S.Y. B.COM
SEMESTER - 3
ELEMENTS OF DIRECT TAXES
(EDT)
MCQs - INCOME UNDER THE HEAD "SALARIES"
1. Salary for exemption of leave encashment shall be taken as:
(A) last drawn Salary
(B) Average Salary of 10 months immediately preceding the month of retirement
(C) average Salary of 10 months immediately preceding the date of retirement.
(D) None
2. The maximum exemption in case of leave encashment shall be:
(A) Rs. 2,40,000
(B) Rs. 3,50,000
(C) Rs. 3,00,000
(D) Rs. 5,00,000
3. An employee availed the exemption of leave encashment of Rs.1,00,000 in the past. He received from the second employer a sum of Rs. 2,50,000 as encashment of leave. He will be entitled to exemption to the extent of:
(A) Nil
(B) Rs. 2,50,000
(C) Rs. 2,00,000
(D) Rs. 1,40,000
4. Compensation received on voluntary retirement is exempt under 10 (10 C) to the maximum extent of:
(A) Rs. 2,40,000
(B) RS. 3,50,000
(C) Rs. 5,00,000
(D) Rs. 1,00,000
5. A is entitled to Children education allowance @ Rs. 80 p.m. per child for 3 children amounting Rs.240 p.m. It will be exempt to the extent of:
(A) Rs. 200 p.m.
(B) Rs. 160 p.m.
(C) Rs. 240 p.m.
(D) Rs. 100 p.m.
6. R is entitled to Hostel expenditure allowance for his 3 children @ Rs. 200 per child. The exemption in this case shall be:
(A) Rs. 600 p.m.
(B) Rs. 400 p.m.
(C) Rs. 300 p.m.
(D) Not
7. R is entitled to a transport allowance of Rs.3,000 p.m. for commuting from his residence to office and back. He spends Rs.2,600 p.m. The exemption shall be:
(A) Rs.1,000 p.m
(B) Rs. 800 p.m.
(C) Rs. 600 p.m.
(D) Not Available
8. R is entitled to Rs. 6,000 as medical allowance He spends Rs. 4000 on his medical treatment and Rs. 1000 on the medical treatment of his major son not dependent on him. The exemption in this case shall be:
(A) Rs. 4,000
(B) Rs. 5,000
(C) NIL
(D) Rs. 2,000
9. R is an employee of a Transport Company. He is entitled to transport allowance of Rs. 6,000 p.m. He spends Rs. 4,000 every month. The exemption shall be:
(A) Rs. 6,000 p.m.
(B) Rs. 4,000 p.m.
(C) Rs. 4,200 p.m.
(D) Rs. 5,000 p.m.
10. Entertainment allowance in case of Government employee is:
(A) fully exempt
(B) fully taxable
(C) exempt upto certain limits mentioned in section 16(ii)
(D) first included in full in gross salary and thereafter deduction allowed from gross salary under section 16(ii)
11. For claiming deduction of entertainment allowance Government employee includes:
(A) Central and Sate Government employee
(B) State Government Employee
(C) Central and State Government Employees and employees of local authority
(D) Central and State Government employees, employees of local authority and employees of statutory corporation
12. During the previous year, the employee was reimbursed Rs. 24,000 as medical expenses incurred by him which includes Rs. 7,000 spent in Government hospital. The taxable perquisite in this case shall be:
(A) Rs.9,000
(B) Nil
(C) Rs. 2,000
(D) Rs. 24,000
13. R, who claimed the exemption of gratuity in the past to the extent of Rs. 3,50,000, was entitled to the gratuity from the present/second employer amounting to Rs. 2,00,000 in the previous year 2019-20. R shall be entitled to exemption to the maximum extent of:
(A) Rs.6,50,000
(B) Nil
(C) Rs. 2,00,000
(D) Rs. 3,00,000
14. R worked with a previous employer for 3 years but was not entitled to any gratuity. He worked with the present employer for 8 years and 7 months. The completed years of service for calculating exemption of gratuity shall be taken as:
(A) 11 years
(B) 8 years
(C) 9 years
(D) 12 years
15. For purpose of calculating exemption of gratuity, salary shall include:
(A) Fixed commission
(B) Commission if it is a fixed percentage on turnover
(C) None of these two
(D) All
16. Un-commuted pension received by a Government employee is:
(A) Exempt
(B) Taxable
(C) Partially taxable
(D) All
17. Commuted pension received shall be fully exempt in case of:
(A) Government employee
(B) Government employee or an employee of local authority
(C) Government employee or an employee of local authority or an employee of statutory corporation
18. An employee who was not entitled to gratuity got 30% of his total pension commuted in the past. He wishes to commute another 25% of his total pension in the previous year. He shall be allowed exemption to the extent of:
(A) Nil
(B) 1/3
(C) 2/3
(D) 2/6
19. Deduction of Entertainment Allowance is available only to
(A) All employees
(B) Government employees
(C) Non-government employees
(D) Private company's employees
20. Maximum ceiling limit for exemption u/s 10(10) in respect of gratuity for employees covered by payment of Gratuity Act, 1972 is
(A) 10,00,000
(B) 5,00,000
(C) 3,50,000
(D) 20,00,000
21. HRA paid to an employee residing in Patna is exempt up to lower of actual HRA, excess of rent paid over 10% of salary and
(A) 30% of salary
(B) 40% of salary
(C) 50% of salary
(D) 60% of salary
22. R, a chartered accountant is employed with R Ltd., as an internal auditor and requests the employer to call the remuneration as internal audit fee. R shall be chargeable to tax for such fee under the head.
(A) Income from Salaries
(B) Profit and gains from Business and Profession
(C) Income from other Sources
(D) All
23. R Ltd., pays a salary of Rs. 2,90,000 to his employee G and undertakes to pay the Income Tax amounting to Rs. 3,090 during the previous year 2019-20 on behalf of G. The gross Salary of G shall be:
(A) Rs. 2,90,000
(B) Rs. 2,93,090
(C) Rs. 2, 86,910
(D) Rs. 2,55,000
24. R was employed on 1-7-2013 in the grade of Rs.15,000-400-17,000-500-22,000. His gross salary for the assessment year 2020-21 shall be
(A) Rs. 1,99,200
(B) Rs. 2,04,000
(C) Rs.2,08,500
(D) Rs. 2,10,000
25. R was employed from 1-8-2016 in the grade of Rs.15,000-400-17,000-500-22,000 and his salary was fixed at Rs.16,200 from the date of joining. His gross salary for the assessment year 2020-21 shall be.
(A) Rs. 1,99,200
(B) Rs. 2,04,000
(C) Rs.2,08,000
(D) Rs. 2,10,000
26. R, who is entitled to a Salary of Rs. 10,000 p.m., took an advance of Rs. 20,000 against the salary in the month of March 2020. The gross salary of R for assessment year 2020-21 shall be:
(A) Rs. 1,60,000
(B) Rs. 1,40,000
(C) none of these two
(D) Rs. 1,80,000
27. R, who is entitled to Salary of Rs.10,000 p.m. took advance salary from his employer for the months of April and May 2020 along with Salary of March 2020 on 31-3-2020. The gross salary of R for assessment year 2020-21 shall be:
(A) Rs. 1,20,000
(B) Rs. 1,40,000
(C) Rs. 2,00,000
(D) None Of These
28. R is employed with G Ltd., at a salary of Rs. 10,000 p.m. As G Ltd., was in financial crisis, it paid the salary of January 2020 to March 2020 to R only in July 2020. The gross salary of R for assessment year 2020-21 shall be:
(A) Rs.1,20,000
(B) Rs.90,000
(C) Rs. 45,000
(D) None of these three
29. Salary of R is Rs. 10,000 p.m. R had taken Salary in advance for the months of April 2019 to June 2019 in March 2019 itself. The gross salary of R for assessment year 2020-21 shall be:
(A) Rs. 1, 20,000
(B) Rs. 90,000
(C) Rs. 40,000
(D) None of these three
30. Salary of R becomes due on 1st of next month and it is paid on 7th of that month. For assessment year 2020-21, the salary of R shall be taken from:
(A) April 2019 to March 2020
(B) March 2019 to February 2020
(C) None of these
(D) All of these
31. R who was working with another company joined the present employer w.e.f. 1-5-2019 at a Salary of Rs. 10,000 p.m. His salary becomes due on first of next month. He was also entitled to a pension of Rs. 4,000 p.m. from his former employer as he retired on 31-3-2019. His gross salary for assessment year 2020-21 shall be:
(A) Rs. 1,10,000.
(B) Rs. 1,58,000
(C) Rs. 1,48,000
(D) Rs. 1,50,000
32. The Government of India announced increase in the D.A on 15-3-2019 with retrospective effect from 1-5-2018 and the same were paid on 6-4-2019. The arrears of D.A shall be taxable in the previous year:
(A) 2018-19
(B) 2019-20
(C) In respective previous years to which these relate
(D) None
33. Gratuity shall be fully exempt in the case of:
(A) Central and State Government employee
(B) Central and State Government employees and employees of local authorities
(C) Central and State Government employee, employee of local authorities and employee of Statuary Corporation
34. An employee is covered under Payment of Gratuity Act, 1972:
(i) Salary for purpose of calculating 15 days salary for each completed year of service shall be:
(A) Last drawn Salary
(B) Average Salary of last 10 months
(C) Average Salary of last 3 completed years.
(D) All
(ii) Salary for the above purpose shall:
(A) Include dearness allowance and fixed percentage of commission on turnover achived by the employee.
(B) Not include Dearness allowance
(C) Include dearness allowance the extent the terms of employment provide
(D) shall include dearness allowances to the extent the terms of employment so provide.
(iii) If the employee has completed service of 16 years 6 months and 5 days, the number of completed year shall be taken as:
(A) 16 years
(B) 17 years
(C) 15 years
(D) 16 years 6 months and 5 days.
(iv) If he has completed exactly 16 years and 6 months, the completed year shall be:
(A) 16 Years
(B) 17 Years
(C) 10 years
(C) 16 Years and 6 months
(v) For purpose of computing 15 days' salary, the number of days in a,month shall be taken as:
(A) 30 days
(B) 26 days
(C) 31 days
(D) 25 days
(vi) The maximum exemption of gratuity shall be:
(A) Rs. 3,00,000
(B) Rs. 3,50,000
(C) Rs. 3,50,000 If he retires before 24-05-10 and Rs. 10,00,000 if he retires on or after 24-05-10
(D) Rs. 20,00,000
35. Alia Bhatt, an actress is employed in Chopra films where she is paid monthly remuneration of Rs.2,00,000 She acts in various films produced by various producers. Remuneration for acting in such films is directly paid to Chopra films by different producers. Rs.2,00,000 will be taxabl under which head
(A) Salary
(B) Other sources
(C) Income from profession
(D) Not taxable
36. Income tax paid by the employer on non-monetary perquisite on behalf of employer is _____ in the hands of employee
(A) Exempt
(B) Taxable
(C) Partly exempt, partly taxable
(D) Not applicable
37. Salary is taxable on
(A) Due basis
(B) Receipt basis
(C) Due basis or receipt basis whichever is earlier
(D) Not taxable
38. Transport allowance granted to an employee to meet his expenditure for commuting between place of residence and place of his duty is
(A) Fully taxable
(B) Fully exempt
(C) Partly taxable, partly exempt
(D) None of the above
39. Children Education Allowance is exempt to what extent
(A) Rs.100 per month per child
(B) Rs.50 per month per child
(C) Rs. 20 per month per child
(D) Rs. 300 per month per child
40. Which of the following allowances are fully exempt
(A) Allowances paid by the government to citizen of India outside India
(B) Allowances to High Court judges
(C) Allowances paid by UNO to its employees
(D) All of the above
41. State whether true or false.
"When gratuity is received from 2 or more employers in the same year then the aggregate amount of gratuity exempt from tax cannot exceed Rs.20,00,000 in case covered by payment of Gratuity Act, 1972."
(A) True
(B) False
42. Exemption amount in the case of leave salary received at the time of retirement government employees is the least of
(i) Rs. 3,00,000
(ii) Leave salary actually received
(iii) average salary
(iv) Cash equivalent of leave to the credit of employee at the time of retirement or death
(A) 8 months
(B) 2 months
(C) 10 months
(D) 12 months
43. Medical facilities provided by employee to employer is fully taxable except
(A) Treatment done in hospital maintained by employer
(B) Treatment done in hospital maintained by government
(C) Both (a) and (b)
(D) Treatment done in private hospitals
44. The employee is provided with furniture costing Rs. 1,50,000 alongwith house w.e.f. 1-4-2019. The value of the furniture to be included in the valuation of unfurnished house shall be:
(A) Rs. 15,000
(B) Rs. 12,500
(C) RS.18,750
(D) Rs. 22,500
45. Salary of an employee is Rs. 2,00,000. Rent paid by the employer for the unfurnished house provided to employee at mumbal is Rs. 3,000 p.m. The employer charges Rs. 2,000 p.m. as rent from the employee. The valuation of this perquisite shall be:
(A) Rs. 16,000
(B) Rs. 6,000
(C) Rs. 12,000
(D) Nil
46. The Gardner, Sweeper and the watchman are employed by the employee but their salary of Rs. 500 p.m. per person is paid by the employer. The valuation of this perquisite shall be:
(A) Rs. 4,320
(B) Rs. 18,000
(C) Rs. 1,960
(D) Rs. 6,000
47. R Ltd. owns a house which has been provided to its employee along with the Gardner. The Gardner salary paid shall be:
(A) Tax free perquisite
(B) Taxable to the extent of Rs. 120 p.m.
(C) Fully taxable
(D) Tax free perquisite but will be added to the fair rental value
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