CS Executive · Free
Tax Laws and Practice MCQs for CS Executive
Chapter-wise Tax Laws and Practice MCQs with answers and explanations. Try the sample questions below, then practise a set of 10 with instant right/wrong.
Practise 10 Tax MCQsSample Tax Laws and Practice MCQs with answers
Q1 · Income from House Property
Under the Income-tax Act, 1961, which of the following is the correct basis of charge for a resident individual for income from house property?
- (a) Income from house property is taxable on actual rent received irrespective of ownership
- (b) Income is computed under the head 'Income from House Property' on the basis of annual value after permitted deductions, for the owner of the property
- (c) Income from house property is taxable only if the property is let out for business purposes
- (d) Income from house property is exempt when the owner occupies the property for residence
Show answer ↓
Answer: (b) Income is computed under the head 'Income from House Property' on the basis of annual value after permitted deductions, for the owner of the property
(b) is correct: income from house property is charged on the owner of the property on the basis of annual value, after the standard deduction of 30% of NAV and interest on borrowed capital. (a) is wrong because actual rent is not the test; annual value is. (c) and (d) misstate the charge, since self-occupied property is also taxable under this head, subject to the interest deduction limit.
Q2 · Income from Salaries
A salaried employee receives basic salary of Rs. 60,000 per month and dearness allowance (forming part of retirement benefits) of Rs. 10,000 per month. What is the salary income for the month before any other allowance, assuming no other components?
- (a) Rs. 60,000
- (b) Rs. 70,000
- (c) Rs. 50,000
- (d) Rs. 80,000
Show answer ↓
Answer: (b) Rs. 70,000
(b) is correct: basic salary and dearness allowance forming part of retirement benefits are both fully taxable as salary, giving Rs. 70,000 for the month. Rs. 60,000 ignores the dearness allowance, and Rs. 50,000 and Rs. 80,000 have no basis in the given figures.
Q3 · Capital Gains
A resident individual sells a long-term capital asset (land) for Rs. 40,00,000 and has an indexed cost of acquisition of Rs. 25,00,000. Assuming no expenses on transfer, what is the long-term capital gain before exemptions?
- (a) Rs. 15,00,000
- (b) Rs. 25,00,000
- (c) Rs. 65,00,000
- (d) Rs. 40,00,000
Show answer ↓
Answer: (a) Rs. 15,00,000
(a) is correct: long-term capital gain equals full value of consideration less indexed cost of acquisition, i.e. Rs. 40,00,000 minus Rs. 25,00,000 = Rs. 15,00,000. Rs. 25,00,000 wrongly uses the cost alone as the subtraction, and Rs. 65,00,000 adds instead of subtracting.
Q4 · Income from Other Sources
Mr. Ravi, a salaried employee, receives Rs. 50,000 as interest on a bank fixed deposit during the year. Under which head should this interest be assessed, assuming he has no business income?
- (a) Income from Salaries
- (b) Income from House Property
- (c) Income from Other Sources
- (d) Capital Gains
Show answer ↓
Answer: (c) Income from Other Sources
(c) is correct: interest on bank fixed deposits not forming part of any other head is taxable under Income from Other Sources. (a) is wrong since salary is only what is received from employment, and (d) is wrong because interest is not a capital gain.
Q5 · Income from Other Sources
Mrs. Priya receives a gift of Rs. 60,000 in cash from a friend (not a relative) during the year. What is the taxable amount under Income from Other Sources?
- (a) Nil, as gifts are always exempt
- (b) Rs. 60,000 in full
- (c) Rs. 50,000 in full, as Rs. 10,000 is exempt
- (d) Rs. 10,000 only
Show answer ↓
Answer: (b) Rs. 60,000 in full
(b) is correct: a cash gift from a non-relative is taxable in full where aggregate gifts in the year exceed Rs. 50,000, and the whole amount (Rs. 60,000) is taxed, not just the excess. (a) is wrong because only gifts from relatives and specified exceptions are exempt, and (c) and (d) wrongly apply a partial exemption.
Practise Tax Laws and Practice MCQs
Pick a chapter or practise all chapters. Your score card and analysis open in the free app.
Featured · Today
Daily MCQ set · CS Executive
Today's question of the day plus quick questions from your level.
Course
Level
Subject
Chapter
Free · no sign-up · questions checked by Bruno, the Studycaller AI
More CS Executive MCQs
Free app · 5 lakh+ learners
Unlimited Tax MCQs in the app
Score cards, weak-topic analysis, timer, ICAI-level questions and case studies — free on Android and iPhone.