State whether the following are TRUE (Or) FALSE
1) Mr.'X' is a Partner in a firm.He is assessable as an individual (T)
2) Mr'Y' is the M.D of A Ltd. He is assessable as an individual (T)
3) Delhi Muncipal Corporation is assessable as an AJP (F)
4) Bombay Sales Tax Bar Council is an AOP (F)
5) The Finance Act 2009, provides the Income Tax rates for the
AY 2011-12 (F)
6) An Association which has as its members Firms, HUF's, Individuals.
etc is a BOI (F)
Test Your Concepts
1) A.Y. may be less than 12 months (T/F) _______________
2) The basic source of Income-tax Law is __________________
a) Income- Tax Act, 1961
b) Circulars/Notifications issued by CBDT
c) Judgements of Courts
3) The exceptions "AOP/BOI/AJP - formed for a SHORT DURATION is covered U/s
174A
4) The definition of PERSON under the Income Tax Act, 1961 is complete/incomplete Incomplete
5) Every Assessee is a Person but every person need not be an Assessee ( T/F) True
6) Illegal Income is exempt under the Income Tax Act T/F) False
7) A Representative Assessee U/s160 is a deemed to be an Assessee.
8) Income Could be either Positive Income (or) Negative Income
9) Sec 176 covers the provisions for Income of a Discontinued Business/ Profession
10) Who is a Deemed to be an Assessee in Default ?
A) a Person who has not deducted TDS
B) a Person who has deducted TDS but has not deposited it within time with the Govt.
C) a Person who has not paid any Advance Tax - when it is due to be paid etc.
D) All of the Above.
Answer : D
11) Assessee is Defined U/s 2(7)
12) An AOP & BOI means the same under the Income Tax Act, 1961 (T/F) False
13) If the Net Income is Rs. 5,68,765 then it is rounded off to Rs. 568770
14) If the Net Income is Rs. 568763 then it is rounded off to Rs. 568760
15) Deductions U/s 80C to 80U are covered under Chapter VI A of the Income tax Act.
16) The Surcharge for a Domestic Company is @ if the Net Income exceeds Rs. 1 Crore
17) The Exemption Limit for Resident Woman who is 65 years of Age for the A.Y. 2010-11 is Rs. 2,40,000.
18) In the case of AJP, surcharge is payable only if the Net Income exceeds Rs. 10,00,000 (T/F) False
19) Total Education Cess @3% is payable for the A.Y 2010-11 on –
A) Income Tax
B) IT+ SURCHARGE
C) Surcharge
D) None
Answer : B
20) The Income Tax rate on S/T-C/G covered U/s 111A for the A.Y. 2010-11 is @ 15%
21) ITL on Casual Incomes U/s 115 BB will be @ 30%
22) The exemption limit for PSF’s for the A.Y. 2010-11 is Rs. NIL
23) A Domestic Company means :-
a) Only an Indian Company
b) Only a Foreign Company which has made the prescribed arrangements for declaration and payment of dividends in India
c) Indian Company and a foreign company which has made the prescribed arrangements for declaration and payment of dividends in India
ANSWER :- C
24) The Surcharge for an Individual is :-
A) 10% of tax payable
b) 2.5% of tax payable
c) 10% of tax payable if total income exceeds Rs. 10Lakh
d) None
ANSWER : - D
25) The additional benefit available to a Resident Woman Assessee below the age of 65 years at any time during the previous year 2009-10
a) Higher basic exemption limit of Rs. 1,90,000
b) Higher basic exemption limit of Rs. 2,40,000
c) Rebate of tax payable subject to a maximum of Rs. 5000
ANSWER : - A
26) If an Individual Assessee has no other Income except a Lottery Winning of Rs. 1,00,000 during the P.Y. 2009-10, then the following provision will apply :
a) The entire Rs. 1,00,000 will be exempt
b) The entire Rs. 1,00,000 will be taxable @ 30% + Total EC @3% U/s 115 BB
27) The surcharge applicable to a Foreign Company for A.Y. 2010-11 is
a) Nil
b) 2.5% if the total income exceeds Rs. 1 Crore.
c) 2.5%
ANSWER :- B
Thursday, December 24, 2009
Monday, November 30, 2009
OBJECTIVE QUESTIONS ON VAT
VALUED ADDED TAX
1. Tax is levied under VAT at:
a) Last stage of sale b) Multi Stage c) First stage of sale d) First and last stage of sale
2. State whether true or false:
a) lnput credit under VAT is available on account of Central Sales Tax paid on the purchases
b) Input credit is available on account of import duty paid on goods purchased from a country out side India
c) Input credit is payable on account of VAT paid on capital goods
d) Input credit is available only if the purchaser has obtained proper tax in voice
e) VAT avoids cascading effect
f) Vat is easy to administer and transparent
3. VAT is calculated by deducting tax credit from tax collected¬
a) during the payment period
b) during the financial year
c) during any period
Answers to multiple choice questions
1. (B) 2. (B) (F) 2. (D) (T) 2. (F) (T)
2. (A) (F) 2. (C) (T) 2. (E) (T) 3. (A)
PRACTICAL PROBLEMS
Problem No.1: Compute the invoice value to be charged and amount of tax payable under VAT by a dealer who had purchased goods for Rs. 1,20,0000 and after adding for expenses of Rs.10,000 and of profit Rs. 15,000 had sold out the same.
The rate of VAT on purchases and sales is 12.5%.
Invoice value to be charged
Purchase price of goods
Add: Expenses
Add: Profit margin
Amount to be billed
Add: VAT @ 12.5%
Total invoice value 1,20,000
10,000
15,000
1,45,000
18,125
1,63,125
VAT to be paid
VAT charged in the invoice
Less: VAT credit on input 12.5% of Rs. 1,20,000
Balance VAT payable 18,125
15,000
3,125
Problem No.2: Manufacturer A sold product X to B of Delhi @ Rs. 1000 per unit. He has charged CST @ 4% on the said product and paid Rs. 60 as freight.
B of Delhi sold goods to C of Delhi @ Rs. 1250 per unit and charged VAT @ 12.5%.
C of Delhi sold goods to D, a consumer @ Rs. 1500 per unit and charged VAT @ 12.5%
B Liability of VAT Rs.
Cost of product X purchased from Mumbai
Rs. 1000 + 40 (CST) + Rs. 60
(Credit of CST shall not be allowed under VAT)
Sale price
VAT payable
1,100
1,250
156.25
C Liability of VAT Rs.
Purchase price exclusive of VAT
VAT credit to be taken
Sale price
VAT payable @ 12.5%
VAT credit allowed
Net VAT payable 1,250
156.25
1,500
187.50
156.25
31.25
1. Tax is levied under VAT at:
a) Last stage of sale b) Multi Stage c) First stage of sale d) First and last stage of sale
2. State whether true or false:
a) lnput credit under VAT is available on account of Central Sales Tax paid on the purchases
b) Input credit is available on account of import duty paid on goods purchased from a country out side India
c) Input credit is payable on account of VAT paid on capital goods
d) Input credit is available only if the purchaser has obtained proper tax in voice
e) VAT avoids cascading effect
f) Vat is easy to administer and transparent
3. VAT is calculated by deducting tax credit from tax collected¬
a) during the payment period
b) during the financial year
c) during any period
Answers to multiple choice questions
1. (B) 2. (B) (F) 2. (D) (T) 2. (F) (T)
2. (A) (F) 2. (C) (T) 2. (E) (T) 3. (A)
PRACTICAL PROBLEMS
Problem No.1: Compute the invoice value to be charged and amount of tax payable under VAT by a dealer who had purchased goods for Rs. 1,20,0000 and after adding for expenses of Rs.10,000 and of profit Rs. 15,000 had sold out the same.
The rate of VAT on purchases and sales is 12.5%.
Invoice value to be charged
Purchase price of goods
Add: Expenses
Add: Profit margin
Amount to be billed
Add: VAT @ 12.5%
Total invoice value 1,20,000
10,000
15,000
1,45,000
18,125
1,63,125
VAT to be paid
VAT charged in the invoice
Less: VAT credit on input 12.5% of Rs. 1,20,000
Balance VAT payable 18,125
15,000
3,125
Problem No.2: Manufacturer A sold product X to B of Delhi @ Rs. 1000 per unit. He has charged CST @ 4% on the said product and paid Rs. 60 as freight.
B of Delhi sold goods to C of Delhi @ Rs. 1250 per unit and charged VAT @ 12.5%.
C of Delhi sold goods to D, a consumer @ Rs. 1500 per unit and charged VAT @ 12.5%
B Liability of VAT Rs.
Cost of product X purchased from Mumbai
Rs. 1000 + 40 (CST) + Rs. 60
(Credit of CST shall not be allowed under VAT)
Sale price
VAT payable
1,100
1,250
156.25
C Liability of VAT Rs.
Purchase price exclusive of VAT
VAT credit to be taken
Sale price
VAT payable @ 12.5%
VAT credit allowed
Net VAT payable 1,250
156.25
1,500
187.50
156.25
31.25
OBJECTIVE QUESTIONS ON SERVICE TAX
SERVICE TAX
1. Service tax was introduced in India in the year:
a) 1993 b) 1995 c) 2004 d) 1994
2. Service tax was introduced first time on:
a) 5 services b) 3 services c) 4 services d) 7 services
3. Service tax was initially levied in India by the Constitution vide entry No.
a) 92C of the Union list b) 54 of the State list
c) 92C of the concurrent list d) 97 of the Union list
4. The provisions relating to service tax are given in:
a) Chapter V of the Finance Act, 1994
b) Chapter V and VA of the Finance Act, 1994
c) Chapter VII and VIII of the Finance Act, 2004
d) The Service tax Act, 1994
5. The power to levy service tax is now provided by the Constitution vide entry No.
a) 92C of the Union list b) 97 of the Union list
c) 54 of the State list d) 93 of the Union list
6. Service tax is applicable to:
a) Whole of India b) Whole of India except Jammu and Kashmir
c) Whole of India, except Jammu and Kashmir and Union Territories of Dadra, Nagar Haveli, Daman & Diu
7. Service tax was introduced in India on the recommendation of:
a) Kelkar Committee b) Dr. Raja J Challiah Committee
c) Dr. Man Mohan Singh Committee d) Dr. Yashwant Sinha Committee
8. Service tax is levied in India by following the:
a) Comprehensive approach b) Selective approach
9. Service tax is governed and administered by
a) CBDT b) CBEC
10. The power to make rules for service tax is given to Central Government by
a) sections 66 and 67 of the Finance Act, 1994
b) section 94 of the Finance Act, 1994
c) sections 94 and 96-1 of the Finance Act, 1994
d) sections 93 and 94 of the Finance Act, 1994
11. Service tax is payable on the value of taxable service @
a) 12% b) 12.24% c) 12.36% d) 10.3%
12. Service tax is a charge on:
a) Taxable service provided b) Taxable service to be provided
c) Taxable service provided or to be provided
d) Any service provided or to be provided
13. Education cess was levied by
a) The Finance Act, 1994 b) The Finance No. (2) Act, 2004
c) The Finance Act, 2006
14. Where service is received from outside India, such service shall be:
a) taxable in the hands of service provider b) taxable in the hands of Service recipient
c) exempt from service tax
15. Service tax is not payable if the aggregate value of taxable service does not exceed:
a) Rs.8,00,000 b) Rs. 10,00,000 c) Rs. 4,00,000 d) Rs. 6,00,000
16. If the aggregate value of taxable service in the preceding financial year exceeds Rs. 10,00,000, service tax shall be payable during the current financial year -¬
a) If the aggregate value of taxable service exceed, Rs. 10,00,000 during the current year.
b) on the entire aggregate value of service,
c) If the aggregated value of taxable service exceeds Rs. 10,00,000 during the current financial year.
17. If the aggregate value of taxable service in the preceding previous year in less than Rs. 10,00,000, service tax in the current financial year shall be payable:
a) on the entire aggregate value of service
b) on the amount which is in excess of Rs. 10,00,000
18. Service tax is not payable on any service provided to:
a) an undertaking in a free trade zone
b) an undertaking in a software technological park
c) an undertaking in a special economic zone
d) a developer or unit in a special economic zone
19. Secondary and Higher Education Cess was levied by- -
a) The Finance (2) Act, 2004 b) The Finance Act, 2006
c) The Finance Act, 2007
20. The provisions relating to valuation of taxable services are contained in:
a) section 65 of the Finance Act, 1994
b) section 67 of the Finance Act, 1994
c) section 65A of the Finance Act, 1999
d) None of the above
21. State whether True or False
a) Service tax is payable on the gross amount
b) Charge of service tax is in relation to service provided or to be provided
22. Gross amount charged for the taxable services includes:
a) only that amount received towards the taxable service which is received before the provision of such services
b) Only that amount received towards the taxable service which is received after the provision of such services.
c) Any amount received towards the taxable services whether received before, during or after provision of such services.
23. Due date of payment of service tax, other than for the month of March, in case of a company is:
a) 5th day of the month immediately following each quarter
b) 5th day of month immediately following the calendar month
c) 25th day of month immediately following the calendar month
24. Due date of payment of service tax other than for the quarter ending March in case of partnership firm is:
a) 5th day of the month immediately following each quarter
b) 5th day of the month immediately following the calendar month
c) None of the above
25. Due date of payment of service tax for the month/quarter ending 31st March is:
a) 31st March
b) 5th day of the month immediately following March
c) None of the above
26. State whether True or False
a) Service tax is always paid by the service provider
b) Service tax is to be Paid at the stage of rendering the service
c) Service tax is payable on the money which is received in advance
d) In case the payment of service tax is made by cheque, the date of payment is the date on which the cheque is encased by the bank
e) Service tax has to be rounded off to nearest rupees ten
f) Service tax is not payable if it has not been charged in bill
27. Return of service tax has to be filed:
a) monthly b) quarterly c) half-yearly d) yearly
28. Due date of filing return is:
a) 5th of the month following the particular half-year
b) 15th of the month following the particular half-year
c) 25th of the month following the particular half-.year
c) 30 days of the month following the particular half-year '
29. Return of service tax is to be filed in:
a) Form ST-I b) Form ST-3 c) Form ST-2
30. State whether true or false
a) There is no need to file a nil return
b) Separate returns will have to be filed if multiple services are provided
c) If due date of filing return happens to be a holiday, the return can be filed on the next working day immediately following the holiday
Answers to multiple choice questions
1. (D) 9. (B) 17. (B) 24. (A) 27. (C)
2. (B) 10. (C) 18. (D) 25. (A) 28. (C)
3. (A) 11. (C) 19. (C) 26. (A) (F) 29. (B)
4. (B) 12. (C) 20. (B) 26. (B) (F) 30. (A) (F)
5. (B) 13. (B) 21. (A) (T) 26. (C) (T) 30. (B) (F)
6. (B) 14. (B) 21. (B) (T) 26. (D) (F) 30. (C) (T)
7. (B) 15. (B) 22. (C) 26. (E) (F)
8. (B) 16. (B) 23. (B) 26. (F) (F)
PRACTICAL PROBLEMS
Problem No.1 A partnership firm, gives the following particulars relating to the services provided to various clients by them for the half-year ended on 30-9-2008:
1. Total bills raised for Rs. 8,75,000 out of which bill for Rs. 75,000 was raised on an approved International Organization and payments of bills for Rs. 1,00,000 were not, received till 30-9-2008.
2. Amount of Rs. 50,000 was received as an advance from XYZ Ltd. on 25-9-2008 to whom the services were to be provided in October, 2008.
You are required to work out the:
a. taxable value of services
b. Amount of service tax payable.
Solution
Rs.
Total Bills Raised
Less: Bill raised for an approved international organization
(not liable to service tax) 75,000
Amount not yet received 1,00,000
Add: Amount received in advance
Taxable value of services provided
Service tax payable @ 12.36% on Rs. 7,50,000 8,75,000
1,75,000
7,00,000
50,000
7,50,000
92,700
Problem No.2 Ajay Ltd. has agreed to render services to Mr. Guru. The following are the chronological events:
Contract for services entered into on 3 1-8-2008 Rs.
Advance received in September, 2008 towards all services
Total value of services, billed in February, 2009
Above includes non-taxable services of
Balance amount is received in March, 2009 60,000
2,10,000
70,000
When does the liable to pay service tax arise and for what amount? Contract contains clear details of services; consideration and service tax are charged separately, as mutually agreed upon.
Solution: As taxable service includes the services to be provided, the liability to pay service tax arises both at the time of receipt of advance in September, 2008 and at the time of receipt of balance consideration in March 2009. However, the liability to pay service tax arises only upon the receipt of the value of taxable services and not when the bill is raised.
Advance portion Rs.
Advance received towards all Services in September 2008
Amount billed for taxable services (2,10,000 - 70,000)
proportionate advance received towards taxable services
(60,000 x 1,40,000/2,10,000)
Service tax @ 12% (since, service tax is charged separately) on Rs. 40,000
Add: Education cess @ 2%
Add: SHEC @ 1% dd: SHEC @
Total service tax liability 4,944 The due date for payment of service tax in the above case will be 5-10-2008 60,000
1,40,000
40,000
4,800
96
48
4,944
The due date for payment of service tax in the above case will be 5-10-2008.
Balance portion Rs.
Total amount billed
Less: Amount for non-taxable service
Less: Amount already received on which service tax has been paid
Balance amount
Service tax @ 12% on Rs. 1,00,000
Add: Education cess @ 2%
Add: SHEC @ 1%
Total Service tax liability 2,10,000
70,000
1,40,000
40,000
1,00,000
12,000
240
120
12,360
1. Service tax was introduced in India in the year:
a) 1993 b) 1995 c) 2004 d) 1994
2. Service tax was introduced first time on:
a) 5 services b) 3 services c) 4 services d) 7 services
3. Service tax was initially levied in India by the Constitution vide entry No.
a) 92C of the Union list b) 54 of the State list
c) 92C of the concurrent list d) 97 of the Union list
4. The provisions relating to service tax are given in:
a) Chapter V of the Finance Act, 1994
b) Chapter V and VA of the Finance Act, 1994
c) Chapter VII and VIII of the Finance Act, 2004
d) The Service tax Act, 1994
5. The power to levy service tax is now provided by the Constitution vide entry No.
a) 92C of the Union list b) 97 of the Union list
c) 54 of the State list d) 93 of the Union list
6. Service tax is applicable to:
a) Whole of India b) Whole of India except Jammu and Kashmir
c) Whole of India, except Jammu and Kashmir and Union Territories of Dadra, Nagar Haveli, Daman & Diu
7. Service tax was introduced in India on the recommendation of:
a) Kelkar Committee b) Dr. Raja J Challiah Committee
c) Dr. Man Mohan Singh Committee d) Dr. Yashwant Sinha Committee
8. Service tax is levied in India by following the:
a) Comprehensive approach b) Selective approach
9. Service tax is governed and administered by
a) CBDT b) CBEC
10. The power to make rules for service tax is given to Central Government by
a) sections 66 and 67 of the Finance Act, 1994
b) section 94 of the Finance Act, 1994
c) sections 94 and 96-1 of the Finance Act, 1994
d) sections 93 and 94 of the Finance Act, 1994
11. Service tax is payable on the value of taxable service @
a) 12% b) 12.24% c) 12.36% d) 10.3%
12. Service tax is a charge on:
a) Taxable service provided b) Taxable service to be provided
c) Taxable service provided or to be provided
d) Any service provided or to be provided
13. Education cess was levied by
a) The Finance Act, 1994 b) The Finance No. (2) Act, 2004
c) The Finance Act, 2006
14. Where service is received from outside India, such service shall be:
a) taxable in the hands of service provider b) taxable in the hands of Service recipient
c) exempt from service tax
15. Service tax is not payable if the aggregate value of taxable service does not exceed:
a) Rs.8,00,000 b) Rs. 10,00,000 c) Rs. 4,00,000 d) Rs. 6,00,000
16. If the aggregate value of taxable service in the preceding financial year exceeds Rs. 10,00,000, service tax shall be payable during the current financial year -¬
a) If the aggregate value of taxable service exceed, Rs. 10,00,000 during the current year.
b) on the entire aggregate value of service,
c) If the aggregated value of taxable service exceeds Rs. 10,00,000 during the current financial year.
17. If the aggregate value of taxable service in the preceding previous year in less than Rs. 10,00,000, service tax in the current financial year shall be payable:
a) on the entire aggregate value of service
b) on the amount which is in excess of Rs. 10,00,000
18. Service tax is not payable on any service provided to:
a) an undertaking in a free trade zone
b) an undertaking in a software technological park
c) an undertaking in a special economic zone
d) a developer or unit in a special economic zone
19. Secondary and Higher Education Cess was levied by- -
a) The Finance (2) Act, 2004 b) The Finance Act, 2006
c) The Finance Act, 2007
20. The provisions relating to valuation of taxable services are contained in:
a) section 65 of the Finance Act, 1994
b) section 67 of the Finance Act, 1994
c) section 65A of the Finance Act, 1999
d) None of the above
21. State whether True or False
a) Service tax is payable on the gross amount
b) Charge of service tax is in relation to service provided or to be provided
22. Gross amount charged for the taxable services includes:
a) only that amount received towards the taxable service which is received before the provision of such services
b) Only that amount received towards the taxable service which is received after the provision of such services.
c) Any amount received towards the taxable services whether received before, during or after provision of such services.
23. Due date of payment of service tax, other than for the month of March, in case of a company is:
a) 5th day of the month immediately following each quarter
b) 5th day of month immediately following the calendar month
c) 25th day of month immediately following the calendar month
24. Due date of payment of service tax other than for the quarter ending March in case of partnership firm is:
a) 5th day of the month immediately following each quarter
b) 5th day of the month immediately following the calendar month
c) None of the above
25. Due date of payment of service tax for the month/quarter ending 31st March is:
a) 31st March
b) 5th day of the month immediately following March
c) None of the above
26. State whether True or False
a) Service tax is always paid by the service provider
b) Service tax is to be Paid at the stage of rendering the service
c) Service tax is payable on the money which is received in advance
d) In case the payment of service tax is made by cheque, the date of payment is the date on which the cheque is encased by the bank
e) Service tax has to be rounded off to nearest rupees ten
f) Service tax is not payable if it has not been charged in bill
27. Return of service tax has to be filed:
a) monthly b) quarterly c) half-yearly d) yearly
28. Due date of filing return is:
a) 5th of the month following the particular half-year
b) 15th of the month following the particular half-year
c) 25th of the month following the particular half-.year
c) 30 days of the month following the particular half-year '
29. Return of service tax is to be filed in:
a) Form ST-I b) Form ST-3 c) Form ST-2
30. State whether true or false
a) There is no need to file a nil return
b) Separate returns will have to be filed if multiple services are provided
c) If due date of filing return happens to be a holiday, the return can be filed on the next working day immediately following the holiday
Answers to multiple choice questions
1. (D) 9. (B) 17. (B) 24. (A) 27. (C)
2. (B) 10. (C) 18. (D) 25. (A) 28. (C)
3. (A) 11. (C) 19. (C) 26. (A) (F) 29. (B)
4. (B) 12. (C) 20. (B) 26. (B) (F) 30. (A) (F)
5. (B) 13. (B) 21. (A) (T) 26. (C) (T) 30. (B) (F)
6. (B) 14. (B) 21. (B) (T) 26. (D) (F) 30. (C) (T)
7. (B) 15. (B) 22. (C) 26. (E) (F)
8. (B) 16. (B) 23. (B) 26. (F) (F)
PRACTICAL PROBLEMS
Problem No.1 A partnership firm, gives the following particulars relating to the services provided to various clients by them for the half-year ended on 30-9-2008:
1. Total bills raised for Rs. 8,75,000 out of which bill for Rs. 75,000 was raised on an approved International Organization and payments of bills for Rs. 1,00,000 were not, received till 30-9-2008.
2. Amount of Rs. 50,000 was received as an advance from XYZ Ltd. on 25-9-2008 to whom the services were to be provided in October, 2008.
You are required to work out the:
a. taxable value of services
b. Amount of service tax payable.
Solution
Rs.
Total Bills Raised
Less: Bill raised for an approved international organization
(not liable to service tax) 75,000
Amount not yet received 1,00,000
Add: Amount received in advance
Taxable value of services provided
Service tax payable @ 12.36% on Rs. 7,50,000 8,75,000
1,75,000
7,00,000
50,000
7,50,000
92,700
Problem No.2 Ajay Ltd. has agreed to render services to Mr. Guru. The following are the chronological events:
Contract for services entered into on 3 1-8-2008 Rs.
Advance received in September, 2008 towards all services
Total value of services, billed in February, 2009
Above includes non-taxable services of
Balance amount is received in March, 2009 60,000
2,10,000
70,000
When does the liable to pay service tax arise and for what amount? Contract contains clear details of services; consideration and service tax are charged separately, as mutually agreed upon.
Solution: As taxable service includes the services to be provided, the liability to pay service tax arises both at the time of receipt of advance in September, 2008 and at the time of receipt of balance consideration in March 2009. However, the liability to pay service tax arises only upon the receipt of the value of taxable services and not when the bill is raised.
Advance portion Rs.
Advance received towards all Services in September 2008
Amount billed for taxable services (2,10,000 - 70,000)
proportionate advance received towards taxable services
(60,000 x 1,40,000/2,10,000)
Service tax @ 12% (since, service tax is charged separately) on Rs. 40,000
Add: Education cess @ 2%
Add: SHEC @ 1% dd: SHEC @
Total service tax liability 4,944 The due date for payment of service tax in the above case will be 5-10-2008 60,000
1,40,000
40,000
4,800
96
48
4,944
The due date for payment of service tax in the above case will be 5-10-2008.
Balance portion Rs.
Total amount billed
Less: Amount for non-taxable service
Less: Amount already received on which service tax has been paid
Balance amount
Service tax @ 12% on Rs. 1,00,000
Add: Education cess @ 2%
Add: SHEC @ 1%
Total Service tax liability 2,10,000
70,000
1,40,000
40,000
1,00,000
12,000
240
120
12,360
Objective Questions on Income Tax
1. Surcharge of 10 per cent is payable by an individual where the total income exceeds:
a. Rs.7,50,000
b. Rs.8,50,000
c. Rs.10,00,000
d. None of the three
2. Additional surcharge (education cess ) of 2 per cent is payable on
a. Income tax
b. Income tax plus surcharge
c. Surcharge
3. Family pension received by a widow of a member of the armed forces where the death of the member has occurred in the course of the operational duties, is
a. Exempt up to Rs.3,00,000
b. Exempt up to Rs. 3,50,000
c. Totally exempt under section 10(19)
d. Totally chargeable to tax
4. In respect of shares held as investment, while computing the capital gains, securities transaction tax paid in respect of sale of listed shares sold in a recognized stock exchange,
a. Is deductible up to Rs.1,00,000
b. Is deductible up to Rs.2,00,000
c. Is deductible if C.G.’s is < 5,00,000
d. Is not deductible at all
5. Gift of Rs 5,00,000 received on 10 July, 2005 through account payee cheque from a non-relative regularly assessed to income-tax, is
a. A capital receipt not chargeable to tax
b. Chargeable as other sources
c. Chargeable to tax as business income
d. Exempt up to Rs.25,000 and balance chargeable to tax as income from other sources
6. The maximum rebate allowable under section 88E to an individual deriving income of Rs.2,00,000 from taxable securities transactions, who has paid securities transactions tax of Rs.14,600 and whose average rate of income-tax is 8 per cent , is
a. Rs.16,000
b. Rs.20,600
c. Rs.14,600
d. None of the above
7. For an employee in receipt of hostel expenditure allowance for his three children, the maximum annual allowance exempt under section 10(14) is
a. Rs.10, 800
b. Rs.7,200
c. Rs.9,600
d. Rs.3,600
8. For an industrial undertaking fulfilling the conditions, additional depreciation in respect of a machinery costing Rs.10 lakh acquired and installed on October 3, 2005 is
a. Rs.75,000
b. Rs.1,50,000
c. Rs.1,00,000
d. None of the above
9. Assessee is always a person but a person may or may not be an assessee.
a. True
b. False
10. A person may not have assessable income but may still be assessee.
a. True
b. False
11. In some cases assessment year and previous year can be same financial year.
a. True
b. false
12. A.O.P should consist of :
a. Individual only
b. Persons other than individual only.
c. Both the above
13. Body of individual should consist of :
a. Individual only
b. Persons other than individual only.
c. Both the above
14. A new business was set up on15-11-2005 and it commenced its business from 1-12-2005.The first previous year in this case shall be:
a. 15-11-2005 to 31-3-2006
b. 1-12-2005 to 31-3-2006
c. 2004-2005
15. A person leaves India permanently on 15-11-2005.The assessment year for income earned till 15-11-2005 in this case shall be:
a. 2004-05
b. 2005-06
c. 2006-07
16. Surcharge in case of an individual or HUF for assessment year 2006-07 is payable at the rate of :
a. 12% of the income-tax payable provided the total income exceed Rs.60,000.
b. 10% of the income-tax payable provided the total income exceeds Rs.10,00,000
c. 5% of the income-tax payable if the total income exceeds Rs.8,50,000
17. Surcharge in case of a firm for assessment year 2006-07 is payable at the rate:
a. 2.5% of income-tax payable
b. 5% of income-tax payable
c. 10% of income-tax payable
18. The maximum amount on which income-tax is not chargeable in case of firm is:
a. Rs.1,00,000
b. Rs. 90,000
c. Nil
19. The maximum amount on which income-tax is not chargeable in case a co-operative society is:
a. Rs.50,000
b. Rs.30,000
c. Nil
20. A local authority is taxable at flat rate of income-tax.
a. True
b. False
21. A co-operative society is taxable at flat rate of 30% on TI.
a. True
b. False
22. Education cess is leviable @:
a. 2%
b. 5%
c. 2.5%
23. Education cess is leviable in case of:
a. An individual and HUF
b. A company assessee only
c. All assesses
24. In case of an individual and HUF education cess is leviable only when the total income of such assessee
a. Exceeds Rs.10,00,000
b. No income limit
25. The TI of the assessee has been computed as Rs.2,53,494.90. For rounding off ,the TI will be taken as:
a. Rs.2,53,500
b. Rs.2,53,490
c. Rs.2,53,495
26. Income tax is rounded off to:
a. Nearest ten rupees
b. Nearest one rupee
c. No rounding off of tax is done
27. A’s TI for the A.Yr.2006-07 is Rs.2,50,000.His tax liability shall be
a. 25,000
b. 25,500
c. 21,830
28. Residential status to be determined for :
a. Previous year
b. Assessment year
c. Accounting year
29. Incomes which accrue or arise outside India but are received directly into India are taxable in case of
a. Resident only
b. Both ordinarily resident and NOR
c. Non-resident
d. All the assesses
30. Income deemed to accrue or arise in India is taxable in case of :
a. Resident only
b. Both ordinarily resident and NOR
c. Non-resident
d. All the assesses
31. Income which accrue outside India from a business controlled from India is taxable in case of:
a. Resident only
b. Not ordinarily resident only
c. Both ordinarily resident and NOR
d. Non-resident
32. Income which accrue or arise outside India and also received outside India taxable in case of:
a. resident only
b. not ordinarily resident
c. both ordinarily resident and NOR
d. none of the above
33. TI of a person is determined on the basis of his:
a. residential status in India
b. citizenship in India
c. none of the above
d. both of the above
34. Once a person is a resident in a P.Yr. he shall be deemed to be resident for subsequent P. Yr.
a. True
b. False
35. Once a person is resident for a source of income in a particular P. Y r. he shall be deemed to be resident for all other sources of income in the same P. Yr :
a. True
b. False
36. R Ltd., is an Indian company whose entire control and management of its affairs is situated outside India. R Ltd., shall be :
a. Resident in India
b. Non-resident in India
c. Not ordinarily resident in India
37. R Ltd., is registered in U.K. The control and management of its affairs is situated in India .R Ltd shall be :
a. Resident in India
b. Non-resident
c. Not ordinarily resident in India
38. R, a foreign national visited India during previous year 2005-06 for 180 days. Earlier to this he never visited India. R in this case shall be:
a. Resident in India
b. Non-resident
c. Not ordinarily resident in India
39. An Indian company is always resident in India
a. True
b. False
40. Dividend paid by an Indian company is:
a. Taxable in India in the hands of the recipient
b. Exempt in the hands of recipient
c. Taxable in the hands of the company and exempt in the hands of the recipient
41. Agricultural income is exempt provided the:
a. Land is situated in India
b. Land is situated in any rural area India
c. Land is situated whether in India or outside India.
42. If the assessee is engaged in the business of growing and manufacturing tea in India ,the agricultural income in that case shall be:
a. 40% of the income from such business
b. 60% of the income from such business
c. market value of the agricultural produce minus expenses on cultivation of such produce
43. Agricultural income is :
a. Fully exempt
b. Partially exempt
c. Fully taxable
44. The partial integration of agricultural income, is done to compute tax on:
a. agricultural income
b. non agricultural income
c. both agricultural and non agricultural income
45. There will be no partial integration of agricultural income with non agricultural income, if the non agricultural income does not exceed:
a. Rs.1,00,000
b. Rs.60,000
c. Rs. 50,000
46. There will be no partial integration, if the agricultural income does not exceed:
a. Rs.40,000
b. Rs.50,000
c. Rs.5,000
47. A local authority has earned income from the supply of commodities outside its own jurisdictional area. It is :
a. Exempt
b. Taxable
48. R, a chartered accountant is employed with R Ltd., as an internal auditor and requests the employer to call the remuneration as internal audit fee. R shall be chargeable to tax for such fee under the head.
a. Income from salaries
b. Profit and gains from Business and Profession
c. Income from other sources.
49. R, who is entitled to a salary of Rs.10,000 p.m. took an advance of Rs.20,000 against the salary in the month of March 2005.The gross salary of R for assessment year 2005-06 shall be:
a. Rs.1,40,000
b. Rs.1,20,000
c. None of these two
50. A is entitled to children education allowance @ Rs. 80 p.m. per child for 3 children amounting Rs. 240 p.m. It will be exempt to the extent of :
a. Rs.200 p.m.
b. Rs.160 p.m.
c. Rs. 240 p.m.
51. R gifted his house property to his wife in 2000. R has let out the house property @ Rs.5,000 p.m. The income from such house property will be taxable in the hands of :
a. Mrs. R
b. R. However , income will be computed first as Mrs. R’s income and thereafter clubbed in the income of R
c. R as he will be treated as deemed owner & liable to tax
52. R transferred his house property to his wife under an agreement to live apart. Income from such house property shall be taxable in the hands of :
a. R as deemed owner
b. R. However, it will be first computed as Mrs. R income & Thereafter clubbed in the hands of R
c. Mrs. R
53. R gifted his house property to his married minor daughter. The income from such house property shall be taxable in the hands of :
a. R as deemed owner.
b. R. However, it will be first computed as minor daughters income & clubbed in the income of R.
c. Income of married minor daughter.
54. A has two house properties. Both are self-occupied. The annual value
a. Of both house shall be nil
b. One house shall be nil
c. Of no house shall be nil
55. An assessee has borrowed money for purchase of a house & Interest is payable outside India. Such interest shall:
a. Be allowed as deduction
b. Not to be allowed on deduction
c. Be allowed as deduction if the tax is deducted at source
56. Salary, bonus, commission or remuneration due to or received by a working partner from the firm is taxable under the head.
a. Income from salaries
b. Other sources
c. PGBP
57. Perquisite received by the assessee during the course of carrying on his business or profession is taxable under the head.
a. Salary
b. Other sources
c. PGBP
58. Interest on capital or loan received by a partner from a firm is:
a. Exempt U/S 10(2A)
b. Taxable U/H business and profession
c. Taxable U/H income from other sources
59. Under the head Business or Profession, the method of accounting which an assessee can follow shall be :
a. Mercantile system only
b. Cash system only
c. Mercantile or cash system only
d. Hybrid system
60. An asset which was acquired for Rs. 5, 00, 000 was earlier used for scientific research. After the research was completed, the machinery was brought into the business of the assessee. The actual cost of the asset for the purpose of inclusion in the block of asset shall be :
a. Rs.5,00,000
b. Nil
c. Market value of the asset on the date it was brought into business
61. A car is imported after 1- 4- 2005 by R Ltd. from London to be used by its employee. R Ltd. shall be allowed depreciation on such car at:
a. 15%
b. 40%
c. Nil
62. Unabsorbed depreciation which could not be set off in the same assessment year, can be carried forward for:
a. 8 Years
b. Indefinitely
c. 4Years
63. Certain revenue and capital expenditure on scientific research are allowed as deduction in the previous year of commencement of business even if these are incurred:
a. Five years immediately before the commencement of business
b. 3 years immediately before the commencement of the business
c. Any time prior to the commencement of the business.
64. If any amount is donate for research, such research should be in nature of:
a. Scientific research only
b. Social or statistical research only
c. Scientific or social or statistical research
65. Preliminary expenses incurred are allowed deduction in:
a. 10 equal installments
b. 5 equal installments
c. full
66. In case the assessee follows mercantile system of accounting, bonus or commission to the employee are allowed as deduction on:
a. Due basis
b. Payment basis
c. Due basis but subject to section 43B.
67. Interest on money borrowed for the purpose of acquiring a capital asset pertaining to the period after the asset is put to use is to be:
a. Capitalized
b. Treated as revenue expenditure
68. Expenditure incurred on purchase of animals to be used by the assessee for the purpose of carrying on his business& profession is subject to
a. Depreciation
b. Deduction in the previous year in which animal dies or become permanently useless
c. Nil deduction
69. Expenditure incurred on family planning amongst the employees is allowed to
a. Any assessee
b. A company assessee
c. An assessee which is a company or cooperative society
70. Interest on capital of or loan from partner of a firm is allowed as deduction to the firm to the extent of:
a. 18% p.a.
b. 12% p.a. even if it is not mentioned in partnership deed
c. 12% p.a. or at the rate mentioned in partnership deed whichever is less.
71. Deduction under section 40(b) shall be allowed on account of salary /remuneration paid to :
a. Any partner
b. Major partner only
c. Working partner only
72. Remuneration paid to working partner shall be allowed as deduction to a firm:
a. In full
b. Subject to limits specified in section 40(b)
c. None of these two
73. A firm business income is nil /negative. It shall still be allowed as deduction on account of remuneration to working partner to the maximum extent of:
a. Actual remuneration paid as specified in partnership deed
b. Rs.50,000
c. Nil
74. For person carrying on profession, tax audit is compulsory, if the gross receipts of the previous year exceeds:
a. Rs.50 lakhs
b. Rs.40 lakhs
c. Rs.10 lakhs
75. Tax audit is compulsory in case a person is carrying on business whose gross turnover/sales/receipts, as the case may be, exceeds:
a. Rs. 10 lakhs
b. Rs. 40 lakhs
c. 1 crore
76. In case an assessee in engaged in the business of civil construction, presumptive income scheme is applicable if the gross receipts paid or payable to him in the previous year does not exceed:
a. Rs.10 lakhs
b. Rs. 40 lakhs
c. Rs. 50 lakhs
77. In the aforesaid case ,the income shall be presumed to be :
a. 5% of gross receipts
b. 8% of gross receipts
c. 10% of gross receipts
78. In case an assessee is engaged in the business of plying hiring or leasing goods carriage, presumption income scheme under section 44AE is applicable if the assessee is the owner of maximum of :
a. 8 goods carriages
b. 10 goods carriages
c. 12 goods carriages
79. In case an assessee is engaged in the business of retail trade, presumptive income scheme is applicable if the total turnover of such retail trade of goods does not exceed:
a. Rs.10 lakhs
b. Rs.30 lakhs
c. Rs.40 lakhs
d. Rs.50 lakhs
80. In the above case the income to be presumed under section 44AF shall be :
a. 8% of total turnover
b. 5% of total turnover
c. 10% of total turnover
81. If the assessee opts for section 44AD or 44AF or 44AE,then the assessee shall:
a. Not be entitled to any deduction under sections 30 to 37
b. be entitled to deduction under sections 30 to 37
c. Not be entitled to deduction under sections 30 to 37except for interest on capital or loan from partner and remuneration to a working partner subject to conditions laid down under section 40(b)
82. The period of holding of shares acquired in exchange of convertible debentures shall be reckoned from:
a. The date of holding of debentures
b. The date of when the debentures were converted into shares
c. None of these two
83. Securities transaction tax paid by the seller of shares and units shall
a. Be allowed as deduction as expenses of transfer
b. Not be allowed as deduction
84. The cost inflation index number of the p.Yr.2005-06 is :
a. 480
b. 497
c. 426
d. 463
85. Conversion of capital asset into stock in trade will result into capital gain of the previous year:
a. In which such conversion took place
b. In which such converted asset is sold or otherwise transferred
c. None of these two
86. Where a partner transfers any capital asset into the business of firm ,the sale consideration of such asset to the partner shall be :
a. Market value of such asset on the date of such transfer
b. Price at which it was recorded in the books of the firm
c. Cost of such asset to the partner
87. Where the entire block of the depreciable asset is transferred after 36 months, there will be:
a. Short-term capital gain
b. Long-term capital gain
c. Short-term capital gain or loss
d. Long-term capital gain or loss
88. In the case of compulsory acquisition, the indexation of cost of acquisition or improvement shall be done till the :
a. Previous year of compulsory acquisition
b. In which the full compensation received
c. In which part or full consideration is received
89. If good will of a profession which is self generated is transferred, there will:
a. Be capital gain
b. Not be any capital gain
c. Be a short-term capital gain
90. Exemption under section 54 is available to :
a. All assesses
b. Individuals only
c. Individual + HUF.
91. The exemption under section 54 ,shall be available:
a. To the extent of capital gain invested in the HP
b. Proportionate to the net consideration price invested
c. To the extent of amount actually invested
92. The exemption u/s 54B, is allowed to :
a. Any assessee
b. Individual only
c. Individual or HUF
93. For claiming exemption under section 54B the assessee should acquire:
a. Urban agricultural land
b. Rural agricultural land
c. Any agricultural land
94. New assets acquired for claiming exemption u/s 54, 54B or 54D,if transferred within 3 years, will result in:
a. Short-term capital gain
b. long-term capital gain
c. ST or LTCG depending upon original transfer
95. Loss from a speculation business of a particular A. Yr. can be set off in the same A. Yr. from:
a. Profit and gains from any business
b. Profit and gains from any business other then speculation business
c. Income of speculation business
96. Loss under the head capital gain in a particular assessment year can:
a. Be set off from other head of income in the same assessment year.
b. Be carried forward
c. Neither be set off nor carried forward
97. The loss is allowed to be carried forward only when as assessee has furnished:
a. Return of loss
b. Return of loss before the due date mentioned u/s 139(1)
c. Or not furnished the return of loss
98. Loss under the head income from house property can be carried forward:
a. Only if the return is furnished before the due date mentioned u/s 139(1)
b. Even if the return is not furnished
c. Even if the return in furnished after the due date
99. Deduction u/s 80C in respect of LIP, Contribution to provident fund, etc. is allowed to :
a. Any assessee
b. An individual
c. An individual or HUF
d. An individual or HUF who is resident in India
100. Deduction under section 80C is allowed from:
a. Gross total income
b. Total income
c. Tax on total income
101. An assessee has paid life insurance premium of Rs.25,000 during the previous year for a policy of Rs.1,00,000.He shall:
a. Not be allowed deduction u/s 80C
b. Be allowed Deduction u/s 80C to the extent of 20% of the capital sum assured i.e.Rs.20,000
c. Be allowed Deduction for the entire premium as per the provisions of section 80C
102. For claiming Deduction u/s 80C, the payment or deposit should be made:
a. Out of any income
b. Out of any income chargeable to income tax
c. During the current year out of any source
103. Deduction under section 80C shall be allowed for :
a. Any education fee
b. Tution fee exclusive of any payment towards any development fee or donation or payment of similar nature
c. Tution fee and annual charges
104. Deduction under section 80CCC is allowed to the extent of :
a. Rs. 20,000
b. Rs. 10,000
c. Rs. 40,000
105. Deduction under section 80D in respect of medical insurance premium is allowed to:
a. Any assessee
b. An individual or HUF
c. Individual or HUF who is resident in India
d. Individual only
106. Deduction u/s 80D is allowed if the premium is paid to :
a. Life insurance Corporation
b. General insurance Corporation or any other insurer
c. Life insurance or General insurance corporation
107. The payment for Insurance premium under section 80D should be paid:
a. In cash
b. By cheque
c. Cash/by cheque
108. The quantum of deduction allowed under section 80D shall be limited to:
a. Rs.6,000
b. Rs.10,000
c. Rs. 40,000
109. Deduction U/s 80G on account of donation is allowed to:
a. A business assessee only
b. Any assessee
c. Individual or HUF only
110. The maximum deduction u/s 80GG shall be limited to:
a. Rs. 1,000 p.m.
b. Rs. 2,000 p.m.
c. Rs. 3,000 p.m.
111. Deduction u/s 80GGA in respect of certain donation for scientific reseach or rural development is allowed to:
a. any assessee
b. non corporate business assessee
c. an assessee whose income does not include PGBP income.
112. Deduction under section 80DD shall be allowed:
a. To the extent of actual expenditure/deposit or Rs.40,000 whichever is less
b. For a sum of Rs.50,000 irrespective of actual expenditure or deposit
c. For a sum of Rs.40,000 irrespective of any expenditure incurred or actual deposited
113. The deduction u/s 80E is allowed for repayment of interest to the extent of :
a. Rs.25,000
b. Rs.40,000
c. Any amount repaid
114. The quantum of deduction allowed u/s 80U is :
a. Rs. 40,000
b. Rs. 50,000
c. Rs. 60,000
115. A circular of the CBDT u/s 119 of the Income tax Act 1961.
a. Can override or detract from the Act
b. Cannot override or detract from the Act
116. The circulars issued by CBDT are binding on:
a. Assessee
b. Income-tax Authorities
c. Both the above
117. As per Sec.139(1), a company shall have to file return of income:
a. When its total income exceeds Rs.50,000
b. When its total income exceeds the maximum amount which is not chargeable to income tax
c. In all cases irrespective of any income or loss earned by it.
118. If the TI of an assessee does not exceed the maximum exemption limit, it will be still obligatory for him to file return of income if he:
a. Satisfies any one out of six economic indicators
b. Satisfies any two out of six economic indicators
c. Resides in such area as may be specified.
d. Resides in such area as may be specified by the board and satisfies any 1 of the 6 economic indicators.
119. One of the six economic indicators for filling obligatory return of income is occupation of immovable property exceeding a specified floor areas:
a. By way of ownership
b. By way of ownership or tenancy
c. By way of ownership or tenancy or otherwise
120. The last date of filing the return of income u/s 139(1) for A. Yr. 2006-07 in case of a company assessee is
a. 30th November of the assessment year
b. 31st October of the assessment year
c. 31st march of the assessment year
121. The last date of filing the return of income u/s 139(1) for assessment year 2006-07 in case of a non corporate business assessee whose accounts are not liable to be audited shall be:
a. 31st July of the assessment year
b. 30th June of assessment year
c. 31st October of the assessment year
122. For the P.Y. 2005-06 the business income of the assessee before providing C.Yr. depreciation of Rs. 3,50,000 is Rs. 1,50,000. His due date of return was 31-10-2006 but he submitted the return on 16-12-2006, the assessee in this case:
a. Be allowed to carry forward unabsorbed depreciation of Rs. 2,00,000
b. Not allowed to carry forward unabsorbed depreciation of Rs.2,00,000
123. K finds some mistake in the return of income submitted by him on 05-06-2005 for assessment year 2005-06, he wishes to revised such return. No assessment has been done in this case. K can revise such return till:
a. 31-03-2006
b. 31-03-2007
c. 31-03-2008
124. The notice under section 143(2) must be served within:
a. 12 months from the date of filing of return
b. 12 months from the due date of filing the return u/s 139(1) or from the date of filing of return of income.
c. 12 months from the end of the month in which the return was furnished.
125. Time limit for completion of asst. u/s 143/144 shall be:
a. Four years from the end of the relevant assessment year in which income was first assessable.
b. Two years from the end of the relevant assessment year in which income was first assessable.
c. Two years from the end of the month in which the return was so furnished.
126. The time limit for completion of assessment/reassessment u/s 147 shall be:
a. One year from the end of financial year in which notice u/s 148 was served on the assessee
b. Two years from the end of the financial year in which notice u/s 148 was served on the assessee
c. Four years from the end of the financial year in which notice u/s 148 was served on the assessee
127. The amendment of an order u/s 154 can be made:
a. Within 4 years from the date when the order sought to be amended was passed
b. Within 4 years from the date of receipt of such order by the assessee
c. Within 4 years from the end of the F.Y, in which the order sought to be amended was passed.
128. The first appeal against the order the assessing officer lies with:
a. Deputy commissioner (Appeals)
b. Commissioner appeals
c. Appellate Tribunal
129. The first appeal can be filed by:
a. The assessee only
b. Assessing officer only
c. Either the assessee or the assessing officer
130. If the assessee is not satisfied with any order passed by the assessing officer, he can:
a. File appeal to commissioner (Appeal)
b. Apply for revision to the CIT u/s 264
c. Either file appeal or apply for revision u/s 264
d. File appeal as well as apply for revision.
131. Revision u/s 263 is to be done by the commissioner
a. On his own motion
b. On the request of the assessee
c. On the request of the assessing officer
d. On his own motion or on the request of the assessee or the assessing officer
132. The time limit for passing an order of revision under section 263 by the commissioner of Income-tax, where the same is to give effect to a direction by the High Court is:
a. Two years from the date of direction
b. Three years from the date of direction
c. Two years from the end of the financial year in the direction is given
d. There is no time limit.
ANSWERS
1. c 2. b 3. c 4. d 5. b 6. c 7. d 8. c 9. a 10. a 11. a 12. c 13. a 14. a
15. b 16. b 17. c 18. c 19. c 20. a 21. b 22. a 23. c 24. b 25. b 26. a 27. b 28. a
29. d 30. d 31. c 32. a 33. a 34. b 35. a 36. a 37. b 38. b 39. a 40. c 41. a 42. b
43. a 44. b 45. a 46. c 47. b 48. a 49. b 50. b 51. c 52. c 53. c 54. b 55. c 56. c
57. c 58. b 59. c 60. b 61. c 62. b 63. b 64. c 65. a 66. c 67. b 68. b 69. b 70. c
71. c 72. b 73. b 74. c 75. b 76. b 77. b 78. b 79. c 80. b 81. c 82. b 83. b 84. b
85. b 86. b 87. c 88. a 89. b 90. c 91. a 92. b 93. c 94. a 95. c 96. b 97. b 98. c
99. c 100. a 101. b 102. b 103. b 104. b 105. b 106. b 107. b 108. b 109. b 110. b 111. a
112. b 113. c 114. b 115. b 116. b 117. c 118. d 119. c 120. b 121. a 122. a 123. b 124. c
125. b 126. a 127. c 128. b 129. a 130. c 131. a 132. d
a. Rs.7,50,000
b. Rs.8,50,000
c. Rs.10,00,000
d. None of the three
2. Additional surcharge (education cess ) of 2 per cent is payable on
a. Income tax
b. Income tax plus surcharge
c. Surcharge
3. Family pension received by a widow of a member of the armed forces where the death of the member has occurred in the course of the operational duties, is
a. Exempt up to Rs.3,00,000
b. Exempt up to Rs. 3,50,000
c. Totally exempt under section 10(19)
d. Totally chargeable to tax
4. In respect of shares held as investment, while computing the capital gains, securities transaction tax paid in respect of sale of listed shares sold in a recognized stock exchange,
a. Is deductible up to Rs.1,00,000
b. Is deductible up to Rs.2,00,000
c. Is deductible if C.G.’s is < 5,00,000
d. Is not deductible at all
5. Gift of Rs 5,00,000 received on 10 July, 2005 through account payee cheque from a non-relative regularly assessed to income-tax, is
a. A capital receipt not chargeable to tax
b. Chargeable as other sources
c. Chargeable to tax as business income
d. Exempt up to Rs.25,000 and balance chargeable to tax as income from other sources
6. The maximum rebate allowable under section 88E to an individual deriving income of Rs.2,00,000 from taxable securities transactions, who has paid securities transactions tax of Rs.14,600 and whose average rate of income-tax is 8 per cent , is
a. Rs.16,000
b. Rs.20,600
c. Rs.14,600
d. None of the above
7. For an employee in receipt of hostel expenditure allowance for his three children, the maximum annual allowance exempt under section 10(14) is
a. Rs.10, 800
b. Rs.7,200
c. Rs.9,600
d. Rs.3,600
8. For an industrial undertaking fulfilling the conditions, additional depreciation in respect of a machinery costing Rs.10 lakh acquired and installed on October 3, 2005 is
a. Rs.75,000
b. Rs.1,50,000
c. Rs.1,00,000
d. None of the above
9. Assessee is always a person but a person may or may not be an assessee.
a. True
b. False
10. A person may not have assessable income but may still be assessee.
a. True
b. False
11. In some cases assessment year and previous year can be same financial year.
a. True
b. false
12. A.O.P should consist of :
a. Individual only
b. Persons other than individual only.
c. Both the above
13. Body of individual should consist of :
a. Individual only
b. Persons other than individual only.
c. Both the above
14. A new business was set up on15-11-2005 and it commenced its business from 1-12-2005.The first previous year in this case shall be:
a. 15-11-2005 to 31-3-2006
b. 1-12-2005 to 31-3-2006
c. 2004-2005
15. A person leaves India permanently on 15-11-2005.The assessment year for income earned till 15-11-2005 in this case shall be:
a. 2004-05
b. 2005-06
c. 2006-07
16. Surcharge in case of an individual or HUF for assessment year 2006-07 is payable at the rate of :
a. 12% of the income-tax payable provided the total income exceed Rs.60,000.
b. 10% of the income-tax payable provided the total income exceeds Rs.10,00,000
c. 5% of the income-tax payable if the total income exceeds Rs.8,50,000
17. Surcharge in case of a firm for assessment year 2006-07 is payable at the rate:
a. 2.5% of income-tax payable
b. 5% of income-tax payable
c. 10% of income-tax payable
18. The maximum amount on which income-tax is not chargeable in case of firm is:
a. Rs.1,00,000
b. Rs. 90,000
c. Nil
19. The maximum amount on which income-tax is not chargeable in case a co-operative society is:
a. Rs.50,000
b. Rs.30,000
c. Nil
20. A local authority is taxable at flat rate of income-tax.
a. True
b. False
21. A co-operative society is taxable at flat rate of 30% on TI.
a. True
b. False
22. Education cess is leviable @:
a. 2%
b. 5%
c. 2.5%
23. Education cess is leviable in case of:
a. An individual and HUF
b. A company assessee only
c. All assesses
24. In case of an individual and HUF education cess is leviable only when the total income of such assessee
a. Exceeds Rs.10,00,000
b. No income limit
25. The TI of the assessee has been computed as Rs.2,53,494.90. For rounding off ,the TI will be taken as:
a. Rs.2,53,500
b. Rs.2,53,490
c. Rs.2,53,495
26. Income tax is rounded off to:
a. Nearest ten rupees
b. Nearest one rupee
c. No rounding off of tax is done
27. A’s TI for the A.Yr.2006-07 is Rs.2,50,000.His tax liability shall be
a. 25,000
b. 25,500
c. 21,830
28. Residential status to be determined for :
a. Previous year
b. Assessment year
c. Accounting year
29. Incomes which accrue or arise outside India but are received directly into India are taxable in case of
a. Resident only
b. Both ordinarily resident and NOR
c. Non-resident
d. All the assesses
30. Income deemed to accrue or arise in India is taxable in case of :
a. Resident only
b. Both ordinarily resident and NOR
c. Non-resident
d. All the assesses
31. Income which accrue outside India from a business controlled from India is taxable in case of:
a. Resident only
b. Not ordinarily resident only
c. Both ordinarily resident and NOR
d. Non-resident
32. Income which accrue or arise outside India and also received outside India taxable in case of:
a. resident only
b. not ordinarily resident
c. both ordinarily resident and NOR
d. none of the above
33. TI of a person is determined on the basis of his:
a. residential status in India
b. citizenship in India
c. none of the above
d. both of the above
34. Once a person is a resident in a P.Yr. he shall be deemed to be resident for subsequent P. Yr.
a. True
b. False
35. Once a person is resident for a source of income in a particular P. Y r. he shall be deemed to be resident for all other sources of income in the same P. Yr :
a. True
b. False
36. R Ltd., is an Indian company whose entire control and management of its affairs is situated outside India. R Ltd., shall be :
a. Resident in India
b. Non-resident in India
c. Not ordinarily resident in India
37. R Ltd., is registered in U.K. The control and management of its affairs is situated in India .R Ltd shall be :
a. Resident in India
b. Non-resident
c. Not ordinarily resident in India
38. R, a foreign national visited India during previous year 2005-06 for 180 days. Earlier to this he never visited India. R in this case shall be:
a. Resident in India
b. Non-resident
c. Not ordinarily resident in India
39. An Indian company is always resident in India
a. True
b. False
40. Dividend paid by an Indian company is:
a. Taxable in India in the hands of the recipient
b. Exempt in the hands of recipient
c. Taxable in the hands of the company and exempt in the hands of the recipient
41. Agricultural income is exempt provided the:
a. Land is situated in India
b. Land is situated in any rural area India
c. Land is situated whether in India or outside India.
42. If the assessee is engaged in the business of growing and manufacturing tea in India ,the agricultural income in that case shall be:
a. 40% of the income from such business
b. 60% of the income from such business
c. market value of the agricultural produce minus expenses on cultivation of such produce
43. Agricultural income is :
a. Fully exempt
b. Partially exempt
c. Fully taxable
44. The partial integration of agricultural income, is done to compute tax on:
a. agricultural income
b. non agricultural income
c. both agricultural and non agricultural income
45. There will be no partial integration of agricultural income with non agricultural income, if the non agricultural income does not exceed:
a. Rs.1,00,000
b. Rs.60,000
c. Rs. 50,000
46. There will be no partial integration, if the agricultural income does not exceed:
a. Rs.40,000
b. Rs.50,000
c. Rs.5,000
47. A local authority has earned income from the supply of commodities outside its own jurisdictional area. It is :
a. Exempt
b. Taxable
48. R, a chartered accountant is employed with R Ltd., as an internal auditor and requests the employer to call the remuneration as internal audit fee. R shall be chargeable to tax for such fee under the head.
a. Income from salaries
b. Profit and gains from Business and Profession
c. Income from other sources.
49. R, who is entitled to a salary of Rs.10,000 p.m. took an advance of Rs.20,000 against the salary in the month of March 2005.The gross salary of R for assessment year 2005-06 shall be:
a. Rs.1,40,000
b. Rs.1,20,000
c. None of these two
50. A is entitled to children education allowance @ Rs. 80 p.m. per child for 3 children amounting Rs. 240 p.m. It will be exempt to the extent of :
a. Rs.200 p.m.
b. Rs.160 p.m.
c. Rs. 240 p.m.
51. R gifted his house property to his wife in 2000. R has let out the house property @ Rs.5,000 p.m. The income from such house property will be taxable in the hands of :
a. Mrs. R
b. R. However , income will be computed first as Mrs. R’s income and thereafter clubbed in the income of R
c. R as he will be treated as deemed owner & liable to tax
52. R transferred his house property to his wife under an agreement to live apart. Income from such house property shall be taxable in the hands of :
a. R as deemed owner
b. R. However, it will be first computed as Mrs. R income & Thereafter clubbed in the hands of R
c. Mrs. R
53. R gifted his house property to his married minor daughter. The income from such house property shall be taxable in the hands of :
a. R as deemed owner.
b. R. However, it will be first computed as minor daughters income & clubbed in the income of R.
c. Income of married minor daughter.
54. A has two house properties. Both are self-occupied. The annual value
a. Of both house shall be nil
b. One house shall be nil
c. Of no house shall be nil
55. An assessee has borrowed money for purchase of a house & Interest is payable outside India. Such interest shall:
a. Be allowed as deduction
b. Not to be allowed on deduction
c. Be allowed as deduction if the tax is deducted at source
56. Salary, bonus, commission or remuneration due to or received by a working partner from the firm is taxable under the head.
a. Income from salaries
b. Other sources
c. PGBP
57. Perquisite received by the assessee during the course of carrying on his business or profession is taxable under the head.
a. Salary
b. Other sources
c. PGBP
58. Interest on capital or loan received by a partner from a firm is:
a. Exempt U/S 10(2A)
b. Taxable U/H business and profession
c. Taxable U/H income from other sources
59. Under the head Business or Profession, the method of accounting which an assessee can follow shall be :
a. Mercantile system only
b. Cash system only
c. Mercantile or cash system only
d. Hybrid system
60. An asset which was acquired for Rs. 5, 00, 000 was earlier used for scientific research. After the research was completed, the machinery was brought into the business of the assessee. The actual cost of the asset for the purpose of inclusion in the block of asset shall be :
a. Rs.5,00,000
b. Nil
c. Market value of the asset on the date it was brought into business
61. A car is imported after 1- 4- 2005 by R Ltd. from London to be used by its employee. R Ltd. shall be allowed depreciation on such car at:
a. 15%
b. 40%
c. Nil
62. Unabsorbed depreciation which could not be set off in the same assessment year, can be carried forward for:
a. 8 Years
b. Indefinitely
c. 4Years
63. Certain revenue and capital expenditure on scientific research are allowed as deduction in the previous year of commencement of business even if these are incurred:
a. Five years immediately before the commencement of business
b. 3 years immediately before the commencement of the business
c. Any time prior to the commencement of the business.
64. If any amount is donate for research, such research should be in nature of:
a. Scientific research only
b. Social or statistical research only
c. Scientific or social or statistical research
65. Preliminary expenses incurred are allowed deduction in:
a. 10 equal installments
b. 5 equal installments
c. full
66. In case the assessee follows mercantile system of accounting, bonus or commission to the employee are allowed as deduction on:
a. Due basis
b. Payment basis
c. Due basis but subject to section 43B.
67. Interest on money borrowed for the purpose of acquiring a capital asset pertaining to the period after the asset is put to use is to be:
a. Capitalized
b. Treated as revenue expenditure
68. Expenditure incurred on purchase of animals to be used by the assessee for the purpose of carrying on his business& profession is subject to
a. Depreciation
b. Deduction in the previous year in which animal dies or become permanently useless
c. Nil deduction
69. Expenditure incurred on family planning amongst the employees is allowed to
a. Any assessee
b. A company assessee
c. An assessee which is a company or cooperative society
70. Interest on capital of or loan from partner of a firm is allowed as deduction to the firm to the extent of:
a. 18% p.a.
b. 12% p.a. even if it is not mentioned in partnership deed
c. 12% p.a. or at the rate mentioned in partnership deed whichever is less.
71. Deduction under section 40(b) shall be allowed on account of salary /remuneration paid to :
a. Any partner
b. Major partner only
c. Working partner only
72. Remuneration paid to working partner shall be allowed as deduction to a firm:
a. In full
b. Subject to limits specified in section 40(b)
c. None of these two
73. A firm business income is nil /negative. It shall still be allowed as deduction on account of remuneration to working partner to the maximum extent of:
a. Actual remuneration paid as specified in partnership deed
b. Rs.50,000
c. Nil
74. For person carrying on profession, tax audit is compulsory, if the gross receipts of the previous year exceeds:
a. Rs.50 lakhs
b. Rs.40 lakhs
c. Rs.10 lakhs
75. Tax audit is compulsory in case a person is carrying on business whose gross turnover/sales/receipts, as the case may be, exceeds:
a. Rs. 10 lakhs
b. Rs. 40 lakhs
c. 1 crore
76. In case an assessee in engaged in the business of civil construction, presumptive income scheme is applicable if the gross receipts paid or payable to him in the previous year does not exceed:
a. Rs.10 lakhs
b. Rs. 40 lakhs
c. Rs. 50 lakhs
77. In the aforesaid case ,the income shall be presumed to be :
a. 5% of gross receipts
b. 8% of gross receipts
c. 10% of gross receipts
78. In case an assessee is engaged in the business of plying hiring or leasing goods carriage, presumption income scheme under section 44AE is applicable if the assessee is the owner of maximum of :
a. 8 goods carriages
b. 10 goods carriages
c. 12 goods carriages
79. In case an assessee is engaged in the business of retail trade, presumptive income scheme is applicable if the total turnover of such retail trade of goods does not exceed:
a. Rs.10 lakhs
b. Rs.30 lakhs
c. Rs.40 lakhs
d. Rs.50 lakhs
80. In the above case the income to be presumed under section 44AF shall be :
a. 8% of total turnover
b. 5% of total turnover
c. 10% of total turnover
81. If the assessee opts for section 44AD or 44AF or 44AE,then the assessee shall:
a. Not be entitled to any deduction under sections 30 to 37
b. be entitled to deduction under sections 30 to 37
c. Not be entitled to deduction under sections 30 to 37except for interest on capital or loan from partner and remuneration to a working partner subject to conditions laid down under section 40(b)
82. The period of holding of shares acquired in exchange of convertible debentures shall be reckoned from:
a. The date of holding of debentures
b. The date of when the debentures were converted into shares
c. None of these two
83. Securities transaction tax paid by the seller of shares and units shall
a. Be allowed as deduction as expenses of transfer
b. Not be allowed as deduction
84. The cost inflation index number of the p.Yr.2005-06 is :
a. 480
b. 497
c. 426
d. 463
85. Conversion of capital asset into stock in trade will result into capital gain of the previous year:
a. In which such conversion took place
b. In which such converted asset is sold or otherwise transferred
c. None of these two
86. Where a partner transfers any capital asset into the business of firm ,the sale consideration of such asset to the partner shall be :
a. Market value of such asset on the date of such transfer
b. Price at which it was recorded in the books of the firm
c. Cost of such asset to the partner
87. Where the entire block of the depreciable asset is transferred after 36 months, there will be:
a. Short-term capital gain
b. Long-term capital gain
c. Short-term capital gain or loss
d. Long-term capital gain or loss
88. In the case of compulsory acquisition, the indexation of cost of acquisition or improvement shall be done till the :
a. Previous year of compulsory acquisition
b. In which the full compensation received
c. In which part or full consideration is received
89. If good will of a profession which is self generated is transferred, there will:
a. Be capital gain
b. Not be any capital gain
c. Be a short-term capital gain
90. Exemption under section 54 is available to :
a. All assesses
b. Individuals only
c. Individual + HUF.
91. The exemption under section 54 ,shall be available:
a. To the extent of capital gain invested in the HP
b. Proportionate to the net consideration price invested
c. To the extent of amount actually invested
92. The exemption u/s 54B, is allowed to :
a. Any assessee
b. Individual only
c. Individual or HUF
93. For claiming exemption under section 54B the assessee should acquire:
a. Urban agricultural land
b. Rural agricultural land
c. Any agricultural land
94. New assets acquired for claiming exemption u/s 54, 54B or 54D,if transferred within 3 years, will result in:
a. Short-term capital gain
b. long-term capital gain
c. ST or LTCG depending upon original transfer
95. Loss from a speculation business of a particular A. Yr. can be set off in the same A. Yr. from:
a. Profit and gains from any business
b. Profit and gains from any business other then speculation business
c. Income of speculation business
96. Loss under the head capital gain in a particular assessment year can:
a. Be set off from other head of income in the same assessment year.
b. Be carried forward
c. Neither be set off nor carried forward
97. The loss is allowed to be carried forward only when as assessee has furnished:
a. Return of loss
b. Return of loss before the due date mentioned u/s 139(1)
c. Or not furnished the return of loss
98. Loss under the head income from house property can be carried forward:
a. Only if the return is furnished before the due date mentioned u/s 139(1)
b. Even if the return is not furnished
c. Even if the return in furnished after the due date
99. Deduction u/s 80C in respect of LIP, Contribution to provident fund, etc. is allowed to :
a. Any assessee
b. An individual
c. An individual or HUF
d. An individual or HUF who is resident in India
100. Deduction under section 80C is allowed from:
a. Gross total income
b. Total income
c. Tax on total income
101. An assessee has paid life insurance premium of Rs.25,000 during the previous year for a policy of Rs.1,00,000.He shall:
a. Not be allowed deduction u/s 80C
b. Be allowed Deduction u/s 80C to the extent of 20% of the capital sum assured i.e.Rs.20,000
c. Be allowed Deduction for the entire premium as per the provisions of section 80C
102. For claiming Deduction u/s 80C, the payment or deposit should be made:
a. Out of any income
b. Out of any income chargeable to income tax
c. During the current year out of any source
103. Deduction under section 80C shall be allowed for :
a. Any education fee
b. Tution fee exclusive of any payment towards any development fee or donation or payment of similar nature
c. Tution fee and annual charges
104. Deduction under section 80CCC is allowed to the extent of :
a. Rs. 20,000
b. Rs. 10,000
c. Rs. 40,000
105. Deduction under section 80D in respect of medical insurance premium is allowed to:
a. Any assessee
b. An individual or HUF
c. Individual or HUF who is resident in India
d. Individual only
106. Deduction u/s 80D is allowed if the premium is paid to :
a. Life insurance Corporation
b. General insurance Corporation or any other insurer
c. Life insurance or General insurance corporation
107. The payment for Insurance premium under section 80D should be paid:
a. In cash
b. By cheque
c. Cash/by cheque
108. The quantum of deduction allowed under section 80D shall be limited to:
a. Rs.6,000
b. Rs.10,000
c. Rs. 40,000
109. Deduction U/s 80G on account of donation is allowed to:
a. A business assessee only
b. Any assessee
c. Individual or HUF only
110. The maximum deduction u/s 80GG shall be limited to:
a. Rs. 1,000 p.m.
b. Rs. 2,000 p.m.
c. Rs. 3,000 p.m.
111. Deduction u/s 80GGA in respect of certain donation for scientific reseach or rural development is allowed to:
a. any assessee
b. non corporate business assessee
c. an assessee whose income does not include PGBP income.
112. Deduction under section 80DD shall be allowed:
a. To the extent of actual expenditure/deposit or Rs.40,000 whichever is less
b. For a sum of Rs.50,000 irrespective of actual expenditure or deposit
c. For a sum of Rs.40,000 irrespective of any expenditure incurred or actual deposited
113. The deduction u/s 80E is allowed for repayment of interest to the extent of :
a. Rs.25,000
b. Rs.40,000
c. Any amount repaid
114. The quantum of deduction allowed u/s 80U is :
a. Rs. 40,000
b. Rs. 50,000
c. Rs. 60,000
115. A circular of the CBDT u/s 119 of the Income tax Act 1961.
a. Can override or detract from the Act
b. Cannot override or detract from the Act
116. The circulars issued by CBDT are binding on:
a. Assessee
b. Income-tax Authorities
c. Both the above
117. As per Sec.139(1), a company shall have to file return of income:
a. When its total income exceeds Rs.50,000
b. When its total income exceeds the maximum amount which is not chargeable to income tax
c. In all cases irrespective of any income or loss earned by it.
118. If the TI of an assessee does not exceed the maximum exemption limit, it will be still obligatory for him to file return of income if he:
a. Satisfies any one out of six economic indicators
b. Satisfies any two out of six economic indicators
c. Resides in such area as may be specified.
d. Resides in such area as may be specified by the board and satisfies any 1 of the 6 economic indicators.
119. One of the six economic indicators for filling obligatory return of income is occupation of immovable property exceeding a specified floor areas:
a. By way of ownership
b. By way of ownership or tenancy
c. By way of ownership or tenancy or otherwise
120. The last date of filing the return of income u/s 139(1) for A. Yr. 2006-07 in case of a company assessee is
a. 30th November of the assessment year
b. 31st October of the assessment year
c. 31st march of the assessment year
121. The last date of filing the return of income u/s 139(1) for assessment year 2006-07 in case of a non corporate business assessee whose accounts are not liable to be audited shall be:
a. 31st July of the assessment year
b. 30th June of assessment year
c. 31st October of the assessment year
122. For the P.Y. 2005-06 the business income of the assessee before providing C.Yr. depreciation of Rs. 3,50,000 is Rs. 1,50,000. His due date of return was 31-10-2006 but he submitted the return on 16-12-2006, the assessee in this case:
a. Be allowed to carry forward unabsorbed depreciation of Rs. 2,00,000
b. Not allowed to carry forward unabsorbed depreciation of Rs.2,00,000
123. K finds some mistake in the return of income submitted by him on 05-06-2005 for assessment year 2005-06, he wishes to revised such return. No assessment has been done in this case. K can revise such return till:
a. 31-03-2006
b. 31-03-2007
c. 31-03-2008
124. The notice under section 143(2) must be served within:
a. 12 months from the date of filing of return
b. 12 months from the due date of filing the return u/s 139(1) or from the date of filing of return of income.
c. 12 months from the end of the month in which the return was furnished.
125. Time limit for completion of asst. u/s 143/144 shall be:
a. Four years from the end of the relevant assessment year in which income was first assessable.
b. Two years from the end of the relevant assessment year in which income was first assessable.
c. Two years from the end of the month in which the return was so furnished.
126. The time limit for completion of assessment/reassessment u/s 147 shall be:
a. One year from the end of financial year in which notice u/s 148 was served on the assessee
b. Two years from the end of the financial year in which notice u/s 148 was served on the assessee
c. Four years from the end of the financial year in which notice u/s 148 was served on the assessee
127. The amendment of an order u/s 154 can be made:
a. Within 4 years from the date when the order sought to be amended was passed
b. Within 4 years from the date of receipt of such order by the assessee
c. Within 4 years from the end of the F.Y, in which the order sought to be amended was passed.
128. The first appeal against the order the assessing officer lies with:
a. Deputy commissioner (Appeals)
b. Commissioner appeals
c. Appellate Tribunal
129. The first appeal can be filed by:
a. The assessee only
b. Assessing officer only
c. Either the assessee or the assessing officer
130. If the assessee is not satisfied with any order passed by the assessing officer, he can:
a. File appeal to commissioner (Appeal)
b. Apply for revision to the CIT u/s 264
c. Either file appeal or apply for revision u/s 264
d. File appeal as well as apply for revision.
131. Revision u/s 263 is to be done by the commissioner
a. On his own motion
b. On the request of the assessee
c. On the request of the assessing officer
d. On his own motion or on the request of the assessee or the assessing officer
132. The time limit for passing an order of revision under section 263 by the commissioner of Income-tax, where the same is to give effect to a direction by the High Court is:
a. Two years from the date of direction
b. Three years from the date of direction
c. Two years from the end of the financial year in the direction is given
d. There is no time limit.
ANSWERS
1. c 2. b 3. c 4. d 5. b 6. c 7. d 8. c 9. a 10. a 11. a 12. c 13. a 14. a
15. b 16. b 17. c 18. c 19. c 20. a 21. b 22. a 23. c 24. b 25. b 26. a 27. b 28. a
29. d 30. d 31. c 32. a 33. a 34. b 35. a 36. a 37. b 38. b 39. a 40. c 41. a 42. b
43. a 44. b 45. a 46. c 47. b 48. a 49. b 50. b 51. c 52. c 53. c 54. b 55. c 56. c
57. c 58. b 59. c 60. b 61. c 62. b 63. b 64. c 65. a 66. c 67. b 68. b 69. b 70. c
71. c 72. b 73. b 74. c 75. b 76. b 77. b 78. b 79. c 80. b 81. c 82. b 83. b 84. b
85. b 86. b 87. c 88. a 89. b 90. c 91. a 92. b 93. c 94. a 95. c 96. b 97. b 98. c
99. c 100. a 101. b 102. b 103. b 104. b 105. b 106. b 107. b 108. b 109. b 110. b 111. a
112. b 113. c 114. b 115. b 116. b 117. c 118. d 119. c 120. b 121. a 122. a 123. b 124. c
125. b 126. a 127. c 128. b 129. a 130. c 131. a 132. d
Friday, October 9, 2009
Work / study balance: planning your study time
Studying while holding down a job is a whole new ball game, requiring a considerable amount of planning, including around factors you might not have much control over – such as workload pressure or the demands of your boss. Our advice - plan ahead:
1. Give yourself a break – accept that achieving the perfect balance between work, study and your personal life is a ‘big ask’; that doesn’t mean you shouldn’t try, but don’t beat yourself up about occasionally having to make compromises.
2. Develop the habit of good habits – no-one wants to be stuck in a rut, but having a structure that allows you to stay disciplined while allowing a degree of reasonable flexibility will help you get into the groove of your studies without feeling straitjacketed.
3. Identify when you’re at your most alert – optimise your studies by keeping this time free for your textbooks and homework; if that means finding a quiet room in the office during your lunch hour, or before or after work, so be it – and your diligence and dedication will be on display to the powers-that-be.
4. Maintain a study diary – and add your study schedule into your office diary; you’ll be far less likely to break the commitment you’ve made yourself if your sessions are written down in black and white.
5. Less is more – a two or three-hour study session might seem like a good idea when you’re bursting with energy and enthusiasm, but loses its allure at the end of a long, gruelling day at work; by all means put aside evenings to study but take plenty of breaks, especially if you’re reading reams of text on a screen.
6. Just five minutes – it’s easy to convince yourself there’s little point in studying for much less than 15 or 30 minutes; but short bursts can pay huge dividends; try writing key points in colours on small filing cards to revise on public transport or when waiting to meet friends.
7. Take physical breaks – crouching over a book or laptop and concentrating on taking in all you read will take a physical as well as mental toll; stretch, take short walks; even try breathing exercises to re-energise yourself and ensure you don’t give up because of discomfort.
8. Seize the day – everyone’s different but many of us are better at assimilating complex information during the daytime.
9. Brain food, but at the right time – certain foods boost our brain power and wellbeing, so ensure you have a balanced diet that includes protein-rich staples (such as fish, broccoli, nuts, dairy products) and sources of serotonin (such as pasta, starchy vegetables and cereals) but be careful not to load up immediately prior to a study session; let your body’s digestive system do its work before you settle down.
10. Don’t head to bed on your studies – you need quality sleep to be an effective student (and be fit for the office); allow yourself time to relax between studying and sleeping; read or do something to take your mind off the subject.
1. Give yourself a break – accept that achieving the perfect balance between work, study and your personal life is a ‘big ask’; that doesn’t mean you shouldn’t try, but don’t beat yourself up about occasionally having to make compromises.
2. Develop the habit of good habits – no-one wants to be stuck in a rut, but having a structure that allows you to stay disciplined while allowing a degree of reasonable flexibility will help you get into the groove of your studies without feeling straitjacketed.
3. Identify when you’re at your most alert – optimise your studies by keeping this time free for your textbooks and homework; if that means finding a quiet room in the office during your lunch hour, or before or after work, so be it – and your diligence and dedication will be on display to the powers-that-be.
4. Maintain a study diary – and add your study schedule into your office diary; you’ll be far less likely to break the commitment you’ve made yourself if your sessions are written down in black and white.
5. Less is more – a two or three-hour study session might seem like a good idea when you’re bursting with energy and enthusiasm, but loses its allure at the end of a long, gruelling day at work; by all means put aside evenings to study but take plenty of breaks, especially if you’re reading reams of text on a screen.
6. Just five minutes – it’s easy to convince yourself there’s little point in studying for much less than 15 or 30 minutes; but short bursts can pay huge dividends; try writing key points in colours on small filing cards to revise on public transport or when waiting to meet friends.
7. Take physical breaks – crouching over a book or laptop and concentrating on taking in all you read will take a physical as well as mental toll; stretch, take short walks; even try breathing exercises to re-energise yourself and ensure you don’t give up because of discomfort.
8. Seize the day – everyone’s different but many of us are better at assimilating complex information during the daytime.
9. Brain food, but at the right time – certain foods boost our brain power and wellbeing, so ensure you have a balanced diet that includes protein-rich staples (such as fish, broccoli, nuts, dairy products) and sources of serotonin (such as pasta, starchy vegetables and cereals) but be careful not to load up immediately prior to a study session; let your body’s digestive system do its work before you settle down.
10. Don’t head to bed on your studies – you need quality sleep to be an effective student (and be fit for the office); allow yourself time to relax between studying and sleeping; read or do something to take your mind off the subject.
CS Notes - Income Tax| Executive Program| CALCULATION OF INCOME TAX
1. Income of every person is chargeable to tax at the rates prescribed in the Finance Act such as slab rates. However some of the income tax rates are not mentioned in Finance Act but they have been mentioned in Act itself, such as Tax on lottery income is 30% as per section 115BB and tax on long-term capital gains is 20% as per section 112 and if equity shares are sold after 1/10/2004 the STCG are taxable at 15% as per section 111A.
2. Individuals, HUF, AOP, BOI and every artificial juridical person get their income taxable on the basis of slab rate.
3. Surcharge @ 10% is leviable on the tax liability in the case of individual and HUF where their taxable income exceeds Rs. 10 lakhs and Rs. 100 Lakhs in case of firms and companies for the AY 2009-2010.
4. Firms & domestic companies are chargeable at a flat rate of 30%.
5. Surcharge leviable for the AY 2009-2010 has been 10% except in case of foreign companies where it is 2.5%.
6. No surcharge is imposed on local authority and co-operative societies.
7. Every person whose total income of the assessment year exceeds the maximum amount not chargeable to tax shall pay the tax as per the rates mentioned in the finance act, in the previous year itself. Such total income is to be calculated on the basis of the residential status of a person.
8.Education cess for the AY 2009-2010 is 2% for primary education and 1% for higher and secondary education. We should not calculate and charge education cess at 3%, it would be principally wrong.
2. Individuals, HUF, AOP, BOI and every artificial juridical person get their income taxable on the basis of slab rate.
3. Surcharge @ 10% is leviable on the tax liability in the case of individual and HUF where their taxable income exceeds Rs. 10 lakhs and Rs. 100 Lakhs in case of firms and companies for the AY 2009-2010.
4. Firms & domestic companies are chargeable at a flat rate of 30%.
5. Surcharge leviable for the AY 2009-2010 has been 10% except in case of foreign companies where it is 2.5%.
6. No surcharge is imposed on local authority and co-operative societies.
7. Every person whose total income of the assessment year exceeds the maximum amount not chargeable to tax shall pay the tax as per the rates mentioned in the finance act, in the previous year itself. Such total income is to be calculated on the basis of the residential status of a person.
8.Education cess for the AY 2009-2010 is 2% for primary education and 1% for higher and secondary education. We should not calculate and charge education cess at 3%, it would be principally wrong.
CS Notes- Income Tax | RESIDENTIAL STATUS
1. Section 6(1): An Individual can be resident or a non resident in India. To be a resident he has to satisfy one of the following conditions:
1. Stay in India >/= 182 days in a PY OR
2. Stay in India >/= 60 days in a PY and Stay in India >/= 365 days in preceeding 4 PYs.
II) For the b) condition above, we have 3 exceptional cases. In all these 3 cases 60 days shall be taken as 182 days:
1. A citizen of India who leaves India for the employment purposes.
2. A citizen of India who leaves India as a member of crew of Indian ship.
3. An Individual who is a citizen of India OR is a person of Indian origin who comes to India on a visit.
III) Section 6(6)(a): A Resident individual can be ROR or NOR. ROR is one who satisfies both of the following conditions
1. Resident in 2/10 preceeding PYs.
2. Stay in India >/= 730 days in a 7 preceding PYs.
IV) For an individual, residential status is determined based on the period of stay in India. However, for HUF, Firm, AOP and other non-corporate entities the control and management is critical in determining residential status.
V) While determining residential status of HUF period of stay of karta is not at all relevant. What is important is whether control and management of such HUF is situated in India or not. Further to check whether HUF is ROR or NOR residential status of karta as an individual becomes relevant.
VI) An Indian company is always regarded as a Domestic Company. A company incorporated outside India may also be treated as a domestic company if certain conditions are fulfilled.
VII) An Indian company is always a resident. A Company incorporated outside India is treated as `resident’ only if control and management is wholly in India.
VIII) Resident and ordinarily resident is taxed on his global income.
IX) Not ordinarily resident is taxed in respect of Indian Income. In respect of foreign income he is taxed only if it is from business controlled in India or profession set up in India.
X) Non resident is taxed in respect of Indian Incomes only.
XI) Remittance in India is never taxed in India, since it is the second receipt.
XII) Agriculture income from a land in India is always exempt from tax. However, if land is not in India then agriculture income will be taxed in India.
XIII) Dividend from Domestic Company is not taxed but from foreign company it is fully chargeable to tax. Dividends from cooperative societies are fully taxable.
1. Stay in India >/= 182 days in a PY OR
2. Stay in India >/= 60 days in a PY and Stay in India >/= 365 days in preceeding 4 PYs.
II) For the b) condition above, we have 3 exceptional cases. In all these 3 cases 60 days shall be taken as 182 days:
1. A citizen of India who leaves India for the employment purposes.
2. A citizen of India who leaves India as a member of crew of Indian ship.
3. An Individual who is a citizen of India OR is a person of Indian origin who comes to India on a visit.
III) Section 6(6)(a): A Resident individual can be ROR or NOR. ROR is one who satisfies both of the following conditions
1. Resident in 2/10 preceeding PYs.
2. Stay in India >/= 730 days in a 7 preceding PYs.
IV) For an individual, residential status is determined based on the period of stay in India. However, for HUF, Firm, AOP and other non-corporate entities the control and management is critical in determining residential status.
V) While determining residential status of HUF period of stay of karta is not at all relevant. What is important is whether control and management of such HUF is situated in India or not. Further to check whether HUF is ROR or NOR residential status of karta as an individual becomes relevant.
VI) An Indian company is always regarded as a Domestic Company. A company incorporated outside India may also be treated as a domestic company if certain conditions are fulfilled.
VII) An Indian company is always a resident. A Company incorporated outside India is treated as `resident’ only if control and management is wholly in India.
VIII) Resident and ordinarily resident is taxed on his global income.
IX) Not ordinarily resident is taxed in respect of Indian Income. In respect of foreign income he is taxed only if it is from business controlled in India or profession set up in India.
X) Non resident is taxed in respect of Indian Incomes only.
XI) Remittance in India is never taxed in India, since it is the second receipt.
XII) Agriculture income from a land in India is always exempt from tax. However, if land is not in India then agriculture income will be taxed in India.
XIII) Dividend from Domestic Company is not taxed but from foreign company it is fully chargeable to tax. Dividends from cooperative societies are fully taxable.
Saturday, October 3, 2009
BASIC CONCEPTS AND DEFINATIONS
1.The Income-tax Act, 1961 came into force with effect from 1/4/1962. It has XXIII chapters and 298 sections in all.
2. India: Section 2(25A) India means the territory of India as referred to in Article 1 of the Constitution, its territorial waters, seabed and subsoil underlying such waters, continental shelf, exclusive economic zone or any other maritime zone as referred to in the Territorial Waters, Continental Shelf, Exclusive Economic Zone and other maritime Zones Act, 1976 and the air space above its territory and territorial waters.
3. Person: Section 2(31) includes seven types of persons namely an individual, a Hindu undivided family (HUF), A company, A firm, An association of persons (AOP) or a body of individuals (BOI), A local authority, Every artificial juridical person not falling within any of the preceding sub clauses.
4. The 2 basic differences between AOP and BOI are:
a) In BOI there are only individuals but in AOP there can be any type of persons.
b) BOI is creation of law whereas AOP can be created by different persons coming together for doing some income producing activity on the voluntary basis.
5.Assessee: Section 2(7) means any person by whom tax, interest or penalty is payable under any provision of this act and includes:
1.deemed assessee
2.assessee in default
3.Person against whom any income tax proceedings have been started for the assessment of his income or loss or the income of some other person or the loss for whom he is liable.
6.Assessment year: Section 2(9) means the period of 12 months starting from 1st April every year and ending on 31st march of the succeeding year.
7. Previous year: Section 2(34) means the year immediately preceeding to assessment year. Income for the previous year is always taxed in the assessment year. The following are the exceptions to the general rule that income of every previous year is chargeable to tax in the relevant assessment year.
Section 172: Shipping business of a non-resident;
Section 174: Person leaving India;
Section 174A: An AOP formed for the purpose of a particular event.
Section 175: Persons likely to transfer property to avoid tax;
Section 176: Discontinued business or profession
8.Income includes the gifts received in excess of Rs.50000. If anyone has received gift in cash exceeding Rs.50000 from a non-relative then whole of such amount received shall be considered his income.
9. However gifts received from relatives shall not be covered in the said 8) point above.
10. Section 14: Gross total income is the aggregate of income from all five heads of Income, namely
Income under the head salary
Income under the head house property
Income under the head business and profession
Income under the head capital gains
Income under the head other sources
11. Section 14A: while computing total income no deduction shall be allowed for that expenditure which has been incurred to earn exempted income.
12. Section 2(45): Total income is income after reducing the deduction under chapter VI-A from the gross total income. This income is also called taxable income on which tax has to be imposed.
13. Section 288A: The total income shall be rounded off in the multiples of Rs. 10.
14.APPLICATION OF INCOME V/S DIVERSION OF INCOME: Application of income means spending the money after it has been earned by the assessee. Such an amount is always included while computing taxable income in the hands of assessee. In other words once an income has been earned it could not be excluded on the grounds that it has been applied for some purpose. On the other hand diversion of income is the process of diverting the income before it is earned by the assessee.
FOR EXAMPLE: J Ltd sells a unit of a product at Rs.100 with very clear message to customer that out of Rs.100 Rs.5 will go to the charitable institution. Now only Rs.95 shall be regarded as the income in the hands of company and Rs.5 will be known as diversion of income.
FOR EXAMPLE: Mr. J inherited property from his father but subject to the right of residence in favour of mother of Mr. J. This means that Mr. J has the right over the ownership of the property but mother has right over residence in the house. If the house is to be sold then for the effective sale of house both should transfer their rights in house. From the total sales consideration Mr. J can not be held liable for the tax on that portion which represents the right of his mother.
15.REVENUE VS CAPITAL: Any receipt of money can either be categorized as revenue or capital. Revenue receipts are always fully taxable unless specific exemption has been provided for that. Capital receipts are never taxable. That’s why amount received from insurance company at the time of maturity is not taxed u/s 10(10D). Similarly loan taken is also not taxed. However, some of the capital receipts are taxable since they have been specifically provided in the definition of Income such as tax on Capital gains on sale of Capital asset.
2. India: Section 2(25A) India means the territory of India as referred to in Article 1 of the Constitution, its territorial waters, seabed and subsoil underlying such waters, continental shelf, exclusive economic zone or any other maritime zone as referred to in the Territorial Waters, Continental Shelf, Exclusive Economic Zone and other maritime Zones Act, 1976 and the air space above its territory and territorial waters.
3. Person: Section 2(31) includes seven types of persons namely an individual, a Hindu undivided family (HUF), A company, A firm, An association of persons (AOP) or a body of individuals (BOI), A local authority, Every artificial juridical person not falling within any of the preceding sub clauses.
4. The 2 basic differences between AOP and BOI are:
a) In BOI there are only individuals but in AOP there can be any type of persons.
b) BOI is creation of law whereas AOP can be created by different persons coming together for doing some income producing activity on the voluntary basis.
5.Assessee: Section 2(7) means any person by whom tax, interest or penalty is payable under any provision of this act and includes:
1.deemed assessee
2.assessee in default
3.Person against whom any income tax proceedings have been started for the assessment of his income or loss or the income of some other person or the loss for whom he is liable.
6.Assessment year: Section 2(9) means the period of 12 months starting from 1st April every year and ending on 31st march of the succeeding year.
7. Previous year: Section 2(34) means the year immediately preceeding to assessment year. Income for the previous year is always taxed in the assessment year. The following are the exceptions to the general rule that income of every previous year is chargeable to tax in the relevant assessment year.
Section 172: Shipping business of a non-resident;
Section 174: Person leaving India;
Section 174A: An AOP formed for the purpose of a particular event.
Section 175: Persons likely to transfer property to avoid tax;
Section 176: Discontinued business or profession
8.Income includes the gifts received in excess of Rs.50000. If anyone has received gift in cash exceeding Rs.50000 from a non-relative then whole of such amount received shall be considered his income.
9. However gifts received from relatives shall not be covered in the said 8) point above.
10. Section 14: Gross total income is the aggregate of income from all five heads of Income, namely
Income under the head salary
Income under the head house property
Income under the head business and profession
Income under the head capital gains
Income under the head other sources
11. Section 14A: while computing total income no deduction shall be allowed for that expenditure which has been incurred to earn exempted income.
12. Section 2(45): Total income is income after reducing the deduction under chapter VI-A from the gross total income. This income is also called taxable income on which tax has to be imposed.
13. Section 288A: The total income shall be rounded off in the multiples of Rs. 10.
14.APPLICATION OF INCOME V/S DIVERSION OF INCOME: Application of income means spending the money after it has been earned by the assessee. Such an amount is always included while computing taxable income in the hands of assessee. In other words once an income has been earned it could not be excluded on the grounds that it has been applied for some purpose. On the other hand diversion of income is the process of diverting the income before it is earned by the assessee.
FOR EXAMPLE: J Ltd sells a unit of a product at Rs.100 with very clear message to customer that out of Rs.100 Rs.5 will go to the charitable institution. Now only Rs.95 shall be regarded as the income in the hands of company and Rs.5 will be known as diversion of income.
FOR EXAMPLE: Mr. J inherited property from his father but subject to the right of residence in favour of mother of Mr. J. This means that Mr. J has the right over the ownership of the property but mother has right over residence in the house. If the house is to be sold then for the effective sale of house both should transfer their rights in house. From the total sales consideration Mr. J can not be held liable for the tax on that portion which represents the right of his mother.
15.REVENUE VS CAPITAL: Any receipt of money can either be categorized as revenue or capital. Revenue receipts are always fully taxable unless specific exemption has been provided for that. Capital receipts are never taxable. That’s why amount received from insurance company at the time of maturity is not taxed u/s 10(10D). Similarly loan taken is also not taxed. However, some of the capital receipts are taxable since they have been specifically provided in the definition of Income such as tax on Capital gains on sale of Capital asset.
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