UGC NET - Income-tax: concepts, residential status, exempt incomes, agricultural income, computation under heads, deductions, assessment of individuals, clubbing Online Test (MCQ Quiz)

1. What is the primary legal framework governing income tax in India?

A) The Companies Act, 2013 B) The Income-tax Act, 1961 C) The Goods and Services Tax Act, 2017 D) The Indian Contract Act, 1872

2. Which of the following is NOT a basic concept in income tax?

A) Assessee B) Assessment Year C) Capital Asset D) Net Profit

3. An 'Assessee' under the Income-tax Act, 1961 includes:

A) Every person by whom any tax or any other sum of money is payable B) Every person in respect of whom any proceeding under this Act is held C) Both (a) and (b) D) Only a person holding a Permanent Account Number (PAN)

4. What is the 'Previous Year' in the context of income tax?

A) The financial year immediately preceding the Assessment Year B) The calendar year in which the income is earned C) The year in which the tax return is filed D) The financial year in which the income is earned

5. Which of the following is NOT an 'Assessment Year'?

A) 2023-24 B) 2024-25 C) 2022-23 D) 2021-2021

6. What is the significance of 'Residential Status' for an individual?

A) It determines the taxability of income earned outside India B) It affects the rate of tax applicable C) It is used to classify income as capital or revenue D) It is irrelevant for tax purposes

7. An individual is considered 'Resident and Ordinarily Resident' (ROR) if they satisfy which of the following conditions?

A) Resident in India for at least 182 days in the previous year B) Resident in India for at least 60 days in the previous year and 365 days in the preceding 4 previous years C) Resident in India for at least 182 days in the previous year AND satisfies the two conditions relating to residency in India in previous years D) Resident in India for at least 120 days in the previous year

8. Income earned by a 'Non-Resident' is generally taxed in India on:

A) Income accrued or arisen in India or deemed to accrue or arise in India B) Income received or deemed to be received in India C) Both (a) and (b) D) Only income earned globally

9. Which of the following incomes is generally exempt from income tax?

A) Salary income B) Income from house property C) Agricultural income D) Income from business

10. Agricultural income is defined as rent or revenue derived from land situated in India and used for:

A) Agricultural purposes B) Gardening purposes C) Forestry purposes D) Any of the above

11. If a person earns both agricultural income and non-agricultural income, and the agricultural income is above a certain threshold, how is the tax calculated?

A) Agricultural income is taxed separately at a flat rate B) Non-agricultural income is taxed at normal rates, and agricultural income is exempt C) Marginal relief is provided on the non-agricultural income D) The agricultural income is added to non-agricultural income to calculate tax, applying the slab rates of individuals, and then tax on agricultural income is calculated separately. Relief is given for tax on agricultural income.

12. Which of the following is NOT considered a 'Head of Income' under the Income-tax Act?

A) Salaries B) Profits and Gains of Business or Profession C) Capital Gains D) Interest Income

13. Income from house property is computed after deducting:

A) Interest on loan taken for repairs B) Municipal taxes paid by the owner C) Annual value of the property D) All of the above

14. What is the standard deduction available for salary income?

A) 10% of salary B) Rs. 50,000 or the amount of salary, whichever is less C) Rs. 30,000 D) No standard deduction is available

15. Which deduction is available for interest paid on a loan taken for acquiring a self-occupied house property?

A) Rs. 2,00,000 B) Rs. 1,50,000 C) Rs. 1,00,000 D) Rs. 50,000

16. Deduction under Section 80C of the Income-tax Act is available for:

A) Medical insurance premium B) Repayment of principal amount of housing loan C) Donations to specified funds D) Interest paid on education loan

17. Which of the following is a 'permissible deduction' when computing income under the head 'Profits and Gains of Business or Profession'?

A) Personal expenses of the proprietor B) Capital expenditure C) Interest paid on capital borrowed for business purposes D) Fines and penalties paid to government

18. Long-term capital gains are gains arising from the sale of a capital asset held for a period exceeding:

A) 12 months B) 24 months C) 36 months D) 6 months

19. Which section deals with the taxation of capital gains on sale of equity shares of a company listed on a recognized stock exchange?

A) Section 112A B) Section 111A C) Section 45 D) Section 54

20. Income from other sources includes:

A) Dividend income B) Winnings from lotteries C) Interest on securities not forming part of business D) All of the above

21. What is the maximum limit for deduction under Section 80D for medical insurance premium for self, spouse, and dependent children?

A) Rs. 25,000 B) Rs. 50,000 C) Rs. 75,000 D) Rs. 1,00,000

22. Which of the following is NOT a mode of assessment?

A) Self-assessment B) Best judgment assessment C) Summary assessment D) Advance assessment

23. Under which section can the Assessing Officer make a 'Best Judgment Assessment'?

A) Section 143(3) B) Section 144 C) Section 147 D) Section 153A

24. What is the primary purpose of 'Clubbing of Income' provisions?

A) To prevent tax evasion by transferring income to persons with lower tax liability B) To simplify tax calculations C) To encourage investment D) To provide relief to taxpayers

25. Which of the following scenarios falls under the clubbing of income provisions?

A) Income earned by a minor child from his own skills or experience B) Income of a spouse from a business where the other spouse has also invested own funds C) Income of a minor child from a business set up by parents D) Both (a) and (c)

26. If an individual is a 'Resident but Not Ordinarily Resident' (RNOR), their taxable income in India includes:

A) Income accrued or arisen in India B) Income received in India C) Income accrued or arisen outside India during the previous year D) Only income accrued or arisen in India and income received in India

27. Which section deals with the exemption of certain allowances received by an employee?

A) Section 10(1) B) Section 10(13A) C) Section 10(5) D) Section 10(23C)

28. Leave Travel Concession (LTC) exemption is available under which section?

A) Section 10(13A) B) Section 10(5) C) Section 10(10AA) D) Section 10(14)

29. What is the maximum amount of deduction allowed for donations to certain funds and charitable institutions under Section 80G?

A) 50% of the donated amount B) 100% of the donated amount C) 50% or 100% of the donated amount, subject to qualifying limits D) Rs. 1,00,000

30. Income from royalties, fees for technical services, or interest on securities received by a non-resident may be taxed at a special rate under:

A) Section 115A B) Section 112A C) Section 111A D) Section 115BAC

31. The tax liability of an individual is computed on their:

A) Gross total income B) Total income C) Net income D) Taxable income

32. Which of the following is a capital asset?

A) Stock-in-trade B) Consumable stores C) Land used for agricultural purposes D) Personal jewellery

33. What is the tax treatment of short-term capital gains?

A) Taxed at special rates B) Taxed at slab rates C) Exempt from tax D) Taxed at a flat rate of 20%

34. Deduction for interest paid on loan taken for higher education is available under which section?

A) Section 80E B) Section 80D C) Section 80G D) Section 80EEA

35. Which of the following is NOT a condition for computing income under the head 'Profits and Gains of Business or Profession'?

A) The income must be of a revenue nature B) The income must arise from a business or profession carried on by the assessee C) The income must be received in India D) The income must be computed according to the method of accounting regularly employed by the assessee

36. Under the clubbing provisions, income from assets transferred to a spouse without adequate consideration is clubbed with the income of:

A) The spouse B) The transferor spouse C) Both spouses equally D) The minor child

37. Which of the following is a tax-free allowance for an employee?

A) City Compensatory Allowance B) Dearness Allowance C) House Rent Allowance (subject to limits) D) Conveyance Allowance (for personal use)

38. The exemption for gratuity received by government employees on retirement is:

A) Rs. 3,50,000 B) Rs. 10,00,000 C) As per the provisions of the Payment of Gratuity Act, 1972 D) Fully taxable

39. What is the threshold limit for agricultural income to be considered for aggregation with non-agricultural income for tax calculation purposes?

A) Rs. 2,500 B) Rs. 5,000 C) Rs. 10,000 D) Rs. 15,000

40. Which section deals with the taxation of income from undisclosed sources?

A) Section 68 B) Section 69 C) Section 69A D) Section 69B

41. Deduction for expenses incurred for treatment of specified diseases for a dependent is available under which section?

A) Section 80D B) Section 80DD C) Section 80DDB D) Section 80U

42. What is the maximum deduction allowed for interest on housing loan for a self-occupied property?

A) Rs. 1,00,000 B) Rs. 1,50,000 C) Rs. 2,00,000 D) Rs. 3,00,000

43. Which of the following is NOT a condition for an individual to be resident in India for tax purposes?

A) 182 days or more in the previous year B) 60 days or more in the previous year and 365 days in the preceding 4 previous years C) 120 days or more in the previous year and 480 days in the preceding 7 previous years D) Visits India at least once in the previous year

44. The taxability of income earned by a Resident and Ordinarily Resident (ROR) includes:

A) Income accrued or arisen in India only B) Income received in India only C) Income accrued or arisen outside India D) All of the above

45. What is the tax rate for short-term capital gains on sale of equity shares on which Securities Transaction Tax (STT) has been paid?

A) 10% B) 15% C) 20% D) 30%

46. Which of the following is a deduction from 'Gross Total Income'?

A) Standard deduction for salary B) Interest on borrowed capital for business C) Deduction under Chapter VI-A D) Depreciation

47. Income from lottery is taxed under which head?

A) Salaries B) Profits and Gains of Business or Profession C) Capital Gains D) Income from Other Sources

48. Tax liability of an individual is calculated based on the rates applicable for:

A) Assessment Year B) Previous Year C) Financial Year D) Calendar Year

49. Which section allows for deductions for rent paid by an employee in a metro city?

A) Section 80GG B) Section 80GGA C) Section 80GGC D) Section 80E

50. The concept of 'deemed dividend' falls under which head of income?

A) Salaries B) Profits and Gains of Business or Profession C) Capital Gains D) Income from Other Sources

Income-tax: concepts, residential status, exempt incomes, agricultural income, computation under heads, deductions, assessment of individuals, clubbing - Online Test

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