Question 1

An Indian citizen leaves India for employment abroad on 25th September 2023. He has never left India before. For the Financial Year 2023-24, his residential status will be:

Deemed Resident.Resident but Not Ordinarily Resident (RNOR).Non-Resident (NR).Resident and Ordinarily Resident (ROR).

View Explanation

He stays in India from 1st April to 25th Sept (approx 178 days). Since he leaves for employment, the 60-day rule is replaced by 182 days. Since 178 < 182, he is a Non-Resident.

Question 2

Under Section 194A, TDS is deducted on interest (other than securities) paid by banks to resident individuals if the amount exceeds _____ in a financial year (for senior citizens).

?10,000?1,00,000?40,000?50,000

View Explanation

The threshold limit for TDS on interest income for Senior Citizens is ?50,000. For others, it is ?40,000.

Question 3

Liability for payment of Advance Tax arises if the estimated tax liability of the assessee for the year is:

?10,000 or more.?1,00,000 or more.?5,000 or more.?20,000 or more.

View Explanation

As per Section 208, every person whose estimated tax liability for the year is ?10,000 or more is liable to pay advance tax.

Question 4

Deferred Tax Assets (DTA) arise when:

Accounting Income is higher than Taxable Income due to permanent differences.Taxable Income is higher than Accounting Income due to timing differences.Tax rate increases.Accounting Income is higher than Taxable Income due to timing differences.

View Explanation

If Taxable Income > Accounting Income, you pay more tax now but will pay less later. This prepayment creates an Asset (DTA). Example: Disallowance of expenses in tax that are allowed in books.

Question 5

Short Term Capital Gain (STCG) on the sale of listed equity shares (where STT is paid) is taxed at:

30%10%20%15%

View Explanation

Under Section 111A, STCG on listed equity shares is taxed at a concessional rate of 15% (plus surcharge/cess).

Question 6

The maximum deduction available under Section 80C (including 80CCC and 80CCD(1)) of the Income Tax Act is:

?2,00,000?1,50,000?1,00,000?50,000

View Explanation

The aggregate limit for deductions under sections 80C, 80CCC, and 80CCD(1) is currently capped at ?1.5 Lakh per financial year.

Question 7

Under Section 139A, quoting PAN is mandatory for cash deposits in a bank account aggregating to _____ or more in a financial year.

?20 Lakh?10 Lakh?50,000?2.5 Lakh

View Explanation

A recent rule change mandates PAN/Aadhaar for cash deposits or withdrawals aggregating to ?20 Lakh or more in a financial year, or for opening a current account.

Question 8

Income of a minor child is clubbed with the income of the parent:

It is not clubbed; filed separately.Who is the father.Whose total income (excluding minor's income) is greater.Who is the mother.

View Explanation

Under Section 64(1A), a minor's income is clubbed with the parent having the higher income. Exception: Income earned through manual work or skill/talent of the minor.

Question 9

The quarterly TDS return to be filed by banks for interest payments (other than salary) is:

Form 27QForm 24QForm 16AForm 26Q

View Explanation

Form 26Q is for TDS on payments other than salary to residents. 24Q is for Salary. 27Q is for non-residents.

Question 10

Income earned in the Financial Year 2023-24 is taxed in the Assessment Year:

2025-262024-252022-232023-24

View Explanation

The year in which income is earned is the Previous Year (FY 2023-24). The year in which it is assessed and taxed is the Assessment Year (AY 2024-25).

Question 11

Form 15H is submitted to the bank by:

Any individual to avoid TDS.Companies to avoid TDS.Senior Citizens (60+ years) to claim NIL TDS on interest if tax liability is nil.NRIs to claim lower TDS.

View Explanation

Form 15G is for individuals below 60 years, and Form 15H is exclusively for Senior Citizens (60 years and above).

Question 12

Deduction under Section 80E is available for:

Rent paid.Interest paid on Loan taken for Higher Education.Medical Insurance Premium.Donations to Charity.

View Explanation

Section 80E allows deduction of the entire interest amount paid on education loans for self, spouse, or children, for a maximum of 8 years.

Question 13

Agricultural Income in India is:

Fully Taxable.Exempt under Section 10(1).Taxed at a special rate.Partially Taxable.

View Explanation

Agricultural income is exempt from central income tax. However, it is included for rate purposes to determine the tax slab for other income (Partial Integration).

Question 14

Income Tax is charged on the income of the "Previous Year". The Previous Year is defined as:

The year in which tax is paid.The Financial Year immediately preceding the Assessment Year.The calendar year before the tax year.Any period of 12 months chosen by the taxpayer.

View Explanation

In India, the Previous Year always runs from 1st April to 31st March immediately preceding the Assessment Year.

Question 15

Income from subletting a house property is taxable under the head:

Income from Other SourcesIncome from House PropertyProfits and Gains of Business or ProfessionCapital Gains

View Explanation

Income from House Property is applicable only to the OWNER. A tenant subletting the house is not the owner, so the rent received is taxed under "Other Sources" or Business (if it's their business).

Question 16

Under Section 54EC, capital gains arising from the transfer of long-term capital assets are exempt if invested in specified bonds (like NHAI/REC) within:

6 months from the date of transfer.1 year from the date of transfer.Before the due date of filing return.3 months from the date of transfer.

View Explanation

To claim exemption on Long Term Capital Gains, the assessee must invest the gains in specified bonds of NHAI, REC, etc., within a strict timeline of 6 months from the date of asset transfer. The maximum limit for investment in a financial year is ?50 Lakh.

Question 17

Under Section 194C, what is the TDS rate for payments made to individual/HUF contractors if PAN is provided?

1%10%2%5%

View Explanation

For payments to resident contractors: If the payee is an Individual or HUF, TDS is 1%. For others (like companies/firms), it is 2%. If PAN is not provided, the rate jumps to 20%.

Question 18

Loss from a "Speculation Business" can be set off against:

Income from any other business.Only against profits of another Speculation Business.Income from Salary.Income from House Property.

View Explanation

Under Section 73, losses from a speculation business are treated distinctly. They cannot be set off against normal business profits or other heads. They can only be set off against speculation profits and carried forward for 4 years.

Question 19

The maximum deduction available under Section 80D for health insurance premium paid for Senior Citizen parents is:

?50,000?25,000?30,000?1,00,000

View Explanation

The general limit is ?25,000. However, for senior citizens (age 60 or above), the limit is enhanced to ?50,000. This is separate from the self/family limit.

Question 20

A "Best Judgment Assessment" under Section 144 is carried out by the Assessing Officer when:

The assessee fails to file a return or fails to comply with notices.The assessee has filed a correct return.There is a refund claim.The assessee requests for it.

View Explanation

If the taxpayer is non-compliant (doesn't file return, doesn't produce documents), the officer estimates the income to the best of their judgment and determines the tax liability.

Question 21

Under Section 194N, TDS is deducted on cash withdrawals from a bank account if the aggregate amount exceeds _____ in a year (for a person who has filed returns).

?20 Lakh?2 Crore?1 Crore?50 Lakh

View Explanation

For compliant taxpayers (who filed returns), TDS @ 2% applies on cash withdrawals exceeding ?1 Crore. For non-filers, the threshold is lower (?20 Lakh).

Question 22

Deduction under Section 80TTA regarding interest on savings accounts is available up to:

?10,000?5,000No limit?50,000

View Explanation

For individuals (other than senior citizens) and HUF, interest on savings accounts (bank/post office) up to ?10,000 is deductible. (For Senior Citizens, Sec 80TTB gives ?50,000 limit including FD interest).

Question 23

Tax Collection at Source (TCS) under Section 206C(1G) applies to remittances under the Liberalized Remittance Scheme (LRS) if the amount exceeds _____ in a financial year.

?5 Lakh?7 Lakh?2 Lakh?10 Lakh

View Explanation

For LRS remittances (other than for education via loan), TCS @ 20% (revised rate) applies on amounts exceeding ?7 Lakh in a financial year.

Question 24

What is the due date for filing Income Tax Return for a working partner of a firm whose accounts are required to be audited?

31st October30th September31st December31st July

View Explanation

If a firm is subject to audit, the due date for the firm AND its working partners is 31st October of the Assessment Year.

Question 25

The standard deduction available for Salaried Employees under Section 16(ia) is:

?1,00,000?75,000?50,000?40,000

View Explanation

The standard deduction for salaried individuals is ?50,000 (or the amount of salary, whichever is less) under both Old and New Tax Regimes.

Question 26

If a person holds more than one PAN card:

It is legal.A penalty of ?10,000 can be levied under Section 272B.They can use one for business and one for personal use.The second PAN is automatically cancelled.

View Explanation

Holding more than one PAN is illegal. The Income Tax Act imposes a penalty of ?10,000 for possessing multiple PANs.

Question 27

Compensation received for the termination of an agency business is treated as:

Capital Receipt (Not Taxable).Casual Income.Revenue Receipt (Taxable).Capital Receipt (Taxable as Capital Gains).

View Explanation

As per Section 28(ii), compensation for termination or modification of terms of agency is taxable as "Profits and Gains of Business or Profession".

Question 28

Allowances paid to High Court Judges are:

Fully Exempt.Partially Exempt.Fully Taxable.Taxable as "Other Sources".

View Explanation

Under Article 222(2) of the Constitution and Income Tax Act, allowances paid to Judges of High Court and Supreme Court are fully exempt from tax.

Question 29

For individuals, the highest rate of Surcharge (under the new regime for income > ?5 Crore) has been capped at:

25%37%15%10%

View Explanation

In Budget 2023, the highest surcharge rate was reduced from 37% to 25% under the New Tax Regime to provide relief to high income earners.

JAIIB Quiz

Quiz Finished!