Multiple Choice Questions and Answers on Income Tax Rate & Basic Concept of Income Tax

Questions
1 Which of the following income is not included in the term 'income' under the Income-tax Act, 1961 -
A Profit and gains
B Dividend
C Profit in lieu of salary
D Reimbursement of travelling expenses.

Answer:Reimbursement of travelling expenses.
2 Which amongst the following is not a head of Income?
A Salaries
B Income from house Property
C Capital gains
D Income from exports

Answer:Income from exports
3 Amongst the following which activity will be taxable?
A Profits & gains of any insurance business
B Income from specific services provided by carried on by a co-operative society. Trade, professional or similar association.
C The profits and gains of any banking business carried on by a co-operative society.
D All of the above.

Answer:All of the above.
4 AB & Co. received Rs.`2, 00,000 as compensation from CD & Co. for premature termination of contract of agency. Amount so received is -----
A Capital receipt and taxable
B Capital receipt and not taxable
C Revenue receipt and taxable
D Revenue receipt and not taxable

Answer:Revenue receipt and not taxable
5 Subsidy if given as assistance to carry on business already commenced is a -----
A Revenue receipt
B Capital receipt
C It is not a receipt
D None of these

Answer:Revenue receipt
6 Which of the following is not included in taxable income -
A Income from smuggling activity
B Casual income
C Gifts of personal nature subject to a maximum of `50,000 received in cash
D Income received in kind.

Answer:Gifts of personal nature subject to a maximum of `50,000 received in cash
7 Compensation on account of loss of profit is -
A Revenue receipt
B Capital receipt
C Revenue expenditure
D Capital expenditure

Answer:Revenue receipt
8 Out of the following, which of the capital receipt is not taxable:
A Capital gains of Rs.` 10,00,000
B Amount of Rs.`5,00,000 won by way of lottery, games, puzzles
C Amount of Rs.`2,00,000 received by way of gift from relatives
D Amount of Rs.`1,00,000 received by way of gift from a friend on marriage anniversary

Answer:Amount of Rs.`2,00,000 received by way of gift from relatives
9 In case the Key man insurance policy is taken in name of any other person any sum received on its maturity by such person shall be taxable under the head -
A Salaries
B Profits & Gains of Business or Profession
C Capital Gains
D Income from Other Sources

Answer: Income from Other Sources
10 Method of Accounting is not relevant for –
A Salaries
B Income from House Property
C Capital Gains
D All of the above

Answer:All of the above
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