laboursonline – MCQs, Mock Tests | CBES Board Class 11 CS Executive Tax Laws MCQs Set-2

A municipal committee legally entitled to manage and control a municipal fund is chargeable to income-tax in the status of:

1. Individual
2. Association of persons
3. Local authority
4. Artificial juridical person

✅ Correct Answer: 3

A domestic company has a total income of ₹ 120 lakh. The rate of surcharge is applicable on income-tax would be:

1. 2%
2. 5%
3. 796
4. 296

✅ Correct Answer: 3

Mr. Ganapathy a resident individual received ₹12 lakh during the financial year 2020-2021 by way of dividends from domestic companies. The applicable rate of tax on such dividend income would be:

1. At the rate as per slabs
2. 31.296
3. Nil
4. 15.696

✅ Correct Answer: 1

The tax rate applicable for a non-resident engaged in the shipping business in India shall be:

1. 5%
2. 7.5%
3. 10%
4. 20%

✅ Correct Answer: 2

A Domestic Manufacturing Company claiming exemptions under Section 115BAA earned total income (computed) for the Assessment Year 2021-2022 ₹ 30 Crore. The rate of income tax applicable for such company (without cess) would be:

1. 2596
2. 3096
3. 2296
4. 1596

✅ Correct Answer: 3

Income chargeable to tax under the Income-tax Act, 1961 in the Assessment Year has been defined in Section 2(24) to include: (i) Voluntary contribution received by an electoral trust (ii) Profits of insurance business (iii) Amounts received under Keyman Insurance Policy [except where it is exempt u/s 10(10D)] (iv) Gift from non-relative of an amount exceeding ₹ 50,000

1. (ii) and (iv)
2. (i) and (iv)
3. (ii) and (iii)
4. All the four above

✅ Correct Answer: 4

In the case of a cooperative society, the surcharge is levied, where its total income exceeds Crore.

1. ₹ 1
2. ₹ 5
3. ₹ 10
4. None of the above

✅ Correct Answer: 1

HSP, an LLP had taken Key Men insurance policy on the life of its Managing Partner. The policy got matured on 13th September 2020, and an amount of ₹ 75 lakh was paid by the insurers to the Managing Partner. The amount so received on maturity of the policy by the managing partner:

1. is exempt in full u/s 10(10D)
2. 5096 of ₹ 75 lakh is exempt
3. ₹ 75 lakh is taxable
4. ₹ 25 lakh is exempt and the balance is taxable

✅ Correct Answer: 3

The basic exemption limit in case of a non-resident individual being a senior citizen for assessment year 2020-2021 is:

1. ₹ 5,00,000
2. ₹ 3,00,000
3. ₹ 2,50,000
4. ₹ 1,80,000

✅ Correct Answer: 3

Total income-tax including education cess payable in case of a resident individual aged 58 years, whose computed total income is ₹ 4,40,000 for the assessment year 2021-2022 shall be:

1. ₹ 2,080
2. Nil
3. ₹ 4,160
4. ₹ 4,680

✅ Correct Answer: 2

Income-tax on the income from the transfer of Carbon Credit under section 115BG of Income-tax, Act, 1961 derived /earned during the previous year 2020-2021 shall be taxable:

1. At the normal rate of tax
2. At a concessional rate of 10% only
3. At concessional rate of 10% + HEC
4. At 20% of concessional rate

✅ Correct Answer: 3

A resident individual can avail the benefit of rebate of ₹ 12,500 or 100% of Income Tax whichever is less under section 87A of Income-tax Act, 1961 for the assessment year 2021-2022 on fulfilling the condition that total income does not exceed:

1. ₹ 2,50,000
2. ₹ 5,00,000
3. ₹ 3,50,000
4. ₹ 3,00,000

✅ Correct Answer: 2

Surcharge on the amount of tax is to be levied at a specified percentage when an individual is having income exceeding specified limits:

1. @7% having income exceeding ₹ 1 Croreand@ 12% if the income exceeds ₹ 10 Crore
2. @ 2% having income exceeding ₹ 1 Crore and @ 12% if the income exceeds ₹ 10 Crore
3. @ 15% having income exceeding ₹ 1 Crore and @ 10% if the income exceeds ₹ 50 lakh but does not exceed ₹ 1 Crore
4. None of the above

✅ Correct Answer: 3

As per Income-tax Act, 1961 surcharge @ 12% is payable by a domestic company if the total income exceeds:

1. ₹ 10 lakh
2. ₹ 1 Crore
3. ₹ 10 Crore
4. ₹ 100 Crore

✅ Correct Answer: 3

The total income of Mrs. Rose for the financial year 2020-2021 is ₹ 4,40,000. Her tax liability for AY 2020-2021 on the income of ₹ 4,40,000 shall be:

1. NIL
2. ₹ 2,080
3. ₹ 2,500
4. ₹ 4,700

✅ Correct Answer: 1

The Central Board of Direct Taxes (CBDT) is headed by Chairman and also comprises six members. The Chairman and all the Members of the CBDT are being selected:

1. By Finance Minister
2. From IRS
3. By Prime Minister
4. By Chief Justice of India

✅ Correct Answer: 2

The Central Board of Direct Taxes (CBDT) provides essential inputs for policy and planning of direct taxes in India and is a functioning under the Central Board of Revenue Act, 1963.

1. Constituted Authority
2. Revenue Administration Authority
3. Statutory Authority
4. Central Authority

✅ Correct Answer: 3

The Apex Court in the case of CIT-Gujarat v. Saurashtra Cements Ltd. (2010) 233 CTR 209 has held that liquidated damages received from the supplier on account of delay in the supply of plant and machinery shall be treated in the nature of :

1. Capital Receipt
2. Revenue Receipt
3. Not a receipt but to be reduced from the cost of Plant & Machinery
4. Compensation

✅ Correct Answer: 3

Bimal is employed in a factory at a salary of ₹ 2,400 per month. He also gets a dearness allowance @ ₹ 600 per month and a bonus of @ ₹ 200 per month. He retired on 31 st December 2020 and received ₹ 75,000 as gratuity under the Payment of Gratuity Act, 1972 after serving 31 years and 4 months in that factory. The amount of gratuity exempt under the Income-tax Act, 1961 will be

1. ₹ 75,000
2. ₹ 53,654
3. ₹ 21,346
4. ₹ 20,00,000

✅ Correct Answer: 2

Akash is entitled to get a pension of ₹ 6,000 per month from a private company. He gets 60% of the pension commuted and receives ₹ 3,60,000. He also receives ₹ 2,00,000 as gratuity from the same employer. Taxable portion of commuted value of pension will be:

1. ₹ 1,60,000
2. Nil
3. ₹ 3,60,000
4. ₹ 60,000

✅ Correct Answer: 1

Anjan joins a service in the grade of ₹ 15,600 – 39,100 plus grade pay of ₹ 6,000 on 1.8.2020. He also gets a dearness allowance @ 225% of his salary. His tax liability for AY 2021 -2022 will be:

1. ₹ 15,410
2. ₹ 5,940
3. Nil
4. ₹ 19,340

✅ Correct Answer: 1

Chandan, a handicapped employee receives ₹ 3,000 p.m. as a transport allowance from his employer. His actual expenditure on transport is ₹ 2,000 p.m. The amount of transport allowance taxable under the head income from salaries will be—

1. ₹ 18,000
2. Nil
3. ₹ 6,000
4. ₹ 8,000

✅ Correct Answer: 2

Joy Ltd. transfers a Honda City car to its employee Happy after using it for 4 years and 10 months, for ₹ 2,10,000. The cost of the car is Y10,00,000. The value of taxable perquisite in the hands of Happy is:

1. ₹ 1,17,680
2. ₹ 1,99,600
3. Nil
4. ₹ 7,90,000

✅ Correct Answer: 2

Ramesh, an employee of Gauri & Co. of Delhi, received the following payments during the previous year ended 31st March 2021: Basic salary: ₹ 2,40,000 Dearness allowance: 40% of basic salary (40% forming part of salary). Rent-free unfurnished accommoda¬tion provided by the employer for which rent paid by employer being ₹ 50,000. The value of taxable perquisite in the hands of Ramesh will be:

1. ₹ 41,760
2. ₹ 50,000
3. ₹ 36,000
4. ₹ 52,500

✅ Correct Answer: 1

Children education allowance received by an employee from his employer is ₹ 80 per month per child for 3 children. Taxable education allowance will be

1. ₹ 960
2. ₹ 480
3. Nil
4. ₹ 1,200

✅ Correct Answer: 1

Which of the following is not correct about the approved superannuation fund?

1. Employees’contribution qualifies for deduction under section 80C
2. Any amount contributed by the employer is exempt from tax
3. Interest on accumulated balance is exempt from income-tax
4. Under some circumstances, payments from the fund are chargeable to income-tax

✅ Correct Answer: 2

Ashraf is an employee of Moon Public School. His daughter, Zara, is studying in the said school at concessional fees of ₹ 600 p.m. (Actual fee: ₹ 4,000 p.m.) Amount taxable in the hands of Ashraf will be

1. ₹ 48,000
2. ₹ 7,200
3. Nil
4. ₹ 40,800

✅ Correct Answer: 4

Ashok took an interest-free loan of ₹ 15,000 from B Ltd. (the employer). Assuming that the market rate of interest on the similar loan is 10%, the taxable value of the prerequisite in the hands of Ashok will be:

1. ₹ 150
2. ₹ 1,500
3. Nil
4. None of the above

✅ Correct Answer: 3

During the previous year 2020-21, Barun received a watch worth ₹ 20,000 from his employer. The taxable value of the watch will be

1. ₹ 20,000
2. ₹ 15,000
3. Nil
4. None of the above

✅ Correct Answer: 2

Kapil gets a salary of 712,000 p.m. and is provided with rent-free unfurnished accommodation at Pune (population 31 lakh). House is owned by the employer, the fair rental value of which is ₹ 1,400 p.m. House was provided with effect from 1st July 2020. Value of the prerequisite of rent-free accommodation will be:

1. ₹ 21,600
2. ₹ 10,800
3. ₹ 16,200
4. ₹ 12,600

✅ Correct Answer: 3

Anil is employed in a company with an annual salary of ₹ 8,60,000 (computed). The company paid income-tax of ₹ 37,000 on his non-monetary perquisites. He paid ₹ 1,20,000 to recognized provident fund during the year 2020-21. His total income would be:

1. ₹ 7,77,000
2. ₹ 7,40,000
3. ₹ 7,97,000
4. ₹ 7,60,000

✅ Correct Answer: 2

Rohan retires from private service on 30th April 2020 and his pension has been fixed at ₹ 1,500 p.m. He gets 1/2 of his pension commuted during January 2020 and receives ₹ 75,000. He also gets ₹ 60,000 as gratuity. The total pension taxable including commuted value will be

1. ₹ 16,500
2. ₹ 41,500
3. ₹ 39,250
4. ₹ 14,250

✅ Correct Answer: 3

Govt, of India paid a salary of ₹ 5 lakh and allowances and perquisites valued at ₹ 2.20 lakh to a person who is a citizen of India for the services rendered by him outside India for 5 months during the previous year. His total income chargeable to tax would be:

1. ₹ 6,80,000
2. ₹ 4,50,000
3. ₹ 5,70,000
4. Nil

✅ Correct Answer: 2

Pankaj joins service on 1st April, 2016 in the grade of ₹ 15,000-1,000-18,000-2,000-26,000. He shall be paying tax for the year ended on 31st March, 2021 on the total salary of:

1. ₹ 2,16,000
2. ₹ 2,40,000
3. ₹ 2,28,000
4. ₹ 1,80,000

✅ Correct Answer: 2

An employee of a company, who was entitled for a gratuity of ₹ 8,00,000, also received ₹ 12,00,000by commuting 40% of his pension. The taxable amount of commuted pension is:

1. ₹ 2,00,000
2. ₹ 4,00,000
3. ₹ 12,00,000
4. ₹ 22,00,000

✅ Correct Answer: 1

Ravi is receiving ₹ 10,000 as a medical allowance from his employer. Out of this, he spends ₹ 5,000 on his own medical treatment, ₹ 2,000 on the medical treatment of his dependent wife, and another ₹ 3,000 for the medical treatment of his major son who is not dependent on him. The amount of medical allowance taxable in his hand is:

1. ₹ 10,000
2. ₹ 5,000
3. ₹ 3,000
4. Nil

✅ Correct Answer: 1

Ms. Janhvi is provided with an interest loan by her employer for the purchase of a house. The value of the perquisite shall be:

1. Simple interest computed at the rate charged by the Central Government to its employees on 1st April of the previous year
2. Simple interest computed at the rate charged by State Bank of India on 1st April of the previous year
3. Simple interest computed at the rate charged by National Housing Bank on 1st April of the previous year
4. Simple interest computed at the rate determined by the employer on 1 st April of the previous year

✅ Correct Answer: 2

Murali is employed in Megha Ltd., Delhi. He is paid a house rent allowance of ₹ 9,000 per month in the financial year 2020-21 his salary for the purpose of computation or house rent allowance relief may be taken as ₹ 20,000 per month. Murali pays actual rent of ₹ 10,000 per month. How much of the house rent allowance is tax-free?

1. ₹ 1,08,000
2. ₹ 1,20,000
3. ₹ 96,000
4. ₹ 60,000

✅ Correct Answer: 3

Satish is employed as chief engineer in Gama Ltd., Chennai w.e.f. 1st April 2020 for a consolidated salary of ₹ 60,000 per month. He is provided with rent-free unfurnished accommodation owned by the employer from 1st July 2019 onwards. The value of taxable perquisite is

1. ₹ 1,08,000
2. ₹ 81,000
3. ₹ 72,000
4. ₹ 54,000

✅ Correct Answer: 2

Mrs. Meena retired from service with Sky Ltd. on 31st January 2021. She received the following amounts from the unrecognized provident fund: (i) Own contribution ₹ 1,50,000 (ii) Interest on own contri- ₹ 21,000 bution (iii) Employer’s contribu- ₹ 1,10,000 tion (iv) Interest on employer’s ₹ 15,000 contribution How much of the receipt is chargeable to tax as income from salary?

1. ₹ 21,000
2. ₹ 15,000
3. ₹ 1,25,000
4. ₹ 1,71,000

✅ Correct Answer: 3

A company acquired a motor car for ₹ 8 lakh on 30th June 2019. It sold the said motor car to its employee, Jayant, for ₹ 6 lakh on 10th June 2020. The company claimed depreciation @ 15% for the year ended 31st March 2020. The perquisite value in the hands of Jayant on sale of motor car would be –

1. ₹ 80,000
2. Nil
3. ₹ 2,00,000
4. ₹ 1,40,000

✅ Correct Answer: 3

awan, employed in Magic Ltd., was eligible for a transport allowance of ₹ 2,000 per month to meet his travel expenses from residence to office. He actually incurred ₹ 1,200 per month towards travel. The amount of travel allowance chargeable to tax as perquisite would be:

1. ₹ 24,000
2. ₹ 14,000
3. ₹ 4,800
4. Nil

✅ Correct Answer: 1

An employee of a public limited company received ₹ 3,00,000 as encashment of leave salary at the time of retirement. He has 18 months left to his credit at the time of retirement and his average salary for the last 10 months is ₹ 24,000. The taxable amount of leave encashment would be:

1. ₹ 2,40,000
2. ₹ 3,00,000
3. ₹ 60,000
4. Nil

✅ Correct Answer: 3

Allowances and perquisites allowed to an employee for services rendered outside India are tax-free in case of –

1. All types of employees
2. Government employees only
3. Non-government employees only
4. None of the above

✅ Correct Answer: 2

The company has provided a laptop worth ₹ 50,000 to his employee for official as well as personal purposes. The taxable amount of perquisites will be:

1. ₹ 5,000
2. ₹ 25,000
3. ₹ 10,000
4. Nil

✅ Correct Answer: 4

Mr. Ashwin retired on 31.10.2020 after rendering 35 years of service in PLN & Co. Ltd. He received a gratuity of ₹ 18 lakhs. He is governed by the Payment of Gratuity Act, 1972. The monetary limit eligible for the exemption is:

1. ₹ 20 lakhs
2. ₹ 10 lakhs
3. ₹ 3,50,000
4. Nil

✅ Correct Answer: 1

Mr. A is employed in ABS Transports as a cabin driver. He is paid ₹ 15,000 every month in the whole of the previous year 2020-21 as an allowance for meeting his personal expenditure in the course of running the goods vehicle. Mr. A does not receive any other amount by way of the daily allowance. The amount of allowance eligible for the exemption is:

1. ₹ 1,80,000
2. ₹ 1,20,000
3. ₹ 1,26,000
4. Nil

✅ Correct Answer: 2

Mr. Arjun employed in KL (P) Ltd. at Mumbai was provided rent-free accommodation by the employer who owned such accommodation. The salary income of Mr. Arjun for the purpose of computing the perquisite value is ₹ 8 lakhs. The perquisite value of rent-free accommodation in the hands of Mr. Arjun is:

1. 10% of salary ie. ₹ 80,000
2. 7.5% of salary ie. ₹ 60,000
3. Nil
4. 15% of salary ie. ₹ 1,20,000

✅ Correct Answer: 4

Mr. Gupta is given a motor car with chauffeur by the employer which is used for both official and personal purposes. The entire running expenses of the car amounting to ₹ 64,800 were met by the employer in the previous year 2020-21. The cubic capacity of the engine of the motor car exceeds 1.6 liters. The perquisite value of motor car taxable in the hands of Mr. Gupta is:

1. ₹ 19,200
2. ₹ 39,600
3. ₹ 28,800
4. ₹ 64,800

✅ Correct Answer: 2

Ashwin Co. Ltd. contributed 15% of the salary of the employee Virat towards the recognized provident fund. Amount liable to tax as perquisite in the hands of Virat would be of contribution.

1. 5%
2. 396
3. Nil
4. Any sum exceeding ₹ 1,50,000

✅ Correct Answer: 2