BBA IV SEMESTER (TAXATION AND LAW) Unit

Under the Income Tax Act 1961, the concept of "residence" is important in determining an individual's tax liability in India.

The tax liability of an individual in India is determined based on their residential status for a particular financial year. The residential status of an individual is determined based on their physical presence in India during the financial year and the preceding financial years.

As per the Income Tax Act 1961, an individual can be classified as a resident in India in any of the following three categories:

Resident and Ordinarily Resident (ROR) - An individual who has been physically present in India for at least 182 days or more during the financial year, or has been present in India for at least 60 days or more during the financial year and 365 days or more during the preceding 4 financial years.
Resident but Not Ordinarily Resident (RNOR) - An individual who has been a resident of India in at least 2 out of the 10 previous financial years preceding the relevant financial year, and who has been in India for 729 days or less during the 7 preceding financial years.
Non-Resident (NR) - An individual who does not meet any of the above conditions is classified as a non-resident.

The tax liability of an individual in India is determined based on their residential status. Resident and Ordinarily Resident (ROR) individuals are taxed on their worldwide income, while Resident but Not Ordinarily Resident (RNOR) individuals are taxed only on their income earned or received in India, and Non-Resident (NR) individuals are taxed only on their income earned or received in India.

Therefore, it is important to determine the residential status of an individual for each financial year to ascertain their tax liability under the Income Tax Act 1961.

Here are some multiple-choice questions (MCQs) based on the concept of "residence" and tax liability under the Income Tax Act 1961:

Which of the following is not a factor in determining an individual's residential status under the Income Tax Act 1961? a. The number of days the individual has been present in India during the financial year. b. The individual's nationality. c. The number of days the individual has been present in India during the preceding financial years. d. The individual's place of birth.

Answer: b. The individual's nationality.

An individual who has been physically present in India for at least 182 days or more during the financial year, or has been present in India for at least 60 days or more during the financial year and 365 days or more during the preceding 4 financial years is classified as: a. Resident but Not Ordinarily Resident (RNOR) b. Non-Resident (NR) c. Resident and Ordinarily Resident (ROR) d. None of the above

Answer: c. Resident and Ordinarily Resident (ROR)

Which of the following statements is true for a Resident and Ordinarily Resident (ROR) individual under the Income Tax Act 1961? a. They are taxed only on their income earned or received in India. b. They are taxed on their worldwide income. c. They are exempt from paying any taxes in India. d. They are taxed on their income earned or received in India and any income earned outside India which is received in India.

Answer: b. They are taxed on their worldwide income.

An individual who does not meet any of the conditions to be classified as a Resident and Ordinarily Resident (ROR) or Resident but Not Ordinarily Resident (RNOR) under the Income Tax Act 1961 is classified as: a. Resident and Ordinarily Resident (ROR) b. Non-Resident (NR) c. Resident but Not Ordinarily Resident (RNOR) d. None of the above

Answer: b. Non-Resident (NR)

Which of the following is not a factor in determining an individual's tax liability under the Income Tax Act 1961? a. The individual's residential status b. The amount of income earned or received by the individual c. The individual's occupation d. The source of income earned or received by the individual

Answer: c. The individual's occupation.

MCQs on Basic Concept of Income Tax, Residential Status & Exempt Income Q1. Income Tax is imposed by . (a) State Government (b) Central Government (c) Both of the above (d) Constitution of India

Q2. Parliament has the power to levy tax on incomes other than . (a) Exempt Incomes (b) Income of poor people (c) Agricultural Income (d) All incomes aretaxable Q3. Which Entry of Union List gives the power to Parliament to levy tax on incomes?

(a) Entry 81 of List I to Seventh schedule (b) Entry 81 of List II to Seventh schedule (c) Entry 82 of List I to Seventh schedule (d) Entry 82 of List II to Seventh schedule

Q4. Highest Administrative Authority for Income Tax in India is . (a) Finance Minister (b) CBDT (c) President of India (d) Director of Income Tax

Q5. Income-tax Act, 1961 applies to . (a) Whole of India (b) Whole of India excluding J&K (c) Maharashtra (d) All of the above

Q6. The basic source of income-tax law is . (a) Income-tax Act, 1961 (b) Income-tax Rules, 1962 (c) Circulars/Notifications (d) Judgments of Courts

Q7. Income Tax Act came into force on . (a) 1.4.1961 (b) 1.4.1962 (c) 1.4.1956 (d) 1.4.1965

Q8. Income Tax Act contains sections (a) XIV (b) 297 (c) XV (d) 298

Q9. Income Tax Act contains schedules. (a) XIV (b) 297 (c) XV (d) 298

Q10. Proviso gives to the main provision. Q24. Body of Individuals consists of. (a) Clarification (b) Exceptions (c) Proper Administration (d) None of these (a) Individuals (only) (b) Company (c) Any Person other than (a) (d) Any kind of person

Q11. Explanation gives to the main provision. Q25. As per Section 2(31), the following is not included in (a) Clarification (b) Exceptions (c) Proper Administration (d) None of these

Q13. Finance Bill becomes the Finance Act when it is passed by . (a) Lok Sabha (b) Both Lok Sabha & Rajya Sabha (c) Both House of Parliament & signed by President. (d) Both House of Parliament & signed by Prime Minister.

Q14. Part 2 of schedule of I of the Finance Act, 2018 gives rate of tax deductible of source for the PY .

Q16. Notifications issued by CBDT are binding on . (a) Assessee (b) Income TaxAuthority (c) Both of above (d) None of the above

Q17. Circulars issued by CBDT are binding on . (a) Assessee (b) Income TaxAuthority (c) Both of above (d) None of the above

Q18. Circulars are issued by the CBDT to the scope & meaning of the provisions of Law. (a) Clarify the doubts (b) Exceptions (c) Proper Administration (d) None of these

Q19. As per Section 2(7),“Assesses” means a person (a) By whom any tax or other sum of money is payable (b) Against whom proceeding has been taken under the act (c) A person deemed to be assessee in default (d) All of the above

Q20. A person includes . (a) Individual & HUF (b) Firm & Company (c) AOP/BOI, LA, Every AJP (d) All of the above.

Q21. Every assessee is a person, & every person is . (a) Also an assessee (b) Need not be an assessee

Q22. The term “Person” includes . (a) Registered Firm (b) Unregistered Firm (c) Both of (a) & (b) (d) None of (a) or (b)

Q23. Association of persons consists of . (a) Individuals (only) (b) Company (c) Any Person other than (a) (d) Any kind of person

Q24. Body of Individuals consists of.

(a) Individuals (only) (b) Company (c) Any Person other than (a) (d) Any kind of person

Q25. As per Section 2(31), the following is not included in

Q26. A municipal corporation legally entitled to manage & control a municipal fund is taxable in the status of : (a) Individual (b) AOP (c) LA (d) AJP

Q27. A & B are legal heirs of C. After death of C, A & B carry on his business without entering into a partnership. What is their Status? (a) Company (b) LLP (c) AOP (d) Firm

Q28. As per sec. 2(24) definition of ‘income’ is: (a) Inclusive (b) Exhaustive (c) Exclusive (d) Descriptive

Answer:

1: d 2: c 3: c 4: b 5: a 6: a 7: b 8: d 9: a 10: b 11: a 12: b 13: c 14: a 15: b 16: c 17: b 18: a 19: d 20: d 21: b 22: c 23: d 24: a 25: d 26: c 27: c 28: a

Q29. A domestic company means . (a) Indian company only (b) Both Indian company & foreign company (c) Both Indian company & a foreign company having business connection in India (d) Both Indian company & a foreign company which has made the prescribed arrangement for declaration & payment of dividends in India out of the income chargeable to tax in India. Q30. ‘Income’ includes the following types . (a) Legal (b) Illegal (c) Both (d) None Q31. ‘Income’ u/s 2(24) includes . (i) Profits of any business carried on by a person. (ii) Any advance money forfeited in the course of negotiations for transfer of capital asset. Choose the correct option: (a) Both (i) & (ii) (b) Only (i) (c) Only (ii) (d) Neither (i) nor (ii). Q32. Which of the following income is not included in the term ‘income’ ? (a) Profit & gains (b) Dividend (c) Profitin lieu of salary (d) Reimbursement of travelling expenses Q33. Cash gift received from a non-relative is regarded as income. But Exempt amount is p.a. (a) Rs. 25,000 (b) Rs. 75,000 (c) Rs. 50,000 (d) Rs. 25,000 *Q34. What is not included in taxable Income ? (a) Income from smuggling activity (b) Casual income (c) Capital Receipt, except gains on transfer of capital asset (d) Income received in kind. *Q35. A & Co. received Rs. 2 lacs as compensation from B & Co. for premature termination of contract of agency. Amount so received is . (a) Capital receipt & taxable (b) Capital receipt & not taxable (c) Revenue receipt & taxable (d) Revenue receipt & not taxable *Q36. Mr. P has taken a loan of Rs. 5,00,000 from HDFC bank for purchasing a car. His rental income is Rs. 50,000 pm out of which Rs. 5,000 pm directly goes to the bank as an instalment of loan. Discuss the tax treatment. (a) Rs. 5,000 p.m is treated as diversion of Income. (b) Rs. 5,000 p.m is an application ofincome. (c) Rs. 5,000 p.m is not treated as his income. (d) None of the above. Q37. Year in which income is taxable is known as & year in which income is earned is known as . (a) PY, AY (b) AY, PY (c) AY, AY (d) PY, PY Q38. Pick-the correct one. (a) AY & PY are same concepts. (b) AY is the year next to the PY. (c) PY is the year next to the AY. (d) None of the above

Q39. Assessment Year is the period of 12 month commencing on 1st day of . (a) April every year (b) December every year (c) July every year (d) January every year

*Q40. Previous Year can be a period of . (a) > 12 months or < 12 months (b) only 12 months (c) 12 months or < 12 months (d) ≥ 12 months.

Q41. Assessment year can be a period of . (a) > 12 months or < 12 months (b) only 12 months (c) 12 months or < 12 months (d) ≥ 12 months.

Q42. Mr. P sets up a new business on 15.7.2018 & he commenced his business from 1.2.2019. First PY shall be: (a) 15.7.2018 to 31.3.2019 (b) PY 2018-19 (c) 1.2.2018 to 31.3.2019 (d) PY 2019-20

*Q43. First previous year in case of a business or profession newly set up on 31.3.2019 would be . (a) Start from 1.4.2018 & end on31.03.2019 (b) Start from 31.3.2019 & will end on 31.3.2019 (c) Start from 1.1.2019 & end on 31.12.2019 (d) Start from 1.1.2019 & end on 31.3.2019

Q44. All Assessees are required to follow: (a) Uniform PY which must be calendar year only (b) Uniform PY which must be FY only (c) Any period of 12 months as previous year (d) Period starting from 1st July to 30th June as PY

Q45. A person follows Calendar year for accounting purpose. For taxation, he has tofollow (a) Calendar year only – 1 Jan to 31 December (b) FY only - 1 April to 31 March (c) Any Calendar or FY as per his choice (d) He will follow extended year from 1st January to next 31st March (a period of 15 months)

Q47. In which of the following cases, income of PY is assessable in the previous year itself. (a) A persons leaving India (b) Salaried Employee (c)Illegal business (d) Charitable institution

*Q48. If the master of the ship belonging to a NR could not file return of income before the departure of ship from India then it can be filed after the ship has left India but within days. (a) 30 (b) 45 (c) 60 (d) 90

*Q49. In case of shipping business of NR, Income = (a) 10% of the fare & freight collected by theship. (b) 20% of the fare & freight collected by the ship. (c) 25% of the fare & freight collected by theship. (d) 7.5% of the fare & freight collected by the ship.

Q50. Income of NR from shipping business in India is taxed (a) 30% + SC + HEC (b) 40% + SC + HEC (c) 50% + SC + HEC (d) 60% + SC + HE

29: d 30: c 31: a 32: d 33: c 34: c 35: a 36: b 37: b 38: b 39: a 40: c 41: b 42: a 43: b 44: b 45: b 46: c 47: a 48: a 49: d 50: b

Q1. HUF of Mr. P consisting of himself, his wife & 2 sons is assessed to tax. Residential status of HUF = NR when . (a) Its management & control is wholly in India (b) Its management & control is wholly o/s India (c) The status of Karta is non-resident for that year (d) When majority of the members are NR. Q2. If Karta is ROR in India but control & management of HUF is situated partly outside India in PY, HUF is: (a) ROR (b) RNOR (c) NR (d) None Q3. Mr. P is Karta of HUF doing business at Pune. Mr. P is residing in Dubai for past 10 years & visited India for 20 days every year for filing Income tax return of HUF. His 2 major sons take care of the day to day affairs of business in India. Residential status of HUF for AY 2019-20 is: (a) ROR (b) RNOR (c) NR (d) None *Q4. Residential status of company is determined (a) u/s 6(4) (b) u/s 6(1) (c) u/s 6(6) (d) u/s 6(3) Q5. A company is considered to be resident if: (a) It is an Indian Company (b) During PY, foreign company’s POEM is situated in India (c) Both (a) & (b) (d) Any of the above Q6. Indian company would be Resident in India if its . (a) POEM is in India (b) POEM is outside India (c) All shareholders are ROR (d) All directors are ROR Q7. A company incorporated outside India having its place of effective management fully situated in India in the previous year will be treated as . (a) NR (b) ROR (c) RNOR (d) Resident Q8. PC Ltd. is registered in Australia & has head office in Australia. POEM of its business affairs is situated in India. PC Ltd. shall be: (a) Resident (b) ROR (c) NR (d) None Q9. PC Ltd. is registered in India but it has POEM inNepal. D Ltd. is registered in Nepal but it has POEM in India. (a) PC Ltd. – Resident; D Ltd. – NR (b) Both are NR (c) Both D & PC Ltd. are resident of India. (d) PC Ltd. is a NR but D Ltd. is resident of India Q10. PC Ltd. is an Indian company. It carries its business in Delhi & London. The POEM of the company is situated in London. More than 85% of its business income is from the business in England. If so, its residential status will be- (a) NR (b) ROR (c) RNOR (d) Resident Q11. Income deemed to be received in India is given u/s (a) 10 (b) 7 (c) 12 (d) 5 Q12. Indian Income means _ . (a) Income accrued.deemed to be accrued in India (b) Income received.deemed to be received in India (c) Both (a) & (b) (d) None of the above. Q13. Foreign Income means . (a) Income accrued.deemed to be accrued in India (b) Income received.deemed to be received in India (c) Both (a) & (b) (d) None of the above.

Q14. Income received in India during the previous year is taxable in the case of . (a) ROR (b) RNOR (c) NR (d) All Q15. Foreign income received in India during the previous year is taxable in the case of . (a) ROR (b) RNOR (c) NR (d) All Q16. Incomes which accrues in India but received outside India are taxable in case of . (a) ROR (b) RNOR (c) NR (d) All Q17. Income which accrue or arise outside India & also received outside India is taxable in case of . (a) ROR (b) RNOR (c) NR (d) ROR &RNOR Q18. Income accruing in London & received there is taxable in India in the case of . (a) ROR (b) RNOR (c) NR (d) ROR &RNOR Q19. Income accruing from agriculture in a foreign country is taxable in India in case of an assesses who is: (a) ROR (b) RNOR (c) NR (d) ROR &RNOR Q20. Which Income is taxable in India to ROR Individual? (a) Any Income accrued or Received in India (b) Any Income accrued outside India (c) Any Income received outside India (d) All Incomes are Taxable Q21. Which Income is taxable in India to RNOR Individual? (a) Business income accruing outside India (b) Property income accruing outside India (c) Interest income accruing outside India (d) Income accruing outside India if it is derived from a business controlled in India. *Q22. Income which accrue outside India from business controlled from India is not taxable in India in case of: (a) ROR (b) RNOR (c) NR (d) All Q23. Which Income is taxable in India to NRIndividual? (a) Any Income accrued or Received in India (b) Any Income accrued outside India (c) Any Income received outside India (d) No Income is Taxable in India in the hands of NR. *Q24. Income earned & received outside India but later on remitted to India, is taxable to: (a) ROR (b) RNOR (c) NR (d) None Q25. Past untaxed profit of PY 2017-18 brought to India in PY 2018-19 is taxable in AY 2019-20 to (a) All the assesses (b) ROR (c) Non-resident in India (d) None of the above *Q26. Profits of Rs. 1,00,000 for PY 2017-18 of a business in Australia remitted to India during PY 2018-2019 (not taxed earlier) would be. (a) Taxable in India for ROR only (b) Not taxable in India for all (ROR, NOR & NR) (c) Taxable in India for all (ROR, NOR & NR) (d) Taxable only for NOR & NR

1: b 2: a 3: b 4: c 5: c 6: b 7: d 8: a 9: c 10: d 11: b 12: c 13: d 14: d 15: d 16: d 17: a 18: a 19: a 20: d 21: d 22: c 23: a 24: d 48: d 49: b

1. Incomes which are not included in total income of the

(a) Exempt Incomes (c) Taxable Incomes (b) Incomes deductibleu/c VI-A. (d) None ofthe above Q2. Gross Total Income means Aggregate of Incomes under all heads of Income . (a) After claiming deduction u/c VI-A (b) Before claiming deduction u/c VI-A. (c) Income for which no deduction u/c VI-A. (d) None of the above. Q3. Total (taxable) Income means Aggregate of Incomes under all heads of Income . (a) After claiming deduction u/c VI-A (b) Before claiming deduction u/c VI-A. (c) Income for which no deduction u/c VI-A. (d) None of the above. Q4. Any Expenditure incurred to earn Exempt Income shall be allowed as while computing income under any head. (a) Deduction (b) not allowed as deduction (c) Exemption. (d) None of the above Q5. Any sum received by an Individual as a member of HUF from the income of HUF shall be . (a) Fully taxable (b) Fully exempt u/s 10(2) (c) Fully taxable u/h “Salary” (d) Taxable @ 15%. Q6. Share of the profits from the firm by the partner is: (a) Fully taxable (b) Fully Exempt u/s 10(2A) (c) Fully taxable u/h “Salary” (d) Exempt upto Rs. 2.5 lacs Q7. Interest on any money standing to any Individual’s credit in Non-Resident External A/c in any bank in India is: (a) Taxable to person in whose name A/c is being operated (b) Exempt to person in whose name A/c is being operated (c) Taxable to person who withdraws Amt from such A/c (d) Exempt to person who withdraws Amt from such A/c Q8. Exemption is available on Interest received by NR on money standing in NRE A/c only if to maintain such A/c. (a) such NR person is permitted by AO (b) such NR person is permitted by RBI payable. (a) 30% (b) 100% (c) 40% (d) 25%

Q9. Which of the following incomes are exempt u/s 10(6) in the hands of an Individual who is not a citizen of India ? (a) Remuneration of Foreign Diplomats & Employees of a Foreign Enterprise for services rendered in India (b) Salary received by NR Non-citizen of India as a crew Member of Foreign Ship (c) Remuneration received by Foreign Government Employees from foreign government for specified training in India. (d) All ofthe above *Q10. Royalty.FTS received by non-corporate NR & foreign companies for services rendered in or o/s India to National Technical Research Organisation (NTRO) is - (a)Exempt. (b) Taxable

Q11. Paid by Government of India to a Citizen of India for rendering services outside India is Exempt u/s 10(7). (a) Salary (b) Allowance& perquisites (c) Both (a) & (b) (d) None of the above. Q12. Government of India paid salary of Rs. 5 lacs & Allowances.perquisites of Rs. 2.20 lacs to a person who is citizen of India for services rendered by him outside India. His taxable income will be _. (a) 7.2 Lacs (b) 5 Lacs (c) 6.1 Lacs (d) Nil Q13. Any compensation received or receivable by a victim of Bhopal Gas leak disaster is . (a) Taxable (b) Fully exempt (c) Exempt upto Rs. 10 lacs. (d) Exempt except to the extent of amount received or receivable which has been allowed as deduction for any loss.damage caused by such disaster. Q14. Any amount received from CG.SG.LA by Individual or his legal heir as compensation for any disaster is . (a) Taxable (b) Fully exempt (c) Exempt upto Rs. 10 lacs. (d) Exempt except to the extent of amount received or receivable which has been allowed as deduction for any loss.damage caused by such disaster. Q15. Tax paid by the employer on non-monetary perquisites provided to the employee is exempt u/s . (a) 17(2) (b) 10(14) (c) 10(10CC) (d) None Q16. Amount received from recognized provident fund after 5 years of continuous service is - (a) Exempt u/s 10(12) (b) Fully taxable Q17. Which of the following payment received from Sukanya Samriddhi scheme is.are Exempt? (a) Interest (b) Maturity amount (withdrawals) (c) Both (a) & (b) (d) None of the above. Q18. Amount payable at the time of closure or opting out of National Pension Scheme referred to in section 80CCD shall be exempt to the extent of total amount payable. (a) 30% (b) 100% (c) 40% (d) 25% Q19. Amount payable at the time of partial withdrawal out of National Pension Scheme referred to in section 80CCD shall be exempt to the extent of total amount assessee are called . Q20. Amount received by the nominee at the time of closure.opting out of NPS referred to in sec 80CCD due to death of Assessee is exempt upto total amount payable (a) 30% (b) 40% (c) 100% (d) 25% Q21.Interest on GoldDeposit Bonds&bonds issued by LA: (a) Exempt (b) Taxable (c) Partly Exempt Q22. Mr. P traced a missing person & was awarded a sum of Rs. 1 lac but there was no agreement. Suchsum is . (a) Casual income & fully taxable without BEL (b) Casual income & exempt up to Rs. 2,50,000 (c) Fully exempt (d) Exempt up to 2,50,000

1: a 2: b 3: a 4: b 5: b 6: b 7: b 8: b 9: d 10: a 11:b 12:b 13: b 14: b 15: c 16: a 17: c 18: c 19: d 20: c 21: a 22: a

Questions and Answers

1. The onus of responbibility to prove the residential status of a person lies with

(a)

Assessee

(b) Government

(d) Court

2. A Person may be Resident of

(a) Only one country always

(b) More than one country for any previous year.

(d) No specific rule

3. Residential Status is to be determined for -

(a) Previous Year

(b) Assessment Year

(d) Accounting Year

4. Residential Status of a Person is determined for

(a) Each Previous Year

(b) Set of Previous years

(c)

The year the person resides in India

(d) None of the above

5. Income which accrue or arise outsde India but are received directly into India are

taxable in case of -

(a) Resident only

(b) Both Ordinarily Resident and NOR

(d) All Assessees

6. 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 Assessees

7. Income which accrue or arise outsde 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

8. Income which accrue or arise outside India and also received outside India is taxable in

case of –

(a) Resident only

(b) Not Ordinarily Resident

(c)

Both Ordinarily Resident and NOR

(d) None of the above

9. Total Income of a person is determined on the basis of his –

(a)

Residential Status in India

(b) Citizenship in India

(d) None of the above

10. Once a person is a resdent in a P.Y, he shall be deemed to be resident for subsequent

P.Y. also.

(a) True

(b)

False

11. Once a person is resident for a source of income in a particular P.Y, he shall be deemed

to be resident for all other sources of income in the same P.Y.

(a) True

(b)

False

12. A Resident in India cannot become resident in any other country for the same previous

year.

(a)

True

(b)

False

13. RA was born on 5th April, 1997 in India & he later on took the citizenship of U.S.A.

Neither his parents nor his grand parents were born in divided/undivided India. RA in

this case shall be a –

(a) Citizen of India

(b) Artificial Person

(d) Foreign National

14. RB was born in England, his parents were born in India in 1952. His grand parents were

born in South Africa. RB shall be a –

(a) Person of Indian Origin

(b) Foreign National

(d) Citizen of India

15. RC was born in India in 1997. His father was born in India in 1950 and his mother was

born in England. His grand father was born in England & his grand mother was born in

South Africa. The parents of RC along with RC took the citizenship of England RC is a –

(a) Citizen of India

(b) Person of Indian Origin

(d) Foreign National

16. RD was born in India in 1997. His parents were born in India in 1952. His grandfather

was born in Lahore in 1937 but his grandmother was born in England in 1941. RD will

be a –

(a) Citizen of India

(b) Person of Indian Origin

(c)

Foreign National

(d) Artificial Person

17. RE a person of Indian Origin visited India on 03.10.2020 and plans to stay here for 185

days. During 4 years prior to previous year 2020-21, he was in India for 750 days.

Earlier to that he was never in India. For A.Y. 2021-22, RE shall be –

(a) Resident and Ordinarily Resident in India if his income from other than foreign

sources exceeds Rs. 15 lacs.

(b) Resident but not Ordinarily Resident in India if his income from other than

foreign sources exceeds Rs. 15 lacs.

(d) Non-Resident

18. RF a citizen of India, left India for U.S. on 16-8-2020 for booking order on behalf of an

India Company. For exporting goods to U.S., he came back to India on 5-5-2021. He

had been resident in India for the past 10 years. For A.Y. 2021-2022, RF shall be –

(a) Resident and Ordinarily Resident in India

(b) Resident but not Ordinarily Resident in India

19. RG, a citizen of India, is employed on an Indian ship. During the previous year 2020-21

he leaves India for Germany on 15.9.2020 for holidays and returned 1.4.2021. He had

been Non-Resident for the past 2 years. Earlier to that he was permanently in India. For

A.Y. 2021-2022, RG shall be –

(a) Resident and Ordinarily Resident in India

(b) Resident but not Ordinarily Resident in India

20. RH Ltd is an Indian Company whose entire control and management of its affairs is

situated outside India. RH Ltd shall be –

(a) Resident in India

(b) Non-Resident in India

21. RI Ltd is registered in U.K. The entire control and management of its affairs is situated

in India. RI Ltd shall be -

(a) Resident in India

(b) Non-Resident in India

22. RJ, a Foreign National, visited India during previous year 2020-2021 for 180 days.

Earlier to this he never visited India. RJ in this case shall be –

(a) Resident in India

(b) Non-Resident in India

23. RK, a Foreign National, but a person of Indian origin visited India during previous year

2020-2021 for 181 days. During 4 preceding previous year he was in India for 400

days. RK shall be –

(a) Resident in India

(b) Non-Resident in India

24. An India Company is always resident in India.

(a) True

(b)

False

25. A Foreign Company is always Non-resident in India.

(a) True

(b)

False

26. Salary payable by a Company to an Indian citizen for services rendered outside India is

an income which is deemed to accrue or arise in India.

(a) True

(b)

False

27. Salary payable by the Government to an Indian citizen who is Non-Resident in India for

services rendered outside India is not taxable in India.

(a) True

(b)

False

28. Dividend paid by an Indian Company outside India is –

(a) Taxable in India in the hands of the recipient

(b) Exempt in the hands of recipient

29. Only indvduals and HUF’s can be resident, but not ordinarily resident in India. Firms

can be either a Resident or Non-Resident.

(a) True

(b)False

30. Income to a Non-Resident by way of Interest, Royalty and Fee for Technical Services is

deemed to accrue or arise in India and is taxable in India irrespective of territorial

nexus.

(a)

True

(b)

False

31. Income accruing in Japan and received there is taxable in India in the case of-

(a) Resident and Ordinarily Resident only

(b) Both Resident and Ordinarily Resident and resident but not Ordinarily Resident

(d) Non-Resident

32. A Company other than an Indian Company, would be treated as Resident in India, if

during the prevous year, its control & management is situated –

(a) Wholly in India

(b) Partly in India

(d) None of the above

33. A Non-Indian Company is treated as Resident, only if the control & management of its

affairs is situated wholly in India during the previous year.

(a) True

(b)

False

34. Arun comes to India for the first time on 21.02.2020. Determine his Residential status

for the AY 2021-2022.

(a)

Resident

(b) Non-Resident

(d) Resident and Not Ordinary Resident

35. Harry (an American citizen) leaves India for the first time in the last 20 years on

26.10.2018. During the year 2019, he comes to India for a period of 70 days. During the

Calender year 2020 he does not visit India, but comes on 15.01.2021. Determine the

Residential Status of Harry for the Assessment Year 2021-2022.

(a) Resident

(b) Resident and Ordinary Resident

(c)

Resident and Not Ordinary Resident (d) Non-Resident

36. Latha leave India for the first time on 24.12.2019. Determine her Residential status for

the AY 2021-2022.

(a) Resident

(b) Resident and Ordinary Resident

(c)

Resident and Not Ordinary Resident (d) Non-Resident

37. An Individual is said to be a Resident and Ordinarily Resident if

(a) He is a Resident in any 2 out of the last 10 years preceding the relevant previoys

year

(b) His total stay in India in the last 7 years preceding the relevant previous year is

730 days or more

(d) Either (a) or (b)

38. Which of the following statement is true for determining the residential status of

person?

(a) Stay in India should be for a continuous period.

(b) Stay should be in any one place in India.

(d) Neither (a) nor (b)

39. How is Residential Status of a HUF determined?

(a) No. of days of stay of the Karta

(b) Control and Management of the affairs of the HUF

(d) HUF can only be Resident

40. Place of Effective Management of a Company for deciding the residential status, shall

not apply to a Company having

(a) Turnover of Gross receipts of Rs. 50 Crores or less in a financial year.

(b) Turnover of Gross receipts of Rs. 50 Lakhs or less in a financial year.

(d) Turnover of Gross receipts of Rs. 50 Lakhs or less in a financial year.

41. A Firm is said to be a Resident of India

(a) If control and management of its affairs is wholly inside India

(b) If all the Partners are resident in India

(d) None of the above

42. The following Income is taxable for-

(i) Income received or deemed to be received in India during the current financial

year, irrespective of place of accrual. And

(ii) Income accruing or arising or deemed to accrue or arise in India during the

current financial year, irrespective of place of receipt

(a) Resident

(b) Non-Resident

(d) All of the above

43. Income from business which is situated outside India but controlled from India is

taxable for

(a) Non-Resident

(b) Resident and Ordinary Resident

(d) Both (b) and (c)

44. Ravi has a house property in Sri Lanka for which he receives the rent in India. The

Income is taxable in the hands of Ravi, if he is a

(a) Non-Resident

(b) Resident and Ordinary Resident

(d) All of the Above

45. S Ltd. is registered in UK. Its control and management is from India. S Ltd is a

(a) Resident

(b) Non Resident

(d) None of the above

46. Fees for technical services rendered in India but received in Dubai is taxable in case of

(a) Resident

(b) Non Resident

(d) All of the above

47. Global Income earned by Seema will be taxable in India if she is a

(a) Non-Resident

(b) Resident and Ordinary Resident

(d) All of the above

48. Raghav is a Non Resident living in Sydney. For the PY 2020-2021, he receives Rs.

25,000 rental income from his house in Pune. He had sold his property in Chennai to

his friend Ramesh who also resides in Sydney for Rs. 75,00,000. He also received

Dividend Income of Rs. 15,000 from an Indian Company. Calculate his taxable income

in India for the AY 2021-2022.

(a) 75,25,000

(b) 40,000

(d) 25,000

49. Interest paid by a Resident for carrying on business or profession outside India is

deemed to accrue or arise in India, if the receiver is a

(a) Non-Resident

(b) Resident and Ordinary Resident

(d) All of the above

50. Interest paid by a Resident for any other purpose other than carrying on business or

profession outside India is deemed to accrue or arise in India, if the receiver is a

(a) Non-Resident

(b) Resident and Ordinary Resident

(d) All of the above

51. Dr. Mahath, a Doctor from London visited India to perform a surgery at an Indian

Hospital and earned Rs. 3 Lakhs. This Income is

(a) Taxable in India because he is an Indian Citizen

(b) Taxable in London as he is a registered Doctor in London

(d) Partly taxable in India and partly taxable in London

52. Mrs. Alia, a non-resident aged 62 years, has an immovable property in India from

which she gets rental income of Rs. 3,00,000 per annum. She has appointed you as a

consultant to advise her regarding the maximum amount not chargeable to tax in her

case for A.Y. 2021-22.

(a) Maximum amount not chargeable to tax would be Rs. 2,50,000

(b) Maximum amount not chargeable to tax would be Rs. 3,00,000

(d) She is not allowed to avail basic exemption as she is non-resident for A.Y. 2021-22

53. Mr. A has stayed in India for a period of 82 days during the P.Y. 2020-21 and his stay

in India for immediate preceding 4 years is 364 days, calculate his residential status for

the P.Y. 2020-21;

(a) Resident

(b) Non Resident

(d) Cannot determine with the above facts

54. A HUF whose control & management is in India and the residential status of its Karta is

resident & ordinarily resident, determine the status of residential of HUF;

(a) Resident but data is not sufficient to determine whether HUF is ROR or RNOR

(b) Resident but not ordinarily resident

(d) Resident and ordinarily resident

55. A company is incorporated outside India. Its place of effective management in the P.Y.

2020-21 is in India. Determine its residential status in India for A.Y. 2021-22;

(a) Resident

(b) Non Resident

56. Mr. A, aged 32 years, is resident and ordinarily resident in India and is deputed to USA

under employment. He has received salary equivalent to Rs. 40 lakhs in USA. The

income earned by him in India comprises only of interest on fixed deposits, which is

below the maximum amount not chargeable to tax. Determine the taxability of Mr. A in

respect of the above-mentioned incomes.

(a) Only interest income is taxable in India

(b) Only salary income is taxable in India

(d) He has no taxable income in India

57. Ms. Ayushi is an Indian Citizen who left India for the purpose of employment on

02.08.2020. She was in India for a total period of 730 days during the Previous Years

from 2016-17 to 2019-20. She was in India for 240 days in Previous Year 2014-15 and

310 days in Previous Year 2015-16. Determine her residential status for the A.Y. 2021-

22.

(a) Resident and ordinarily resident

(b) Non-resident

(d) Resident but data is not sufficient to determine whether she is ROR or RNOR

58. Texcos Ltd. is an Indian Company. It has 20 shareholders who are foreign citizens and

non-resident in India. The business of the company is wholly carried out outside India.

Determine the residential status of Texcos Ltd. for the Assessment Year 2021-22.

(a) Resident

(b) Non-resident, since the control and management of the company during the year

is outside India.

(d) Either resident or non-resident, depending on the place of effective management,

which is not possible to determine in this case since the information given in the

question is insufficient

59. On 19.08.2020, Mr. Khera is also planning to start a fashion boutique in Turkey soon,

once she gets settled. Both, Mr. & Mrs. Khera, are Indian citizens and have been

working in India for more than a decade now. Comment on their residential status for

A.Y. 2021-22, assuming they did not visit India after August 2020 –

(a) Mr. & Mrs. Khera will qualify to be non-resident

(b) Mr. Khera will qualify to be non-resident and Mrs. Khera will be resident but not

ordinarily resident

(d) Mr. & Mrs. Khera will qualify to be resident but not ordinarily resident

60. The Business of a HUF is transacted from Australia and all the policy decisions are

taken there. Mr. E, the Karta of the HUF, who was born in Kolkata, visits India during

the PY 2020-2021 after 15 years. He comes to India on 01.04.2020 and leaves for

Australia on 01.12.2020. Determine the residential status of Mr. E and the HUF for AY

2021-2022.

(a) Individual is ROR and HUF is R

(b) Individual is ROR and HUF is NR

ANSWERS

1.c

2.b

3.a

4.a

5.d

6.d

7.c

8.a

9.a

10.b

11.a

12.b

13.d

14.b

15.d

16.a

17.b

18.a

19.a

20.b

21.a

22.b

23.c

24.a

25.b

26.b

27.b

28.a

29.a

30.a

31.a

32.a

33.a

34.b

35.c

36.d

37.c

38.d

39.c

40.a

41.a

42.d

43.d

44.d

45.a

46.d

47.b

48.c

49.c

50.d

51.c

52.a

53.b

54.d

55.a

56.c

57.b

58.a

59.a

60.d

1. RS, a Chartered Accountant is employed with GK Ltd, as an Internal Auditor and

requests the Employer to call the remuneration as Internal Audit Fee. RS shall be

chargeable to tax for such fee under the head -

(a) Income from Salares

(b) Profits and Gains from Business and Profession

2. Mahendra Ltd pays a Salary of Rs. 2,50,000 to his Employee Vasu and undertakes to

pay the Income Tax amounting to Rs. 10,300 during the previous year 2020-2021 on

behalf of Vasu. The Gross Salary of Vasu shall be -

(a) Rs. 2,50,000

(b) Rs. 2,60,300

3. KS, who is entitled to a Salary of Rs. 20,000 p.m, took an advance of Rs. 50,000

against the salary in the month of March 2020. The Gross Salary of KS for A.Y. 2021-

2022 shall be -

(a) Rs. 2,90,000

(b) Rs. 2,40,000

4. SM, who is entitled to a Salary of Rs. 20,000 p.m. took advance salary from the

Employer for the months of April and May 2021 along with Salary of March 2021 on

31-3-2021. The Gross Salary of SM for A.Y. 2021-22 is -

(a) Rs. 2,90,000

(b) Rs. 2,80,000

5. SR is employed with G Ltd, at a salary of Rs. 20,000 p.m. As G Ltd was in financial

crisis, it paid the salary of Jan 2021 to March 2021 to SR only in July 2021. The Gross

Salary of SR for A.Y. 2021-22 shall be -

(a) Rs. 2,40,000

(b) Rs. 1,80,000

6. Salary of D is Rs. 10,000 p.m. D had taken Salary in advance for the months of April

2021 to June 2021 in March 2021 itself. The Gross Salary of D for A.Y. 2021-22 shall

be -

(a) Rs. 2,40,000

(b) Rs. 1,50,000

7. Salary of Z becomes due on 1st of next month and it is paid on 7th of that next month.

For A.Y. 2021-22, the Salary of Z shall be taken from -

(a) April 2020 to March 2021

(b) March 2020 to February 2021

The Govt. of India announced increase in D.A. on 15-8-2020 with retrospective effect

from 1-6-2018 and the same were paid on 16-12-2020. The arrears of D.A. shall be

taxable in the previous year -

(a)

2019-20

(b)

2020-21

9. Which of the following is not true about charging Income under the head Salaries?

(a) Salary comprises only of monetary benefits

(b) There should be Employer and Employee Relationship.

(d) Both (a) and (c)

10. Salary received by the Partner of a Firm is charged under the head

(a) Salaries

(b) Business Income

(d) Its exempt from tax

11. Salary paid to MLAs and MPs are charged under the head

(a) Salaries

(b) Business Income

(d) Its exempt from tax

12. Commission received by a Director of the Company is charged under the head

(a) Salaries

(b) Business Income

(d) Its exempt from tax

13. Salary is taxable on

(a) receipt basis

(b) due basis

(d) due or receipt basis whichever is later

14. Salary of Madhan (Rs. 18,000) becomes due on the last day of every month but it s paid

on the 7th of the following month during the PY 2020-2021. In March 2021, he

received Salary of April 2021 and May 2021 as Advance. What is his Salary for the PY

2020-2021?

(a) 1,80,000

(b) 2,52,000

15. Raju is working for a Private Firm. He borrowed a loan of Rs. 3 Lakhs for hs sister’s

wedding as an advance against salary. This amount will be taxed under the head

(a) Salaries

(b) Business Income

(d) not taxable

16. For Government Employees the period of chargeability of Salary is from

(a) April to March

(b) March to February

(d) September to August

17. Arrears of Pension is taxable on

(a) receipt basis

(b) due basis

(d) due or receipt basis whichever is later

18. For a Government Employee, the entire gratuity received is exempt

(a) on his death

(b) on his retirement

(d) only if covered under the Payment of Gratuity Act

19. The Notified amount of Gratuity that is exempt

(a) Rs. 10,00,000

(b) Rs. 20,00,000

(d) Rs. 5,00,000

20. Where an Individual receives Retirement Gratuity from more than one employer, he

can claim exemption

(a) In respect of both of them. Maximum amount not exceeding Rs. 10,00,000 for

each employer.

(b) Only from the First employer

each employer.

(d) In respect of both of them. Maximum amount not exceeding Rs. 20,00,000 both

put together.

21. Gratuity received durng the period of service is

(a) fully taxable

(b) partly taxable

(d) depends on agreement with employer

22. Gratuity shall be fully exempt in the case of -

(a) Central and State Government Employees

(b) Central and State Government Employees, Employees of Local Authorities and

Employees of Statutory Corporation

23. An Employee is covered under Payment of Gratuity Act, 1972. Salary for the purpose

of calculating 15 days salary for each completed year of service shall be -

(a) Last drawn Salary

(b) Average Salary of last 10 months

24. An Employee is covered under Payment of Gratuity Act, 1972, his Salary shall include-

(a) include Dearness Allowance

(b) not include Dearness Allowance

25. An Employee is covered under Payment of Gratuity Act, 1972. If the Employee has

completed service of 16 years 6 months and 5 days, the number of completed year shall

be taken as -

(a) 16 years

(b) 17 years

26. An Employee is covered under Payment of Gratuity Act, 1972. If he has completed

exactly 16 years and 6 months, the completed year shall be -

(a) 16 years

(b) 17 years

27. An Employee is covered under Payment of Gratuity Act, 1972. For the purpose of

computing 15 days Salary, the number of days in a month shall be taken as

(a) 30 days

(b) 26 days

28. An Employee is covered under Payment of Gratuity Act, 1972. The maximum

exemption for Gratuity shall be -

(a) Rs. 2,40,000

(b) Rs. 20,00,000

(d) 20 months Salary

29. An Employee is neither a Government Employee nor covered under Payment of

Gratuity Act, 1972 Salary for purpose of calculating gratuity based on half month salary

shall be taken as -

(a) Last drawn Salary

(b) Average Salary of 10 months preceding the month of retirement

30. An Employee is neither a Government Employee nor covered under Payment of

Gratuity Act, 1972 Salary for the above purpose -

(a) shall nclude Dearness Allowance

(b) shall not include Dearness Allowance

provide

31. An Employee is neither a Government Employee nor covered under Payment of

Gratuity Act, 1972. If the Employee has completed 16 years and 8 months of service,

the number of completed years is -

(a) 17 years

(b) 16 years

32. An Employee is neither a Government Employee nor covered under Payment of

Gratuity Act, 1972. The maximum exemption of Gratuity shall be -

(a) Rs. 2,40,000

(b) Rs. 20,00,000

33. A, who claimed the exemption of gratuity in the past to the extent of Rs. 9,50,000, was

entitled to gratuity from the present/second Employer amounting to Rs. 15,00,000 in

the previous year 2020-21. A shall be entitled to exemption to the maximum extent of -

(a) Rs. 15,00,000

(b)

Nil

34. B worked with a previous Employer for 3 years but was not entitled to any gratuity. He

worked with the present Employer for 8 years and 7 months. The completed years of

service for calculating exemption of gratuity shall be taken as -

(a) 11 years

(b) 8 years

(d) 12 years

35. For the purpose of calculating exemption of Gratuity, Salary shall include -

(a) Fixed Commission

(b) Commission if it is a fixed percentage on turnover

36. Uncommuted Pension received by a Government Employee is -

(a) Exempt

(b) Taxable

37. Commuted Pension received shall be fully exempt in case of -

(a) Government Employee

(b) Govt. Employee or an Employee of Local Authority or an Employee of Statutory

Corporation

38. An Employee, who was also entitled to Gratuity, got 60% of his pension commuted and

received a sum of Rs. 1,20,000 s commuted pension. The exemption is -

(a) Rs. 1,20,000

(b) Rs. 40,000

(d) Rs. 80,000

39. Mr. Suresh retired on 31.03.2020 receiving Rs. 20,000 pm as Pension. On 01.11.2020,

he commuted 60% of his Pension and received Rs. 10,00,000 as Commuted Pension.

What is the value of Uncommuted Pension for the Year 2020-2021?

(a) Rs. 2,40,000

(b) Rs. 2,00,000

(d) Rs. 8,60,000

40. For a Non Government Employee who is in receipt of Gratuity, commuted Pension is

(a) fully taxable

(b) Fully exempt

(d) Exempt upto 1/2 of Full Value of Pension he is entitled to receive

41. Commuted Pension is exempt for

(a) Government Employees

(b) Non Government Employee who is in receipt of Gratuity

(d) All of the above

42. Uncommuted Pension is taxable for

(a) Government Employees

(b) Non Government Employee who is in receipt of Gratuity

(c)

Non Government Employee who is not in recept of Gratuity

(d) All of the above

43. Encashment of leave Salary at the time of retirement is fully exempt in the case of -

(a) Central Government Employee

(b) State Government Employee

(d) Government Employee and Employee of Local Authority

44. Which of the following incomes will be included in the meaning of salary for

encashment of Leave Salary to other Employees -

(a) D.A.

(b) Dearness Allowance to the extent the terms of employment so provide

(d) Taxable Allowance

45. Salary for the purpose of exemption of Leave Enccashment shall be taken as -

(a) Last drawn Salary

(b) Average Salary of 10 months mmediately preceeding the month of retirement

46. The maximum exmption in case of Leave Encashment shall be -

(a) Rs. 2,40,000

(b) Rs. 3,50,000

47. Compensation received on Voluntary Retirement is exempt u/s 10(10C) to the

maxmum extent of -

(a) Rs. 2,40,000

(b) 3,50,000

48. An Employee availed the exemption of VRS of Rs. 1,00,000 in the past. He received

from the second Employer a sum of Rs. 2,50,000 as VRS Compensation. He will be

entitled to exemption to the extent of -

(a)

Nil

(b) Rs. 2,00,000

(d) Rs. 1,40,000

49. Whch of the following payments can be received by a employee only once in a life time

(a) Gratuity

(b) VRS Compensation

(d) All of the above

50. Compute the taxable value of retrenchment received in the following case: Completed

Years of Service – 25 years and 8 months. Salary – Rs. 15,000 pm. Retrenchment

Compensation received – Rs. 12,00,000.

(a) 1,87,500

(b) 10,12,500

(d) 10,05,000

51. Which of the following payments is not eligible for Relief u/s 89?

(a) Arrears of Salary

(b) Taxable Value of Commuted Pension

(d) All of the above

52. If rent is paid for a house situated in Mumbai, the HRA shall be exempt to the

maximum extent of -

(a) 40% of Salary

(b) 50% of Salary

53. Which of the following is not included in the meaning of salary for exemption of HRA.

(a) Advance Salary

(b) Arrears of Salary

(d) All of the above

54. Shreeja has twn sons and a daughter. She receives education allowance of Rs. 25,000

p.a. What is the taxable amount?

(a) 22,600

(b) 17,800

(d) 14,200

55. Ram travels 10 kms everyday to reach his office. He spends Rs. 4,000 p.m. for

travelling to his office. He receives a transport allowance of Rs. 4,000 p.m. What is the

taxable amount?

(a)

Nil

(b) 9,600

(d) 12,000

56. Shuba is employed in a Company in Coimbatore on 01.04.2020. Her Parents reside in

Chennai. They have a house property in Coimbatore. Shuba pays rent to her Parents.

On 01.12.2020, She joins a new Company in Mumbai. Is Shuba eligible for HRA?

(a) HRA can be claimed on monthly basis only for Mumbai Accomodation at 50%.

Rent paid to parents is not eligible for exemption.

(b) Yes in both cases on monthly basis claiming exemption for Coimbatore at 40%

and Mumbai at 50%.

cannot be claimed.

57. Keerthana resides n Chennai and earns a Basic Salary of Rs. 20,000 pm. She receves

DA of Rs. 24,000 pa. She also receives HRA at Rs. 5000 pm. During the PY 2020-21,

She rents a house for Rs. 7,000 pm. She stays with her frend during the month of April

and May and from June she moves to the rented house. Calculate her taxable HRA.

(a) Rs. 28,800

(b) Rs. 2,400

(d) Rs. 60,000

58. B is entitled to Hostel expenditure allowance of Rs. 600 p.m. for his 3 children at Rs.

200 per child. The exemption in this case shall be -

(a) Rs. 600 p.m.

(b) Rs. 400 p.m.

59. D is entitled to Rs. 6,000 as Medical Allowance. He spends Rs. 4000 on his medical

treatment and Rs. 1000 on the medical treatment of his major son not dependent on

him. The exemption in this case shall be -

(a) Rs. 4,000

(b) Rs. 5,000

(c)

Nil

60. Entertainment Allowance in case of Govt. Employee is -

(a) fully exempt

(b) exempt upto limits mentioned in sec. 16(ii)

Salary u/s 16(ii)

61. During the previous year, the Employee was reimbursed Rs. 24,000 as medical

expenses incurred by him which includes Rs. 7,000 spend in Govt. hospital. The

taxable perquisite in this case shall be -

(a) Rs. 17,000

(b) Rs. Nil

(d) Rs. 12,000

62. Mr. C, wife of C, who is employed in G Ltd went for by-pass surgery in England along

with heer husband. Expenses on medical treatment of wife and stay outside India of

wife and C amounted to Rs. 7,00,000 as aganst Rs. 6,50,000 permitted by RBI. The

travel expenses amounted to Rs. 1,50,000. All expenses were reimbursed by the

Employer. Assume the gross salary and income from other sources of the Employee are

Rs. 1,40,000 and Rs. 40,000 respectively. The taxable perquisite in this case shall be -

(a) Rs. Nil

(b) Rs. 50,000

(d) Rs. 1,50,000

63. Leave Travel Concession is a tax free perquisite for -

(a) once in a block of 4 Previous years

(b) Twice in a block of 4 Calendar years

(d) None of the above

64. Mr. Divyam avails the benfit of LTC and went by air (economy class) on a holiday in

India on 25.01.2021 along with his wife and three children consstng of son aged 4 years

and twin daughters of 1 year age. Total cost of tickets reimbursed by his employer was

Rs. 90,000 (Rs. 60,000 for 2 adults and 30,000 for the three children). What the amount

which can be claimed by Mr. Divyam out of the reimbursement as not subject to tax?

(a) Rs. 90,000

(b) Rs. 60,000

(d)

Nil

65. In the above question, what will be the exempted amounted if the twins were born frst

and the Son was born later?

(a) Rs. 90,000

(b) Rs. 60,000

(d)

Nil

66. Salary of Employee is Rs. 2,00,000. Fair rent of the unfurnished house given to

Employee (in an area with population > 25 lakhs) s Rs. 1,30,000, the valuation of the

perquisite of the house if he is a Government Employee is -

(a) Rs. 20,000

(b) License fee determined by the Government

(d) Fully exempt

67. Salary of Employee is Rs. 5,00,000. Fair rent of the unfurnished house given to

Employee (in an area with population > 25 lakhs) s Rs. 1,30,000, the valuation of the

perquisite of the house if he is a Non Government Employee is -

In case of any other Employee -

(a) Rs. 50,000

(b) Rs. 75,000

(d) Rs. 30,000

68. Employee is provided with furniture costing Rs. 1,50,000 along with house w.e.f.

1.4.2020. The value of the furniture to be included in the valuation of unfurnished

house shall be -

(a) Rs. 15,000

(b) Rs. 12,500

(d) Rs. 22,500

69. K is an Employee of Indian Oil Corporation Ltd. He is provided with free gas for his

personal purposes by the Employer. The value of this perquisite shall be -

(a)

Nil

(b) 6.25% of the salary

(d) Market Rate of Gas

70. M owns a house in which he lives. His Employer reimburses to him the electricity bill

amounting to Rs. 5,000. It shall be a perquisite for -

(a) Specified Employee only

(b) Employee other than Specified Employees

71. An Employer provides free facility of gas, electricity etc. to hs Employee which he uses

partly for official and partly for hs personal purposes. The actual amount spent by

Employer is Rs. 10,000 and the Salary of the Employee is Rs. 2,00,000. The valuaton

of ths perquisite shall be -

(a) Rs. 10,000

(b) Rs. 6,250

72. An Employer provides free facility of Watchman, Sweeper and Gardener to his

Employees. It will be a perquisite for -

(a) Specfed Employee only

(b) Employees other than Specifed Employees

73. Gardener, Sweeper and Watchman are employed by the Employee but their salary of

Rs. 500 p.m. per person is paid by the employer. The valuation of this perquisite shall

be -

(a) Rs. 6,000

(b) Rs. 18,000

74. Employer’s Contribution to Statutory Provident Fund shall be -

(a) Fully Exempt

(b) Exempt upto 12% of Salary

75. Interest credited to Statutory Provident Fund shall be -

(a) Fully Exempt

(b) Exempt upto 12% p.a.

(d) Exempt upto 9.5% p.a.

76. Employer’s Contribution to Recognized Provident Fund shall be -

(a) Fully Taxable

(b) Fully Exempt

77. Interest credited to Recognized Provident Fund is -

(a) Fully Taxable

(b) Fully Exempt

(d) Exempt upto 9.5% p.a.

78. Employer’s Contribution to Unrecognized Provident Fund shall be -

(a) Fully Taxable

(b) Fully Exempt

(b) Exempt upto 12% of Salary

(d) Neither exempt nor taxable in the year of contribution

79. Interest on Employer’s Contribution credited to Unrecognized Provident Fund is -

(a) Fully Taxable

(b) Fully Exempt

(d) Neither exempt nor taxable in the year of accrual

80. Employee’s/Assessee’s own contribution to Statutory Provident Fund or Recognized

Provident Fund or Public Provident Fund shall be subject to -

(a) Deduction u/s 80C

(b) Deduction u/s 80CCC

81. Employee’s Contribution to Unrecognized Providen Fund shall be eligible for -

(a) Deduction u/s 80C

(b) Deduction u/s 80CCC

82. Payment from Statutory Provident Fund and PPF is -

(a) Taxable

(b) Fully Taxable

83. Payment from Recognized Provident Fund after 5 years of service shall be -

(a) Taxable

(b) Fully Exempt

84. Payment from Recognized Provident Fund before 5 years of service shall be -

(a) Fully Taxable

(b) Fully Exempt

85. Payment from Unrecognized Provident Fund shall be -

(a) Fully Taxable

(b) Fully Exempt

(d)

Same as (c) and Interest from Emplloyees Contribution shall be taxable under the

head Other Sources.

86. The year in which Unrecognized Provident Fund is converted to a Recognized

Provident Fund -

(a) Employers Contribution till date and interest thereon shall be taxable

(b) Employers Contribution till date shall be taxable

and excess amount of Employers contribution and interest thereon shall be

chargeable to tax

87. Q is provided with a Rent Free Accomodation owned by his Employer in Delhi

(Population>25 lakhs). The value of this perquisite shall be -

(a) 15% of Salary

(b) 7.5% of Salary

(d) 10% of Salary plus excess of FRV over 60% of salary

88. Q is provided with interest free loan by the Employer for purchase of a house / car.

Vlaue of this perquisite shall be determined as the sum equal to -

(a) Simple Interest computed at 10% p.a.

(b) Simple Interest computed at 13% p.a.

previous year on the maximum outstanding monthly balance

(d) Simple Interest computed at the rate charged by SBI on last day of the relevant

previous year on the maximum outstanding monthly balance

89. The Employer has given a lap top computer for the personal use of the Employee. The

value of this perquisite shall be -

(a)

Nil

(b) 10% p.a. of the cost of the asset

90. The Employer had purchased a Car for Rs. 3,00,000 which was being used for official

purposes. After 2 year 6 months of its use, the Car is sold to S, the Employee, for Rs.

1,20,000. The value of this perquisite shall be -

(a) Rs. 72,000

(b) Rs. 60,000

(d) Rs. 1,20,000

91. Neelam Ltd has given a Laptop Computer, owned by it, for the personal use of its

employee, Sparsh. The value of this perquisites shall be -

(a) 10% p.a. of the Cost of the Laptop Computer

(b) 10% p.a. of WDV of the Laptop Computer

(c)

Nil

(d) 10% of the Salary

92. For an employee in receipt of Hostel Expenditure Allowance for his 3 children, the

maximum annual allowance exempt u/s 10(14) is -

(a) Rs. 10,800

(b) Rs. 7,200

(d) Rs. 3,600

93. Where an Employer, at his option, has paid Income-Tax on Non-Monetary Perquisites

of any Employee, the Income-Tax so paid by the Employeer is a taxable perquisite in

the hands of the employee.

(a) True

(b)

False

94. MNJ Pvt. Ltd., provided following information for calculation of perquisite value of

company leased accommodation for one of its employee, Mr. Z for A.Y. 2021-22:

Rent paid to landlord – Rs. 35,000 p.m.

Interest free refundable security deposit – Rs. 1,80,000

15% salary of Mr. Z (computed) – Rs. 36,325 p.m.

Notional Interest Rate – 10% p.a. (return that might have been enarned, if the amount

of security deposit was invested)

What will be treatment of notional interest?

(a) Notional interest has to be added after total value of perquisite is calculated i.e.

15% of salary or rent, whichever is lower

(b) Notional interest has to be included in total value of rent and then compare with

15% of salary to calculate the perquisite value

perquisite value

(d) Notional interest should not be considered

95. MNJ Pvt. Ltd. provided following information for calculation of perquisite value of

company leased accommodation for its one of employee, Mr. Z:

Rent paid to landlord – Rs. 35,000 p.m.

Interest free refundable security deposit – Rs. 1,80,000

15% salary of Mr. Z (computed) – Rs. 36,325 p.m.

Notional Interest Rate – 10% p.a. (return that might have been earned, if the amount of

security deposit was invested)

Determine the perquisite value for company leased accommodation for Mr. Z for A.Y.

2020-21.

(a) Rs. 4,38,000

(b) Rs. 4,35,900

(d) Rs. 4,20,000

96. Bill & Hill Pvt. Ltd. is bearing the taxes on perquisite for Ms. Lily, their Production

Head from Germany for their newly set plant. In the initial years of run, the company

foreseen losses with minimum recovery. Also, Ms. Lily’s India taxable income falls in

the highest slab. On this arrangement of salary and taxes, which of the following is the

correct treatment of taxes borne by employer in Lily’s tax computation:

(a) Only offer tax borne by employer on monetary salary as perquisite in her tax

computation

(b) Only offer tax borne by employer on non-monetary salary as perquisite

(d) No perquisite on tax borne by employer to be reported in her tax computation

97. What would be the impact on company’s taxable profit of tax borne by employer on

perquisities and allowances provided to employees?

(a) Tax borne by employer on entire salary of employee would be allowable

expenditure

(b) Tax borne by employer on monetary salary alone would be disallowed

(d) Tax borne on non-monetary perquisite will be disallowed

98. An Assessee functioning in dual capacity, one as an Employee and another under a

contract for service. The Commission paid for contract for service, is taxable under -----

----------- the heads of Income.

(a) Income from Salary

(b) Income from Business or Income from Other Sources

(d) None of the above

Raghav requests you to compute his Taxable Income for the previous year ending

31.03.2021, from the following data –

(i) Joined service on 01.10.2020, on a consolidated salary of Rs. 60,000 per month.

(ii) He was paid Rs. 30,000 in September 2020, so that he should not join elseqhere.

(iii) He contributed towards – (i) Life Insurance Premium – Rs. 20,000, (ii) PPF – Rs.

1,50,000.

99. The Taxable Salary of Raghav for the AY 2021-22 is

(a) Rs. 3,40,000

(b) Rs. 3,50,000

100. The Total Income of Raghav for the AY 2021-22 is

(a) Rs. 3,20,000

(b) Rs. 1,90,000

(d) Rs. 1,70,000

ANSWERS

1.a

2.b

3.b

4.b

5.a

6.b

7.a

8.b

9.d

10.b

11.c

12.a

13.c

14.b

15.d

16.b

17.b

18.c

19.b

20.d

21.a

22.c

23.a

24.a

25.b

26.a

27.b

28.b

29.b

30.c

31.b

32.b

33.c

34.a

35.b

36.b

37.b

38.c

39.b

40.c

41.a

42.d

43.c

44.b

45.b

46.c

47.c

48.a

49.b

50.d

51.c

52.b

53.d

54.a

55.c

56.b

57.c

58.b

59.b

60.c

61.a

62.c

63.b

64.a

65.c

66.b

67.b

68.a

69.c

70.c

71.c

72.a

73.b

74.a

75.a

76.c

77.d

78.d

79.d

80.a

81.c

82.b

83.b

84.c

85.d

86.c

87.a

88.c

89.a

90.a

91.c

92.b

93.b

94.d

95.d

96.a

97.d

98.b

99.a

100.d

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Sana-The Commerce House

BBA IV SEMESTER (TAXATION AND LAW) Unit - II

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