2,55,000 and other in his own
capacity for INR 2,88,000
c. Has to file only one income tax return on behalf of his father for INR 2,55,000
d. Has to file only one income tax return on behalf of father for INR 5,43,000
18. Return of Income is required to be filed by every resident and ordinarily resident if _______________.
a. He has signing authority in any account located outside India or holds assets outside India
b. He is a beneficiary of any asset located outside India.
c. Both (a) and (b)
d. None of (a) and (b) since no asset is located in India
19. An individual who is a beneficiary of any asset located outside India is _______________ if such income is
includible in the Income of the beneficial owner.
a. Required to file Return of Income under 4th proviso to section 139(1)

b. Not required to file Return of Income under 4th proviso to sec 139(1)
c. Required to deduct TDS under TDS under 4th proviso to sec 139(1)
d. Not required to deduct TDS under 4th proviso to sec 139(1)
20. The Last date of filling Return of Income u/s 139 (1) for AY 2020-21 in case of non-corporate Assessee who
does not have any income of PGBP is ___________________.
a. 30th September of PY
b. 30th September of AY
c. 31st July of AY
d. 31st July of the PY
21. The Last date of filling Return of Income u/s 139 (1) for AY 2020-21 in case of non-corporate Assessee whose
accounts are not liable to be audited is _____________________.
a. 30th September of PY
c. 31st July of AY
d. 31st July of the PY
22. Due date of furnishing return of income for a working partner of a firm whose accounts are required to be
audited is _________________.
a. 31st July of AY
c. 30th November of AY
d. 31st March of AY
23. Due date of furnishing Return of Income for a non-working partner of a firm whose accounts are required to
be audited is __________________.
a. 31st July of AY
d. 31st March of AY
24. Due date of furnishing return of Return of Income for a non-working partner of a firm whose accounts are not
required to be audited is _______________________.
a. 31st July of AY
d. 31st March of AY
25. If last date of filling of Return of Income / Return of Loss is a public holiday, Assessee can file Return of
Income / Return of Loss on __________.
a. Previous working day

b. Next working day
c. On the same day
d. Assessee should ask AO for the suitable date of file Return of Income
26. If the Assessee has to carry forward the loss, the return of loss must be submitted ____________.
a. On or before the due date mentioned in section 139(1)

b. At any time before the end of the relevant AY
c. At any time before the expiry of one year from the end of the relevant assessment year
d. Time specified by AO
27. For AY 2020-21, the Assessee suffered the loss u/h house property of INR 1,20,000. His business income for
the same PY is INR 50,000. The due date of filling Return of Income is 31.7.2020 but he submitted his Return
of Income on 9.9.2020. In this case, the Assessee ________________________.
a. Shall be allowed to carry forward the loss of INR 70,000

b. Shall not be allowed to carry forward loss of INR 70,000
c. No set off is allowed for such loss
d. Depends on the discretion of AO
28. Section 80 prohibits _________ of losses if Return of Loss is not filed within due date of filing Return of
Income u/s 139(1) but it does not prohibit __________ of losses.
a. Carry forward, set off

b. Set off, carry forward
c. Either of (a) or (b)
29. Belated return can be filled by an Assessee before end of _______ or before _______ whichever is earlier.
a. Relevant AY, Completion of Assessment

b. 1 year from the end of AY, Completion of Assessment
c. Relevant PY, Completion of Assessment
d. 1 year from the end of PY, Completion of Assessment
30. Return of Income is treated as defective if it is not accompanied by _______________.
a. Statement showing the computation of tax payable on the basic of the return
b. Audit report u/s 44AB
c. Proof regarding the tax claimed to have been deducted or collected at sources and Advance tax and self-
assessment tax claimed to have been paid
d. Any of the above
31. If AO considers that return is defective, he may intimate the defect to the Assessee and give him ________.
a. Opportunity to rectify the defect within 30 days

b. Opportunity to rectify the defect within 15 days
c. No opportunity shall be given
32. If the defect is not rectified within 15 days or such further extended period as allowed by AO, then the return
would be treated as ______ return and it would be deemed that the Assessee had failed to furnish the return.
a. Valid
b. Illegal
c. Invalid
d. None
33. PAN is compulsorily required in _______________.
a. Opening a Bank account (other than time deposit)

b. Total cash deposit > INR 50,000 in a day
c. Cash payment for Hotels/ Restaurants bills at any one time > INR 50,000
d. All of the above
34. Provisions relating to Compulsory Quoting of Aadhar number u/s sec 139AA would not apply to individual
who does not possess Aadhar number or Enrolment ID and is ___________________.
a. Residing in states of Assam, J&K and Meghalaya

b. Super senior citizen [age > 80 year at any time during PY]
c. Non-resident or Not a Citizen of India
d. All of the above
35. Who cannot be Tax Return Preparer?
a. Officer of Scheduled Bank in which Assessee maintain current A/C or has regular dealings
b. Legal practitioner who is entitled to practice in any civil court in India
c. Charted Accountant and Employee of “Specified class of Person”
d. All of the above
36. Assessee filed his return of income in requisite form without making the payment of tax. The Return so filed is
__________________.
a. Valid
b. Not valid
c. Defective
d. Not defective
37. Where the amount paid by the Assessee falls short of the aggregate of the tax, interest and fees as aforesaid,
what will be sequence in which the amount so paid by him shall be adjusted.
i) fees payable
ii) interest
iii) tax payable.
a) (i), (ii), (iii)

b) (ii), (i), (iii)
c) (iii), (i), (ii)
d) (iii), (ii), (i)
38. In case of Tax Return preparer, the Department shall pay a commission @ _________ of the tax paid on the
income declared in the return or __________ whichever is less.
a) 3%; INR 250

b) 3%; INR 1,000
c) 5%; INR 250
d) 5%; INR 1,000
39. Statement 1: A return shall not be deemed to be a defective return if amount of self-assessment tax or
interest etc. has not been paid by him till the due date of furnishing of return.
Statement 2: If return of loss has been filed after the due date of filing of return of income, in that case carry
forward of unabsorbed depreciation is not allowed.

40. In which of the following cases, Assessee is required to file Return of Income?
i) During PY 2019-20, Ram’s total income is INR 2,06,000. He has deposited an amount or aggregate of the
1 crore in his current account maintained with SBI.
ii) During PY 2019-20, Mohan’s total income is INR 2,50,000. He has incurred expenditure of 3 lakhs travel
to a foreign country.
iii) During PY 2019-20, Sohan’s total income is INR 2,50,000. He has incurred electricity expenditure of 1
lakh.
a. i.,
b. i., ii
c. i., ii. iii
d. ii
Answer Key
1. A 2. B 3. C 4. A 5. D 6. C 7. C
8. A 9. B 10. B 11. D 12. D 13. C 14. D
15. 16. B 17. B 18. C 19. B 20. C 21. C
22. B 23. A 24. A 25. B 26. A 27. A 28. A
29. A 30. D 31. B 32. C 33. D 34. D 35. D
36. C 37. A 38. B 39. A 40. D
CA Kishan Kumar MCQs – Clubbing of Income May/Nov 2020
1. Income of a minor child suffering from any disability of the nature specified in section 80U is __________.
a. To be assessed in the hands of the minor child

b. To be clubbed in the income of that parent whose total income, before including minor’s income is higher
c. Completely exempt from tax
d. To be clubbed with the income of father
2. Income arising to a minor married daughter is __________________.
a. To be assessed in the hands of the minor married daughter

b. To be clubbed with the income of that parent whose total income, before including minor’s income, is
higher
d. To be clubbed with the income of her husband
3. Where a member of a HUF has converted or transferred his self-acquired property for inadequate
consideration into joint family property, income arising therefrom is ___________________.
a. Taxable as the income of the transferor-member

b. Taxable in the hands of the HUF
c. Taxable in the hands of the Karta of the HUF
d. Exempt from tax
4. If the converted property is subsequently partitioned among the members of the family, the income derived
from such converted property as is received by the spouse of the transferor will be taxable ___________.
a. As the income of the Karta of the HUF

b. As the income of the spouse of the transferor
c. As the income of the HUF
d. As the income of the transferor-member
5. Exemption of a certain amount (not exceeding the income clubbed) is available under section 10(32), where a
minor’s income is clubbed with the income of the parent. The maximum exemption available is _______.
a. Upto INR 1500 in respect of each minor child

b. Upto INR 1500 in respect of each minor child maximum of two children
c. Upto INR 2000 in respect of each minor child
d. Upto INR 2000 in respect of each minor child maximum of two children
6. Mr. A gifts a sum of INR 1,00,000 to his brother’s wife Mrs. B. Mr. B gifts a sum of INR 1,00,000 to Mr. A.
From the sum gifted to her, Mrs. B invests in a fixed deposit, income therefrom is INR 10,000 will be included
in the total income of _______.
a. Mr. A
b. Mrs. A
c. Mrs. B
d. Mr. B
7. Scholarship to meet the cost of education received by a minor child is is ___________________.

b. To be clubbed with the total income of that parent whose total income, before including minor’s income,
is higher
8. Income of a minor child from a fixed deposit with a bank, made out of income earned from the scholarship is
________________________________.

b. To be clubbed with the total income of that parent whose total income, before including minor’s income,
is higher
9. Mr. X transfers income of INR 51,000 from rent to his major son without transfer of house property. Rent of
INR 51,000 is _______________.
a. Taxable in the hands of the transferor-father

b. Taxable in the hands of his son
c. Taxable in the hands of that parent whose total income is higher
d. Exempt from tax
10. Interest form a fixed deposit received by a minor married daughter is _________________.

b. To be clubbed with the income of that parent whose total income, before including minor’s income is
higher
d. To be clubbed with the income of her husband
ICAI Sample MCQs
11. Mr. Aarav gifted a house property valued at Rs. 50 lakhs to his wife, Geetha, who in turn has gifted the same to
her daughter-in-law Deepa. The house was let out at Rs. 25,000 per month throughout the P.Y.2019-20.
Compute income from house property for A.Y.2020-21. In whose hands is the income from house property
chargeable to tax?
a) Rs. 3,00,000 in the hands of Mr. Aarav
b) Rs. 2,10,000 in the hands of Mr. Aarav

c) Rs. 2,10,000 in the hands of Geetha
d) Rs. 2,10,000 in the hands of Deepa
12. Mr. Arvind gifted a house property to his wife, Ms. Meena and a flat to his daughter-in law, Ms. Seetha. Both of
the properties were let out. Which of the following statements are correct?
a) Income from both properties is to be included in the hands of Mr. Arvind by virtue of section 64.
b) Income from property gifted to wife alone is to be included in Mr. Arvind’s hands by virtue of section 64.
c) Mr. Arvind is the deemed owner of house property gifted to Ms. Meena and Ms. Seetha.
d) Mr. Arvind is the deemed owner of property gifted to Ms. Meena. Income from property gifted to Ms.
Seetha would be included in his hands by virtue of section 64.
13. Mr. Kishore celebrated his 50th marriage anniversary. On this occasion, his wife received a diamond necklace
worth Rs.5,00,000 from Kishore's brother. Kishore's son gifted him a luxurious car worth Rs.15,00,000, His
grandchildren gifted them a new furniture set worth Rs.3,00,000. Also, he received cash gifts from his friends
amounting collectively to Rs.80,000. Which of them the following statements stand true on taxability?
a) Neither Mr. Kishore nor Mrs. Kishore will be liable for tax for any gifts since they have been received on
occasion of marriage anniversary
b) Mr. Kishore & Mrs. Kishore will jointly share the tax liability on all the gifts
c) Mrs. Kishore will be liable to pay tax on diamond set and Mr. Kishore will bear tax for the cash gifts
received
d) Mr. Kishore will be liable for tax on cash gifts only.
14. Sujata, aged 16 years, received scholarship of Rs.50,000 during the previous year 2019-20. Which of the
following statements are true regarding taxability of such income:
a) Such income shall be assessed in hands of Sujata

b) Such income to be included with the income of parent whose income before such clubbing is higher
c) Such income is completely exempt from tax
d) Such income to be clubbed with father's income
15. On 20.10.2019, Pihu (minor child) gets a gift of Rs.20,00,000 from her father’s friend. On the same day, the
amount is deposited in Pihu’s bank account. On the said deposit, interest of Rs.13,000 was earned during the
P.Y. 2019-20. In whose hands the income of Pihu shall be taxable? Also, compute the amount of income that
shall be taxable.
a) Income of Rs. 20,11,500 shall be taxable in the hands of Pihu’s father.

b) Income of Rs. 20,13,000 shall be taxable in the hands of Pihu’s father.
c) Income of Rs. 20,11,500 shall be taxable in the hands of Pihu’s father or mother, whose income before this
clubbing is higher.
d) Income of Rs. 20,13,000 shall be taxable in the hands of Pihu’s father or mother, whose income before
this clubbing is higher.
ICAI RTP and MTPs
16. Ram owns 500, 15% debentures of Reliance Industries Ltd. of INR 500 each. Annual interest of INR 37,500
was declared on these debentures for P.Y. 2019-20. He transfers interest income to his friend Shyam, without
transferring the ownership of these debentures. While filing return of income for A.Y. 2020-21, Shyam showed
INR 37,500 as his income from debentures. As tax advisor of Shyam, do you agree with the tax treatment done
by Shyam in his return of income?
a. Yes, since interest income was transferred to Shyam therefore, after transfer it becomes his income.
b. No, since Ram has not transferred debentures to Shyam, interest income on the debentures is not taxable
income of Shyam.
c. Yes, if debentures are not transferred, interest income on debentures can be declared by anyone, Ram or
Shyam, as taxable income depending upon their discretion.
d. No, since Shyam should have shown the income as interest income received from Mr. Ram and not as
interest income earned on debentures.
MCQs for practice
17. If there is revocable transfer of an asset by any person to another person, any income arising from such asset
shall be included in income of _____________________.
a. Transferor
b. Transferee
c. Both transferor & transferee
d. None
18. A transfer shall be deemed to Revocable if ______________________.
a. Transfer contains any provision for re-transfer of the Asset or Income to the transferor, during the life-
time of beneficiary or transferee
b. Gives right to the transferor to re-assume power over the asset or income during the life-time of
beneficiary or transferee
c. Both (a) or (b)
19. If there is a transfer of asset which is not revocable during the life time of the transferee, income arising from
such asset shall be included in the income of _______________________.
a. Transferor
b. Transferee
c. Transferee till his death & thereafter in the hands of the transferor
d. Transferor or transferee at their mutual consent
20. If both Husband and Wife have Substantial Interest & both are in receipt of Remuneration without
qualification from the Same Concern – Remuneration of other spouse will be clubbed in total income of
Husband/Wife whose _____________________.
a. Total income excluding such remuneration is greater

b. Total income excluding such remuneration is lower
c. Not to be clubbed
d. None of these
21. Mrs. Ram received salary of Rs. 74,00,000 from a firm where her husband has 18% profit share. Mrs. Ram
doesn’t have any qualification or experience or skill to match this remuneration. Apart from above amount, the
income of Mrs. Ram is Rs. 3,50,000. Income taxable for Mr. Ram & Mrs. Ram is __________________.
a. Mr. Ram 77,50,000, Mrs. Ram Nil

b. Mr. Ram Nil, Mrs. Ram 77,50,000
c. Mr. Ram 74,00,000, Mrs. Ram 3,50,000
22. Income from asset transferred to spouse will be taxable in the hands of transferor if ________________.
a. Asset has been transferred in pursuance of an agreement to live apart

b. Asset was transferred for an adequate consideration
c. Asset was transferred before marriage
d. Asset was transferred for inadequate consideration
a. Transfer of asset in connection with agreement to live apart is deemed to be transfer with adequate
consideration & thus, no clubbing
b. If consideration is payable in parts then only proportionate income shall be clubbed
c. Both (a) & (b)
24. Mr. P as on 1/10/2018 transferred shares without consideration to his fiancée, Ms J. They got married on
1/4/2019. For AY 2020-21, Income from share shall be assessed in hands of ______________.
a. Mr. P
b. Ms. J
c. Any of the above, with their mutual consent
d. Neither of the above
25. Mr. P gifts Rs. 1,00,000 to Mrs. S on 10/4/2019, who invested the same in the business of cloth which is being
run by her for last 3 years. Total capital of business after this investment is Rs. 4,00,000. Mrs. S earns Rs.
20,000 as profit from such business for the AY 2020-21. What amount will be in the income of Mr. P?
a. Rs. 20,000
b. Rs. 10,000
c. Rs. 1,20,000
d. Nil
26. Mr. Ram transfers the house property to his minor child without adequate consideration, then income of such
house property shall be ____________________________.
a. Clubbed in the income of Mr. Ram as per section 27 & exemption of Rs. 1500 shall be allowed
b. Clubbed in the income of Mr. Ram as per section 27 but exemption of Rs. 1500 shall not be allowed
c. Clubbed in the income of Mr. Ram as per section 64(1A) but exemption of Rs. 1500 shall not be allowed
d. Clubbed in the income of Mr. Ram as per section 64(1A) & exemption of Rs. 1500 shall be allowed
27. Mr. Ram has 4 minor children - 2 daughters and 2 sons. Annual income of 2 daughters was 77,500 & 75,000
and of sons was 75,500 and Rs. 12,500 respectively. The daughter having income of 75,000 is suffering from a
disability specified u/s 80U. Work out the amount of income earned by minor children to be clubbed in the
hands of Mr. Ram.
a. Rs. 163,250
b. Rs. 161,000
c. Rs. 161,250
d. Rs. 161,750
28. 10,00,000 earned by minor child from manual activity is invested in fixed deposits. He earns 1,00,000 as
interest from fixed deposit during the AY 2020-21 i.e. PY 2019-20. 10,00,000 & 1,00,000 shall be assessed in
the hands of _____________.
a. Minor child, Minor child

b. Minor child, Parent
c. Parent, Parent
d. Parent, Minor Child
29. Mr. P transferred a residential property to his wife by way of gift on 1/4/2019. During the AY 2020-21, she
earned residential income of Rs. 30,000 per month. She made fixed deposit in a bank out of such rental
income & earned interest income during the year of Rs. 21,000. The total amount of income liable for clubbing
in the hands of Mr. P for the AY 2020-21 is _________________________.
a. Nil
b. 21,000
c. 2,52,000
d. 2,73,000
30. While computing substantial interest for the provisions of clubbing of income, we consider the holding of
_____________________.
a. The individual only
b. The individual & his spouse taken together

c. The individual along with his relatives
d. The individual & his spouse taken separately
31. At the time of fixation of marriage of his son, Mr. P gifted land to his would-be daughter in law. The marriage
was held in the month subsequent to the date of transfer. The income accruing on land after marriage shall be
taxable in the hands of _________________________.
a. Mr. P
b. Daughter in law
c. Equally in hands of (a) & (b)
32. If in respect of a particular year, income of a minor child has been clubbed in the hands of one parent (let’s say
Father), then in the next year such income _________ be clubbed in the income of other parent (i.e. mother).
a. Can
b. Cannot
c. Can; unless the Assessing Officer is satisfied that it is necessary to do so.
d. Cannot; unless the Assessing Officer is satisfied that it is necessary to do so.
33. If none of the parent is alive, minor shall file the return through legal guardian. The income of the minor in
this case shall be _______________
a. clubbed in the hands of guardian

b. taxable in the hands of minor child itself
c. Either of (a) or (b) at the discretion of legal guardian
d. Either of (a) or (b) at the discretion of Assessing Officer
34. Statement 1: In order to apply clubbing provision, relationship of wife and husband must exist on the date of
accrual of income.
Statement 2: Minor child includes step child and adopted child but does not include minor married
daughter.
a. Statement 1 is correct
b. Statement 2 is correct
c. Both statements are correct
d. Both statements are incorrect
Answer Key
1. A 2. B 3. A 4. D 5. A 6. D 7. C
8. B 9. A 10. B 11. B 12. D 13. D 14. C
15. C 16. B 17. A 18. C 19. C 20. A 21. B
22. D 23. C 24. B 25. D 26. B 27. B 28. B
29. C 30. C 31. B 32. D 33. B 34. D
01

04
Clearance

CA Kishan Kumar MCQs – Setoff and Carry Forward of Losses May/Nov 2020
1. According to section 80, no loss which has not been determined in pursuance of a return filed in accordance
with the provisions of section 139(3), shall be carried forward. The exceptions to this are __________.
a) Loss from specified business under section 73A

b) Loss under the head “Capital Gains” and unabsorbed depreciation carried forward under section 32(2)
c) Loss from house property and unabsorbed depreciation carried forward under section 32(2)
d) Loss from speculation business under section 73
2. Section 70 enables set off of losses under one source of income against income from any other sources under
the same head. The exception to this section is __________________.
a) Loss under the head “Capital gain”, loss from speculative business, loss from house property and loss
from the activity of owning and maintaining race horses
b) Long-term capital loss, loss from speculative business loss from specified business and loss from the
activity of owning and maintaining race horse
c) Short term capital loss and loss speculative business
d) Loss from specified business and short-term capital loss
3. Mr. X incurred long-term capital loss from sale of listed shares in recognized stock exchange and STT is paid
at the time of acquisition and sale of such shares. Such loss _______________.
a) can be set-off only against long-term capital gains

b) can be set-off against both short-term capital gains and long-term capital gains
c) can be set-off against any head of income.
d) is not allowed to beset-off
4. The maximum period for which speculation loss can be carried forward is _________________.
a) 4 years
b) 5 years
c) Indefinitely
d) not allowed to be carry forward
5. Mr. A incurred short-term capital loss of INR 10,000 on sale of shares through the National Stock Exchange.
Such loss _____________________.
a) can be set-off only against short-term capital gains

b) can be set-off against both short-term capital gains and long-term capital gains
c) can be set-off against any head of income.
d) not allowed to beset-off
6. The maximum period for which loss from specified business can be carried forward is _______________.
a) 4 years
b) 8 years
c) Indefinitely
d) not allowed to be carry forward
7. Loss from house Property of INR 3,10,000 of AY 2019-20 is allowed to be set off against income from house
property of AY 2020-21 of INR 5,00,000 to the extent of _________________.
a) INR 2,00,000
b) Fully allowed i.e, 3,10,000
c) INR 2,50,000
d) INR 1,00,000
8. Any loss from the specified business referred to in section 35AD can be set off against ______________.
a) only profit and gains of same specified business of the Assessee

b) profits and gains of any business of the Assessee
c) profit and gains of any other specified business of the Assessee
d) income from any other head
9. Business loss of the current year cannot be set-off against ______________.
a) Any income other than business income

b) Long-term capital gain
c) Either long-term capital gain or short-term capital gain
d) Salary income
10. Brought forward loss from house property can be set-off _________________.
a) Against any head of income to the extent of INR 2,00,000

b) Against income from house property to the extent of INR 2,00,000
c) Against income from house property without any limit
d) Against any head of income without any limit
ICAI Sample MCQs
11. In respect of loss from house property, which of the following statements are correct?
a) While computing income from any house property, the maximum interest deduction allowable under
section 24 is Rs. 2 lakhs
b) Loss from house property relating to a particular year can be set-off against income under any other head
during that year only to the extent of Rs. 2 lakhs
c) The loss in excess of Rs. 2 lakhs, which is not set-off during the year, can be carried forward for set-off
against any head of income in the succeeding year(s)
d) All of the above
12. Mr. Ravi incurred loss of Rs. 4 lakhs in the P.Y. 2019-20 in retail trade business. Against which of the
following incomes earned during the same year, can the loss be set-off?
a) profit of Rs.1 lakh from wholesale cloth business

b) long-term capital gains of Rs.1.50 lakhs on sale of land
c) speculative business income of Rs.40,000
d) All of the above
13. Virat, runs a business of manufacturing of shoes in P.Y. 2017-18. During the P.Y. 2017-18 and P.Y. 2018-19,
Virat had incurred business losses. For P.Y. 2019-20, he earned business profit (computed) of Rs. 3 lakhs.
Considering he may/may not have sufficient business income to set off his earlier losses, which of the
following order of set off shall be considered:
(He does not have income from any other source)
a) First adjustment for loss of P.Y. 2017-18, then loss for P.Y. 2018-19 and then unabsorbed depreciation, if
any, income is available for adjustment
b) First adjustment for loss of P.Y. 2018-19, then loss for P.Y. 2017-18 and then unabsorbed depreciation, if
c) First adjustment for unabsorbed depreciation, then loss of P.Y. 2018-19 and then loss for P.Y. 2017-18, if
d) First adjustment for unabsorbed depreciation, then loss of P.Y. 2017-18 and then loss for P.Y. 2018-19, if
14. During the A.Y. 2019-20, Mr. A has a loss of Rs. 8 lakhs under the head “Income from house property” which
could not be set off from any other head of income as per the provisions of section 71. The due date for filing
return of income u/s 139(1) in case of Mr. A has already expired and Mr. A forgot to file his return of income
within the said due date. However, Mr. A filed his belated return of income for A.Y. 2019-20. Now, while
filing return of income for A.Y. 2020-21, Mr. A wishes to set off the said loss during P.Y. 2019-20. Determine
whether Mr. A can claim the said set off?
a) No, Mr. A cannot claim set off of loss of Rs.8 lakhs during A.Y. 2020-21 as he failed to file his return of
income u/s 139(1) for A.Y. 2019-20.
b) Yes, Mr. A can claim set off of loss of Rs. 2 lakhs, out of Rs. 8 lakhs, from its income from house property
during A.Y. 2020-21, if any, and the balance has to be carried forward to A.Y. 2021-22.
c) Yes, Mr. A can claim set off of loss of Rs. 2 lakhs, out of Rs. 8 lakhs, from its income from any head during
A.Y. 2020-21 and the balance, if any, has to be carried forward to A.Y. 2021-22.
d) Yes, Mr. A can claim set off of loss of Rs. 8 lakhs during AY 2020-21 from its income from house property,
if any, and the balance has to be carried forward to A.Y.2021-22.
15. X Ltd. files its return of loss for the A.Y. 2020-21 on 01.12.2020. The following data is taken from return
submitted by the company:
Particulars Amount
Business Loss for P.Y. 2019-20 (before depreciation) Rs. 1,70,000
Depreciation Rs. 30,000
Short term capital loss Rs. 45000
Long term capital gain Rs. 10,000
Income from other sources Rs. 23,000
unabsorbed deprecation pertaining to A.Y. 2018-19 and A.Y. 2019-20 which has Rs. 75,000
Particulars Amount
been determined in pursuance of return filed
Compute the amount of loss that can be carried forward by X Ltd.
a. Rs.1,05,000
b. Rs.30,000
c. Rs.2,87,000
d. Nil
16. The details of income/loss of Mr. Kumar for A.Y. 2020-21 are as follows:
Particulars Amount
Income from Salary (Computed) Rs. 5,20,000
Loss from self-occupied house property 95,000
Loss from let-out house property 2,25,000
Loss from specified business u/s 35AD 2,80,000
Loss from medical business 1,20,000
Long term capital gain 1,60,000
Income from other sources 80,000
Compute gross total income of Mr. Kumar for A.Y. 2020-21:
a. INR 4,40,000
b. INR 3,20,000
c. INR 1,60,000
d. INR 4,80,000
MCQs for practice
17. Loss from a speculation business can be set off from _______________.
a. Any head of income

b. Profits and gains from any business
c. Profits and gains from any business other than speculation business
d. Income of speculation business
18. Loss on account of owning and maintaining the race horses can be set off from ___________________.
a. Any business income

b. Any income under the head other sources
c. Income from horse races
d. Income of owning and maintaining of race horses
19. Loss under the head Capital Gains can ______________.
a. Be set off from any other head of income in same year

b. Be carried forward only
c. Neither be set off nor carried forward
20. During the AY 2020-21, Mr. P has following incomes and brought forward losses:
Short term capital gains on sale of shares (STT not paid) Rs. 150,000,
Long term capital loss of AY 2018-19 (Rs. 96,000),
Short Term capital loss of AY 2018-19 (Rs. 37,000).
Compute capital gain taxable in the hands of Mr. P and the loss that can be carried forward to AY 2021-22?
a. Rs. 1,13,000 and Nil

b. Rs. 17,000 and Nil
c. Rs. 113,000 and Rs. 96,000
d. Rs. 54,000 and Rs. 37000
21. Brought forward loss of business and profession _________________.
a. Can be set off in any of the 8 succeeding years

b. Must be set off in the immediate succeeding year if income is available and balance in the immediately
next succeeding year and so on for 8 years
c. Cannot be set off in the current year
22. A business loss can be carried forward and set off in the subsequent assessment year irrespective of whether
the business _______________.
a. Is continued in the AY in which the such loss is set off

b. Is continued or not
c. Is continued for any part of the previous year
23. If a person is eligible to claim
1) Unabsorbed depreciation
2) Current scientific research expenditure
3) Current depreciation
4) Brought forward business loss
The order of priority to set-off would be ______________.
a. (4), (3), (2), (1)

b. (2), (3), (4), (1)
c. (3), (4), (1), (2)
d. (1), (2), (3), (4)
24. Losses from speculative business, losses of owning and maintaining race horses and losses of specified
business u/s 35AD can be carried forward and set off from income __________________.
a. Of any business
b. Any type of Capital Gain
c. Any source/ head except income from salary
d. Only from respective nature of income
25. Mathur Storage (P) Ltd. engaged in chain cold storage (which is a specified business u/s 35AD) has brought
forward business loss of Rs. 12 lakhs relating to assessment year 2018-19. During the previous year 2019-20,
its income from the said business is Rs. 9 lakhs. It also has profit from trade in food grains of Rs. 6 lakhs. The
total income of the company for the AY 2020-21 is _________.
a. Rs. 15 lakhs
b. Rs. 9 lakhs
c. Rs. 6 lakhs
d. Rs. 3 lakhs
26. If an individual, having a sales turnover of Rs. 60 lakhs files his return of income for the assessment year
2020-21 after due date, showing unabsorbed business loss of INR 23,000 and unabsorbed depreciation of
Rs. 45,000, he can carry forward to the subsequent assessment years ______________.
a. Both unabsorbed business loss of Rs. 23,000 and unabsorbed depreciation of Rs. 45,000
b. Only unabsorbed business loss of Rs. 23,000
c. Only unabsorbed depreciation of Rs. 45,000
d. Neither unabsorbed business loss of Rs. 23,000 nor unabsorbed depreciation of Rs. 45,000
27. The amount of depreciation not absorbed in the same year can be carried forward for a period ________.
a. 4 years
b. 8 years
c. 6 years
d. Indefinitely
28. Compute the total income and losses to be carried forward of Mr. P for the AY 2020-21.
Loss from profession Rs. 1,05,000;
short term capital loss on the sale of property Rs. 55,000;
Long term Capital gains on sale of shares Rs. 2,05,000 (STT not paid);
Winnings from lotteries Rs. 1,00,000;
Loss from horse races in Mumbai Rs. 40,000.
a. Rs. 2,50,000; Rs. 1,45,000

b. Rs. 1,45,000; Nil
c. Rs. 1,45,000; Rs. 40,000
d. Rs. 3,05,000; Rs. 2,00,000
29. Mr. Hussey for the previous year has

(i) business loss of Rs. 1,30,000
(ii) income from salary Rs. 2,40,000
(iii) Speculation gain of Rs. 1,10,000.
His total income for income tax assessment is ________________.
a. Rs. 3,50,000
b. Rs. 2,20,000
c. Rs. 2,40,000
d. Rs. 1,10,000
30. Statement 1: Set off and carry forward of loss is mandatory.

Statement 2: Agricultural Losses u/s 10(1) cannot be set off.

31. Mr. X runs a business and he has brought forward business losses of PY 2015-16. He expires during PY 2019-
20 and the business is inherited by his son Mr. Chhota X. In this case, __________________.
a. Mr. Chhota X is allowed to carry forward and set-off such loss against his own income till PY 2023-24.
b. Mr. Chhota X is allowed to carry forward and set-off such loss against his own income till PY 2027-28.
c. Mr. Chhota X is not allowed to carry forward and set – off such losses.
32. In which of the following cases, loss can be carried forward by a person other than one who has incurred loss.
i) Amalgamation of a Company
ii) Demerger of a Company
iii) Conversion of a sole proprietary concern into Company
iv) Sale of business
a. (i), (ii)
b. (i), (ii), (iii)
c. (i), (ii), (iii), (iv)
d. (i), (iii), (iv)
Answer Key
1. C 2. B 3. A 4. A 5. B 6. C 7. B
8. C 9. D 10. C 11. B 12. D 13. A 14. D
15. A 16. A 17. D 18. D 19. B 20. C 21. B
22. B 23. C 24. D 25. C 26. C 27. D 28. B
29. C 30. C 31. A 32. B
CA Kishan Kumar MCQs – Deduction from GTI May/Nov 2020
1. Mr. Srivastav, aged 72 years, paid medical insurance premium of INR 52,000 by cheque and INR 4,000 by cash
during May, 2019 under a Medical Insurance Scheme of the General Insurance Corp. The above sum was paid
for insurance of his own health. He would be entitled to a deduction under section 80D of a sum of ____.
a. INR 30,000
b. INR 50,000
c. INR 52,000
d. INR 56,000
2. Mr. Ramesh pays a rent of INR 5,000 per month. His total income is INR 2,80,000 (i.e gross total income as
reduced by deduction under chapter VI-A except section 80GG). He is also in receipt of HRA He would be eligible
for a deduction under section 80GG of an amount of ______________.
a. INR 60,000
b. INR 32,000
c. INR 70,000
d. NIL
3. The deduction under section 80QQB in respect of royalty income of authors of certain books is subject to a
maximum limit of _____________.
a. INR 1,00,000
b. INR 3,00,000
c. INR 5,00,000
d. INR 2,00,000
4. Under section 80GGB, deduction is allowable in respect of contribution to political parties by __________.
a. any person other than local authority and every artificial juridical person wholly or partly funded by the
Government
b. Local authority and every artificial juridical person wholly or partly funded by the Government
c. An Indian company
d. Unassessed
5. As per section 80CCE, INR 1.5 lakh is the maximum qualifying limit for deduction under __________.
a. Section 80C and80CCD.

b. Sections 80CCC and80CCD
c. Sections 80C, 80CCC and 80CCD(1)
d. Sections 80C, 80CCC and80CCD
6. Deduction u/s 80C in respect of life insurance policy, Contribution to provident fund, etc. is allowed to
_____________.
a. Any Assessee
b. an individual
c. An individual or HUF
d. An individual or HUF who is resident in India
7. An Assessee has paid life insurance premium of INR 25,000 during the previous year 2019-20 for policy of INR
1,00,000 taken on 1.4.2016. He shall ____________________.
a. Not be allowed deduction u/s 80C

b. Be allowed deduction of INR 20,000 under section 80C
c. Be allowed deduction of INR 25,000 U/S 80C
d. Be allowed deduction of INR 10,000 u/s 80C
8. In order to be eligible for deduction u/s 80D, the payment for Insurance premium should be paid _________.
a. in cash
b. by any mode other than cash
c. by cheque
d. through account payee cheque/ account payee bank draft
9. In respect of loan of INR 40 lakhs sanctioned by SBI in April, 2019 for purchase of residential house intended
for self-occupation, compute the interest deduction allowable under the provisions of the Act for A.Y. 2020-21,
assuming that the disbursement was made on 1 st June, 2019, the rate of interest is 8% and the loan sanctioned
was 80% of the stamp duty value of the property.
a. INR 2,00,000 u/s 24 and INR 66,667 u/s 80EEA

b. INR 1,50,000 u/s 80EEA and INR 1,16,667 u/s 24
c. INR 2,00,000 u/s 24 and INR 13,333 u/s 80EEA
d. INR 2,00,000 u/s 24
10. The maximum amount which can be donated in cash for claiming deduction under section 80G is _______.
a. 5,000
b. 10,000
c. 1,000
d. 2,000
ICAI Sample MCQs
11. Which of the following statements is not true with respect to the A.Y. 2020-21?
a) No exemption under section 80TTA would be available to resident senior citizens

b) Share of profit will not be exempt in the hands of partner, if firm claims exemption of income under section
10AA
c) Exemption will be available in respect of STT paid long term capital gains of Rs. 90,000 on listed equity
shares
d) Exemption under section 10(32) on income of minor child is allowed for more than two children also
12. Mr. Shaleen, a businessman, whose total income (before allowing deduction u/s 80GG) for A.Y.2020-21 is Rs.
4,60,000, paid house rent at Rs.12,000 p.m. in respect of residential accommodation occupied by him at
Chennai. The deduction allowable to him under section 80GG for AY 2020-21 is_____________.
a) Rs. 98,000
b) Rs. 1,15,000
c) Rs. 60,000
d) Rs. 24,000
13. Mr. Shiva made a donation of Rs. 50,000 to National Children's Fund and Rs. 20,000 to Rajiv Gandhi
Foundation by cheque. He made a cash donation of Rs. 10,000 to a public charitable trust. The deduction
allowable to him under section 80G for AY 2020-21 is _____________________.
a) Rs. 80,000
b) Rs. 70,000
c) Rs. 60,000
d) Rs. 35,000
14. Mr. Anuj, a businessman, whose total income (after allowing deduction under chapter VI-A except under section
80GG) for AY 2020-21 is Rs. 5,95,000. He does not own any house property and is staying in a rented
accommodation in Patna for a monthly rent of Rs. 9,000. Deduction allowance under section 80GG for A.Y.
2020-21 is ________________.
a) Rs. 48,500
b) Rs. 1,48,750
c) Rs. 60,000
d) Rs. 1,08,000
15. Gross total income of Arpita for P.Y. 2019-20 is Rs. 6,00,000. She had taken a loan of Rs. 7,20,000 in the
financial year 2016-17 from a bank for her husband who is pursuing MBA course from IIM, Kolkata. On
02.04.2019, she paid the first instalment of loan of Rs. 1,45,000 including interest of Rs. 65,000. Compute her
total income for A.Y. 2020-21.
a) Rs. 6,00,000
b) Rs. 5,35,000
c) Rs. 4,90,000
d) Rs. 5,55,000
16. Soumil, aged 47 years, paid medical insurance premium of Rs. 15,000 and Rs. 20,000 to insure health of himself
and his spouse, respectively. He also paid medical insurance premium of Rs. 43,000 to insure health of his
father, aged 69 years, not dependant on him. He had also incurred Rs. 4,000 in cash on preventive health check-
up of his father. Total deduction admissible under section 80D to Mr. Soumil is ___________.
a) Rs. 55,000
b) Rs. 29,000
c) Rs. 68,000
d) Rs. 72,000
17. Mr. Pulkit, aged 45 years, paid health insurance premium in lump sum of Rs. 90,000 for three years on 01-05-
2019. Compute the amount of deduction allowable to him for A.Y. 2020-21.
a) Rs. 90,000
b) Rs. 30,000
c) Rs. 25,000
d) Nil
18. X Ltd. credits a sum of Rs. 45,000 as commission to Y Ltd., an Indian company on 25.06.2019 without deducting
tax at source. Y Ltd. paid its entire tax liability on its income by way of advance payment of tax during P.Y. 2019-
20 and filed its return of income for A.Y. 2020-21 on 15.07.2020. X Ltd. also has a certificate in Form No. 26A
from a chartered accountant. Compute the amount of deduction that shall be allowed to X Ltd. in respect of the
commission credited to Y Ltd. assuming that X Ltd. follows mercantile system of accounting.
a) Rs. 45,000
b) Nil
c) Rs. 13,500
d) Rs. 31,500
19. Which of the following statements is/are correct in respect of deduction allowed to an Assessee in respect of
certain donations for scientific research or rural development u/s 80GGA?
(i) Deduction is not allowed to an Assesses having income from business.
(ii) The maximum amount of deduction allowed is Rs. 10,000.
(iii) 100% deduction is allowed if amount in excess of Rs. 10,000 donated is paid by any mode other than cash.
(iv) Deduction is not allowed to an Assessee having income from salaries.
(v) Any sum paid to a University for scientific research is allowed if such University is approved u/s 35.
(vi) Any sum paid to a notified Urban Development Fund is allowed.
a. (i), (iii), (iv), (v), (vi)

b. (ii), (iii), (v)
c. (i), (ii)
d. (i), (iii), (v)
MCQs for practice
20. Deduction u/s 80C to 80U are not allowed from _________________.
a) LTCG taxable u/s 112 and 112A

b) Casual Incomes
c) STCG taxable u/s 111A
d) All of the above
21. Deduction u/s 80C in respect of Life Insurance Policy, Contribution of employee to Provident Fund, etc. is
allowed to ________________.
a. Any Assessee
b. Individual Assessee only
c. Individual or HUF who may be resident or non-resident
d. Individual or HUF who is resident in India
22. An Assessee has paid life insurance premium of INR 45,000 during the previous year for policy of INR 2,00,000
taken on 1/4/2000. He shall ____________________.
a. Not be allowed any deduction u/s 80C

b. Be allowed deduction u/s 80C to the extent of 10% of the capital sum assured
c. Be allowed deduction for the entire premium
d. Be allowed deduction u/s 80C to the extent of 20% of the capital sum assured
23. An Assessee suffering with disability specified u/s 80U has paid life insurance premium of INR 45,000 during
the previous year for a policy of INR 2,00,000 taken on 1/6/2012. He shall _________________.
a. Not be allowed any deduction u/c 80C

b. Be allowed deduction u/s 80C, to the extent of 10% of the capital sum assured
c. Be allowed deduction u/s 80C to the extent of 15% of the capital sum assured
d. Be allowed deduction u/s 80C to the extent of 20% of the capital sum assured
24. For claiming deduction u/s 80C in respect of PPF, contribution must be paid by the individual in the PPF account
of __________________.
a. Himself only
b. Himself and spouse
c. Himself, spouse or any child
d. Himself, spouse or any dependent child
25. Deduction u/s 80C is allowed for investment in notified Equity Linked Saving Scheme (ELSS) of Unit trust of
India or Mutual Fund for minimum _________ years.
a. 3 years
b. 5 years
c. 10 years
26. Annual interest accrued on National Saving Certificate shall be __________________.
a. Exempt u/s 10
b. Taxable u/h Income from Other Source
c. Taxable as income from Income from Other Source and Interest so accrued shall also be eligible for deduction
u/s 80C
27. Deduction in respect of contribution for annuity plan to certain pension fund u/s 80CCC is allowed to
____________________.
a. Any Assessee
b. Individual Assessee only
c. Individual or HUF
d. Individual who is resident
28. Deduction u/s 80C for tuition fee shall be allowed if such fee is paid to _________________.
a. Any university, college, school or other educational institution situated within India or Outside India
b. Any university, college, school or other educational institution situated within India
c. Any university, college, school or other educational institution situated Outside India
d. Only to school situated within India or outside India
29. Deduction u/s 80C in respect of tuition fee is allowed to an individual for ______________.
a. Any of his children

b. Any two children of such individual
c. Any two minor children of such individual
d. Any two dependent children of such individual
30. Contribution to which of the following is deductible u/s 80C?
a. Contribution to National Housing Bank (tax saving) Term Deposit Scheme 2008
b. Contribution in Unit Link Insurance Plan of UTI or LIC Mutual Funds
c. Contribution to Approved Annuity Plan of LIC or Public Deposit Scheme of HUDCO
d. All of the above
31. For claiming deduction u/s 80C, the payment or deposit should be made ________________
a. Out of any type of income

b. Out of any income chargeable to income tax
c. Out of the current year’s income
d. Out of the exempted income
32. Deduction u/s 80C is available on _________________ basis.
a. Accrual
b. Payment
c. Depends on the method of accounting followed by the Assessee
d. Earlier of (a) or (b)
33. If an Assessee discontinues the life insurance policy before completion of 2 years, then _______________.
a. No deduction shall be allowed in respect of the payment made in the year of termination
b. No deduction shall be allowed u/s 80C in the year of termination
c. Amount of the deduction claimed due to insurance premium during past years shall be liable to tax in the
year of termination
d. No tax treatment has been given under Income Tax Act
34. As per section 80CCE deduction u/s 80C, 80CCC and 80CCD Cannot exceed ________________.
a. INR 1,00,000 including employer’s contribution to notified pension scheme referred to in section 80CCD
b. INR 1,00,000 exclusive of employer’s contribution to notified pension scheme referred to in section 80CCD
c. INR 1,50,000 including employer’s contribution to notified pension scheme referred to in section 80CCD
d. INR 1,50,000 exclusive of employer’s contribution to notified pension scheme referred to in section 80CCD
35. In case of contribution to NPS by employee, additional deduction of INR 50,000 is allowed u/s
_______________.
a. 80CCC
b. 80CCD
c. 80CCD(1B)
d. 80CCE
36. Deduction u/s 80D in respect of medical insurance premium is allowed to ___________________.
a. Any Assessee
b. An individual or HUF who is resident or non-resident
c. An individual or HUF who is resident of India
d. Individual only
37. Deduction u/s 80D on amount of preventive health check-up is allowed if it is paid_____________.
a. By cheque
b. Any mode other than cash
c. Any mode including cash
d. In cash
38. Maximum deduction u/s 80D on amount of preventive health check-up is _________________.
a. INR 25,000
b. INR 5,000
c. INR 5,000 which is in addition to INR 25,000
d. INR 5,000 which is part of INR 25,000
39. Deduction u/s 80DDB to individual who is not a senior citizen shall be allowed ________________.
a. To extent of actual expenditure/ deposit or INR 40,000 whichever is less

b. To extent of actual expenditure/ deposit or INR 1,00,000 whichever is less
c. For a sum of INR 50,000 irrespective of any expenditure incurred or actual amount deposited
d. For a sum of INR 1,00,000 irrespective of any expenditure incurred or actual amount deposited
40. Deduction u/s 80DDB shall be allowed for medical treatment of specified disease of ________________.
a. Any dependant relative

b. Any dependant handicapped relative
c. The Assessee himself or any dependant relative
41. Deduction u/s 80E shall be allowed for higher education of ___________________.
a. Assessee himself
b. Assessee himself and his /her spouse
c. Assessee himself, his /her spouse and his/ her children or student for whom the individual is a legal guardian
d. Assessee himself, his/her spouse and his/ her children
42. For claiming deduction of interest u/s 80E loan should be taken for doing _________________.
a. Any post graduate course

b. Any graduate or post graduate course is engineering, medicine, management and post graduate course in
applied science or pure sciences including mathematics and pure sciences.
c. For any course of study after passing the secondary examination or its equivalent
d. For any course of study after passing the senior secondary examination on its equivalent
43. The deduction u/s 80EE is allowed for payment by way of interest on loan for residential house property to the
extent of _________________.
a. INR 2 Lakhs
b. INR 1.5 Lakhs
c. INR 1 Lakh
d. INR 50,000
44. Donation u/s 80G should be paid out of _________________.
a. Any taxable income

b. Any exempted income
c. Income of earlier years
d. All of the above
45. Deduction u/s 80EE for payment of interest on loan for acquisition of residential house property is allowed for
__________________.
a. 5 years
b. 6 years
c. Till repayment of loan
46. Adjusted Gross Total Income for the purpose of sec 80G means ____________________.
a. Gross total Income - All deductions under chapter VI-A

b. Gross total income - All deductions under chapter VI-A except deduction u/s 80G
c. Gross total income - STCG u/s 111A - LTCG u/s 112/112A – All deductions under chapter VI-A
d. Gross total income - STCG u/s 111A - LTCG u/s 112/112A - All deductions under chapter VI-A except
Deduction u/s 80G
47. Deduction u/s 80GGB and 80 GGC is allowed if donations are made in ___________________.
a. Any mode other than cash

b. Cash upto INR 10,000
c. Both (a) and (b)
d. Donation in Kind
48. Deduction in respect of rent paid u/s 80GG is allowed to ________________________.
a. An individual
b. An individual who is self-employed
c. Any individual who is self-employed or who is an employee but not entitled to HRA or Rent-Free
Accommodation
d. Any individual who is self-employed or who is an employee but not entitled to HRA or Rent-Free
Accommodation and who pays rent for his residential accommodation
49. In case of donation u/s 80GGA, the maximum amount of donation in cash allowed is ________________.
a. INR 1,50,000
b. INR 2,00,000
c. INR 10,000
d. INR 50,000
50. Deduction u/s 80GGA of donation for scientific research/ rural developments is allowed to ____________.
a. Any Assessee
b. Non-corporate business Assessee
c. An Assessee whose gross total income does not include income chargeable to PGBP
d. Any professional
51. Deduction u/s 80GGA, 80GGB and 80GGC shall be allowed to the extent ____________________.
a. 100% of the donation/contribution so made

b. 200% of the donation/contribution so made
c. 125% of the donation/contribution so made
d. 150% of the donation/contribution so made
52. Deduction u/s 80TTA shall be allowed if the Total Income includes ____________________.
a. Interest on deposits in a Savings Account with a Bank

b. Interest on deposits in a Savings Account with a Co-operative bank
c. Interest on deposits in saving A/c with Post Office
d. Any of the above
53. Maximum deduction allowed u/s 80TTB shall be ____________________.
a. INR 10,000 p.a.

b. INR 50,000 p.a.
c. INR 40,000 p.a.
d. INR 20,000 p.a.
54. Deduction u/s 80QQB is allowed in respect of royalty income to____________________.
a. Resident individual who is author of any kind of book

b. Resident individual and who is author of any kind of book
c. Resident individual and who is author of any kind of book which is not a text book
d. Resident individual and who is author of any kind of book which is a text book
55. Deduction allowed u/s 80U to individual who has disability of less than 40% is __________________.
a. INR 30,000
b. INR 50,000
c. INR 75,000
d. Nil
56. Deduction allowed u/s 80U to individual who has disability of 40% - 80% is ________________.
a. INR 30,000
b. INR 75,000
c. INR 1,25,000
d. Nil
57. Deduction allowed u/s 80U to individual who has disability of more than 80% is __________________.
a. INR 30,000
b. INR 75,000
c. INR 1,25,000
d. Nil
58. Deduction u/s 80JJAA is available if the Assessee is __________________.
a. Individual
b. Any Assessee
c. Company only
d. Any Assessee to whom section 44AB apply
59. Deduction u/s 80JJAA is limited to _______________________.
a. 50% of Additional Employee Cost incurred in the PY or INR 5 Lakhs whichever is lower
b. 50% of Additional Employee Cost incurred in the PY
c. 30% of Additional Employee Cost incurred in the PY or INR 3 Lakhs whichever is lower
d. 30% of Additional Employee Cost incurred in the PY
60. Additional Employee u/s 80JJAA shall not include_____________________.
a. Employee whose Total Emoluments is more than INR 25,000 p.m. or who does not participate in RPF
b. Employee for whom entire contribution is paid by government under Employees’ Pension Scheme
c. Employee employed for less than 240 days during PY
d. All of the above
61. Central Government has notified ____________ as the pension fund for the purpose of section 80CCD.
a. Nehru Pension Yojana

b. Jawahar Lal Nehru Pension Yojana
c. Indira Gandhi Pension Yojana
d. Atal Pension Yojana
62. Statement 1: Deduction u/s 80TTB is allowed only to a resident senior citizen who has interest income on
deposits in Saving Account, Fixed Deposits or Time Deposits with any bank / Post Office.
Statement 2: In case of Assessee other than employee, maximum deduction u/s 80CCD is allowed is 30% of
Gross Total Income.
63. The maximum deduction allowable u/s 80EEA is ___________ and the benefit of deduction under this section
would be available _________________.
a. INR 150,000; till the repayment of loan continues
b. INR 150,000; for PY 2019-20
c. INR 50,000; till the repayment of loan continues
d. INR 50,000; for PY 2019-20
64. Statement 1: For deduction u/s 80EEA, the Assessee should not own any residential house on the date of
sanction of loan.
Statement 2: If a person jointly owns HP with spouse and they both paying the instalments of the loan, then
only one of them can claim this deduction u/s 80EEA.
Statement 3: Deductions under Section 80EEA will be applicable to affordable real estate projects that are
sanctioned on or after the 1st of April, 2019 but on or before the 31st of March, 2020.
Which of the above statements are true?
a. (i), (iii)
b. (i), (ii)
c. (ii), (iii)
d. (i), (ii), (iii)
65. Statement 1: Deduction u/s 80EEB is allowed only to Individual or Company.

Statement 2: Maximum deduction u/s 80EEB is INR 1,50,000 for Interest on loan taken from a financial
institution for acquisition of any two electric vehicles.
Answer Key
1. B 2. D 3. B 4. C 5. C 6. C 7. D
8. B 9. D 10. D 11. B 12. C 13. C 14. A
15. B 16. D 17. C 18. A 19. D 20. D 21. C
22. D 23. B 24. C 25. A 26. C 27. B 28. B
29. B 30. D 31. A 32. B 33. C 34. D 35. C
36. B 37. C 38. D 39. A 40. C 41. C 42. D
43. D 44. D 45. C 46. D 47. A 48. D 49. C
50. C 51. A 52. D 53. B 54. C 55. D 56. B
57. C 58. D 59. D 60. D 61. D 62. A 63. A
64. A 65. D
CA Kishan Kumar MCQs – Salary May/Nov 2020
1. The maximum ceiling limit for exemption under section 10(10) in respect of gratuity for employees covered by
the Payment of Gratuity Act, 1972 is _____________________.
a) INR 10,00,000
b) INR 5,00,000
c) INR 3,50,000
d) INR 20,00,000
2. The maximum ceiling limit for exemption under section 10(10C) with respect to compensation received on
voluntary retirement is __________________.
a) INR 2,50,000
b) INR 3,00,000
c) INR 3,50,000
d) INR 5,00,000
3. The HRA paid to an employee residing in Patna exempt up to the lower of actual HRA, excess of rent paid over
10% of salary and __________________.
a) 30% of salary
b) 40% of salary
c) 50% of salary
d) 60% of salary
4. Anirudh stays in New Delhi. His basic salary is INR 10,000 p.m. D.A. (60% of which forms part of pay) is INR
6,000 p.m. HRA is INR 5,000 p.m. and he is entitled to a commission of 1% on the turnover achieved by him.
Anirudh pays a rent of INR 5,500 p.m. The turnover achieved by him during the current year is INR 12 lakhs.
The amount of HRA exempt under section 10(13A) is ________________________.
a) INR 48,480
b) INR 45,600
c) INR 49,680
d) INR 46,800
5. Where there is a decision to increase the D.A in March 2020 with retrospective effect from 1.4.2018, and the
increased D.A. is received in April 2020, the increase is taxable _____________________.
a) in the previous year 2018-19

b) in the previous year 2019-20
c) in the previous year 2020-21
d) in the respective year to which they relate
6. Rajesh is provided with a rent-free unfurnished accommodation, which is owned by his employer, XY Pvt. Ltd.
in New Delhi. The value of perquisite in the hands of Rajesh is _____________________.
a) 20% of salary
b) 15% of salary
c) 10% of salary
d) 7.5% of salary
7. Anand is provided with furniture to the value of INR 70,000 along with house from February 2019. The actual
hire charges paid by his employer for hire of furniture is INR 5,000 p.a. The value of furniture to be included
along with value of unfurnished house for A.Y. 2020-21] is _______________.
a) INR 5,000
b) INR 7,000
c) INR 10,500
d) INR 14,000
8. For the purpose of determining the perquisite value of loan at concessional rate given to the employee, the
lending rate of State Bank of India as on _________ is required.
a) 1st day of the relevant previous year

b) Last day of the relevant previous year
c) The day the loan is given
d) 1st day of the relevant assessment year
9. Mr. Kashyap received basic salary of INR 20,000 p.m. from his employer. He also received children education
allowance of INR 3,000 for three children and transport allowance of INR 1,800 p.m. The amount of salary
chargeable to tax for P.Y. 2019-20 is _____________________.
a) INR 2,62,600
b) INR 2,12,600
c) INR 2,22,200
d) INR 2,07,800
10. The entertainment allowance received by a Government employee is exempt up to the lower of the actual
entertainment allowance received, 1/5th of basic salary and ____________________.
a) INR 4000
b) INR 6000
c) INR 5000
d) INR 10,000
ICAI Sample MCQs
11. For the purposes of computing exemption under section 10(10), in case of Mr. Anand, an employee of ABC Ltd.,
who is covered by the Payment of Gratuity Act, 1972, "salary" includes _______________.
a) only basic pay
b) basic pay and dearness allowance, if provided in the terms of employment

c) basic pay and dearness allowance
d) basic pay, dearness allowance and commission as a fixed percentage of turnover
12. Provision of rent-free accommodation and motor car owned by Beta Ltd. to its employee Mr. Anand, where
motor car is allowed to be used by Mr. Anand both for official and personal purposes, is a ______________.
a) perquisite taxable in case of all employees

b) perquisite taxable only in case of specified employees
c) perquisite of rent-free accommodation is taxable in case of all employees whereas perquisite of motor car
is taxable only in case of specified employees
d) perquisite of rent-free accommodation is taxable only in case of specified employees whereas perquisite of
motor car is taxable in case of all employees
13. A member of parliament is entitled to salary, constituency allowance and daily allowance when the Parliament
is in session. Which of the following statements are correct?
a) His entire income is taxable under the head "Salaries"

b) Only his salary component is taxable under the head "Salaries". Constituency allowance and daily allowance
are exempt.
c) Only his salary component is taxable under the head "Income from other sources". Constituency allowance
and daily allowance are exempt
d) His salary component and constituency allowance are taxable under the head "Income from other sources".
Daily allowance is exempt.
ICAI RTP and MTPs
14. Miss Riya has started working in a reputed company. This is her first job. She earned total income of INR 8
Lakhs in P.Y. 2019-20. While filing her return of income she had a doubt with respect to deduction of transport
allowance. Her father advised her that she cannot claim deduction of transport allowance while her friend told
that maximum deduction of INR 1600 p.m. in respect of the said allowance can be claimed. According to you,
what is the correct treatment for the same?
a. Transport allowance upto a maximum INR 1600 per month can be claimed.
b. Transport allowance upto a maximum INR 800 per month can be claimed.
c. No separate deduction for transport allowance is allowed. However, a standard deduction of 50,000 is
allowed to salaried Assessees.
d. Deduction of transport allowance is allowed without any monetary limit.
15. X is an employee of Z Ltd who receives Rs.1,25,000 as gratuity (he is covered under the Payment of Gratuity Act,
1972). He retires on 31.01.2020 after service of 29 years and 8 months. At the time of retirement, X drew monthly
salary of Rs. 5,200 and monthly bonus of Rs. 2,000. Compute the amount of gratuity exempt from tax in the
instant case u/s 10(10) of the Income-tax Act, 1961.
a. Rs. 90,000
b. Rs. 1,25,000
c. Rs. 78,000
d. Rs. 87,000
16. Mr. Jagat is an employee in accounts department of Bharat Ltd., a cellular company operating in the regions of
eastern India. It is engaged in manufacturing of cellular devices. During F.Y. 2019-20, following transactions
were undertaken by Mr. Jagat:
(i) He attended a seminar on “Perquisite Valuation”. Seminar fees of INR 12,500 was paid By Bharat Ltd.
(ii) Tuition fees of Mr. Himanshu (son of Mr. Jagat) was reimbursed by Bharat Ltd. Amount of fees is INR
25,000.
(iii) Ms. Sapna (daughter of Mr. Jagat) studies in DPS Public School (owned and maintained by Bharat Ltd.).
Tuition fees paid for Ms. Sapna was INR 750 per month. Cost of education in similar institution is INR
5,250 per month.
Compute the amount which is chargeable to tax under the head “Salaries” in hands of Mr. Jagat for AY 2020-21.
a. INR 25,000
b. INR 37,500
c. INR 66,500
d. INR 79,000
MCQs for practice
17. Mr. P is a CA is employee of PC Ltd. and is working as an internal auditor having contract of services with PC
Ltd. Mr. P requests PC Ltd. to show his salary as internal Audit fee. The amount shall be taxed u/h
______________________.
a. Salaries
b. PGBP
c. Income from Other Sources
d. None
18. Income is taxable as salary income when there is employer - employee relationship. However, in one exceptional
case income is taxable as salary even in the absence of employer - employee relationship which is ________.
a. Members of parliament
b. Professors of colleges
c. Partner of a firm
d. Judges of High Court and Supreme Court
19. PC Ltd. is a company paying salary of INR 4,50,000 to its employee Mr. Ram and in addition undertakes to pay
the income tax amounting to INR 10,400 on his behalf during AY 2020-21. What is the salary taxable in the
hands of Mr. Ram?
a. INR 4.3 Lakhs

b. INR 4.5 Lakhs
c. INR 4.604 Lakhs
d. None
20. Read the following statements and state correct answer:
1. Contract between employer and employee is contract of service

2. Contract between employer and employee is contract for service
3. Contract between professional and client is contract of service
4. Contract between professional and client is contract for service
a. 1 and 2 are correct

b. 2 and 3 are correct
c. 3 and 4 are correct
d. 1 and 4 are correct
21. Mr. P who is entitled to a salary of INR 10,000 p.m. took advance of INR 20,000 against salary in the month of
March 2020. Gross salary of Mr. P for AY 2020-21 Shall be ___________________.
a. INR 1,00,000
b. INR 1,20,000
c. INR 1,40,000
22. Salary u/s 15 salary is taxable on ______________ basis.
a. Receipt
b. Due
c. Earlier of (a) or (b)
d. None
23. Government of India announced increase in DA on 15-03-2019 with retrospective effect from 1.5.2017 and the
same were paid on 8.5.2019. Arrears of DA is taxable in __________________.
a. PY 2018-19
b. PY 2019-20
c. PYs to which these are related to
d. PY as per Assessing Officer
24. Salary paid to partner by the firm is _________________.
a. Taxable u/h Salaries

b. Taxable u/h PGBP
c. Always exempt
d. Always taxable
25. Medical expenditure reimbursed by the employer to the employee shall be exempt upto _____________.
a. INR 15,000 pm
b. INR 1,00,000 pa
c. Fully exempt
d. Fully taxable
26. Mr. P purchased a residential house property in Ahmedabad on loan for which he paid an interest of INR 50,000
during the PY. He is working in Delhi and getting an HRA of 4,000 p.m. He can claim exemption/ deduction for
_________________.
a. Only HRA
b. Only interest paid
c. Either interest or HRA
d. Both HRA and interest paid
27. Children education allowance is exempt upto _____________________.
a. INR 100 pa for 2 children

b. INR 100 pm for 2 children
c. INR 100 pm per child for 2 children each
d. INR 100 pa per child for 2 children each
28. Underground allowance to employee is exempt upto ________________.
a. INR 700 p.m.

b. INR 900 p.m.
c. INR 1,000 p.m.
d. INR 800 p.m.
29. Mr. P received 300 pm as children education allowance for each of his 3 children. The taxable and exempt part
of children education allowance shall be?
a. INR 8,400 and INR 2,400 respectively

b. INR 2,400 and INR 8,400 respectively
c. INR 10,800 and Nil respectively
d. Nil and INR 10,800 respectively
30. Mr. P is entitled to a transport allowance of INR 1,000 p.m. For commuting from his residence to office and
back, he spends INR 600 p.m. The exemption shall be ______________________.
a. INR 1,000 p.m.

b. INR 600 p.m.
c. INR 400 p.m.
d. Nil
31. Children born out of multiple birth after the first child will be treated as __________________.
a. Two child and exemption will be granted only for 1 child

b. One child only and exemption will be granted only for both child
c. On the discretion of Assessing Officer
32. Value of perquisite in case of rent-free accommodation given to government employees will be __________.
a. 10% of salary
b. 15% of salary
c. 7.5% of salary
d. Licence fees determined by Government
33. Mr. P gets salary of INR 12,000 p.m. and is provided with rent free unfurnished accommodation at Bettiah
(which has population of 20 Lakh). House is owned by employer, fair rental value of which is INR 1,400 p.m.
The house was provided from 1st July 2019. Value of the perquisite will be _____________.
a. INR 21,600
b. INR 10,800
c. INR 16,200
d. INR 12,600
34. Mr. P gets salary of INR 25,000 p.m. and is provided with accommodation at Pune on his transfer in hotel for a
week. Value of the perquisite of rent-free accommodation will be ________________.
a. INR 72,000
b. INR 30,000
c. INR 45,000
d. Nil
35. If any employee has been transferred and employer has provided him accommodation at the new place also
while the employee continuing to occupy the house at old place. In such cases _____________.
a. Both houses will be charged to tax as perquisite

b. Only one of the accommodations having lower perquisite value shall be taxable upto 90 days (three months)
and after 90 days, both of the accommodations shall be taxable
c. Depends upon the agreement between employee and employer
d. Depends upon the discretion of Assessing Officer
36. Mr. P is entitled to INR 8,000 p.m. as medical allowance. He spends INR 4,000 p.m. on his medical treatment
and INR 1,000 on the medical treatment of his major son not dependant on him. Exemption= ____________.
a. INR 4,000 p.m.

b. INR 5,000 p.m.
c. Nil
d. INR 8,000 p.m.
37. In which of the following cases, interest-free loan is not treated as perquisite?
a. If the amount of loans < INR 20,000
b. If loan is given for medical treatment of prescribed diseases (cancer, tuberculosis, etc)
c. Both (a) and (b)
38. Employee is on official tour and he takes his family member with him. Value of perquisite = ____________.
a. Amount incurred for employee and such family member

b. Amount incurred for such family member
c. It is illegal to take family member with him since it will distract him
d. He should ask for the permission of Assessing Officer before taking his wife (family member)
39. Cash gifts by employer to employee are ______________.
a. Taxable if value is INR 6,000 or less

b. Exempt if value is INR 5,000 or less
c. Always fully taxable
d. Fully exempt
40. An employee has been provided free meal worth INR 110 per meal for 295 days in the office, during office hours.
Such facility provided to employees shall be taxable for ___________________.
a. INR 60 per day for 295 days

b. INR 110 per day for 295 days
c. INR 50 per day for 295 days
d. Not taxable at all
41. Expenditure pertaining to health club, sports facilities etc is _______________________.
a. Taxable perquisite
b. Exempt perquisite
c. Partly exempt
42. Free or concessional tickets granted to employees of an airline or the railways is _________________.
b. Exempt perquisite
c. Partly exempt
43. A company has provided laptop worth INR 50,000 to its employee for official as well as personal purposes. The
taxable amount of perquisite will be _______________________.
a. INR 5,000
b. INR 25,000
c. INR 10,000
d. Nil
44. Employer has given a video-camera for the personal use of the employee. The value of this perquisite is _____.
a. 10% pa of historical cost

b. Nil
c. 10% pa of the WDV
d. Fully exempt
45. The employer had purchased a car for INR 8,00,000, 2 years and 7 months ago. This car is sold to the employee
for INR 2,02,000. The value of this perquisite shall be _____________________.
a. INR 2,80,00
b. INR 1,20,000
c. INR 8,00,000
d. INR 3,10,000
46. Mr Ram, an employee of Tax Limited, took voluntary retirement in December 2019 and received INR 2,00,000
from NPS Trust. The amount chargeable to tax will be ______________________.
a. Nil as 100% is exempt

b. INR 1,20,000 as 40% is exempt
c. INR 1,00,000 as 50% is exempt
d. INR 80,000 as 60% is exempt
47. Mr. P is an employee of JSPC Ltd. which is an oil manufacturing company. He is provided with free gas for his
personal purpose by the employer. Perquisite value ______________________.
a. Fixed by employee
b. Fixed by the Employer
c. Manufacturing cost per unit
d. Market rate of gas per unit
48. Employer provides a car (below 1600 CC) along with a driver to Mr. P and he uses the car partly for official and
partly for personal purpose. Following expenses are incurred by employer:
1. Running and maintenance expenses of INR 84,000

2. Driver’s salary of INR 1,20,000
Determine the perquisite value.
a. INR 21,600
b. INR 10,800
c. INR 32,400
d. INR 2,04,000
49. Mr. P is employee of PC Ltd. and he is provided with a car of engine of 1.9 litre capacity along with driver. The
expenses of running and maintenance of car are met by Mr. P himself. Besides using the car for official purpose,
Mr. P also uses the car for his personal purpose. Perquisite value. In this case shall be _________.
a. INR 2,400 pm
b. INR 1,800 pm
c. INR 600 pm
d. INR 900 pm
50. Mr. P an employee owns a car which is used for his private purpose. All expense of running and maintenance of
the car are met by the employer. The perquisite shall be ____________________.
a. Be taxable in case of specified employee only

b. Be taxable in case of an employee other than specified employees
c. Be taxable in case of all type of employees
d. Not be taxable at all for any employee
51. Maximum exemption in case of leave encashment is ____________________.
a. INR 2.4 Lakhs

b. INR 3.5 Lakhs
c. INR 3 Lakhs
d. INR 10 Lakhs
52. Payment of premium on personal accident insurance policies of the employee by the employer is ________.
b. Exempt perquisite since no immediate benefit would become payable to the employee
c. Partly exempt
53. 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
c. Average salary of 10 months immediately preceding the date of retirement
d. Any of the above
54. Salary for the purpose of exemption of leave encashment shall be taken as _________________.
a. Basic salary+ DA (forming part of salary for retirement benefits or not)

b. Basic salary+ DA (forming part of salary for retirement benefits) + monthly commission
c. Basic salary+ DA (forming part of salary for retirement benefits) + commission (on% basis of sales)
d. Basis salary and commission
55. An employee availed the exemption of leave encashment of INR 1,00,000 in the past. He received from the
second employer a sum of INR 2,50,000 as encashment of leave. He will be entitled to exemption to the extent
of _____________________.
a. Nil
b. INR 2.5 Lakhs
c. INR 2 Lakhs
d. INR 1.4 Lakhs
56. An employee is covered under payment of Gratuity Act, 1972. Salary for purpose of calculating 15 days salary for
each completed year of service shall be _______________________.
a. Last drawn salary

b. Avg. salary of last 1o months
c. Average salary of last 3 completed years
d. Average salary of last 12 months
57. The maximum ceiling limit for exemption u/s 10(10) in respect of Gratuity for employees covered by the
Payment of Gratuity Act, 1972 is ____________________.
a. INR 10 Lakhs
b. INR 5 Lakhs
c. INR 3.5 Lakhs
d. INR 20 Lakhs
58. An employee is not covered under Payment of Gratuity Act, 1972. Maximum exemption of gratuity is _______.
a. INR 10 Lakhs
b. INR 3.5 Lakhs
c. INR 20 Lakhs
d. None
59. Mr. P who claimed exemption of Gratuity in past to the extent of INR 2,50,000 was entitled to gratuity from the
present second employer amounting to INR 20,00,000 in AY 2019-20. Both of employers are covered under the
Payment of Gratuity Act, 1972. Exemption to Mr. P shall be _________________.
a. INR 10,00,000
b. INR 15,00,000
c. INR 20,00,000
d. INR 17,50,000
60. A government employee was entitled to Gratuity. He got 50% of his pension commuted and received a sum of
INR 1,00,000 as commuted pension. The exemption shall be ____________________.
a. INR 50,000
b. INR 33,337
c. INR 1,00,000
d. INR 66,667
61. An employee was not entitled to Gratuity. He got 60% of his pension commuted and received a sum of INR
1,20,000 as commuted pension. The exemption shall be _____________________.
a. INR 1,20,000
b. INR 66,667
c. INR 80,000
d. INR 1,00,000
62. Mr. Sagar retired wef. 01.10.2019 receiving INR 5,000 p.m. as pension. On 01.02.2020, he commuted 60% of
his pension and received INR 3,00,000 as commuted pension. You are required to compute his taxable pension
assuming he has not received any gratuity.
a. INR 24,000
b. INR 1,33,333
c. INR 1,57,333
d. INR 74,000
63. Standard deduction is allowed from gross salary u/s __________________.
a. 16(i)
b. 16(ia)
c. 16(ii)
d. 16(iii)
64. The standard deduction is allowed from gross salary to the maximum of INR 50,000 but ____________.
a. Employee has to prove his all expenses to income tax department

b. Employee has to prove his all expenses to the employer
c. Employee has to prove his all expenses to income tax department or employer as per his own discretion
d. Irrespective of any expenses that employee may or may not have incurred
65. Limit u/s 16(ii) for deduction of entertainment allowance in case of government employee is ____% of salary.
a. 12.5%
b. 20%
c. 15%
d. 7.5%
66. The deduction for professional tax u/s 16 (iii) is for ______________.
a. Actual amount paid but max 2500

b. Actual amount paid
c. Actual amount due
d. Always 2,500
67. Employer’s contribution to Statutory Provident Fund shall be _______________.
a. Fully exempt
b. Exempt upto 12% of salary
c. Fully taxable
d. Exempt up to 10% of salary
68. Employer’s contribution to Recognised Provident Fund shall be _________________.
a. Fully exempt
b. Exempt upto 12% of salary
c. Fully taxable
d. Exempt up to 10% of salary
69. Interest credited to Recognised Provident Fund shall be _______________.
a. Fully Exempt
b. Fully Taxable
c. Exempt upto 8.5% p.a. of total contribution
d. Exempt up to 9.5% p.a. of total contribution
70. Payment from Recognised Provident Fund after 5 years of continuous service of employee shall be ________.
a. Fully taxable
b. Fully exempt
c. Taxable to the extent of employer’s contribution and interest thereon
d. Exempt up to INR 10,00,000
71. An employee received payment from Unrecognised Recognised Provident Fund on his retirement. His own
contribution to Unrecognised Recognised Provident Fund and interest on his own contribution will be
_____________.
a. Taxable, Taxable
b. Exempt, Exempt
c. Taxable, Exempt
d. Exempt, Taxable
72. The year in which Unrecognised Recognised Provident Fund is converted in Recognised Provident Fund
________________.
a. The employer’s contribution till date and interest thereon shall be taxable
b. The employer’s 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
employer’s contribution and interest thereon shall be taxable
73. For PY 2019-20, Mr. P receives a salary of INR 2,80,000. Mr. P’s contribution to employees’ Recognised
Provident Fund account INR 59,000 and matching contribution has been made by employer. Taxable income
of Mr. P will be __________.
a. INR 1,96,400
b. INR 2,46,400
c. INR 3,05,400
d. INR 2,55,400
74. Employer’s contribution to superannuation fund is ________________.
a. Not taxable to employee

b. Fully taxable
c. Taxable to employee provided contribution exceeds INR 1.5 Lakhs
d. Exempt upto 12% of salary
75. Mr. P is employed in PC Ltd. as accounts manager. The employer paid INR 1,60,000 as contribution to approved
superannuation fund for the benefit of Mr. P. The amount of such contribution liable to tax as perquisite is
_____________________.
a. Nil
b. INR 10,000
c. INR 1,60,000
d. INR 60,000
76. Mr. P joins services on 1st April, 2015 in the grade of INR 15,000 - INR 1,000 – INR 18,000 -INR 2,000 - INR
26,000. Total taxable salary for year ended on 31st March, 2020 _______________.
a. INR 2,16,000
b. INR 2,40,000
c. INR 2,00,000
d. INR 1,80,000
77. Statement 1: In case of piece rated employees, salary shall be computed on the basis of average of the total
wages received by them for a period of ten months immediately preceding the termination of their employment.
Statement 2: Official Allowance are exempt irrespective of actual expenditure or saving.
78. Statement 1: If any employee has passed away and gratuity has been received by the family members,
exemption shall be allowed in the normal manner.
Statement 2: Rent free accommodation provided to Judges of high Court/ supreme Court, union ministers,
leaders of opposition in the parliament, chairman and members of UPSC, etc is exempt from income tax in the
hands of such persons.
79. Statement 1: Gratuity paid by LIC to its insurance agents is exempt from tax.
Statement 2: Rent free accommodation provided to any employee working in a mining site, all exploration site
or project execution site or any other remote area is exempt from income tax in the hands of the employee.
80. The value of any benefit provided by the employer to the employee, other than those specifically mentioned in
Income Tax Act, shall be subject to tax and its perquisite value shall be determined on the basis of
_________________.
a. cost to the employer.

b. Fair market value
c. Either of (a) and (b); whichever is higher
d. Either of (a) and (b); whichever is higher
Answer Key
1. D 2. D 3. B 4. A 5. B 6. B 7. A
8. A 9. B 10. C 11. C 12. C 13. C 14. C
15. A 16. D 17. A 18. D 19. C 20. D 21. C
22. C 23. B 24. B 25. D 26. D 27. C 28. D
29. A 30. D 31. B 32. D 33. B 34. D 35. B
36. C 37. C 38. B 39. C 40. A 41. B 42. B
43. D 44. A 45. D 46. D 47. C 48. C 49. B
50. A 51. C 52. B 53. C 54. C 55. C 56. A
57. D 58. C 59. D 60. D 61. D 62. D 63. B
64. D 65. B 66. A 67. A 68. B 69. D 70. A
71. D 72. C 73. A 74. C 75. B 76. B 77. D
78. C 79. B 80. A
CA Kishan Kumar MCQs – Basics & Computation of Income Tax May/Nov 2020
1. The basic source of Income-tax law is ____________________.
a) Income-tax Act, 1961

b) Income-tax Rules, 1962
c) Circulars/Notifications issued by CBDT
d) Judgments of Courts
2. A domestic company means _______________.
a) Only an Indian company

b) Both Indian company and a foreign company having a branch in India
c) Both Indian company and a foreign company having business connection in India
d) Both Indian Company and Foreign company which has made the prescribed arrangement for declaration
and payment of dividend in India out of the income chargeable to tax in India.
3. The rates of income tax are mentioned in _________________.
a) The income tax Act, 1961 only

b) Both income tax Act, 1961 and income tax Rules 1962
c) The first schedule to the annual Finance Act
d) Both Income tax Act, 1961 and the first schedule to the annual Finance Act
4. The surcharge applicable in the case of a firm is -
a) 10% of tax payable if total income exceeds INR 1 crore

b) 15% of tax payable if total income exceeds INR 1 crore
c) 7% of tax payable if total income exceeds INR 1 crore
d) 12% of tax payable if total income exceeds INR 1 crore
5. In respect of a non-resident Assessee, who is of the age of 60 years or more but less than 80 years at any time
during the previous year 2018-19, ___________________.
a) Basic exemption of INR 2,50,000 is available

b) Basic exemption of INR 3,00,000 is available
c) Basic exemption of INR 5,00,000 is available
d) No basic exemption limit would be available
6. In case of a domestic company whose gross receipts for the P.Y. 2017-18 is INR 251 crores, the rate of tax
applicable is __________________.
a) 29%
b) 25%
c) 30%
7. The surcharge applicable to a domestic company for A.Y. 2020-1 is ____________________.
a) 5% if the total income exceeds INR 1 Crore

b) 10% if the total income exceeds INR 1 Crore
c) 7% if the total income exceeds INR 1 crore but does not exceeds INR 10 crore and 15% if the total income
exceeds INR 1 crore
d) 7% if the total income exceeds INR 1 crore but does not exceeds INR 10 crore and 12% if the total income
exceeds INR 10 crore
8. The surcharge applicable to a foreign company for A.Y. 2020-21 is ___________________.
a) 5% If the total income exceeds INR 1 Crore

b) 10% if the total income exceeds INR 1 Crore
c) 2% if the total income exceeds INR 1 crore but does not exceeds INR 10 crore and 5% if the total income
exceeds INR 1 crore
d) 2% if the total income exceeds INR 10 crore
9. The rate of tax applicable to a firm for A.Y. 2020-21 is _________________.
a) 25%
b) 30%
c) 35%
d) 40%
10. Where the total income of an artificial juridical person is INR 4,10,000, the income-tax payable is
_______________ and surcharge payable is ________________.
a) INR 8,000; Nil.

b) INR 16,000; Nil.
c) INR Nil; Nil
d) INR 1,23,000; Nil 6,150
11. Income under the Income-tax Act, 1961, is to be computed under _________________.
a) Five heads
b) Six heads
c) Four heads
d) Seven heads
12. What is the basic exemption limit for a woman Assessee for A.Y. 2020-21, who turned 60 years on 2.4.2020?
a) INR 2,00,000
b) INR 3,00,000
c) INR 2,50,000
d) INR 5,00,000
13. What is the rate of surcharge applicable to individuals having total income exceeding INR 2.5 Crore?
a) 15%
b) 25%
c) 10%
d) 37%
14. What is the basic exemption limit for Mrs. X, a resident individual who is of the age of 80 years as on
30.3.2020?
a) INR 5,00,000
b) INR 2,40,000
c) INR 3,00,000
d) INR 2,50,000
15. Share of profit of Mr. P, who is a partner in M/s PQR, a firm resident in India, is ___________.
a) exempt from tax

b) taxable as his business income
c) taxable as his salary
d) taxable as other sources
16. What is the basic exemption limit for AY 2020-21 for Mr. X, a resident individual who is of the age of 60 years
as on 1.4.2020?
a) 5,00,000
b) 2,40,000
c) 3,00,000
d) 2,50,000
17. The maximum amount of rebate allowable under section 87A for A.Y. 2020-21 is ______________.
a) INR 12,500, if the total income does not exceed INR 5 lakh
b) INR 5,000, if the total income does not exceed INR 5 lakh
c) INR 2,500, if the total income does not exceed INR 3.5 Lakh
d) INR 5,000, if the total income does not exceed INR 3.5 lakh
18. If Mr. Y’s total income for AY 2020-21 is INR 52 lakhs, surcharge is payable at the rate of ____________.
a) 15%
b) 12%
c) 10%
d) 2%
19. Unexhausted basic exemption limit of a resident individual can be adjusted against ______________.
a) only LTCG taxable @ 20% u/s 112

b) only STCG taxable @ 15% u/s 111A
c) both (a) and(b)
d) casual income taxable @ 30% u/s 115BB
20. Unexhausted basic exemption limit of a non-resident individual can be adjusted against ___________.
a) only LTCG taxable @ 20% u/s 112
b) only STCG taxable @ 15% u/s 111A

c) both (a) and(b)
d) neither (a) and (b)
ICAI Sample MCQs
21. Mr. Arjun, aged 53 years, has a total income of Rs. 51 lakhs for AY 2020-21. His total income comprises of
salary, income from house property and interest on savings bank account. His tax liability for AY 2020-21
would be __________________.
a) Rs. 13,96,200
b) Rs. 14,82,000
c) Rs. 15,35,820
d) Rs. 14,69,000
22. Mr. Ramanan, a resident aged 40 years, has a total income of Rs. 4,25,000 for AY 2020-21, comprising of his
salary income and income from house property. His tax liability for AY 2020-21 would be _____________.
a) Rs. 3,900
b) Rs. 1,300
c) Rs. 2,600
d) Nil
23. Which of the following benefits are not allowable to Ms. Sakshi, a non-resident, while computing her total
income and tax liability for A.Y. 2020-21 under the Income-tax Act, 1961?
a) Deduction of 30% of gross annual value while computing her income from house property in Bangalore
b) Tax rebate of upto Rs. 12,500 from tax payable on her total income of Rs. 4,40,000
c) Deduction for donation made by her to Prime Minister’s National Relief Fund
d) Deduction for interest earned by her on NRO savings account.
ICAI RTP and MTPs
24. Mr. Ajay is a recently qualified doctor. He joined a reputed hospital in Delhi on 01.01.2020. He earned total
income of INR 3,40,000 till 31.03.2020. His employer advised him to claim rebate u/s 87A while filing return
of income for A.Y. 2020-21. He approached his father to enquire regarding what is rebate u/s 87A of the Act.
His father told him:
i) An individual who is resident in India and whose total income does not exceed INR 3,50,000 is entitled
to claim rebate under section 87A.
ii) An individual who is resident in India and whose total income does not exceed INR 5,00,000 is entitled
to claim rebate under section 87A.
iii) Maximum rebate allowable under section 87A is INR 5,000.
iv) Rebate under section 87A is available in the form of exemption from total income.
v) Maximum rebate allowable under section 87A is INR 12,500.
vi) Rebate under section 87A is available in the form of deduction from tax liability.
As a tax expert, do you agree with the explanation given by Mr. Ajay’s father? Choose the correct option from
the following:
a. (ii), (iii), (vi)

b. (ii), (v), (vi)
c. (ii), (iii), (iv)
d. (i), (iv), (v)
25. Mr. Krishna is a philanthropic person. During the P.Y. 2019-20, out of his total receipts, he gave away Rs.
8,00,000 in cash to Prime Ministers National Relief Fund and was left with only Rs. 2,00,000 which is just
enough money to meet his personal requirements. On these facts, Mr. Krishna is of the view that as Rs.
2,00,000 is below the maximum amount not chargeable to tax, no income of him is chargeable to tax during
the previous year. He approaches you to file his income tax return showing Rs. 2,00,000 as his gross total
income. Do you agree with the view of Mr. Krishna? Also, compute the amount of his total income.
a. Yes, as income actually left in Mr. Krishna’s hands is Rs. 2,00,000 only. His total income shall be INR
2,00,000
b. No, as what is done after income is earned by Mr. Krishna will not give him any tax exemption. His total
income shall be Rs. 10,00,000.
c. His gross total income and total income are Rs. 10 lakhs, since this is a case of application of income and
donation made in cash will not qualify for deduction under section 80G.
d. Yes, as Rs. 8,00,000 is exempt from tax, the gross total income as well as total income of Mr. Krishna
shall be Rs. 2,00,000 only
26. Under the provisions of the Income-tax Act, 1961, the term “Person” would not include:
a. A body corporate incorporated in a country outside India
b. A Limited Liability Partnership (LLP)
c. Indian branch of a foreign company
d. A local authority
27. Mr. Hari is 65 years old residing in Agra. During F.Y. 2014-15, he purchased a house property in Kamla Nagar
for INR 25 lacs. This house property was self-occupied by him till F.Y. 2016-17. In F.Y. 2017-18, he shifted to
Delhi and the house property in Kamla Nagar was let out to Mr. Kishore. His income from house property was
INR 5 lacs per annum (computed). During F.Y. 2019-20, Mr. Hari earned long-term capital gain of INR 2.50
lacs, casual income of INR 10 lacs, agricultural income of INR 3 lacs and profits from business of INR 4 lacs.
During the same year, he transferred house property situated in Kamla Nagar to Mrs. Neelam (his son’s wife)
without any consideration. Subsequently, income from house property was received by Mrs. Neelam for F.Y.
2019-20. Compute gross total income of Mr. Hari for A.Y. 2020-21:
a. INR 16.50 lacs
b. INR 21.50 lacs
c. INR 19.50 lacs
d. INR 24.50 lacs
MCQs for practice
28. Which entry of union list gives the power to parliament to levy tax on incomes?
a. Entry 81 of List I to seventh schedule

b. Entry 81 of List II to seventh schedule
c. Entry 82 of List I to seventh schedule
d. Entry 82 of List II to seventh schedule
29. Highest administrative authority for Income Tax in India is _____________________.
a. Finance Minister
b. Central Board of Direct Taxes
c. President of India
d. Director of Income tax
30. Income tax Act came into force on ______________.
a. 01.04.1961
b. 01.04.1962
c. 01.04.1956
d. 01.04.1965
31. Income Tax Act contains __________ sections.
a. XIV
b. 297
c. XV
d. 298
32. Notification issued by Central Board of Direct Taxes are binding on_________________.
a. Assessee
b. Income Tax authority
c. Both of above
33. Circulars issued by Central Board of Direct Taxes are binding on ___________________.
a. Assessee
b. Income tax authority
c. Both of above
34. As per section 2(7) “Assessee” means a person ____________________________.
a. By whom any tax or other sum of money is payable

b. Against whom proceeding has been taken under the Act
c. A person deemed to be Assessee in default
d. All of the above
35. A and B are legal heirs of C. After death of C, A and B carry on his business without entering into a partnership.
What is their status?
a. Company
b. LLP
c. AOP
d. Firm
36. As per sec. 2(24), definition of income is __________________.
a. Inclusive
b. Exhaustive
c. Exclusive
d. Descriptive
37. Income includes the following types:
a. Legal
b. Illegal
c. Both
d. None
38. Mr. P has taken a loan of INR 5,00,000 from HDFC bank for purchasing a car. His rental income is INR
50,000 pm out of which INR 5,000 pm directly goes to the bank as an instalment of loan. Discuss the tax
treatment.
a. INR 5,000 p.m. is treated as diversion of income

b. INR 5,000 p.m. is an application of income
c. INR 5,000 p.m. is not treated as his income
39. Pick the correct one.
a. Assessment Year and Previous Year are same concepts

b. Assessment Year is the year next to the Previous Year
c. Previous Year is the year next to the Assessment Year
40. Assessment year can be a period of ____________________.
a. > 12 months or < 12 months

b. Only 12 months
c. 12 month or < 12 months
d. > 12 months
41. First PY in case of a business or profession newly set up on 31.3.2020 would be_______________.
a. Start from 1.4.2019 and end on 31.03.2020

b. Start from 31.3.2020 and will end on 31.3.2020
c. Start form 1.1.2020 and end on 31.12.2020
d. Start form 1.1.2020 and end on 31.3.2020
42. A person follows calendar year for accounting purpose. For taxation he has to follow _______________.
a. Calendar year only (1 January to 31 December)

b. Financial Year only (1 April to 31 March)
c. Any calendar or Financial Year as per his choice
d. He will follow extended year from 1st January to next 31st March (a period of 15 months)
43. Individual leaves India permanently on 1.9.2019. Assessment Year for incomes earned till 1.9.2019 is ______.
a. 2017-18
b. 2018-19
c. 2019-20
d. None
44. Maximum amount exempt from tax in case HUF is_________________.
a. INR 1.8 Lakhs

b. INR 2 Lakhs
c. INR 2.2 Lakhs
d. INR 2.5 Lakhs
45. Max amount which is not taxable in case of firm is ________________.
a. INR 3,00,000
b. INR 5,00,000
c. INR 2,50,000
d. NIL
46. Health and Education cess is leviable on ___________________.
a. Income tax
b. Income tax + Surcharge (if any)
c. Only surcharge
d. Not applicable at all
47. Tax liability is rounded off in multiples of __________ u/s 288B
a. INR 10
b. INR 100
c. INR 1
d. None
48. Direct and Indirect tax is _____________ and _____________ in nature respectively.
a. Progressive; Progressive
b. Regressive; Regressive
c. Progressive; Regressive
d. Regressive; Progressive
49. Mr. P is 55 years old and is a resident of India and has earned a total income of INR 7,12,500. Calculate his tax
liability for the AY 2020-21.
a. INR 51,000
b. INR 57,200
c. INR 40,820
d. None
50. Mrs. S (age 87) is a Non-Resident and has earned total income of INR 4,00,000. Calculate her tax liability for
AY 2020-21.
a. Nil
b. INR 5,200
c. INR 7,800
d. None
51. M.s ABC is a partnership firm having business income of INR 6,00,000. Income from other sources is INR
1,50,000. Specified Donations eligible for deduction u/s 80G is INR 2.5 Lakhs. Calculate tax liability for AY
2020-21.
a. INR 13,000
b. INR 65,000
c. INR 1,56,000
d. Nil
52. Rebate from tax liability is allowed to ____________________.
a. Resident and ordinarily resident

b. Not ordinarily resident
c. Non-Resident
d. Both (a) and (b)
53. Statement 1: If an individual is claiming deduction under section 10AA or under section 35AD or section
80JJAA, 80QQB & 80RRB and his adjusted total income exceeds INR 10 lakhs, AMT provisions will apply.
Statement 2: If AMT > tax computed as per regular provisions, adjusted total income would be deemed to be
total income and Tax is leviable @ 18.5% of adjusted total income.
54. Statement 1: Alternate minimum tax is levied in case of persons other than a company and Firm.
Statement 2: AMT credit can be carried forward for set-off upto a maximum period of 30 assessment years
succeeding the assessment year in which the credit becomes allowable.
55. Statement 1: Tax credit is the excess of AMT paid over the regular income-tax payable under the provisions
of the Income-tax Act, 1961 for the year.
Statement 2: In case where the Assessee has not claimed any deduction under section 10AA or section 35AD
or deduction under section 80JJAA, 80QQB & 80RRB in any previous year and the adjusted total income of
that year does not exceed INR 20 lakhs, it would still be entitled to set-off his brought forward AMT credit in
that year.
Answer Key
1. A 2. D 3. D 4. D 5. A 6. B 7. D
8. C 9. B 10. A 11. A 12. C 13. B 14. A
15. A 16. C 17. A 18. C 19. C 20. D 21. D
22. D 23. B 24. B 25. C 26. C 27. B 28. C
29. B 30. B 31. D 32. C 33. B 34. D 35. C
36. A 37. C 38. B 39. B 40. B 41. B 42. B
43. C 44. D 45. D 46. B 47. A 48. C 49. B
50. C 51. C 52. D 53. B 54. D 55. C
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CA INTER/IPCC (May 2020)

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4. Income under the head Other Sources

6 & 16. Agricultural Income 47 43 - 51

9. Advance Tax and Interest 26 76 - 80

10. Tax Deduction at Source (including TCS) 69 81 -93

11. Filing of Return of Income 40 94 - 102

12. Clubbing of Income 34 103 - 110

13. Set-off and Carry Forward of Losses 32 111 – 118

14. Deductions from Gross Total Income 65 119 – 130

15. Income under the head Salary 80 131 – 146

17. Computation of Total Income and Basics 55 147 – 156

Total MCQs 720

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03 Free Test Series personally evaluated by Sir

Personal Number of Sir for Doubt

05 MCQs dedicated Videos (chapter wise)

06 Constant Support – from Activation to Exams

07 2 Views & 6 Months Validity (with Extension Facility)

ICAI Study Material MCQs

3. A company would be a resident in India for the P.Y. 2019-20, if

d) be taxable in India as such accrues or arise in India

9. Income from a business in Canada, controlled from Canada is taxable in case of –

ICAI Sample MCQs

a) Mint Inc. is not engaged in a business activity in India.

a) Income from any business connection in India

a) No, as agricultural income is exempt u/s 10(1).

ICAI RTP and MTPs

a) Resident and ordinarily resident

a. Residential status of a company has an impact on the tax rate of company

MCQs for Practice

a. Both the basic condition

a. Determination of residential status

1. He must be in India for 180 days or more

Select the correct answer from the options given below.

a. Both (1) and (2)

a. is received or is deemed to be received in India in such year by or on behalf of such person

c. accrues or arises to him outside India during such year

30. Which of the following statement is true or false?

Select the correct answer from the option given below.

Select the correct answer from the options given below.

i. Income received or is deemed to be received in India

Select the correct answer from the options given below

i. ii. iii. iv. v.

Select the correct answer from the options given below

a. Both (I) & (II)

b. Neither (I) nor (II)

Select the correct answer from the options given below

i. The day of arrival

Select the correct answer from the options given below.

a. The period of stay is compulsorily required to active and continuous

c. An Indian citizen is always treated as resident in India

Select the correct answer from the options given below.

38. Which of the following shall be deemed to accrue or arise in India?

a. Income by way of interest payable by the Government to non-resident

39. When an individual be regarded as “Not an ordinary resident”?