Income Tax MCQ with Answers PDF

Basic concept
(Bold Text = Answers)
1. Income tax is a
A) Direct tax
B) Indirect tax
C) Total tax
D) Danger tax

2. Sambalpur university is a
A) Local authority
B) Association of person
C) Individual
D) Artificial juridical person

3. Education cess is levid in case of

A) Individual
B) Hindu undivided family
C) All assesse
D) Company assesse

4. Income tax act 1961 imposed on

A) Legal income
B) Illegal income
 C) Both legal and illegal income
D) None of this

5. Income tax act 1961 applicable to

A) Jammu and Kashmir only
B) All state in India
C) All metro city
D) All India except Jammu and Kashmir

6. Assesse includes
A) Individual
B) Company
C) HUF, AOP/BOI
D) All of the above

7. AOP consist of
A) Individual only
B) Other than individual
C) Both
D) None of Above

8. BOI consist of
A) Individual only
B) Other than individual
C) Both
D) None of Above

9. Health & Education cess is

A) 6%
B) 2%
C) 4%
D) 3%

10. The term income is defined u/s

A) 2(24)
B) 3(24)
C) 24(2)
D) None of the above

11. Income tax act 1961 came in to force on

A) 1st April 1960
B) 31st march 1972
C) 1st April 1962
D) None of the above

12. Who has the statutory power to issued notification under income tax act1961
A) Central board of direct taxes
B) Central board of film certification
C) Finance department of state
D) None of the above
...
13. Income tax is imposed on
A) Half yearly
B) Annually
C) Monthly
D) Daily

14. Assessment year start on

A) 1st April
B) 31st march
C) 1st July
D) None of the Above

15. Previous year ends With

A) 1st April
B) 31st march
C) 1st July
D) None of the Above

16. How many head of income are there

A) 6
B) 3
C) 4
D) 5

17. Residential status is determined on

A) Assessment year
B) Calendar year
C) Previous year
D) Accounting year

18. Taxable income is determined on the basic of

A) Residential status in India
B) Citizenship of India
C) BPL card holder
D) Govt. job holder

19. Section of residential status is

A) 7
B) 6
C) 5
D) 4

20. Salary to MP/MLA is

A) Exempted
B) Free
C) Taxable
D) illegal
 MCQ on Income from Salary
1. Computation of income from salary section is
A) Sec 11-12
B) Sec 15-17
C) Sec 6-10
D) Sec 16-20

2. Deduction allowed against gross salary

A) Income tax
B) Entertainment tax
C) Professional tax
D) education tax

3. RPF full form in income tax

A) Reserve police force
B) Railway police force
C) Recognized provident fund
D) None of the above

4. Exemption limit of interest credit to RPF is

A) 6.5%
B) 9.5%
C) 7.5%
D) None of this

5. Employer contribution to RPF is Exempted up

A) 12%
B) 9.5%
C) 19%
D) 10%

6. Taxable amount of perquisite in respect of small car for offial and personal purpose
A) 1500 p.m.
B) 1800 p.m.
C) 2400 p.m.
D) None of the Above

7. Taxable amount of perquisite in respect of Big car for offial and personal purpose
A) 1800 p.m.
B) 2000 p.m.
C) 1500 p.m.
D) 2400 p.m.

8. Deduction from salary is allowed u/s

A) Sec 15
B) Sec 16
 C) Sec 25
D) None of Above

9. Education allowancw is exempted

A) Rs. 200 per month up to 4 child
B) Rs. 200 per month up to 3 child
C) Rs. 100per month up to 2 child
D) Rs. 100 per month up to 10 child

10. Medical bil reimbursed in respect of treatment in private hospital

A) Up to 15,000
B) Up to 12,000
C) Up to 25,000
D) None of the above

11. HRA exempted u/s

A) 15(13B)
B) 12(13C)
C) 10(13A)
D) None of the above

12. Perquisite Comes U/S

A) 19(3)
B) 17(2)
C) 2(17)
D) None of the above

13. Allowance from U.N.O is

A) partly taxable
B) fully taxable
C) fully exempted
D) None of the above

14. Entertainment allowance is

A) Partly exempted
B) Exempted
C) fully taxable
D) None of the Above

15. HRA exempted u/s 10(13A) includes

A) 40% of salary if accommodation is situated at Delhi, Mumbai, Chennai, Kolkata
B) 60% of salary if accommodation is situated at Delhi, Mumbai, Chennai, Kolkata
C) 50% of salary if accommodation is situated at Delhi, Mumbai, Chennai, Kolkata
D) None of the Above

16. Free food during working hours at office/ business premises exemopted up to
A) Rs. 50 per meal
B) Rs. 60 per meal
C) Rs. 90 per meal
D) None of the above
17. Agricultural income is
A) Taxable
B) Fully taxable
C) Exempted
D) Partly taxable

18. Exempted Income comes under section

A) Sec 12
B) Sec 10
C) Sec 24
D) Sec 13

19. Sec 10AA deduction implies

A) Buffer zone
B) Special economic zone
C) POK zone
D) None of the above

20. Allowance of MP/MLA is

A) Exempted
B) Free
C) Taxable
D) illegal

MCQ on Income from Business & Profession

1. Business has been defined
a. u/s 2(13)
b. u/s 13(2)
c. u/s 10(2)
d. None of the above

2. Chartered accountant is a …..

a. Profession
b. Vocation
c. Business
d. None of the above

3. Singer is a ….
a. Profession
b. Vocation
c. Business
d. None of the above
4. Example of Profession
a. Dancer
b. Singer
c. Lawyer
d. None of the above

5. Expenses allowed as a deduction u/s …. Under the head of profit and gain of business and
profession
a. Sec 20 to 25
b. Sec 15 to 27
c. Sec 30 to 37
d. None of the above

6. Depreciation comes u/s…. under the head of business profession

a. Sec 32
b. Sec 42
c. Sec 22
d. None of the above

7. Repairs & maintenance of machinery , plant & furniture

a. Sec 34
b. Sec 33
c. Sec 31
d. None of the above

8. Rent rates and taxes, repair & insurance for building come under section
a. Sec 40
b. Sec 30
c. Sec 20
d. None of the above

9. Speculative business are

a. Partly taxable
b. Fully taxable
c. Exempted
d. None of the above

10. Recovered against bad debts comes under section

a. Sec 41(4)
b. Sec 31(4)
c. Sec 21(4)
d. None of the above
 MCQ on Income from Capital Gains
1. Sec 45 related to
a. Capital assets
b. capitals gains
c. Assets
d. d. none of the above

2. Where total block of depreciable assets is transferred after 36 months, there will
a. Short term capital gains or loss
b. short term capital gains
c. long term capital gains
d. long term capital gains or losses

3. capital assets includes

a. deposit bonds
b. stock in trade
c. shares
d. none of the above

4. indexation will be allowed in case of

a. LTCG
b. STCG
c. Both
d. None of the above

5. How many types of capital gains are there

a. 3
b. 2
c. 4
d. None of the above

6. Indexation will be done

a. Shares
b. Debenture
c. Other security
d. All of the above

7. Cost inflation index before 31st march, 2001 …

a. 150
b. 200
c. 100
d. None of the above
8. Exemption is not allowed u/s
a. 54B
b. 54E
c. 54
d. None of the above

9. Short term capital gains is taxed at……. Price

a. Normal tax rates
b. Fixed tax rates
c. Market rates
d. None of the above

10. Exemption under section 54 is available to which persons

a. Company
b. Individual and HUF
c. AOP/BOI
d. None of the above

11. For deduction u/s 54EC , the individual should invest the whole or part of the capital gains in the
specified asserts …….
a. Within 6 months from the date of long term capital assets transfer
b. Within 3 months from the date of long term capital assets transfer
c. Within 12 months from the date of long term capital assets transfer
d. None of the above

12. Long term capital gain is taxed ……..

a. 30%
b. 25%
c. 20%
d. None of the above

13. If the goodwill of profession which is self-generated is transferred , then there will be
a. Long term capital gains
b. Short term capital gins
c. No capital gains
d. None of the above

14. Deduction from capital gains under section 54B is for capital gains arising from transfer of….
a. Agricultural land
b. Salary
c. House property
d. None of the above
15. The rate of tax that is imposed on STCG arising from transfer of equity shares of a company ,
concern, units of an equity oriented fund is…..
a. 25%
b. 15%
c. 30%
d. None of the above

16. Short term capital assets has been defined

a. Sec 4(24A)
b. Sec 4(22A)
c. Sec 2(42A)
d. None of the above

17. Long term capital assets

a. Sec 2(29A)
b. Sec 2 (92A)
c. Sec 9(22A)
d. None of the above

18. Transfer of capitals assets has been defined u/s

a. Sec 7(42)
b. Sec 2(47)
c. Sec 2(74)
d. None of the above

19. The computation of capital gains is u/s

a. 48
b. 49
c. 47
d. None of the above

20. Full form of STCG

a. Short term capital gains
b. Short term capital gold
c. Short time capital gain
d. None of the above

21. Computation of capital gains in case of slump sale has been defined u/s
a. 50C
b. 50D
c. 50B
d. None of the above
22. Transfer of security by depository u/s
a. 45(2B)
b. 45(2A)
c. 45(A2)
d. None of the above

23. Transfer of depreciable assets u/s

a. 50
b. 51
c. 52
d. None of the above

24. Transfer of capital assets being the units of UTI or other mutual funds comes u/s
a. Sec 45(8)
b. Sec 45(7)
c. Sec 45(6)
d. None of the above

25. Full form of LTCG

a. Long term capital gains
b. Long term capital gold
c. Long time capital gain
d. None of the above

MCQ on Income from others sources

1. What is the maximum amount of deduction from family pension is…
a. 20,000
b. 15,000
c. 25,000
d. None of the above

2. The aggregate value of monetary gift received during the previous year is exempted , if it
a. Doesn’t exceed 50,000
b. Exceed 50,000
c. Exceed 45,000
d. None of the above

3. T.D.S. is not deducted on lottery income up to…. Amount

a. 10,000
b. 15,000
 c. 5,000
d. None of the above

4. Income from others sources may be includes

a. Indian company dividend
b. Dividend from units
c. Foreign company dividend
d. All of the above

5. If I win from crossword puzzles, horse races, card games and lotteries . then rate of TDS……?
a. 25%
b. 15%
c. 30%
d. None of the above

6. The amount of dividend received from cooperative society is….

a. Partly taxable
b. Exempted
c. Taxable
d. None of the above

7. Gift received from my wife is

a. Exempted
b. Partly taxable
c. Taxable
d. None of the above

8. Income from others sources is known as

a. films head of income
b. Residuary head of income
c. marriage heads of income
d. none of the above

9. income from others sources is u/s ……

a. 56
b. 57
c. 55
d. None of the above

10. Interest on saving bank account is exempted up to……

a. 15,000
b. 12,000
c. 10,000
d. None of the above
 MCQ on Agricultural income
1. Agricultural income defined u/s
a. sec 2(1A)
b. Sec 2(2A)
c. Sec 1(2A)
d. None of the above

2. Agricultural income related to

a. Capital
b. Land
c. Machinery
d. None of the above

3. Agricultural income includes

a. Cultivation
b. Farm house building
c. Agricultural activities
d. All of the above

4. Rule 7 applicable to all except

a. Tea, coffee, and rubber
b. Samosa, aluchop, biribada
c. Pan ,pudia, bhang
d. None of the above

5. Non-agricultural income formulas = sale proceeds of industrial product – M.V. of agricultural

produce used as raw material - industrial expenses (except cost of cultivation)
a. False
b. True
c. Doubt
d. None of the above

6. Agricultural income formulas = M.V. agricultural produce used as raw material - cost of
cultivation
a. True
b. False
c. Doubt
d. None of the above
7. Rule 8 related to
a. Gas manufacturing
b. Tea manufacturing
c. Pan card business
d. None of the above
 8. Income from coffee manufacturing has been divided as
a. 75% as agricultural income & 25% as business income
b. 25% as agricultural income & 75% as business income
c. 40% as agricultural income & 60% as business income
d. None of the above

9. Profit from tea manufacturing has been divided as

a. 40% as agricultural income & 60% as business income
b. 60% as agricultural income & 40% as business income
c. 75% as agricultural income & 25% as business income
d. None of the above

10. Income from rubber manufacturing has been divided as

a. 35% as agricultural income & 65% as business income
b. 75% as agricultural income & 25% as business income
c. 65% as agricultural income & 35% as business income
d. None of the above

MCQ on Set-off and Carry-forward of Losses

1. Set of loss under the same head of income comes under section
A) Sec 60
B) Sec 70
C) Sec 80
D) None of the above

2. Set of loss against income under other heads of income under section......
A) Sec 51
B) Sec 61
C) Sec 71
D) None of the above

3. Loss from the house property can be set off against ......
A) Business profession
B) Capital gains
C) Salaries
D) All of the above

4. Long term capital gain can be carried forward for

A) 8 subsequent assessment years
B) Indefinitely
 C) 6 years
D) None of the above

5. Short term capital loss can be set off in the same assessment year from
A) Long term capital gains
B) Short term capital gold
C) Both
D) None of the above

6. Loss from specified business can be set off

A) Income other than salary
B) Any head of income
C) Profits of any other specified business only
D) None of the above

7. Compulsory filing of loss return has been defined u/s

A) 80
B) 70
C) 60
D) None of the above

8. Carry forward and set off of capital losses comes under section
A) 74(1) & (2)
B) 73(1) & (2)
C) 71(1) & (2)
D) None of the Above

9. The share of loss from a from cannot be set off by a partner against his.....income
A) Gross
B) Total
C) Individual
D) None of the above

10. Loss from house property can be set off only up to ..... From any head on income
A) 2,50,000
B) 2,00,000
C) 3,00,000
D) None of the Above
 MCQ on Clubbing and Aggregation of Income

1. Revocable transfer of assets has been defined under sec...…

A) Sec 51
B) Sec 61
C) Sec 71
D) None of the above

2. In order to curb tax avoidance practices, some necessary clubbing provision have been incorporated u/s
…..
A) 60 to 64
B) 50 to 54
C) 70 to 74
D) None of the above

3. Inclusion of others incomes in the income of the assessee is known as….

A) Inclusion of income
B) Other income
C) Clubbing of income
D) None of the above

4. Clubbing of income of minor child has been defined under section….

A) Sec 64(1A)
B) Sec 74(1A)
C) Sec 64(1B)
D) None of the above

5. Exemption to parent comes u/s….

A) Sec 10(31)
B) Sec 10(32)
C) Sec 10(33)
D) None of the above
E)

6. Amounting to Rs. …. Is exemption in respect to each minor child under clubbing and aggregation of
income
A) 2500
B) 1500
C) 3500
D) None of the above

7. The person on whose name the property has been purchased is known as …… and the property is
known as……
A) Benamidar, Benami property
B) Ostensible owner, own property
C) Benami, footpath
D) None of the above
8. Clubbing provision are applicable for
A) HUF
B) Individual
C) Firms
D) None of the Above

9. Clubbing provision are applicable in case of

A) Positive income
B) Negative income
C) Both
D) None of the above

10. In case parent are separated, then the income of minor will be included in the income of Mother
A) Mother
B) Father
C) That parent who maintain the minor
D) None of the Above

MCQ on Deductions from Gross Total Income

1. Gross total income has been defined u/s .......

A) Sec 80A(1)
B) Sec 80(1)
C) Sec 80u
D) None of the above

2. Maximum deduction allowed in respect of LIP, contribution to PF etc. u/s 80C

A) 125000
B) 175000
C) 150000
D) None of the above

3. Full form of NSC in deduction from gross total income

A) National saving certificate
B) National saving circle
C) National service commission
D) None of the above

4. Who is eligible for deduction in respect of contribution to certain penson funds u/s 80CCC
A) HUF
B) Individual
C) Firms
D) None of the above
 5. Deduction in respect of investment made under rajiv Gandhi equity saving scheme comes u/s
A) 80CCC
B) 80CGC
C) 80CCG
D) None of the above

6. Deduction in respect to medical treatment of disabled dependent has been defined u/s
A) Sec 80CC
B) Sec 80DD
C) Sec 80BB
D) None of the above

7. Deduction in respect to medical treatment come u/s....

A) 80DDB
B) 80CCB
C) 80AAB
D) None of the above

8. Deduction in respect of interest in loan taken for higher education come u/s.....
A) 80E
B) 80C
C) 80D
D) None of the Above

9. Deduction in respect to donation to charitable institution come u/s....

A) 80E
B) 80G
C) 80GG
D) None of the above

10. Deduction in respect of rent paid comes under section....

A) 80U
B) 80E
C) 80GG
D) None of the Above

11. Deduction to political parties has been defined u/s.......

A) 80GGC
B) 80CCG
C) 80GCG
D) None of the above

12. Deduction in respect of profits and gains of an eligible startup comes u/s.....?
A) 80CAI
B) 80ACI
C) 80IAC
D) None of the above

13. Deduction in respect to special economic zone(SEZ) Unit come u/s ....
A) 80ABI
B) 80IAB
 C) 80AIB
D) None of the above

14. Deduction in respect of cooperative society.....

A) 80P
B) 80C
C) 80CO
D) None of the Above

15. Deduction in respect of royalty of author....

A) Sec 80QQB
B) Sec 80RA
C) Sec 80ROA
D) None of the above