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Income Tax and Corporate Tax MCQ Questions and Solutions with Explanations | Commerce

Income Tax and Corporate Tax MCQ Questions and answers with easy and logical explanations. Commerce provides you all type of quantitative and competitive aptitude mcq questions with easy and logical explanations. Income Tax and Corporate Tax MCQ is important for exams like B.COM, M.COM, BBA, BBM, CA, CS, CMA, CPA, CFA, UPSC, NET, Banking and other commerce department exam. Page-1 section-3

Each section contains 100 MCQs on Income Tax and Corporate Tax .
1
Residential status of an assesses can be:
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Answer & Solution
Answer: Option B
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2
Match the following.
List-I List-II
a. . . . . . . . . means accumulated wealth. 1. Flow
b. Capital is . . . . . . . . 2. Capital
c. . . . . . . . . is one, which is turned over, and in the process of being turned over yields income or loss. 3. Fund
d. Revenue is . . . . . . . . 4. Circulating Capital
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Answer & Solution
Answer: Option A
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3
X purchased a land in th PY 1997-98 for Rs. 50,000. This land was sold by him during the PY 2018-19 for Rs. 8,00,000. The fair market value of this land on 1st April 2021 was Rs. 1,20,000. It the cost inflation index for the AY 2019-20 is his capital gain for the AY 2019-20 will be
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Answer & Solution
Answer: Option A
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4
The house rent allowance (HRA) under the salary head of Income Tax Act is given by:
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Answer & Solution
Answer: Option B
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5
Which two of the following are correct about the due date of issue of the TDS certificate?
(1) Form No 16 - Annual
(2) Form No 16A - Quarterly
(3) Form No 16B - Half Yearly
(4) Form No 16C - Monthly
Choose the correct option from those below:
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Answer & Solution
Answer: Option C
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6
Objective of tax planning is
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Answer & Solution
Answer: Option B
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7
Which of the following sections provide for penalty for failure to obtain Tax Deduction Account Number or Tax Collection Account Number (as the case may be)?
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Answer & Solution
Answer: Option B
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8
A tax is meant for welfare of community. Which kind of payment is it to the government by the subject?
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Answer & Solution
Answer: Option A
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9
If the coffee is grown and cured, then the tax liability on the agricultural income is:
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Answer & Solution
Answer: Option B
Solution:
Income from coffee grown and cured by the seller in India is treated as partly agricultural and partly non-agricultural income under the Income Tax Act, 1961.

As per Rule 7B of the Income Tax Rules:
When coffee is grown and cured (but not roasted or grounded), then
65% of the income is treated as agricultural income and exempt from tax
35% of the income is treated as non-agricultural income and taxable under the Income Tax Act

This classification is based on the extent of agricultural vs. processing work involved in the production.

Therefore, the tax liability is calculated on the 35% portion of the total income earned from coffee grown and cured.
10
The value of free accommodation in Delhi provided by employer in the private sector is:
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Answer & Solution
Answer: Option B
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