BBA 2nd Year 4th Sem-MCQs of Taxation & Laws

 

Multiple-choice questions (MCQs) along with their answers on the topics you mentioned:

1. Which of the following is considered a basic concept of income?

A) Salary

B) Expense

C) Liability

D) Asset

Answer: A) Salary

2. Agriculture income is exempt from taxation in which country?

A) United States

B) India

C) United Kingdom

D) Australia

Answer: B) India

3. Casual income refers to income earned from:

A) Regular employment

B) Part-time jobs

C) Investments

D) Inheritance

Answer: B) Part-time jobs

4. The assessment year is the year in which:

A) Income is earned

B) Income tax return is filed

C) Tax is calculated

D) Tax is paid

Answer: B) Income tax return is filed

5. Gross total income includes income from all sources except:

A) Agriculture

B) Salary

C) Business

D) Gifts

Answer: A) Agriculture

6.Total income is calculated by subtracting ________ from gross total income.

A) Deductions

B) Expenses

C) Liabilities

D) Assets

Answer: A) Deductions

7.Who is considered a 'person' for income tax purposes?

A) Only individuals

B) Only companies

C) Individuals, companies, and other entities

D) Only government bodies

Answer: C) Individuals, companies, and other entities

8.Tax evasion refers to:

A) Legally minimizing tax liability

B) Illegally avoiding taxes

C) Paying taxes honestly

D) Claiming tax deductions

Answer: B) Illegally avoiding taxes

9. Which of the following is a form of tax avoidance?

A) Filing tax returns on time

B) Making charitable donations

C) Hiding income to evade taxes

D) Claiming tax credits

Answer: D) Claiming tax credits

10.In which year is income earned, but taxes are paid in the following year?

A) Assessment year

B) Current year

C) Previous year

D) Financial year

Answer: C) Previous year

11. Which income is exempt from tax in India?

A) Agricultural income

B) Business income

C) Salary income

D) Rental income

Answer: A) Agricultural income

12. What is the total income of an individual after deductions?

A) Gross total income

B) Net total income

C) Taxable income

D) Exempt income

Answer: C) Taxable income

13. Which of the following is an example of casual income?

A) Salary from regular employment

B) Dividend income

C) Income from a one-time freelance project

D) Rental income

Answer: C) Income from a one-time freelance project

14. Tax avoidance involves:

A) Using legal means to minimize tax liability

B) Intentionally underreporting income

C) Evading taxes through illegal means

D) Failing to file tax returns

Answer: A) Using legal means to minimize tax liability

15. What does the assessment year refer to?

A) The year in which income is earned

B) The year in which taxes are calculated

C) The year following the previous year in which taxes are paid

D) The year following the current year

Answer: C) The year following the previous year in which taxes are paid

16. Which of the following is considered a basic concept of income tax?

A) Gross total income

B) Net worth

C) Savings account balance

D) Credit score

Answer: A) Gross total income

17. Income earned from agricultural activities is taxable in:

A) Most countries

B) All countries

C) Some countries

D) No country

Answer: D) No country

18. Casual income typically refers to:

A) Regular salary

B) Periodic dividends

C) Irregular earnings

D) Long-term capital gains

Answer: C) Irregular earnings

19. The previous year is also known as the:

A) Assessment year

B) Financial year

C) Tax year

D) Fiscal year

Answer: B) Financial year

20. Gross total income includes income from:

A) Only employment

B) All sources before deductions

C) Only investments

D) Only business activities

Answer: B) All sources before deductions

H ere are additional multiple-choice questions on the mentioned topics:

21  Which of the following is a form of casual income?

A) Monthly salary

B) Annual bonus

C) One-time consultancy fee

D) Quarterly dividends

Answer: C) One-time consultancy fee

23. What is the term used for the year in which income is earned?

A) Financial year

B) Assessment year

C) Previous year

D) Tax year

Answer: C) Previous year

24 . Tax evasion involves:

A) Compliance with tax laws

B) Illegally avoiding paying taxes

C) Properly reporting income

D) Timely filing of tax returns

Answer: B) Illegally avoiding paying taxes

25. Gross total income is calculated before:

A) Deductions

B) Exemptions

C) Allowances

D) Tax credits

Answer: A) Deductions

26. What is the primary source of income for agricultural households?

A) Salary

B) Business profits

C) Agricultural activities

D) Investment returns

Answer: C) Agricultural activities

27. Which of the following is a characteristic of tax avoidance?

A) Legal minimization of tax liability

B) Concealing income to evade taxes

C) Deliberate underreporting of income

D) Failure to pay taxes on time

Answer: A) Legal minimization of tax liability

28. The total income of an individual is calculated after:

A) Deductions

B) Exemptions

C) Allowances

D) Tax credits

Answer: A) Deductions

29. What is the term used for the year in which taxes are calculated and paid?

A) Previous year

B) Assessment year

C) Financial year

D) Tax year

Answer: B) Assessment year

30. Income from casual activities is usually:

A) Regular and predictable

B) Periodic and recurring

C) Irregular and sporadic

D) Fixed and guaranteed

Answer: C) Irregular and sporadic

31. Tax evasion is considered illegal because it involves:

A) Honest reporting of income

B) Full compliance with tax laws

C) Concealment or misrepresentation of income

D) Proper payment of taxes

Answer: C) Concealment or misrepresentation of incomem

Multiple-choice questions (MCQs) with answers on the topic of residential status under the Income Tax Act, 1961:

32. Which section of the Income Tax Act, 1961 deals with the determination of an individual's residential status?

A) Section 5

B) Section 6

C) Section 7

D) Section 8

Answer: B) Section 6

33. An individual is considered a resident in India if he/she stays in India for at least:

A) 90 days

B) 120 days

C) 182 days

D) 60 days

Answer: C) 182 days

34. Which of the following is NOT a condition for an individual to be considered a Resident but Not Ordinarily Resident (RNOR)?

A) He/she has been a non-resident in India in 9 out of 10 previous years

B) His/her stay in India is less than 60 days

C) His/her total income in India exceeds Rs. 15 lakhs

D) He/she is in India for a period of 729 days or less in the last 7 years

Answer: C) His/her total income in India exceeds Rs. 15 lakhs

35. Which type of income is taxable for a Resident and Ordinarily Resident (ROR) in India?

A) Income earned in India

B) Income earned abroad

C) Only income earned in India if it's above a certain threshold

D) Only income earned abroad if it's above a certain threshold

Answer: A) Income earned in India

36. For an individual to be considered a Resident and Ordinarily Resident (ROR) in India, he/she must satisfy which conditions?

A) Stay in India for at least 182 days

B) Stay in India for at least 60 days

C) Stay in India for at least 120 days

D) Both A and C

Answer: D) Both A and C

37. Which of the following is NOT a category under the Residential Status of Hindu Undivided Family (HUF)?

A) Resident and Ordinarily Resident (ROR)

B) Resident but Not Ordinarily Resident (RNOR)

C) Non-Resident

D) Resident Foreign Company

Answer: D) Resident Foreign Company

38. The concept of a 'Control and Management' test is used to determine the residential status of which entity?

A) Partnership Firm

B) Hindu Undivided Family (HUF)

C) Association of Persons (AOP)

D) Company

Answer: D) Company

39. Which section of the Income Tax Act deals with the residential status of a company?

A) Section 4

B) Section 5

C) Section 6

D) Section 7

Answer: B) Section 5

40. An Indian citizen who leaves India for employment abroad will be considered a non-resident if his stay in India does not exceed:

A) 90 days

B) 182 days

C) 60 days

D) 365 days

Answer: A) 90 days

41. An individual who comes to India for a visit and stays for less than 60 days during the financial year is considered:

A) Resident and Ordinarily Resident (ROR)

B) Resident but Not Ordinarily Resident (RNOR)

C) Non-Resident

D) Resident Foreign Company

Answer: C) Non-Resident

42. An individual who is a citizen of India and is engaged in a business outside India will be considered a Resident in India if he stays in India for more than:

A) 182 days

B) 90 days

C) 120 days

D) 60 days

Answer: A) 182 days

43. For an individual who is a citizen of India, but not permanently settled in India, to be considered a Resident, he must stay in India for more than:

A) 182 days

B) 90 days

C) 120 days

D) 365 days

Answer: B) 90 days

44. The residential status of an individual is determined for which period under the Income Tax Act?

A) Financial Year

B) Calendar Year

C) Assessment Year

D) Previous Year

Answer: D) Previous Year

45. An individual who is a citizen of India but leaves India for employment outside India will be considered a non-resident if his stay in India is less than:

A) 182 days

B) 60 days

C) 365 days

D) 90 days

Answer: D) 90 days

46. Which of the following factors is NOT considered in determining the residential status of an individual under the Income Tax Act?

A) Nationality

B) Place of Birth

C) Source of Income

D) Duration of Stay in India

Answer: B) Place of Birth

47. An individual is considered a Resident and Ordinarily Resident (ROR) if he meets which conditions?

A) Stays in India for at least 182 days

B) Stays in India for at least 60 days

C) His total income in India exceeds Rs. 15 lakhs

D) Both A and C

Answer: D) Both A and C

48. A company is considered a Resident in India if it is:

A) Incorporated in India

B) Controlled and managed in India

C) Listed on the Indian stock exchange

D) Both A and B

Answer: D) Both A and B

49. Which of the following is NOT a type of residential status under the Income Tax Act, 1961?

A) Resident and Ordinarily Resident (ROR)

B) Non-Resident

C) Resident but Not Ordinarily Resident (RNOR)

D) Non-Resident Indian (NRI)

Answer: D) Non-Resident Indian (NRI)

50. An individual who is a citizen of India and leaves India for the purpose of employment or any other purpose with the intention to stay abroad for an uncertain period will be considered a Resident if he stays in India for more than:

A) 182 days

B) 60 days

C) 365 days

D) 120 days

Answer: D) 120 days

51. The residential status of an individual is crucial in determining his/her liability to pay tax in India. Which section of the Income Tax Act, 1961 specifically defines the criteria for determining the residential status?

A) Section 4

B) Section 5

C) Section 6

D) Section 7

Answer: C) Section 6

Multiple-choice questions (MCQs) with answers on the topic of exempt income which does not form part of total income:

52. Which of the following is NOT considered exempt income under the Income Tax Act, 1961?

A) Agricultural income

B) Dividends from domestic companies

C) Income from house property

D) Gifts received on marriage

Answer: C) Income from house property

53. Interest earned on which of the following is considered exempt from tax?

A) Fixed Deposits in a bank

B) Public Provident Fund (PPF)

C) Savings account in a foreign bank

D) Corporate bonds

Answer: B) Public Provident Fund (PPF)

54. Long-term capital gains arising from the sale of listed equity shares on a recognized stock exchange are exempt from tax if:

A) The gain is reinvested in residential property

B) The gain is less than Rs. 1 lakh

C) Securities Transaction Tax (STT) is paid on the sale transaction

D) The gain is reinvested in purchasing gold

Answer: C) Securities Transaction Tax (STT) is paid on the sale transaction

55. Income earned by an individual from investments in tax-free bonds is:

A) Fully taxable

B) Exempt from tax

C) Partially taxable

D) Taxable at a reduced rate

Answer: B) Exempt from tax

56  Which of the following is NOT considered exempt income under Section 10 of the Income Tax Act, 1961?

A) Dividends from domestic companies

B) Leave Travel Allowance (LTA)

C) Rental income from a let-out house property

D) Agricultural income

Answer: C) Rental income from a let-out house property

57. Interest received on which of the following is fully exempt from tax in the hands of the recipient?

A) Interest on Fixed Deposits in a bank

B) Interest on Savings Account in a bank

C) Interest on Loans given to friends

D) Interest on National Savings Certificate (NSC)

Answer: D) Interest on National Savings Certificate (NSC)

58. Which of the following allowances is NOT exempt from tax?

A) House Rent Allowance (HRA)

B) Children Education Allowance (CEA)

C) Leave Travel Allowance (LTA)

D) Medical Reimbursement

Answer: D) Medical Reimbursement

59. Which of the following incomes is NOT exempt under Section 10 of the Income Tax Act?

A) Interest on PPF

B) Income from winning lotteries

C) Gratuity received by government employees

D) Scholarships granted to students

Answer: B) Income from winning lotteries

60. Under Section 10 of the Income Tax Act, which of the following is exempt from tax for a salaried individual?

A) Allowances for the blind or handicapped

B) City Compensatory Allowance (CCA)

C) Conveyance Allowance

D) Education Allowance

Answer: A) Allowances for the blind or handicapped

61. Interest earned on which of the following savings schemes is NOT exempt from tax?

A) Employee's Provident Fund (EPF)

B) Sukanya Samriddhi Account

C) Senior Citizen Savings Scheme (SCSS)

D) Kisan Vikas Patra (KVP)

Answer: D) Kisan Vikas Patra (KVP)

62.bDividends received from which of the following are exempt from tax?

A) Mutual Funds

B) Foreign companies

C) Domestic companies

D) Government securities

Answer: C) Domestic companies

63. Life insurance maturity proceeds are exempt from tax under Section 10(10D) if the premium paid is:

A) Less than 5% of the sum assured

B) Less than 10% of the sum assured

C) More than 10% of the sum assured

D) More than 15% of the sum assured

Answer: A) Less than 5% of the sum assured

64. Income earned by a minor child is clubbed with the income of the parent whose:

A) Income is higher

B) Age is lower

C) Income is lower

D) Age is higher

Answer: A) Income is higher

65. Gifts received by an individual on the occasion of his/her wedding are:

A) Fully taxable

B) Exempt up to a certain limit

C) Taxable if the value exceeds Rs. 50,000

D) Taxable if received from non-relatives

Answer: B) Exempt up to a certain limit

66. Income earned from which of the following sources is NOT exempt from tax?

A) Interest on savings account up to Rs. 10,000

B) Income from units of Mutual Funds

C) Pension received by a retired government employee

D) Income from lotteries

Answer: D) Income from lotteries

67  Dividends received from a company outside India are exempt from tax if the Indian resident holds at least:

A) 10% of the voting power

B) 15% of the voting power

C) 20% of the voting power

D) 25% of the voting power

Answer: A) 10% of the voting power

68. Any sum received by an employee from his employer as a gift is:

A) Fully taxable

B) Exempt up to Rs. 5,000

C) Exempt up to Rs. 10,000

D) Exempt up to Rs. 15,000

Answer: C) Exempt up to Rs. 10,000

69. Interest earned on which of the following savings accounts is exempt from tax?

A) Fixed Deposit Account

B) Recurring Deposit Account

C) Savings Account in a cooperative society

D) Savings Account in a bank

Answer: D) Savings Account in a bank

70. Which of the following allowances is NOT exempt from tax?

A) Transport Allowance

B) House Rent Allowance (HRA)

C) Uniform Allowance

D) Special Allowance

Answer: D) Special Allowance

71. Any sum received under a life insurance policy, including the sum allocated by way of bonus, is exempt from tax if the premium paid is:

A) Less than 5% of the sum assured

B) Less than 10% of the sum assured

C) More than 5% of the sum assured

D) More than 15% of the sum assured

Answer: A) Less than 5% of the sum assured

 Short note questions for each of the topics mentioned:

Basis Income:

Briefly explain the concept of basis income in income tax calculations. Provide a concise definition and outline its significance in determining taxable income.

Assessment Year:

Write a short note on the concept of assessment year in income tax law. Highlight its importance in the taxation process and its relationship with the previous year.

Previous Year:

Provide a short explanation of the term 'previous year' as used in income tax legislation. Describe its relevance in computing taxable income and tax liabilities.

Gross Total Income (GTI):

Give a brief overview of Gross Total Income (GTI) in income tax computation. Mention the various components included in GTI and its role in the taxation process.

Total Income (TI):

Write a short note on Total Income (TI) in income tax calculations. Explain its significance in determining tax liability and the deductions allowed to arrive at TI.

Tax Evasion:

Provide a concise explanation of tax evasion and its implications. Briefly discuss the difference between tax evasion and tax avoidance, and mention the penalties associated with tax evasion.

Tax Avoidance:

Give a brief overview of tax avoidance strategies used by taxpayers to minimize tax liability. Highlight the distinction between tax avoidance and tax evasion, and mention the legality of tax avoidance practices.

Tax Planning:

Write a short note on tax planning and its objectives. Discuss the importance of tax planning in financial management and mention some common tax planning techniques.

here are some questions on the residential status under the Income Tax Act, 1961:

What does the term "residential status" signify in the context of the Income Tax Act, 1961?

How does the Income Tax Act classify individuals based on their residential status? Explain each category briefly.

What are the criteria for an individual to be considered a "resident" under the Income Tax Act, 1961?

Distinguish between "Resident" and "Non-Resident" as per the Income Tax Act, 1961.

What conditions must be satisfied for an individual to be categorized as a "Resident but Not Ordinarily Resident" (RNOR)?

Can an individual be a resident of more than one country under the Income Tax Act, 1961? Explain with an example.

How does the concept of "Control and Management" determine the residential status of a company?

Discuss the significance of residential status in determining the tax liability of an individual or a company.

Explain the implications of being a Resident and Ordinarily Resident (ROR) for tax purposes.

Can the residential status of an individual change during a financial year? If yes, under what circumstances?

Here are some questions on income that is not part of total income under the Income Tax Act, 1961:

What is meant by "income which does not form part of total income" under the Income Tax Act, 1961?

Provide examples of types of income that are exempt from tax and do not form part of total income.

Explain the significance of exempt income in tax planning and financial management.

How does the Income Tax Act treat income earned from agricultural activities? Is it considered part of total income?

Describe the tax treatment of dividends received from domestic companies under the Income Tax Act, 1961.

Discuss the tax implications of long-term capital gains arising from the sale of listed equity shares on a recognized stock exchange.

Explain the conditions under which interest earned on certain investments is exempt from tax and does not form part of total income.

Provide examples of allowances and perquisites that are exempt from tax and do not form part of total income.

How does the Income Tax Act treat gifts received by individuals? Are they considered part of total income?

Discuss the tax treatment of income earned by minors and its inclusion or exclusion from total income under the Income Tax Act, 1961.