MCQ on Income from Salary
Income from Salary MCQ with answers
Income Tax MCQs Multiple Choice Questions with Answers
(2022 – 23)
In this
page you get MCQ on Income From Salary which are asked
in various exams of Mumbai University, Dibrugarh University, Gauhati University,
Kolkata University and Assam University.
Also,
these questions are useful for B. Com exams of various universities covered
under CBCS pattern.
Also, these income tax objective type questions and answers are also useful for NTA Net Commerce Exam, CMA, CA, CS and other competitive exams.
Meaning of Salary under Sec. 17 of the Income Tax Act 1961
"Salary" is the remuneration
received by or accruing to an individual, periodically, for service rendered as
a result of an express or implied contract. The actual receipt of salary in the
previous year is not material as far as its taxability is concerned. The
existence of the employer-employee relationship is the essential condition for
taxing a particular receipt under the head “salaries.”
For the purpose of Income Tax, “Salary” includes [Sec. 17(1)]:
a)
Wages
b)
Annuity or pension
c)
Gratuity
d)
Fees, Commission, perquisites or profits in lieu of salary
e)
Advance of Salary
f)
Receipt from Provident Fund
g)
Contribution of an employer to a Recognised Provident Fund in
excess of the prescribed limit
h)
Leave Encashment
i)
Compensation as a result of variation in Service contract etc.
MCQ on Income from Salary
Income from Salary MCQ with answers
Income Tax MCQs Multiple Choice Questions with Answers
(2022 – 23)
Choose the Correct Options
1.
Income from salary includes:
a) Basic payments
b) Allowances
c) Perquisites
d) All of the above
Ans: d) All of the above
2.
Which of the following components of salary is fully taxable?
a) Overtime payments
b) Bonus
c) Dearness Allowance
d) All of the above
Ans: d) All of the above
3. Dearness allowance is taxable in the hands of:
a) Govt. employees.
b) Non Govt. employees.
c) All employees.
d) None of these.
Ans: c) All employees.
4. Deduction
on account of entertainment allowance is allowed to:
a) Non-government employees
b) Government
employees
c) Both the above
d) None of the above
Ans: b) Government employees
5. Entertainment allowance to govt. employees is exempted, which is
least of 20% of basic salary or actual allowance or:
a) Rs. 1,000.
b) Rs. 2,000.
c) Rs. 20,000.
d) Rs. 5,000.
Ans: d) Rs. 5,000.
6. The daily allowance received by a Member of the
Parliament is
a) Taxable.
b) Exempt.
c) Included
in total income for rate purposes.
Ans: b) Exempt.
7. Education allowance is exempted for a maximum of:
a) One child.
b) Two children.
c) Three children.
d) Four children.
Ans: b) Two children.
8. Children education allowance is exempted up to:
a) Rs. 200 p.m. per child.
b) Rs. 300 p.m. per child.
c) Rs. 100 p.m. per child.
d) Rs. 400 p.m. per child.
Ans: c) Rs. 100 p.m. per child.
9. Hostel expenditure allowance is exempted up to:
a) Rs. 300 per month per child.
b) Rs. 200 per month per child.
c) Rs. 150 per month per child.
d) Rs. 250 per month per child.
Ans: a) Rs. 300 per month per child.
10. Which
of the following allowances are fully exempted?
a) Allowance to member of UPSC
b) Allowance to teachers or Professors from
SAARC member states
c) House Rent allowance to Judges
d) All of the above
Ans: Ans: d) All of the above
11.
Which of the following allowances are fully taxable?
a) Marriage Allowance
b) Deputation Allowance
c) Entertainment allowance for
non-government employees
d) All of the above
Ans: d) All of the above
Also Read: Income Tax Chapterwise MCQs (2022 - 2023)
1. 700+ Income Tax MCQs 2022-23 [Free PDF], Income Tax Laws and Practice MCQs
2. 50+ MCQ on Residential Status, Income Tax MCQs 2022 - 23 [Free PDF]
3. 100+ MCQs on Income From Salary, Income Tax MCQs 2022 - 23 [Free PDF]
4. 50 Income from House Property MCQ, Income Tax MCQs 2022 - 23 [Free PDF]
6. 50 MCQ on Capital Gains, Income Tax MCQs 2022 - 23 [Free PDF]
8. 25+ Income Tax Deductions MCQs (80C to 80 U), Income Tax MCQs 2022 – 23 [Free PDF]
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12.
List out partly exempted allowance
|
Name of allowance |
Exemption limit |
|
Children
education allowance Hostel
expenditure allowance Transport
allowance Transport allowance Tribal area
allowance Underground
allowance |
Rs. 100 per
month per child for a maximum of 2 Rs. 300 per
month per child for a maximum of 2 Rs. 1600 per
month for normal employees and Rs. 3200 per
month for physically handicapped Rs. 200 per
month Rs. 800 p.m. |
|
Uniform,
academic research and helper allowance |
Exempted upto
actual expenditure |
13. Salary paid by an employer out of capital will be:
a) A revenue receipt in the
hands of employee.
b) A capital receipt in the
hands of employee.
c) A casual receipt.
d) None of the above.
Ans: a) A revenue receipt in the hands of employee.
14. Salary paid by an Indian company to its employees working in one
of its branches outside India is:
a) Salary accruing in India.
b) Salary deemed to accrue in
India.
c) Salary accruing outside
India.
d) None of these.
Ans: a) Salary accruing in India.
15. Which of the following is not included in salary income?
a) Commuted pension.
b) Un commuted pension.
c) Family pension.
d) Leave salary.
Ans: c) Family pension.
16. In case of Tax free salary:
a) Tax is to be paid by
employer.
b) No tax is payable on such
salary.
c) Tax is to be paid by the
employee.
d) Govt. itself pays the tax at
a future date.
Ans: a) Tax is to be paid by employer.
17. Exempted limit of HRA in metropolitan cities is :
a) 50% of salary.
b) 40% of salary.
c) 15% of salary.
d) None of these.
Ans: a) 50% of salary.
18. A Perquisite or perk is:
a) Cash paid by employer to
employee.
b) Facility provided by
employer to employee.
c) Amount credited to
employees.
d) None of these accounts.
Ans: b) Facility provided by employer to employee.
19. Perquisites to employees are covered in the I.T. Act 1961 under:
a) Sec 2a.
b) Sec. 17b.
c) Sec 28a.
d) Sec. 36 c.
Ans: b) Sec. 17b.
20. An employee is deemed as specified employee if he is a director in
the company or has substantial in the company or his chargeable salary per
annum exceeds.
a) Rs. 5,00,000.
b) Rs. 2,00,000.
c) Rs. 1,00,000.
d) Rs. 50,000.
Ans: d) Rs. 50,000.
21. Value of rent free accommodation in case of Govt. employee shall
be taxable up to:
a) 15% of employee’s salary.
b) 7.5% of employee’s salary.
c) License fee fixed by Govt.
d) 10% of employee’s salary.
Ans: c) License fee fixed by Govt.
22. Value of rent free accommodation a house owned by employer in case
of non- Govt. employees with above 25 lakhs population
is _______.
a) 10% of employee’s salary.
b) 15% of employee’s salary.
c) 7.5% of employee salary.
d) 20% of employee’s salary.
Ans: b) 15% of employee’s salary.
23. Value of rent free accommodation a house owned by employer in case
of non- Govt. employees with above 10 lakhs but not
exceeding 25 lakhs population is:
a) 10% of employee’s salary.
b) 15% of employee’s salary.
c) 7.5% of employee salary.
d) 20% of employee’s salary.
Ans: a) 10% of employee’s salary.
24. Value of rent free accommodation a house owned by employer in case
of non- Govt. employees with less than 10 lakhs population
is:
a) 10% of employee’s salary.
b) 15% of employee’s salary.
c) 7.5% of employee salary.
d) 20% of employee’s salary.
Ans: c) 7.5% of employee’s salary.
25. Accommodation provided by the employer
to its employee is tax free if:
a) Such accommodation is provided for a
period not exceeding 15 days
b) It has been provided on the transfer of
the employees from one place to another
c) both a) & b)
d) None of the above
Ans: c) both a) & b)
26. Interest free loan or loan at
concessional rate is exempted if:
a) Loan amount does exceed Rs. 20,000
b) Loan given for medical treatment of
specified diseases.
c) both a) & b)
d) None of the above
Ans: c) both a) & b)
27.
Which of the following is true about RPF?
a) Employees contribution fully qualifies
for deduction under Sec. 80C.
b) Employer’s contribution is exempted upto
12% of salary
c) Interest on RPF is exempted upto 9.5%
d) All of the above
Ans: d) All of the above
Download PDF File
28. As per National Pension System, it is mandatory
for persons entering the government service on or after January 1, 2004 to
contribute:
a) 20% of
salary every month towards NPS.
b) 15% of
salary every month towards NPS.
c) 10% of
salary every month towards NPS. (Salary = Basic +DA)
Ans: c) 10% of salary every month towards NPS. (Salary =
Basic +DA)
29. Which
of the following is true about unrecognised provident fund (URPF)?
a) Employers contribution to URPF is
neither taxable nor exempted in the year of accrual.
b) Employees contribution to URPF is not
allowed as deduction in the year of contribution.
c) Interest on employees own contribution
to URPF is taxable under the head income from other sources.
d) All of the above
Ans: d) All of the above
30.
Meaning of salary for different purposes:
|
For HRA, PF,
Gratuity and Leave Encashment |
Basic Pay +
DP + Dearness Allowance (Which enters) + Commission on turnover |
|
For Gratuity |
Basic Pay +
Full DA |
|
For Deduction
under Sec. 16 (ii) i.e., Entertainment allowance |
Only Basic
Salary |
|
For rent free
house |
Basic Pay +
DP + DA (Which enters) + any fee, commission, bonus excluding gratuitous
bonus + All taxable allowance + Leave encashment pertaining to current year |
31.
Employer’s contribution to provident fund is exempted upto:
a) 12% of salary
b) Fully taxable
c) Fully exempted
d) 10% of salary
Ans: c) Fully exempted
32.
Which of the following is not taxable under the head salary?
a) Use of laptops and computers of
employers
b) Commuted pension of government employees
c) The salary, remuneration or compensation
received by the partner
d) All of the above
Ans: d) All of the above
33. The periodic payment of money for the past service is known as:
a) Gratuity.
b) Pension.
c) Commuted pension.
d) Leave salary.
Ans: b) Pension
34. Pension is taxable under _______ head.
a) Salary.
b) House property.
c) Capital gains.
d) other sources.
Ans: a) Salary.
35. Family pension received by the widow of a deceased employee is
taxable under the head:
a) Income from salary.
b) Capital gains.
c) Profits and gains of business
or profession.
d) Income from other sources.
Ans: d) Income from other sources.
36. Interest on RPF balance is exempted up to:
a) 9.75%.
b) 9.5%.
c) 10%.
d) 12%.
Ans: b) 9.5%.
37. Employers contribution to RPF is exempted up to:
a) 10% of salary.
b) 13% of salary.
c) 12% of salary.
d) 11% of salary.
Ans: c) 12% of salary.
38. Commuted value of pension is fully exempted in case of:
a) an employee of private
sector.
b) an employee of a public
sector undertaking.
c) a Govt. employee.
d) none of these.
Ans: c) a Govt. employee.
39. Statutory limit for exemption of compensation received at the time
of voluntary retirement (VRS) is:
a) Rs. 5,00,000.
b) Rs. 8,00,000.
c) Rs. 10,00,000.
d) Rs. 15,00,000.
Ans: a) Rs. 5,00,000.
40. Which of the following is exempted?
a) C.C.A.
b) D.A.
c) Foreign Allowance.
d) Medical Allowance.
Ans: c) Foreign Allowance.
41. Rent free accommodation is an example for:
a) Allowance.
b) Compensation.
c) Perquisite.
d) Profit in lieu of salary.
Ans: c) Perquisite.
42. Allowances received by a government employee posted abroad are:
a) Fully exempted.
b) Partly exempted.
c) Fully taxable.
d) Taxable by the country where
posted.
Ans: a) Fully exempted.
43. House rent allowance is:
a) Fully exempted.
b) Partly taxable.
c) Fully taxable.
d) Actual rent paid alone is
taxable.
Ans: B. Partly taxable
44.
Gratuity received is fully exempted for:
a) Non-government employees
b) Government
employees
c) Both the above
d) None of the above
Ans: b) Government employees
45.
Commuted pension is fully exempted for:
a) Non-government employees
b) Government
employees
c) Both the above
d) None of the above
Ans: b) Government employees
46.
Leave encashment at the time of retirement is fully exempted for:
a) Non-government employees
b) Government
employees
c) Both the above
d) None of the above
Ans: b) Government employees
47.
Leave travel concession is a tax free perquisites:
a) For one journey in a block of 4 years
b) One Journey per year
c) Two journey in a block of 4 years
d) Three journey in a block of 4 years
Ans: a) For one journey in a block of 4 years
48. Payment
from recognised provident fund before 5 years shall be:
a) Fully taxable
b) Fully exempted
c) Shall be treated as if the fund was
unrecognised right from beginning
d) None of the above
Ans: c) Shall be treated as if the fund was unrecognised right from
beginning
49. Meal
provided to employee in the office by the employer shall be exempted upto
maximum of:
a) Rs. 50 per meal
b) Rs. 80 per meal
c) Rs. 70 per meal
d) Rs. 100 per meal
Ans: a) Rs. 50 per meal
50. Use
of health club, sports and similar facilities provided uniformly to all
employees is:
a) Fully Taxable perquisites
b) Partly taxable perquisites
c) Tax free perquisites
d) None of the above
Ans: c) Tax free perquisites
MCQ on Income from Salary
Income from Salary MCQ with answers
Income Tax MCQs Multiple Choice Questions with Answers
(2022 – 23)
State Whether the following Statements are True or False:
1. Salary also
includes income tax of employee paid by employer. True
2. Salary paid
to a partner is chargeable under the head
‘salaries’. False
3. Salary received by a Member of
Parliament is taxable under the head Income from salaries. False, Income from
other sources
4. Allowances received by a Member of
Parliament or Member of Legislative Assembly is taxable. False, fully
exempted
5. Examination
fees received by a professor of university of which he is an employee is
taxable as Salary. True
6. Tiffin
allowance is fully exempted allowance. False, taxable
7. House rent
allowance is a fully taxable allowance. False
8. Entertainment
allowance is fully taxable irrespective of any expenditure incurred on
entertainment of guests or
customers. True
9. Place of
accrual of salary income is the place where services rendered. True
10. Employer-employee
relationship is necessary to term any receipt as salary. True
11. Salary
received or due from past or future employer is also taxable under the head
income from salary. True
12. Voluntary
foregoing of salary is exempted. False, fully taxable
13. Surrender
of salary is fully exempted. True
14. Ex-gratia
received from employer is taxable as a salary. False
15. If rent is
paid for a house situated in New Delhi, the house rent allowance shall be
exempted to the maximum extent of 40% of
salary. False, 50%
16. Method of accounting is irrelevant for
income from salary. True
17. Employees contribution to RPF is fully
qualifies for deduction under sec 80C. True
18. Refund from SPF and RPF is fully
exempted. True
19. Allowances paid to UNO employees are
fully exempted. True
20. Sumptuary
allowances paid to HC and Supreme Court Judges are fully taxable. False
21. Allowances paid to
employees serving outside India is fully exempted. True
22. Salary is defined as per section 17(1). True
23. The assessment period for income tax on
salary is 12 months. True
24. Advance salary is taxable and advance
against salary is not taxable. True
25. Pension is fully taxable under the
salary head. True
26. HRA is fully taxable if employees reside
in his own house. True
27. Car used by employees for official
purpose is fully exempted. True
28. Shares given to employees free of cost
or at concessional rate under ESOP plan is taxable perquisites. True
29. Use of car of 1.5 ltrs CC for both
official and personal purpose is taxable @ Rs. 1800 per month. True
30. Use of car of 1.7 ltrs CC for both
official and personal purpose is taxable @ Rs. 2400 per month. True
MCQ on Income from Salary
Income from Salary MCQ with answers
Income Tax MCQs Multiple Choice Questions with Answers
(2022 – 23)
Fill in the blanks
1. Salary, bonus,
commission or remuneration due to or received by a working partner from the
firm is taxable under the head Profits and
Gains from Business and Profession.
2. Payment made by an employer to employee
monthly other than salary is called allowances.
3. Arrears of salary of employee is taxable.
4. Under section 15 of the
Income Tax Act, the salary due in previous year and even if it is not received
is taxable.
5. leave salary received during the period
of service is fully taxable.
6. Salary for
the purpose of entertainment allowance includes basic salary
only.
7. Gratuity
received by any government employee is fully exempted
from income tax.
8. Pension is
taxable under the head income from salary
9. In case of
non-government employees, commuted value of pension is exempted upto ½ of normal pension if gratuity is not
received.
10. In case of non-government employees, commuted value of pension is
exempted upto 1/3 of normal pension if gratuity
is also received.
11. The daily
allowance received by a member of parliament is fully exempted.
12. Tribal area
allowance are exempted to extent of Rs. 200 per month.
13. Dearness
allowance is taxable in the hands of all
employees.
14. Bonus paid by the employer to the
employee is fully taxable.
15. Salary
accrues at the place where service is
rendered.
16. Use of
laptops and computers is fully exempted.
17. Transfer of
Computer and electronic items by employer is valued at cost less 50% of the cost of the employer for each
completed year on WDV basis.
18. Transfer of Motor
Cars by employer is valued at cost less 20% of the cost
of the employer for each completed year on WDV basis.
19. Transfer of
any asset other than laptops, computers and Motor Cars by employer is valued at
cost less 10% of the cost of the employer for
each completed year on SLM basis.
20. Transfer of
assets after 10 years of use by employer is tax
free.
21. Un-commuted pension received by a government employee is taxable.
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