Direct Tax MCQs and Notes

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📊 Direct Tax
Q. Municipal valuation of the house is Rs.1,20,000, fair rent 1,40,000, standard rent Rs.1,30,000 and actual rent received or receivable is Rs.1,25, 000.The gross annual value in this case shall be ______
  • (A) 1,30,000
  • (B) 1,25,000
  • (C) 1,40,000
  • (D) 1,60,000
💬 Discuss
✅ Correct Answer: (C) 1,40,000
📊 Direct Tax
Q. A has two house properties. Both are self-occupied. The annual value of ____
  • (A) Both houses shall be nil
  • (B) One house shall be nil
  • (C) No house shall be nil
  • (D) Single house
💬 Discuss
✅ Correct Answer: (B) One house shall be nil
📊 Direct Tax
Q. Municipal valuation of the house is Rs.1,00,000 fair rent Rs.1,20,000, fair rent Rs.1,20,000, standard rent Rs.1,10,000 and actual rent received or receivable is Rs.1,40,000. The gross annual value in this case shall be ____________
  • (A) 1,30,000
  • (B) 1,25,000
  • (C) 1,40,000
  • (D) 1,35,000
💬 Discuss
✅ Correct Answer: (A) 1,30,000
📊 Direct Tax
Q. M.has taken a house on rent and sublets the same to A, income of M from such house property shall be taxable under the head _____________
  • (A) Income from house property
  • (B) Income from other sources
  • (C) Business income
  • (D) Income
💬 Discuss
✅ Correct Answer: (B) Income from other sources
📊 Direct Tax
Q. Leave travel concession is _________
  • (A) Exempt up to lower of the amount actually spent or the prescribed limits.
  • (B) Exempt fully to the extent actually spent
  • (C) Exempt to the extent of lower of allowance received or the lump sum amount prescribed, irrespective of actual expenditure.
  • (D) Fully taxable
💬 Discuss
✅ Correct Answer: (A) Exempt up to lower of the amount actually spent or the prescribed limits.
📊 Direct Tax
Q. Children education allowance is ____________
  • (A) Exempt upto lower of the amount actually spent or the prescribed limits.
  • (B) Exempt fully to the extent actually spent or the prescribed limits
  • (C) Exempt to the extent of lower of allowance received or the lump sum amount prescribed, irrespective of actual expenditure.
  • (D) Fully taxable
💬 Discuss
✅ Correct Answer: (C) Exempt to the extent of lower of allowance received or the lump sum amount prescribed, irrespective of actual expenditure.
📊 Direct Tax
Q. Pension received by an employee of the central or state government who has been awarded “Param Vir Chakra” _____________
  • (A) Is taxable as income from salary
  • (B) Is exempt from tax
  • (C) Is taxed after deducting Rs.15,000 or 1/3 whichever is lower
  • (D) Is taxable as income from other sources
💬 Discuss
✅ Correct Answer: (B) Is exempt from tax
📊 Direct Tax
Q. Entertainment allowance in case of government employee is _________________
  • (A) Fully exempt
  • (B) Fully taxable
  • (C) Exempt up to certain limits mentioned in sec.16
  • (D) First included in full in gross salary and thereafter deduction allowed from gross salary under section 16 (ii)
💬 Discuss
✅ Correct Answer: (D) First included in full in gross salary and thereafter deduction allowed from gross salary under section 16 (ii)
📊 Direct Tax
Q. M is entitled to children education allowance @80 p.m per child for 3 children amounting Rs.240p.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.250 pm
💬 Discuss
✅ Correct Answer: (B) Rs.160 p.m
📊 Direct Tax
Q. Compensation received on voluntary retirement is exempt under sec.10 (10c) to the maximum extent of ___________
  • (A) Rs.2,40,000
  • (B) Rs.3,00,000
  • (C) Rs.5,00,000
  • (D) Rs.6,00,000
💬 Discuss
✅ Correct Answer: (C) Rs.5,00,000

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