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This set of Direct Tax Multiple Choice Questions & Answers (MCQs) focuses on Direct Tax Set 2

Q1 | M.Ltd announced increase in D.A. on 21-03-2017 with retrospective effect from 21-3-2012 and the same were paid on 6-04-2017. The arrears of D.A. shall be taxable in the previous year ________
  • 2016-17
  • 2017-18
  • In respective previous years to which these relate
  • Previous years
Q2 | Un -commuted pension received by a Government employee is ____________
  • Exempt
  • Taxable
  • 1/3 is exempt
  • Non taxable
Q3 | M.claimed the exemption of gratuity in the past to the extent of Rs.2,50,000.He was entitled to the gratuity from the present employer amounting to Rs.2,00,000 in the previous year 2017-18. M can claim exemption to the maximum extent of ___________
  • Rs.2,00,000
  • Nil
  • Rs.1,00,000
  • Rs.1,50,000
Q4 | Employee M is neither a government employee nor covered under payment of gratuity Act, 1972. He has completed 16 years and 8 months of service. The number of completed years considered for gratuity exemption shall be _____________
  • 17 years
  • 16 years
  • 16 years and 8 months
  • 19 years
Q5 | Compensation received on voluntary retirement is exempt under sec.10 (10c) to the maximum extentof ___________
  • Rs.2,40,000
  • Rs.3,00,000
  • Rs.5,00,000
  • Rs.6,00,000
Q6 | M is entitled to children education allowance @80 p.m per child for 3 children amountingRs.240p.m. It will be exempt to the extent of ___________
  • Rs.200 p.m
  • Rs.160 p.m
  • Rs.240 p.m
  • Rs.250 pm
Q7 | Entertainment allowance in case of government employee is _________________
  • Fully exempt
  • Fully taxable
  • Exempt up to certain limits mentioned in sec.16
  • First included in full in gross salary and thereafter deduction allowed from gross salary under section 16 (ii)
Q8 | Pension received by an employee of the central or state government who has been awarded “ParamVir Chakra” _____________
  • Is taxable as income from salary
  • Is exempt from tax
  • Is taxed after deducting Rs.15,000 or 1/3 whichever is lower
  • Is taxable as income from other sources
Q9 | Children education allowance is ____________
  • Exempt upto lower of the amount actually spent or the prescribed limits.
  • Exempt fully to the extent actually spent or the prescribed limits
  • Exempt to the extent of lower of allowance received or the lump sum amount prescribed, irrespective of actual expenditure.
  • Fully taxable
Q10 | Leave travel concession is _________
  • Exempt up to lower of the amount actually spent or the prescribed limits.
  • Exempt fully to the extent actually spent
  • Exempt to the extent of lower of allowance received or the lump sum amount prescribed, irrespective of actual expenditure.
  • Fully taxable
Q11 | M.has taken a house on rent and sublets the same to A, income of M from such house property shallbe taxable under the head _____________
  • Income from house property
  • Income from other sources
  • Business income
  • Income
Q12 | Municipal valuation of the house is Rs.1,00,000 fair rent Rs.1,20,000, fair rent Rs.1,20,000, standard rent Rs.1,10,000 and actual rent received or receivable is Rs.1,40,000. The gross annual value in this case shall be ____________
  • 1,30,000
  • 1,25,000
  • 1,40,000
  • 1,35,000
Q13 | A has two house properties. Both are self-occupied. The annual value of ____
  • Both houses shall be nil
  • One house shall be nil
  • No house shall be nil
  • Single house
Q14 | Municipal valuation of the house is Rs.1,20,000, fair rent 1,40,000, standard rent Rs.1,30,000 andactual rent received or receivable is Rs.1,25, 000.The gross annual value in this case shall be ______
  • 1,30,000
  • 1,25,000
  • 1,40,000
  • 1,60,000
Q15 | A has two house properties. Both are self-occupied. The annual value of _________
  • Both houses shall be nil
  • One house shall be nil
  • No house shall be nil
  • None of the above
Q16 | An assessee has borrowed money for purchase of house and interest is payable outside India. Suchas interest shall ____________
  • Be allowed as deduction
  • Not to be allowed as deduction
  • Be allowed as deduction if the tax is deducted at source
  • None of the above
Q17 | Municipal tax is deducted from__________
  • Net annual value
  • Gross annual value
  • Municipal valuation
  • Amount value
Q18 | In case the property is owned by co -owners and it is self-occupied by all co -owners. The annualvalue of such house property ____________
  • Be nil
  • For each co-owner shall be nil
  • Only for co -one owner will be nil
  • None of the above
Q19 | A house property with fair rent Rs.1,20,000 is neither let out nor self-occupied throughout theprevious year. Its annual value shall be ________
  • Rs.1,20,000
  • Nil
  • Rs.60,000
  • None of the above
Q20 | Unrealized rent is a deduction from ______-
  • Gross annual value
  • Net annual value
  • Municipal value
  • District
Q21 | Dhanesh is a member of house building cooperative society. The society is the owner of the flats constructed by it. One of the flats is allotted to Dhanesh. The income from that flat will be assesses in the hands of ____________
  • Co -Operative Society
  • Dhanesh
  • Neither of the above
  • Society and Dhanesh equally
Q22 | Following will be taxable as income from house property_______-
  • Sub -letting of a house
  • Letting of an office building
  • Sale of house at profit
  • Rent from open land used for wedding functions
Q23 | Municipal taxes to be deducted from GAV should be _______
  • Paid by the tenant during the previous year
  • Paid by the owner during the previous year
  • Accrued during the previous year
  • Accrued or paid by owner whichever is lower
Q24 | Standard deduction under section 24(a) from income from House property is _______
  • 1/3 rd of NAV
  • Repairs actually incurred by the owner
  • 30% of NAV
  • Rs.30,000
Q25 | Interest on borrowed capital accrued up to the end of the previous year to prior to the year ofcompetition of construction is allowed__________
  • As a deduction in the year of completion of construction
  • In 5 equal annual installments from the year of competition of construction.
  • In the respective year in which the interest accrues
  • Up to Rs.30,000 on Rs.20,000.