Multiple choice questions on taxation with answers are helpful to know the distinction between human judgments from the conceptual subject. It gives 30 percent of marks to the old syllabus writers and new syllabus writers. Let me see direct tax multiple choice questions with answers. Before getting into the MCQ questions, go through a description of taxation, and the difference between direct tax and indirect tax.
What is taxation?
It is known from the global history, that foreign governments have collected uniquely around 10 percent as income tax before the First World War. After that period, tax rates got reformist. In modern terms, taxation is imposed by the government for the transactions which are event-based and money-based. Taxes in India were collected by the state and central government. The payment process shall be direct and indirect. The revenue needed for public expenditure has been satisfied as tax. Income tax, wealth tax, and corporate tax are the taxes that fall under direct taxes. Examples of indirect taxes are Goods and services tax, value-added tax, and sales tax. The evasion of tax payment is culpable as per the law in India.
Direct tax and indirect tax In India
The types of income taxes collected directly in India are corporate tax, fringe benefits tax, minimum alternate tax, securities transaction tax, capital gains tax, wealth tax, tax deducted at source, and tax collected at source. Direct taxes are the sources of revenue; it curbs inflation and reduces inequalities. On the other hand, the advantages of the indirect taxes are it is easy to collect and creates the responsibility of every individual for nation-building.
There are also challenges associated with direct taxes as it reduces the investment and indirect taxation has its impact over the prices of goods. Kept aside from such ups and downs, taxation makes the country to prosper with money available in the hands of the citizens. Corporate tax is also applicable to the foreign corporations whose income is from India and is deemed to add as Indian income. Collecting income tax from different sources is beneficial for the growth of the country.
Income tax multiple-choice questions
Income tax questions and answers are crucial to know the latest amendments. The services of chartered accountant work with many counterparts of an organization such as financial management, labor laws, corporate law, financial restructuring, taxation, accounting audits, investigation, management accounting, assurance services, share valuation, cost accountancy, and investment planning. If the student gets an offer as a taxation audit executive, then he needs to have intensive knowledge about taxation. Taxation is the basic level subject to understand the income, savings, investment, and price movement. Find below the example MCQ questions to start the preparation.
- X has a list of the following deductions as an income taxpayer. Mention which among these benefits do not apply to him?
- Standard deduction of 30 % of gross annual value while computing her income from house property in Bangalore, India
- Tax rebate of NR 12,500 from tax payable on her total income of INR 340,000
- Deduction for donation made by her to Prime Minister’s National Relief Fund
- Interest earned by her on the NRO savings account.
As the standard deduction is to calculate out of net annual value, the statement gives a false figure. So, point A does not apply to him. ‘B’ is about the rebate that applies to a resident with less than 5, 00,000 of total income. The third deduction is also allowed. The fourth deduction is allowed with an upper limit of 10,000 deductions.
- Y is interested in sports events and is enthusiastic about contributing to writing an article about the Soccer game. In what percentage the freelance income of Mr.Y is taxable?
- Normal tax slab rates
As per the tax rate for the financial year 2019 to 2020, freelance income is given treatment in the same way as regular income. So, up to 2.5 Lakhs, the tax rate is nil, from 2.5 to 5 Lakhs it is 5 percent, from 5 to 10 Lakhs it is 20 percent, and from 10 Lakhs and above it is 30 percent.
- Which of the following does not give literal meaning as a “person” according to the income tax section 2(31)?
- An individual
- A company
- A company Hindu undivided Family
- A minor
Answer: D. A minor
- The tax applied to manage the profits relating to high tax countries and low tax countries in case of international dealings is known as
- Transfer price
- Price fluctuation
- Tax deduction
- Primary adjustment