Practice Test

Q1) M, a chartered accountant is employed with M Ltd., as an internal auditor and requests the employer to call the remuneration as internal audit fee. M shall be chargeable to tax for such fee under the head. Show Answer

Q2) M, who is entitled to a salary of Rs.20,000 p.m. took an advance of Rs.50,000 against the salary in the month of March 2017. The gross salary of M for assessment year 2017-18 shall be Show Answer

Q3) M, who is entitled to salary of Rs.12,000 p.m. took advance salary from his employer for the months of April and May 2017, along with salary of March, 2017 on 31-3-2017. The gross salary of M for the assessment year 2017-18 shall be Show Answer

Q4) Salary of M becomes due on 1st of next month and it is paid on 7th of that month. For the assessment year 2015-16, the salary of M shall be taken from Show Answer

Q5) M, Ltd. announced increase in D. A. on 21-3-2014 with retrospective effect from 21-3-2014 and the same were paid on 6-04-2014. The arrears of D. A. shall be taxable in the previous year. Show Answer

Q6) Un-commuted pension received by a Government employee is Show Answer

Q7) M claimed the exemption of gratuity in the past to the extent of Rs.2,50,000. He was entitled to the gratuity from the present employer amounting to Rs.2,00,000 in the previous year 2016-17. M can claim exemption to the maximum extent of Show Answer

Q8) Employee M is neither a government employee nor covered under Payment of Gratuity Act, 1972. He has completed 16 years and 8 months of service. The number of completed years considered for gratuity exemption shall be Show Answer

Q9) Compensation received on voluntary retirement is exempt under sec. 10(10 C) to the maximum extent of Show Answer

Q10) M 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 : Show Answer

Q11) Salary received by the partner from the firm in which he is a partner is taxable under the head______. Show Answer

Q12) Entertainment allowance in case of government employee is Show Answer

Q13) Income under the head salary is taxable only if there is a relationship of _______and ________ between the payer and the payee. Show Answer

Q14) 'Profit in lieu of Salary' is taxable under the head __. Show Answer

Q15) Compensation payable to an employee on termination of service is a capital receipt. It is ______. Show Answer

Q16) A Ltd. Paid salary of Rs.2,00,000 to employee M and undertakes to pay the income-tax amounting to Rs.6,120 during the previous year 2014-15 on behalf of M. The gross salary of Management shall be ________. Show Answer

Q17) Medi-claim insurance premium paid by employer on, the behalf of employee is a _______ perquisite. Show Answer

Q18) Employer's contribution to recognised provident fund during the previous year in excess of ___ of salary is taxable as salary. Show Answer

Q19) Amount notified as exempt gratuity for a non-government employee is _______. Show Answer

Q20) ___ of commuted pension received (along with Gratuity) by a non-government employee is exempt from tax. Show Answer

Q21) Leave encashment received while in service is ______. Show Answer

Q22) M a chartered accountant is employed with M Ltd., as an Manager – Taxation and requests the employer to call the remuneration as tax consultancy fee. M shall be chargeable to tax for such fee under the head income from Salaries. Show Answer

Q23) Salary of M becomes due on 1st of next month and it is paid on 7th of that month. For assessment year 2017-18, the salary of M shall be taken from April 2016 to March 17. Show Answer

Q24) The Govt. of India announced increase in the D. A. on 15-3-14 with retrospective effect from 1-5-06 and the arrears were paid on 6-4-2014. The arrears of D. A. shall be taxable in the previous year 14-15. Show Answer

Q25) Gratuity shall be fully exempt in the case of employees of Central Govt., State Govt. and Local Authorities. Show Answer

Q26) An employee is covered under Payment of Gratuity Act, 1972 . Salary for the purpose of calculating exemption u/s 10(10) shall be the average Salary of last 10 months. Show Answer

Q27) An employee is covered under Payment of Gratuity Act, 1972. If the employee has completed service of 16 years 6 months and 5 days, the number of completed years for calculating exemption u/s 10(10) shall be taken as 16 years. Show Answer

Q28) An employee is covered under Payment of Gratuity Act, 1972. For the purpose of computing 15 days salary for exemption u/s 10(10), the number of days in a month shall be taken as 30 days. Show Answer

Q29) An employee is neither a Government employee nor covered under Payment of Gratuity Act, 1972. Salary for the purpose of calculating half month for calculating exemption u/s 10(10) shall be taken as average Salary of 10 months preceding the month of retirement. Show Answer

Q30) An employee is neither a Government employee nor covered under Payment of Gratuity Act, 1972. If the employee has completed 16 years and 8 months of service, the number of completed years for calculating exemption u/s 10(10) are taken as 17yrs. Show Answer

Q31) An employee is neither a Government employee nor covered under Payment of Gratuity Act, 1972. The maximum amount of gratuity exempt u/s 10(10) shall be Rs.3,50,000. Show Answer

Q32) M who claimed the exemption of gratuity in the past to the extent of Rs.2,50,000 was entitled to the gratuity from the present / second employer amounting to Rs.2,00,000 in the previous year 2016-17. M shall be entitled to exemption to the maximum extent of Rs.2,00,000. Show Answer

Q33) Uncommutted Pension received by a Govt. employee is exempt. Show Answer

Q34) Commuted pension received shall be fully exempt in case of Government employee or an employee of local authority or an employee of statutory corporation. Show Answer

Q35) An employee was entitled to gratuity. He also got 60% of his pension commuted and received a sum of Rs.1,20,000 as commuted pension. The exemption in his case shall be Rs.80,000. Show Answer

Q36) 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 25%. Show Answer

Q37) The maximum exemption in case of leave encashment for a non-govt. employee shall be Rs.3,00,000. Show Answer

Q38) 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 on his retirement. He will be entitled to exemption to the extent of Rs.2,50,000. Show Answer

Q39) Compensation received on voluntary retirement is exempt under 10(10C) to the maximum extent of Rs. 3,50,000 Show Answer

Q40) 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 Rs.200 p.m. Show Answer

Q41) M is entitled to Hostel expenditure allowance of Rs.600 p.m. for his 3 children @ Rs.200 per child p.m. The actual expenditure is Rs.300 per child per month. The exemption in this case shall be Rs.400 p.m. Show Answer

Q42) M is entitled to a transport allowance of Rs.1,000 p.m. for commuting from his residence to office and back. He spends Rs.600 p.m. The exemption shall Rs.600 p.m. Show Answer

Q43) M is entitled to Rs.6,000 as fixed medical allowance p.a. He spends Rs.4,000 on his medical treatment and Rs.1,000 on the medical treatment of his major son not dependent on him. The exemption in this case shall be Rs.4,000. Show Answer

Q44) Entertainment allowance in case of Government employee is first included in full in gross salary and thereafter deduction is allowed from gross salary under section 16(ii). Show Answer

Q45) During the previous year, an employee was reimbursed Rs.21,000 as medical expenses incurred by him which includes Rs.7,000 spent in Govt. hospital. The taxable perquisite in this case shall be Rs.21,000. Show Answer

Q46) Employer’s contribution to statutory provident fund shall be exempt upto 12% of salary. Show Answer

Q47) Interest credited to statutory provident fund shall be fully taxable. Show Answer

Q48) Tea and snacks are provided to employees during office hours. The value of this perquisite shall be Nil, only if the cost is upto Rs.50 per head per day. Show Answer

Q49) Professional tax of Rs.2,500 payable by the employee but paid by the employer is an exempt perquisite. Show Answer