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Income tax 50 MCQ PRACTICE

Income Tax MCQ Practice Test

Income Tax – 50 MCQs Practice Test

Select the correct option for each question and click 'Submit Test' at the bottom.

1. Income Tax in India is levied under which Act?

A. Finance Act, 1956
B. Income Tax Act, 1961
C. Taxation Act, 1947
D. Revenue Act, 1950

2. Income tax is a

A. Indirect tax
B. Progressive tax
C. Proportional tax
D. Regressive tax

3. Previous year means

A. Year in which tax is paid
B. Year following assessment year
C. Financial year in which income is earned
D. Calendar year

4. Assessment year is

A. Year in which income is earned
B. Year in which income is assessed
C. Calendar year
D. Accounting year

5. Income tax is charged on

A. Gross income
B. Net income
C. Capital
D. Turnover

6. Salary income is taxable on

A. Receipt basis
B. Accrual basis
C. Either receipt or accrual whichever earlier
D. Cash basis only

7. Which is NOT a head of income?

A. Salary
B. House Property
C. Capital
D. Other Sources

8. Total number of heads of income are

A. 4
B. 5
C. 6
D. 7

9. Income from house property is taxable on

A. Annual value
B. Municipal value
C. Fair rent
D. Standard rent

10. Standard deduction from house property is

A. 20%
B. 25%
C. 30%
D. 40%

11. Capital gains arise from

A. Salary
B. Sale of capital asset
C. Interest income
D. Rent

12. Short-term capital gain on equity shares (STT paid) is taxed at

A. 10%
B. 15%
C. 20%
D. 30%

13. Long-term capital gain exemption limit on equity shares is

A. ₹50,000
B. ₹1,00,000
C. ₹2,50,000
D. ₹5,00,000

14. Income from lotteries is taxable under

A. Salary
B. Capital gains
C. Other sources
D. Business income

15. Agricultural income is

A. Fully taxable
B. Partially taxable
C. Exempt from tax
D. Taxable after deduction

16. Which section provides deduction for life insurance premium?

A. 80C
B. 80D
C. 80E
D. 80G

17. Maximum deduction under section 80C is

A. ₹1,00,000
B. ₹1,25,000
C. ₹1,50,000
D. ₹2,00,000

18. Deduction for medical insurance premium is under

A. 80C
B. 80D
C. 80DD
D. 80G

19. Basic exemption limit for individuals (below 60 years) is

A. ₹2,00,000
B. ₹2,50,000
C. ₹3,00,000
D. ₹5,00,000

20. Surcharge is charged on

A. Gross income
B. Total income
C. Tax amount
D. Agricultural income

21. PAN stands for

A. Permanent Account Number
B. Personal Account Number
C. Primary Account Number
D. Permanent Assessment Number

22. Advance tax is payable if tax liability exceeds

A. ₹5,000
B. ₹8,000
C. ₹10,000
D. ₹15,000

23. TDS means

A. Tax Deducted System
B. Tax Deposit Scheme
C. Tax Deducted at Source
D. Total Deducted Sum

24. Income tax return is filed under

A. Finance Act
B. Income Tax Rules
C. Income Tax Act
D. Constitution

25. Residential status is determined for

A. Income
B. Person
C. Assessment year
D. Previous year

26. Which is NOT a residential status?

A. Resident
B. Non-resident
C. Resident but not ordinarily resident
D. Ordinary resident alien

27. Casual income is taxed at

A. Normal slab rates
B. Flat 30%
C. 20%
D. 10%

28. Which income is fully exempt?

A. Salary
B. Pension
C. Agricultural income
D. Business income

29. Interest on savings account deduction is under

A. 80C
B. 80D
C. 80TTA
D. 80G

30. Rebate under section 87A is available to individuals with income up to

A. ₹3 lakh
B. ₹4 lakh
C. ₹5 lakh
D. ₹7 lakh

31. Professional tax is deducted from

A. House property income
B. Capital gains
C. Salary income
D. Other sources

32. Loss from house property can be set off up to

A. ₹1,00,000
B. ₹1,50,000
C. ₹2,00,000
D. No limit

33. Which authority administers income tax in India?

A. RBI
B. CBDT
C. SEBI
D. Finance Commission

34. Income tax is levied by

A. State Government
B. Local Authority
C. Central Government
D. RBI

35. Which return form is used by salaried individuals?

A. ITR-1
B. ITR-2
C. ITR-3
D. ITR-4

36. Which income is taxable under “Other Sources”?

A. Dividend
B. Salary
C. Rent
D. Business profit

37. Gift received from non-relative exceeding ____ is taxable

A. ₹25,000
B. ₹40,000
C. ₹50,000
D. ₹1,00,000

38. Income tax slabs are announced in

A. Annual Report
B. Union Budget
C. Economic Survey
D. RBI Bulletin

39. Which section deals with depreciation?

A. 24
B. 32
C. 80C
D. 44

40. Income tax return filing due date for individuals is generally

A. 30th June
B. 31st July
C. 31st August
D. 31st March

41. Which income is taxable on receipt basis only?

A. Salary
B. Business income
C. Capital gain
D. Casual income

42. Which of the following is a direct tax?

A. GST
B. Customs duty
C. Income tax
D. Excise duty

43. Interest on loan for self-occupied house is deductible up to

A. ₹1,00,000
B. ₹1,50,000
C. ₹2,00,000
D. ₹2,50,000

44. Which income is taxed at special rates?

A. Salary
B. Casual income
C. Business income
D. Rental income

45. Assessment order is passed by

A. Tax consultant
B. Assessing Officer
C. CBDT
D. Finance Minister

46. Income tax is calculated on

A. Previous year
B. Assessment year
C. Calendar year
D. Accounting year

47. Set-off of losses means

A. Ignoring loss
B. Adjusting loss against income
C. Carrying forward income
D. Tax evasion

48. Carry forward of business loss is allowed for

A. 4 years
B. 6 years
C. 8 years
D. 10 years

49. Which form is used for presumptive taxation?

A. ITR-1
B. ITR-2
C. ITR-3
D. ITR-4

50. Income tax is an example of

A. Progressive tax
B. Indirect tax
C. Regressive tax
D. Proportional tax

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