1. What is the primary purpose of taxation?

A. To punish businesses
B. To control inflation
C. To raise revenue for the government
D. To support monopolies

Answer: C. To raise revenue for the government

2. 2. Which of the following is a direct tax?

A. Sales tax
B. Customs duty
C. Income tax
D. Value Added Tax (VAT)

Answer: C. Income tax

3. The authority to levy taxes in India is derived from which

document?
A. Indian Penal Code
B. Finance Act
C. Constitution of India
D. Income Tax Act, 1961

Answer: C. Constitution of India

4. Who is responsible for collecting income tax in India?

A. Reserve Bank of India
B. Central Board of Indirect Taxes and Customs
C. Central Board of Direct Taxes (CBDT)
D. State Government

Answer: C. Central Board of Direct Taxes (CBDT)

5. Goods and Services Tax (GST) was implemented in India on:

A. 1st April 2016
B. 1st July 2017
C. 1st January 2017
D. 1st March 2016

Answer: B. 1st July 2017

6. GST in India is a:
A. Direct Tax
B. Single-stage tax
C. Destination-based tax
D. Income-based tax

Answer: C. Destination-based tax

7. Which of the following is not taxed under GST in India?
A. Alcohol for human consumption
B. Mobile phones
C. Restaurants
D. Cement

Answer: C. Destination-based tax

8. The Finance Commission is constituted every:

A. 3 years
B. 4 years
C. 5 years
D. 10 years

Answer: C. 5 years

9. What is the maximum rate prescribed under GST law (excluding

cess)?
A. 18%
B. 28%
C. 30%
D. 35%

Answer: B. 28%

10. Which Article of the Indian Constitution deals with the distribution
of taxes between the Centre and the States?
A. Article 265
B. Article 246
C. Article 270
D. Article 280

Answer: C. Article 270

11. Residential status in India is determined for:

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

Answer: C. Previous year

12. Which section of the Income Tax Act, 1961 deals with the
residential status of individuals?
A. Section 2(31)
B. Section 6
C. Section 4
D. Section 10
Answer: B. Section 6
13. An individual is said to be a resident in India if he stays in India
for:
A. At least 182 days in the financial year
B. At least 60 days in the financial year and 365 days in preceding 4 years
C. Either A or B
D. Only B

Answer: C. Either A or B

14. A person is called a resident but not ordinarily resident (RNOR) if

he satisfies:
A. Both basic conditions and both additional conditions
B. One basic and one additional condition
C. One basic but none of the additional conditions
D. Basic condition only

Answer: C. One basic but none of the additional conditions

15. Additional conditions to determine resident and ordinarily

resident (ROR) include:
A. Resident in at least 2 out of 10 previous years
B. Stayed in India for at least 730 days in the last 7 years
C. Both A and B
D. Stayed in India for 365 days in the last 4 years

Answer: C. Both A and B

16. A Resident and Ordinarily Resident (ROR) is liable to pay tax in

India on:
A. Only Indian income
B. Only foreign income
C. Both Indian and global income
D. Only agricultural income

Answer: C. Both Indian and global income

17. A Non-Resident (NR) is liable to pay tax in India on:

A. Global income
B. Income received or accrued in India
C. Foreign income remitted to India
D. Exempt income only

Answer: B. Income received or accrued in India

18. Agricultural income in India is:

A. Fully taxable
B. Partially taxable
C. Fully exempt from tax
D. Taxable at special rates
 Answer: C. Fully exempt from tax (u/s 10(1))

19. Which section of the Income Tax Act deals with agricultural
income?
A. Section 2(1A)
B. Section 10(1)
C. Section 80C
D. Section 14

Answer: B. Section 10(1)

20. Which of the following activities is not considered agricultural

income?
A. Growing wheat and selling it in the market
B. Income from fisheries
C. Rent received from agricultural land
D. Sale of self-grown crops

Answer: B. Income from fisheries

21. Agricultural income is considered for tax calculation when:

A. It exceeds ₹5,000
B. It exceeds ₹1,00,000
C. It is received outside India
D. Never considered for tax

Answer: A. It exceeds ₹5,000

22. Which of the following states in India has the power to levy tax on
agricultural income?
A. Central Government
B. State Governments
C. Both Central and State
D. Reserve Bank of India

Answer: B. State Governments

23. What is the tax treatment of income derived from saplings or

seedlings grown in a nursery?
A. Fully taxable
B. Partially taxable
C. Fully exempt as agricultural income
D. Exempt only in rural areas

Answer: C. Fully exempt as agricultural income

24. Which of the following is not a condition for classifying income as
agricultural income?
A. Land must be situated in India
B. Income must be from land used for agricultural purposes
 C. Income must be earned by a resident individual
D. Income must be derived from the basic operation on land
Answer: C. Income must be earned by a resident individual
25. Clubbing provisions apply to agricultural income when:
A. Agricultural income is earned by a minor child
B. Agricultural income exceeds ₹2,50,000
C. Agricultural land is jointly owned
D. Agricultural produce is sold abroad

Answer: A. Agricultural income is earned by a minor child

26. Which of the following is a component of 'Salary' under the

Income Tax Act?
A. Interest on savings
B. House Rent Allowance (HRA)
C. Dividend income
D. Capital gains

Answer: B. House Rent Allowance (HRA)

27. Salary is taxable on which basis under the Income Tax Act?
A. Receipt basis only
B. Accrual basis only
C. Earlier of accrual or receipt
D. On due date

Answer: C. Earlier of accrual or receipt

28. Which section of the Income Tax Act deals with 'Income from
Salary'?
A. Section 10
B. Section 15 to 17
C. Section 24
D. Section 80C

Answer: B. Section 15 to 17

29. Which of the following is not taxable under the head 'Salaries'?
A. Gratuity received by a government employee on retirement
B. Bonus received from employer
C. Commission as part of salary
D. Advance salary

Answer: A. Gratuity received by a government employee on retirement

30. Which of the following is fully taxable under salary?

A. Leave Travel Allowance
B. Provident Fund employer contribution
C. City Compensatory Allowance
D. Gratuity to non-government employees
 Answer: C. City Compensatory Allowance

31. Perquisites are taxable in the hands of:

A. Government employees only
B. Non-government employees only
C. All employees (as perquisites defined in Sec 17)
D. Self-employed persons

Answer: C. All employees

32. Standard deduction under salary income for FY 2024-25 is:

A. ₹40,000
B. ₹50,000
C. ₹60,000
D. ₹75,000

Answer: B. ₹50,000

33. Which of the following is an example of a tax-free perquisite?

A. Rent-free accommodation
B. Free use of office car for personal use
C. Medical allowance
D. Laptop provided by employer for official use

Answer: D. Laptop provided by employer for official use

34. Salary from more than one employer is:

A. Taxed under Income from Other Sources
B. Taxable under Business Profession
C. Taxable under Salary head
D. Not taxable at all

Answer: C. Taxable under Salary head

35. Who is responsible to deduct TDS under Section 192?

A. Employer
B. Employee
C. Contractor
D. Auditor

Answer: A. Employer

36. When should TDS on salary be deposited with the government?

A. By 15th of the next month
B. By 7th of the next month
C. By end of the financial year
D. Quarterly

Answer: B. By 7th of the next month

37. Which of the following deductions is not available under the new tax
regime?
A. Section 80C
B. Section 80CCD (2)
C. Standard Deduction
D. Rebate u/s 87A

Answer: A. Section 80C

38. Which deduction is allowed under both old and new regime?
A. 80D (Mediclaim)
B. 80E (Education Loan)
C. 80CCD (2) (Employer NPS contribution)
D. 80TTA

Answer: C. 80CCD (2)

39. Which of the following incomes is exempt under Section 10(14)?

A. Pension
B. Conveyance Allowance for official duty
C. House Rent Allowance (HRA)
D. Gratuity

Answer: B. Conveyance Allowance for official duty

40. What is the default tax regime from FY 2023-24 onwards?

A. Old Regime
B. New Regime (Sec 115BAC)
C. Optional regime
D. Presumptive taxation

Answer: B. New Regime (Sec 115BAC)

41. Which of the following exemptions is not allowed in the new regime?
A. Leave Encashment
B. HRA
C. Gratuity
D. Employer’s contribution to NPS

Answer: B. HRA

42. Which of the following is NOT considered a condition for charging

income under house property?
a) The property must consist of buildings or lands appurtenant thereto
b) The assessee must be the owner
c) The property should be used for business or profession of the assessee
d) The property must not be used for personal purposes

Answer: D) The property must not be used for personal purposes

43. How is the ‘Annual Value’ of a self-occupied house property determined?
a) Higher of Fair Rent or Municipal Value
b) Actual Rent Received
c) Standard Rent
d) Nil

Answer: D) Nil

44. Maximum deduction allowed under Section 24(b) for interest on

loan for self-occupied property is:
a) ₹1,00,000
b) ₹1,50,000
c) ₹2,00,000
d) ₹2,50,000

Answer: C) ₹2,00,000
45. Standard deduction under Section 24(a) is allowed at what rate of
Net Annual Value?
a) 20%
b) 25%
c) 30%
d) 50%
Answer: C) 30%

46. Unrealized rent can be deducted from Gross Annual Value if:
a) The tenant left the property
b) The rent was never expected to be paid
c) Conditions specified under Rule 4 are satisfied
d) Rent was due for less than 3 months
Answer: C) Conditions specified under Rule 4 are satisfied

47. For a property let out throughout the year, Gross Annual Value is:
a) Higher of Expected Rent or Actual Rent Received
b) Lower of Expected Rent or Actual Rent Received
c) Actual Rent Received only
d) Expected Rent only
Answer: A) Higher of Expected Rent or Actual Rent Received

48. Which of the following incomes is exempt under the head “Income
from House Property”?
a) Rental income from commercial property
b) Annual value of one self-occupied house
c) Rental income of multiple houses
d) Sub-letting income

Answer: B) Annual value of one self-occupied house

49. If a loan is taken for repair of house property, the maximum
deduction for interest is:
a) ₹30,000
b) ₹1,00,000
c) ₹2,00,000
d) ₹50,000
Answer: A) ₹30,000

50. A notional rent is chargeable to tax in case of:

a) One self-occupied property
b) Let-out property
c) Second self-occupied property
d) Vacant property owned for personal use
Answer: C) Second self-occupied property

51. Under which section is income from business or profession

chargeable to tax?
a) Section 15
b) Section 17
c) Section 28
d) Section 24
Answer: C) Section 28

52. Which of the following is not a business expense allowable as

deduction?
a) Salary paid to employees
b) Personal expenses of the proprietor
c) Rent paid for business premises
d) Interest on business loan
Answer : B ) Personal expenses of the proprietor

53. Depreciation on business assets is allowed under which section?

a) Section 30
b) Section 31
c) Section 32
d) Section 36
Answer: B) Section 32

54. Which of the following is allowed as deduction under Section 37(1)?

a) Capital expenditure
b) Personal expenditure
c) General business expenditure not covered under any specific section
d) Income tax paid

Answer: C) General business expenditure not covered under any specific section
55. Presumptive taxation under Section 44AD applies to which of the following?
a) Companies
b) LLPs
c) Individual/HUF engaged in eligible business
d) Doctors and Lawyers

Answer: C) Individual/HUF engaged in eligible business

56. Under presumptive taxation (Section 44AD), income is presumed at what

percentage of turnover?
a) 6% or 8%
b) 10%
c) 5%
d) 12%

Answer: A) 6% or 8%

57. Disallowance under Section 40A (3) applies if cash payment exceeds:
a) ₹10,000 in a day to a person
b) ₹20,000 in a day to a person
c) ₹5,000 in total
d) ₹1,00,000 in a year

Answer: A) ₹10,000 in a day to a person

58. Remuneration to partners is allowed as deduction under which section?

a) Section 28
b) Section 37
c) Section 40(b)
d) Section 80G

Answer: C) Section 40(b

59. Medical professionals maintaining regular books of account are required to

maintain which additional document?
a) Cash flow statement
b) Daily case register
c) Audit report
d) GST returns

Answer: B) Daily case register

60. Tax audit is mandatory under Section 44AB if turnover exceeds:

a) ₹1 crore
b) ₹2 crore
c) ₹5 crore
d) ₹10 crore (with digital transactions)

Answer: D) ₹10 crore

61. Capital gain arises from the transfer of which of the following?
a) Stock-in-trade
b) Personal car
c) Capital asset
d) Fixed deposit

Answer: C) Capital asset

62. Which of the following is NOT a capital asset under the Income Tax Act?
a) Shares and securities
b) Land and building
c) Jewellery
d) Stock-in-trade

Answer: D) Stock-in-trade

63. Long-term capital gains arise when a listed equity share is held for more than:
a) 12 months
b) 24 months
c) 36 months
d) 6 months

Answer: A) 12 months

64. 4. What is the rate of tax on long-term capital gains on listed equity shares
exceeding ₹1 lakh (u/s 112A)?
a) 5%
b) 10%
c) 15%
d) 20%

Answer: B) 10%

65. What is the holding period for classification of unlisted land/building as long-term
capital asset?
a) More than 12 months
b) More than 24 months
c) More than 36 months
d) More than 48 months

Answer: B) More than 24 months

66. Which of the following is eligible for exemption under Section 54?
a) Sale of car
b) Sale of rural agricultural land
c) Sale of residential house property
d) Sale of jewellery
 Answer: C) Sale of residential house property

67. Exemption under Section 54EC is available if capital gains are invested in:
a) Residential house
b) Mutual funds
c) NHAI/REC bonds
d) Gold

Answer: C) NHAI/REC bonds

68. What is the maximum investment limit in 54EC bonds for exemption in a financial
year?
a) ₹25 lakh
b) ₹10 lakh
c) ₹5 crore
d) ₹50 lakh

Answer: D) ₹50 lakh

69. Which of the following transactions is NOT regarded as a 'transfer' under capital
gains?
a) Sale of flat
b) Gift to relative
c) Exchange of property
d) Transfer under will or inheritance

Answer: D) Transfer under will or inheritance

70. To claim exemption under Section 54, the capital gain should be invested in:
a) New car
b) New residential house property
c) Commercial shop
d) Fixed deposit

Answer: D) New residential house property

71. The time limit for purchase of a new house to claim exemption under Section 54 is:
a) Within 6 months before or after transfer
b) Within 2 years before or after transfer
c) Within 1 year before or 2 years after transfer (purchase), 3 years (construction)
d) Within 1 year before and after transfer

Answer: C) Within 1 year before or 2 years after transfer (for purchase), 3

years (for construction)
72. To claim exemption under Section 54F, the taxpayer must not own more than:
a) One house property (excluding new one)
b) Two house properties
c) Three house properties
d) No restriction

Answer: A) One house property (excluding new one)

73. Section 54EC requires investment in capital gains bonds within how many months
from date of transfer?
a) 3 months
b) 6 months
c) 9 months
d) 12 months

Answer: B) 6 months

74. Which of the following is true regarding exemption under Section 54GB?
a) Applies only to partnership firms
b) Relates to investment in residential house
c) Relates to investment in equity shares of eligible start-up
d) Has no time limit

Answer: C) Relates to investment in equity shares of eligible start-up

75. Which of the following income is taxable under the head "Income from Other
Sources"?
a) Salary
b) Business income
c) Dividend from a foreign company
d) Agricultural income

Answer: C) Dividend from a foreign company

76. Interest on fixed deposits is taxable under:

a) Income from Salary
b) Income from Business
c) Income from Other Sources
d) Exempt income

Answer: C) Income from Other Sources

77. Gifts received by an individual from a non-relative are exempt up to what amount
in a financial year?
a) ₹10,000
b) ₹25,000
c) ₹50,000
d) ₹1,00,000

Answer: C) ₹50,000

78. Which of the following is not taxable under "Income from Other Sources"?
a) Winnings from lotteries
b) Rent from letting of machinery
c) Dividend from Indian company
d) Agricultural income from rural area

Answer: D) Agricultural income from rural area

79. Winnings from lotteries, horse races, card games, etc., are taxed at what rate (u/s
115BB)?
a) Normal slab rate
b) 10%
c) 20%
d) 30% (plus surcharge & cess)

Answer: D) 30% (plus surcharge & cess)

80. If a closely held company receives share application money in excess of fair market
value (FMV), it is taxable under which section?
a) Section 68
b) Section 69
c) Section 56(2) (vii b)
d) Section 80C

Answer: C) Section 56(2) (vii b)

81. Income from letting out plant & machinery, where it is not the main business, is
taxable under:
a) Income from Business
b) Capital Gains
c) Income from Other Sources
d) House Property

Answer: C) Income from Other Sources

82. Which of the following receipts are taxable under Section 56(2)(x)?
a) Salary arrears
b) Gift of immovable property without consideration
c) Bonus shares from listed company
d) Interest on savings account
 Answer: B) Gift of immovable property without consideration

83. Family pension received by the legal heir is taxable under:

a) Salary
b) House property
c) Capital gains
d) Income from Other Sources

Answer: D) Income from Other Sources

84. Agricultural income from foreign land is taxable under:

a) Exempt income
b) Salary
c) Income from Other Sources
d) Capital Gains

Answer: C) Income from Other Sources

85. Maximum deduction allowed under Section 80C is:

a) ₹1,00,000
b) ₹1,50,000
c) ₹2,00,000
d) ₹2,50,000

Answer: B) ₹1,50,000

86. Which of the following is not eligible for deduction under Section 80C?
a) Public Provident Fund (PPF)
b) National Savings Certificate (NSC)
c) Fixed deposit for 2 years
d) Life Insurance Premium

Answer: C) Fixed deposit for 2 years

87. Deduction under Section 80D is available for:

a) Donations to political parties
b) Tuition fees
c) Medical insurance premium
d) Repayment of housing loan

Answer: C) Medical insurance premium

88. What is the maximum deduction under Section 80D for senior citizens (60+)?
a) ₹25,000
b) ₹30,000
c) ₹50,000
d) ₹75,000

Answer: C) ₹50,000
89. Deduction under Section 80G is available for:
a) Life insurance premium
b) Interest on savings account
c) Donations to approved charitable institutions
d) Education loan repayment

Answer: C) Donations to approved charitable institutions

90. Deduction under Section 80E is for:

a) Interest on home loan
b) Repayment of personal loan
c) Interest on education loan
d) Payment of rent

Answer: C) Interest on education loan

91. Section 80TTA provides deduction up to ₹10,000 for:

a) FD interest
b) NSC interest
c) Interest on savings account
d) Post Office RD interest

Answer: C) Interest on savings account

92. Deduction under Section 80GG is for:

a) House Rent Allowance (HRA)
b) Rent paid where no HRA is received
c) Home loan principal
d) Home loan interest

Answer: B) Rent paid where no HRA is received

93. Under Section 80CCD(1B), additional deduction is allowed for:

a) Senior citizen savings scheme
b) Sukanya Samriddhi Yojana
c) NPS contribution (up to ₹50,000)
d) Health check-up

Answer: C) NPS contribution (up to ₹50,000)

94. Section 80U provides deduction to:

a) Individuals with dependent who is disabled
b) Individual taxpayer who is disabled
c) Senior citizens only
d) Widow pensioners

Answer: B) Individual taxpayer who is disabled

95. Loss under the head "House Property" can be set off against:
A. Only against income from house property
B. Only against salary income
C. Income under any other head (except casual income)
D. Cannot be set off

Answer: C. Income under any other head (except casual income)

96. Business loss can be carried forward for how many assessment years?
A. 4 years
B. 6 years
C. 8 years
D. Indefinitely

Answer: C. 8 years

97. Short-term capital loss can be set off against:

A . Only short-term capital gains
B. Only long-term capital gains
C. Both short-term and long-term capital gains
D. Cannot be set off

Answer: C. Both short-term and long-term capital gains

98. Long-term capital loss can be set off against:

A .Short-term capital gains
B. Salary income
C. Only long-term capital gains
D. Any income

Answer: C. Only long-term capital gains

99. Loss from speculation business can be set off against:

A. Any business income
B. Speculation business income only
C. Capital gains
D. Any income other than salary

Answer: B. Speculation business income only

100. Loss under the head "Income from House Property" can be carried forward for:
A. 4 years
B. 6 years
C. 8 years
D. Indefinitely

Answer: C. 8 years

101. Loss under the head "Capital Gains" can be carried forward only if:
A. Income tax return is filed on time
B. Income tax return is not filed
C. It is set off in the same year
D. It is speculative in nature

Answer: A. Income tax return is filed on time

102. Unabsorbed depreciation can be carried forward for:

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

Answer: D. Indefinitely

103. Can losses from lottery, crossword puzzles, etc., be set off against any income?
A. Yes, against any income
B. Yes, but only against casual income
C. No, such losses are not allowed to be set off
D. Only against capital gains

Answer: C. No, such losses are not allowed to be set off

104. Loss from the activity of owning and maintaining race horses can be set off
against:
A. Any income
B. Only income from race horses
C. Salary income
D. Capital gains

Answer: B. Only income from race horses

105. What is the full form of GST?

A. Goods and Sales Tax
B. Goods and Services Tax
C. General Sales Tax
D. Government Sales Tax

Answer: B. Goods and Services Tax

106. GST is a ________ based tax on the consumption of goods and services.
A. Origin
B. Destination
C. Production
D. Manufacturing

Answer: B. Destination

107. Who is responsible for collecting CGST and SGST?

A. Central Government only
B. State Government only
C. Both Central and State Governments
D. None of the above

Answer: C. Both Central and State Governments

108. Which Article of the Indian Constitution empowers the Government to levy
GST?
A. Article 265
B. Article 246A
C. Article 370
D. Article 301

Answer: B. Article 246A

109. What is the maximum GST slab in India?

A. 18%
B. 20%
C. 28%
D. 30%

Answer: C. 28%

110. Which body governs GST laws in India?

A. RBI
B. SEBI
C. GST Council
D. Finance Commission

Answer: C. GST Council

111. Input Tax Credit (ITC) under GST means:

A. Credit for exports
B. Refund of customs duty
C. Credit for tax paid on purchases
D. Deduction for income tax

Answer: C. Credit for tax paid on purchases

112. Which of the following is exempt under GST?
A. Alcohol for human consumption
B. Petroleum crude
C. Electricity
D. All of the above

Answer: D. All of the above

113. Which of the following is NOT eligible for Input Tax Credit under GST?
A. Goods used for personal consumption
B. Raw materials used in production
C. Capital goods used for business
D. Services used for business promotion

Answer: A. Goods used for personal consumption

114. A registered person can claim ITC only if:

A. They have a valid tax invoice or debit note
B. The supplier has filed their GST returns
C. Goods or services are received
D. All of the above

Answer: D. All of the above

115. What is the time limit to claim ITC for a financial year?
A. 30th April of the following year
B. 30th June of the following year
C. 30th September of the following year or date of filing annual return, whichever is
earlier
D. No time limit

Answer: C. 30th September of the following year or date of filing annual return,
whichever is earlier

116. Can Input Tax Credit be claimed on goods lost, stolen, destroyed, or given as
gifts?
A. Yes, always
B. No, never
C. Only with police report
D. Only with supplier’s consent

Answer: B. No, never

117. Which form is used to report eligible ITC in GST returns?

A. GSTR-1
B. GSTR-2B
C. GSTR-3B
D. GSTR-9

Answer: C. GSTR-3B
118. ITC can be claimed only if the recipient:
A. Is registered under GST
B. Uses the goods/services for taxable supplies
C. Pays the value of supply along with tax within 180 days
D. All of the above

Answer: D. All of the above

119. What happens if the recipient fails to pay the supplier within 180 days?
A. No change
B. ITC must be reversed
C. Supplier gets blocked
D. Tax rate increases

Answer: B. ITC must be reverse

120. Is ITC available on motor vehicles under GST?

A. Yes, for all purposes
B. No, in any case
C. Yes, only for transport, driving training, and passenger supply services
D. Only for private use

Answer: C. Yes, only for transport, driving training, and passenger supply