MCQ - Unit 2

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Sample MCQ for unit 2
Note :Kindly practice numericals also.
To be an Ordinarily resident in India, an individual must satisfy ………………………. A) Both Basic Conditions and One Additional Co
Condition and Both Additional Conditions C) One Basic Condition and One Additional Condition D) Both Basic Conditions and B
Conditions
A person is said to be a non resident when he is _______________. A. not fulfilling any one of the basic conditions B. fulfilling
fulfilling only additional conditions D. fulfilling both basic and additional conditions
A Company has …………. types of residential status. A) 2 B) 3 C) 1 D) 4
The Residential Status of the following parties can be classified into only two
categories- Resident of India and Non- Resident in the previous year
a) Company, Firm
b) Association of persons
c) Both a and b d)Only a
If the ‘karta’ of a resident HUF satisfies _____ condition(s) given u/s _____, HUF is said to be an ordinarily resident.
A)both; 6(1)
b)one; 6(1)
c)both; 6(6)
d)one; 6(6)
An individual is said to be resident and ordinarily resident if he satisfies –

A)both conditions given in sec. 6(1) and any one condition given in sec. 6(6)
B.any one condition given in sec. 6(1) and both conditions given in sec. 6(6)
C.any one condition given in sec. 6(1) and any one condition given in sec. 6(6)
D.any one condition given in sec. 6(1) or both conditions given in sec. 6(6)
As per section 5, the following is not included in the total income of a non-resident company —
A.Income which arises or accrues outside India
B.Income which deemed to accrue or arise in India
C.Income which accrues or arise in India during the previous year
D.Income which is received or deemed to be received in India.
An individual (aged 28 Years) born in India left for first time for employment in France on 30.10.2019. His visit outside India is
residential status for the assessment ye ar 2020-21 will be –
A.Non-resident
B.Residential Status is not applicable
C.Resident and ordinarily resident
D.Resident but not ordinarily resident
Which section of the Income-tax Act deals with determination of residential status of the person?
A.5
B.2
C.4
D.6
An Indian company would –

A,be always resident in India irrespective of location of its place of effective management
B.be resident in India if its control and management is wholly situated outside India
C.be resident in India if its place of effective management is situated in India
D.be resident in India if its control and management is wholly or partly situated in India
The following is the correct criteria to identify a resident of India for an Individual
a) Must stay in India for more than 60 days in the PY
b) Must stay in India for more than 365 days in preceding four years
c) Must stay in India for more than 182 days in India, in the PY
If a person is the resident of India, in a PY----------

a) He can still be the resident of other Country in the PY
b) He cannot be the resident of any other country in the PY
c) None of the above
An individual who is a resident will become resident and ordinarily resident if ------------
a) He has been resident in India at least 2 out of 10 preceding years and
stayed in India for at least 730 days in preceding 7 years
b) He has been the resident in India for 3 out of 10 preceding
c) He has been in India for 765 days in preceding 7 years
Income received in India during the previous year is
taxable in the case of .
(a) ROR (b) RNOR (c) NR (d) All
Incomes which accrues in India but received outside
India are taxable in case of .
(a) ROR (b) RNOR (c) NR (d) All
Foreign Income means .

(a) Income accrued.deemed to be accrued in India
(b) Income received.deemed to be received in India
(c) Both (a) & (b) (d) None of the above.
Income which are not includible in the total income of the assessee are called .
(a) Exempt Incomes (c) Taxable
Incomes
(b) Incomes deductibleu/c VI-A. (d) None ofthe
above
Gross Total Income means Aggregate of Incomes

under
all heads of Income .
(a) After claiming deduction u/c VI-A
(b) Before claiming deduction u/c VI-A.
(c) Income for which no deduction u/c VI-A.
(d) None of the above
Total (taxable) Income means Aggregate of

Incomes
under all heads of Income .
(a) After claiming deduction u/c VI-A
(b) Before claiming deduction u/c VI-A.
(c) Income for which no deduction u/c VI-A.
(d) None of the above
Share of the profits from the firm by the partner
is:
(a) Fully taxable (b) Fully Exempt u/s
10(2A)
(c) Fully taxable u/h “Salary” (d) Exempt upto Rs.
2.5 lacs
Mr, Z working in XYZ ltd, along with the salary was offered accommodation at a
concessional rate. The compensation can be termed as ------------------ under the head
income from salary
a) Allowance
b) Bonus
c) Perquisite
Mr. Z working in a private organization was given education allowance of Rs 400 per
month per child for his three children. Maximum amount he can claim exemption for
children education allowance is ----------.
a) Rupees Two Thousand Four Hundred p.a.
b) Rupees Four Thousand Eight Hundred p.a.
c) Rupees Three Thousand Six Hundred p.a.
Gratuity received by a government employee is .......................

A) Fully exempted
B) Partly exempted
C) Fully taxable
D) Exempted up to Rs:1,00,000
Income received in India whether occurred in India or outside India, the tax incidence
in case of resident is …………………………...
A) Taxable as per slabs B) Exempted from tax
C) Partly exempted D) None of the above
Pension is taxable under ..........................head.
A) Salary B) House property
C) Capital gains D) other sources
The Income TaxAct,1961 broadly covers ………………………...
A) Basic charging income B) Rebates and reliefs
C) Incomes exempted from income tax D) All of the above
Residential Status of an assesses can be …………………………..

A) Different for different previous year in the same assessment year
B) Different for different assessment year
C) None of the above
D) All of the above
Which of the following is not included in salary income.
A) Commuted pension B) Un commuted pension
C) Family pension D) Leave salary
A Perk is.........................
A) Cash paid by employer to employee
B) Facility provided by employer to employee
C) Amount credited to employees.
D) None of these accounts.
Perquisites to employees are covered in the I.T. Act 1961 under...................
A) Sec 2a. B) Sec. 17b. C) Sec 28a. D) Sec. 36 c.
The value of Interest free concessional loans to employees is determined on the basis
of lending rates of ..................... for the same purpose.
A) S.B.I. B) R.B.I. C) Central govt. D) State
govt.
Under Section 15 of Income Tax Act, the salary due in previous years and even if it is
not received is ………………………...
A) Taxable B) Not taxable
C) Partially taxable D) None of the above
The Payment of Gratuity Act came into force in ……………………..
A) 1973 B) 1980 C) 1991 D) 1972
In accordance with the provisions of Section 17(1) of Income Tax Act, 1961, the term
salary includes ……………………..
A) Any annuity or pension
B) Any gratuity
C) Any fees, commission, perquisite or profits in lieu of or in addition to any salary or
wages D) All of the above
The family pension received by the family members of armed forces after death of
employee is ……………………………….
A) Exempt fully B) Exempted after fulfilling of certain
conditions
C) Not exempted D) None of the above
The entertainment tax allowed as a deduction under Section 16 of Income Tax Act is
the least of ………………………….
A) Actual amount of entertainment allowance received
B) 20% of basic salary of the individual
C) 50,00
D) All of the above
Encashment of earned leave is given by ……………………… of Income TaxAct,

1961.
A) Section 10(10AA) B) Section12(10A)
C) Section 15(10B) D) None of the above
The assesses can claim relief under ………………………… for arrears or advance
salary.
A) Section 89(1) B) Section89(2)
C) Section 89(3) D) Section89(4)
U/s 15 salary is taxable on __ basis.
(a) Receipt (b) Due (c) Earlier of (a) or (b) (d) None
Pension/leave salary paid abroad for services
rendered in India is deemed to accrue _____.
(a) In India (b) Outside India
Which of the following is not the condition for
claiming exemption for HRA ?
(a) Employee is in receipt of HRA.
(b) Location of the employer.
(c) Rent paid by employee > 10% of salary.
(d) Location of the accommodation of employees
Maximum Exemption in case of leave encashment is:
(a) Rs. 2.4 lac (b) Rs. 3.5 lac (c) Rs. 3 lac (d) Rs. 10 lac
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) Rs. 10 lac (b) Rs. 5 lac (c) Rs. 3.5 lac (d) Rs. 20 lac
An employee is covered under Payment of Gratuity

Act, 1972 For purpose of computing 15 days’ salary, the
number of days in a month shall be taken as _____ days.
(a) 30 (b) 26 (c) 31 (d) Any of the above
An employee is covered under Payment of Gratuity

Act, 1972 If the employee has completed service of 16
years 6 months & 5 days then to calculate exemption of
Gratuity the number of completed years shall be taken as.
(a) 16 years (b) 17 years
(c) 16 years 6 months & 5 days (d) 16 years &7 months
Maximum Standard deduction u/h Salary shall be __.
(a) Rs. 40,000 (b) Rs. 50,000
(c) Rs. 2,500 (d) Rs. 5,000
Professional Tax is charged under which Article of
Constitution of India
(a) 274 (b) 275 (c) 276 (d) 277
The deduction for Professional Tax u/s 16(iii) is for
(a) Actual amount paid (b) Actual amount due
(c) Actual amount charged by SG (d) Always 2,500
. Entertainment allowance for govt. employee is.

(a) Fully exempt & therefore not included in Gross Salary
(b) Fully Taxable & therefore added in Gross Salary
(c) Not added in Gross Salary but deduction is allowed as
per limits of section 16(ii)
(d) First added in full in Gross Salary & thereafter
deduction allowed from Gross Salary is allowed u/s 16(ii)
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%
B
A
A
A
C
A
B
B
B
A
B

MCQ - Unit 2

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MCQ - Unit 2

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1

An individual is said to be resident and ordinarily resident if he satisfies –

An Indian company would –

If a person is the resident of India, in a PY----------

Foreign Income means .

Gross Total Income means Aggregate of Incomes

Total (taxable) Income means Aggregate of

Gratuity received by a government employee is .......................

Residential Status of an assesses can be …………………………..

Encashment of earned leave is given by ……………………… of Income TaxAct,

The maximum ceiling limit for exemption u/s

An employee is covered under Payment of Gratuity

An employee is covered under Payment of Gratuity

. Entertainment allowance for govt. employee is.

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