Direct Taxes MCQ - Practice Questions with Answers

6Consider the following statements about the Central Board of Direct Taxes: 1. CBDT is a statutory authority constituted under the Central Board of Revenue Act, 1963. 2. Officers of CBDT function as a division of the Ministry dealing with levy and collection of indirect taxes. 3. The earlier Central Board of Revenue was split into CBDT and the Central Board of Excise and Customs with effect from 1 January 1964. 4. CBDT consists of a Chairman and six Members according to the Income Tax Department's organisation page. Which of the statements given above are correct?

7Consider the following statements about section 115BAC and related individual-tax provisions: 1. Section 115BAC applies, in its stated opening clause, to a person being an individual or a Hindu undivided family. 2. Section 115BAC operates without any conditions attached to the computation mechanism. 3. The section 87A proviso linked with section 115BAC refers to a total income ceiling of seven hundred thousand rupees for the full rebate under that proviso. 4. Section 87A is placed under Chapter VIII dealing with rebates and reliefs, not under Chapter VI-A deductions. Which of the statements given above are correct?

8Consider the following statements about Tax Deducted at Source (TDS): 1. TDS is designed to collect tax from the very source of income. 2. The deductor remits the deducted tax into the account of the Central Government. 3. The deductee gets no credit for the amount deducted at source. 4. TDS rates for all payments are determined only by Double Taxation Avoidance Agreements. Which of the statements given above are correct?

9Consider the following statements: 1. Income chargeable under the head income from house property is computed after allowing a deduction equal to thirty per cent of annual value. 2. Interest on borrowed capital used for acquisition, construction, repair, renewal or reconstruction of the property is a deduction under Section 24. 3. For the property covered by the relevant provisos, the interest deduction ceiling may be thirty thousand rupees or two lakh rupees depending on the conditions. 4. Section 24 fixes a five-lakh-rupee aggregate ceiling for the first and second provisos. Which of the statements given above are correct?

10Consider the following statements about the charge and scope of total income under the Income-tax Act, 1961: 1. Income-tax is charged in respect of the total income of the previous year of every person, subject to the Act. 2. Deduction at source or advance payment extinguishes the charge of tax under section 4. 3. For a resident, total income includes income accruing or arising outside India during the previous year. 4. For a non-resident, total income includes all income accruing outside India even when it is neither received nor deemed to be received in India. Which of the statements given above are correct?

11Consider the following statements about basic definitions under the Income-tax Act, 1961: 1. An assessee means a person by whom any tax or any other sum of money is payable under the Act. 2. Assessment includes reassessment. 3. Assessment year means a period of six months commencing on 1 April every year. Which of the statements given above are correct?

12Consider the following statements about taxability based on residential status: 1. A resident and ordinarily resident is taxable on income received or deemed to be received in India. 2. A resident and ordinarily resident is taxable on income accruing or arising outside India. 3. A non-resident is taxable in India only on income received or deemed received in India and income accruing or deemed accruing in India. 4. A non-resident's income accruing outside India is always taxed in India merely because the person has Indian citizenship. Which of the statements given above are correct?

13Consider the following statements about the charge of income tax: 1. Income tax is charged for a tax year at rates provided by a Central Act. 2. The charge of income tax is on the total income of the tax year of every person. 3. The charging provision says income tax can never be deducted or collected at source. Which of the statements given above are correct?

14Consider the following statements: 1. Advance tax is payable during a financial year in accordance with Sections 208 to 219. 2. For advance-tax purposes, current income is the income chargeable for the assessment year immediately following that financial year. 3. A resident individual aged sixty years or more, with no income under profits and gains of business or profession, is outside Section 207(1). 4. Tax deduction at source on salary under Section 192 is made at the time of credit, not at the time of payment. Which of the statements given above are correct?

15Consider the following statements about PAN in TDS compliance: 1. A person receiving income subject to TDS must furnish PAN to the deductor. 2. Failure to provide PAN results in higher TDS rates. 3. If PAN is not provided, TDS is always deducted at zero rate. Which of the statements given above are correct?