INCOME UNDER HEAD SALARY

Q1. Mr. P is a CA is employee of PC Ltd. & is working as an *Q12. Salary of Mr. P is Rs. 10,000 p.m. Mr. P had taken
internal auditor having contract of services with PC Ltd. Salary in advance for April to June 2018 in March 2018
Mr. P requests PC Ltd. to show his salary as Internal Audit itself. Gross salary of Mr. P for AY 2019-20 :
fee. The amount shall be taxed u/h: (a) Rs. 1,20,000 (b) Rs. 70,000
(a) Salaries (b) PGBP (c) IFOS (d) None (c) Rs. 1,00,000 (d) Rs. 90,000

Q2. Income is taxable as Salary Income when there is Q13. Foregone salary is .
employer & employee relationship. However in one (a) Exempt if surrendered to government
exceptional case income is taxable as salary even in the (b) Taxable in other cases
absence of employer employee relationship which is . (c) Just an application of Income (d) All of the above
(a) Members of Parliament (b) Professors of college
(c) Partner of a firm (d) Judges of HC & SC Q14. Pension/leave salary paid abroad for services
rendered in India is deemed to accrue .
Q3. Mr. P was employed on 1.4.2008 in the grade of Rs. (a) In India (b) Outside India
15,000 - Rs. 500 - Rs. 17,000 - Rs. 750 - Rs. 21,500 - Rs. Q15. Which of the following allowance is fully Exempt?
1,000 - Rs. 31,500. His gross salary for AY 2019-20 is .
(a) Overtime allowance (b) Medical allowance
(a) Rs. 2.7 lac (b) Rs. 2.58 lac (c) Rs. 2.16 lac (d) Rs. 1.8 lac (c) Allowances paid by UNO (d) HRA
Q4. PC Ltd is a company paying salary of Rs. 4,50,000 to its Q16. HRA is given u/s .
employee Mr. P & in addition undertakes to pay the Income (a) 10(13A) Rule 2A (b) 10(15B) Rule 3B
Tax amounting to Rs. 10,400 on his behalf during AY 2019- (c) 20(4) Rule 8B (d) 10(14A)
20. The gross Salary of Mr. P is:
(a) Rs. 4.3 lac (b) Rs. 4.5 lac (c) Rs. 4.604 lac (d) None Q17. Salary paid by Government to Citizen of India (R.NR)
for services rendered o/s India is deemed to accrue .
Q5. Read the following statements & state correct answer: (a) in India (b) O/s India
(1) Contract b/w employer & employee is contract of service (c) Depends on the discretion of Assessee (d) None
(2) Contract b/w employer & employee is contract for service
(3) Contract b/w professional & client is contract for service Q18. Allowance or Perquisites paid o/s India by GOI to a .
(4) Contract b/w professional & client is Contract of Service citizen of India for rendering services o/s India will be
(a) 1 & 2 are correct (b) 2 & 3 are correct (a) Taxable in India (b) Fully exempt u/s 10(7)
(c) 3 & 4 are correct (d) 1 & 3 are correct
Q19. Government of India announced increase in DA on
Q6. Salary is deemed to accrue at the place where . 15.3.2018 with retrospective effect from 1.5.2016 & the
(a) Payment for services is received same were paid on 8.5.2018. Arrears of DA is taxable in -
(b) Services are rendered (a) PY 2017-18 (b) PY 2018-19
(c) Either (a) or (b) (d) None of the above (c) PYs to which these are related to (d) PY as per AO

Q7. Mr. P is employed in AB Institute, Pune. He is eligible Q20. Salary paid to Partner by the firm is .
for Rs. 24,000 as dearness allowance to meet increased (a) Taxable u/h Salaries (b) Taxable u/h PGBP
cost of living. The amount of DA taxable is . (c) Always exempt (d) Always taxable
(a) Rs. 10,000 (b) Nil (c) Rs. 24,000 (d) Rs. 9,000
Q21. Bonus is taxable as salary income on basis.
*Q8. Mr. P who is entitled to a Salary of Rs. 10,000 p.m. (a) Due (b) Receipt (c) Earlier of (a) or (b)
took advance of Rs. 20,000 against salary in the month of (d) Anytime at the choice of employer
March 2019. Gross salary of Mr. P for AY 2019-20 shall be: Q22. Mr. P is entitled to a watchman allowance of Rs. 600
(a) Rs. 1,00,000 (b) Rs. 1,20,000 p.m. for the security of his residence. He pays Rs. 500 p.m.
(c) Rs. 1,40,000 (d) None of the above to the watchman employed by him. Taxable allowance =
(a) 500 p.m (b) 100 p.m (c) 600 p.m (d) None
Q9. Inclusive definition of salary is given u/s:
(a) 17(3) (b) 17 (c) 17(1) (d) None Q23. Medical expenditure reimbursed by the employer to
the employee shall be exempt upto .
Q10. U/s 15 salary is taxable on basis. (a) Rs. 15,000 pm (b) Rs. 1,00,000 pa
(a) Receipt (b) Due (c) Earlier of (a) or (b) (d) None (c) Fully Exempt (d) Fully taxable

*Q11. Mr. P who is entitled to Salary of Rs. 10,000 p.m. took Q24. Transport Allowance is .
advance salary from his employer for April & May 2019 (a) Always Taxable
along with Salary of March 2019 on 31.3.2019. Gross salary (b) Exempt to handicapped Employees upto Rs. 3200 p.m
for Mr. P for AY 2019-20 shall be: (c) Always Taxable except to Handicapped employees.
(a) Rs. 1,20,000 (b) Rs. 1,40,000 (d) Both (b) & (c)
(c) Rs. 1,00,000 (d) None of the above
1: a 2: d 3: c 4: c 5: a 6: b 7: c 8: b 9: c 10: c 11: b 12: d
13: d 14: a 15: c 16: a 17: a 18: b 19: b 20: b 21: b 22: c 23: d 24: d
11
Q25. Which of the following allowances are fully taxable ? Q36. Mr. P received 300 pm as children education
(a) Warden Allowance (b) Servant Allowance allowance for each of his 3 children. The taxable & exempt
(c) Non-Practicing Allowance (d) All of the above part of children education allowance shall be?
(a) Rs. 8,400 & Rs. 2,400 respectively
Q26. Which of the following allowances are fully exempt ? (b) Rs. 2,400 & Rs. 8,400 respectively
(a) Sumptuary allowance granted to HC.SC Judges. (c) Rs. 10,800 & NIL respectively
(b) Allowance paid by UNO. (d) Nil & Rs. 10,800 respectively
(c) Compensatory Allowance received by a judge
(d) All of the above Q37. Mr. P is employed in PC Ltd. - Transporters as cabin
driver. He is paid Rs. 15,000 p.m during AY 2019-20 as
Q27. Which of the following is not the condition for allowance for meeting his personal expenditure in the
claiming exemption for HRA ? course of running Goods Vehicle. Mr. P does not receive
(a) Employee is in receipt of HRA. any other amount by way of daily allowance. The amount
(b) Location of the employer. eligible for exemption is.
(c) Rent paid by employee > 10% of salary. (a) Rs. 1,80,000 (b) Rs. 1,20,000
(d) Location of the accommodation of employees (c) Rs. 1,26,000 (d) Rs. 1,75,000

*Q28. Mr. P is entitled to a basic salary of Rs. 50,000 p.m. Q38. The Gardner, Sweeper & Watchman are employed by
& DA of Rs. 10,000 p.m. 40% of which forms part of the employer & provided to employee along with rent free
retirement benefits. He is also entitled to HRA of Rs. accommodation owned by the employer. The salary of Rs.
20,000 pm. He actually lives with his parents in Mumbai & 5,000 p.m per person is paid by the employer. The
does not pay any rent. Market rent of that house is Rs. valuation of this perquisite shall be
20,000 pm in Mumbai. Calculate the exempt HRA. (a) Rs. 1,80,000 (b) Rs. 1,20,000
(a) NIL (b) Rs. 1,75,200 (c) Rs. 60,000 (d) Not taxable at all
(c) Rs. 64,800 (d) Rs. 2,40,000
Q39. Mr. P is Pilot with Jet Airways. He is entitled to
Q29. Mr. P purchased a residential house property in outstation allowance of Rs. 10,000 p.m. He spends Rs.
Ahmedabad on loan for which he paid an interest of Rs. 4,000 every month. The exemption shall be
50,000 during the PY. He is working in Delhi & getting an (a) Rs. 1,20,000 (b) Rs. 48,000
HRA of 4,000 p.m. He can claim exemption.deduction for: (c) Rs. 84,000 (d) Rs. 72,000
(a) Only HRA (b) Only interest paid
(c) Either Interest or HRA (d) Both HRA & interest paid Q40. Mr. P is entitled to a transport allowance of Rs. 1,000
p.m. For commuting from his residence to office & back he
Q30. Children education allowance is exempt upto: spends Rs. 600 pm. The exemption shall be
(a) Rs. 100 pa for 2 children (b) Rs. 100 pm for 2 children (a) Rs. 1,000 p.m. (b) Rs. 600 p.m.
(c) Rs. 100 pm per child for 2 children each (c) Rs. 400 p.m. (d) Nil
(d) Rs. 100 pa per child for 2 children each
Q41. Children born out of multiple birth after the first child
Q31. Hostel expenditure allowance is exempt upto will be treated as .
(a) Rs. 300 p.a for 2 children (b) Rs. 300 p.m for 2 children (a) Two child & exemption will be granted only for 1 child
(c) Rs. 300 p.m per child for 2 children each (b) One child only & exemption will be granted only for
(d) Rs. 300 p.a per child for 2 children each both child
(c) on the discretion of AO (d) None of the above
Q32. Underground allowance to employee is exempt upto.
(a) Rs. 700 p.m. (b) Rs. 900 p.m. Q42. Rent Free Accommodation is covered in.
(c) Rs. 1,000 p.m. (d) Rs. 800 pm (a) Sec 17(2)(ii) Rule 3(a) (b) Sec 17(2)(i) Rule 3(1)
(c) Section 18(i) Rule 3(1) (d) Section 17(2)(vi)
Q33. Mr. P received basic salary of Rs. 20,000 p.m. from his
employer. He also received children education allowance Q43. Accommodation at concessional rent is given u/s .
of Rs. 3,000 for 2 children & transport allowance of Rs. (a) section 17(2)(ii) Rule 3(1) (b) sec 18(i) Rule 5(i)
1,800 p.m. The amount of salary taxable for AY 2019-20 is (c) section 16(ii) (d) section 16(iii)
(a) Rs. 2,62,200 (b) Rs. 2,22,600
(c) Rs. 2,22,200 (d) Rs. 2,07,800 Q44. Value of perquisite in case of rent-free
accommodation given to government employees will be .
Q34. Transport allowance is exempt upto Rs. 3,200 pm for. (a) 10% of salary (b) 15% of salary (c) 7.5% of salary
(a) Govt. employees (b) Non-Govt. Employees (d) License fees determined byovernment.
(c) Handicapped Employee (d) Mentally handicapped
Q45. Salary of employee is Rs. 2 lacs. Fair rent of house
Q35. Allowance for Transport is exempt upto situated in Delhi given to employee is Rs. 1,30,000.
(a) 70% of such Allowance; (b) Rs. 10,000 p.m Perquisite in case of Non-Government employee is:
(c) Lower of (a) or (b) (d) Rs. 5,000 (a) Rs. 2,00,000 (b) Rs. 30,000
(c) Rs. 70,000 (d) Rs. 1,30,000
25: d 26: d 27: b 28: a 29: d 30: c 31: c 32: d 33: c 34: c 35: c
36: a 37: b 38: c 39: a 40: d 41: b 42: b 43: a 44: d 45: b

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Q46. Employee is provided with furniture costing Rs. Q55. Medical facility to employee in India is exempt if:
50,000 along with rent free accommodation w.e.f. (a) Hospital owned/maintained by employer or
1.8.2018. The value of the furniture to be included in the Government Hospital;
value of rent-free accommodation shall be. (b) Private Hospital (if recommended by Government for
(a) Rs. 15,000 (b) Rs. 30,000 (c) Rs. 10,000 (d) Rs. 20,000 treatment of its employees).
(c) Specified facility for prescribed diseases in hospital
Q47. Mr. P is provided with furniture to the value of Rs. approved by PCC/CC (d) All of the above
70,000 along with house from February, 2018. Furniture is
not owned by employer but has been taken on rent by Q56. Mr. P is entitled to Rs. 8,000 p.m as Medical
employer for which employer pays hire charges of Rs. Allowance. He spends Rs. 4,000 p.m on his medical
5,000 pa. The value of furniture to be included along with treatment & Rs. 1,000 on the medical treatment of his
value of unfurnished house for AY 2019-20 is major son not dependent on him. Exemption =
(a) Rs. 5,000 (b) Rs. 7,000 (c) Rs. 10,500 (d) Rs. 14,000 (a) Rs. 4,000 p.m (b) Rs. 5,000 p.m
(c) Nil (d) Rs. 8,000 p.m
Q48. Salary of an employee is Rs. 2,00,000. Rent paid by
the employer for the unfurnished house provided to Q57. Mr. P is employed in PC Ltd. & his wife is suffering
employee at Faridabad is Rs. 3,000 p.m. The employer from a critical disease. The company has sent Mr. P & Mrs.
charges Rs. 2,000 p.m. as rent from the employee. The S to USA for the medical treatment of Mrs. S . The company
valuation of this perquisite shall be . has incurred expenses on medical treatment of Mrs. S &
(a) Rs. 24,000 (b) Rs. 36,000 (c) Rs. 30,000 (d) Rs. 6,000 stay outside India of Mrs. S & of Mr. P. amounting to Rs.
17,00,000 but RBI permitted only Rs. 15,00,000. The travel
Q49. Mr. P gets salary of Rs. 12,000 p.m. & is provided with expenses amounted to Rs. 1,50,000. Salary of Mr. P was Rs.
rent free unfurnished accommodation at Pune (which has 5,00,000. The taxable perquisite in this case shall be.
population of 20 lakh). House is owned by employer, fair (a) Rs. 3,50,000 (b) Rs. 8,50,000
rental value of which is Rs. 1,400 p.m. House was provided (c) Rs. 2,00,000 (d) Rs. 1,50,000
from 1st July, 2018. Value of the perquisite will be.
(a) Rs. 21,600 (b) Rs. 10,800 (c) Rs. 16,200 (d) Rs. 12,600 Q58. During AY 2019-20, the employee was reimbursed
Rs. 14,000 as medical expenses incurred by him which
Q50. Mr. P gets salary of Rs. 25,000 p.m. & is provided with includes Rs. 9,000 spent in Government hospital. The
accommodation at Pune on his transfer in hotel for a week. taxable perquisite in this case shall be.
Value of the perquisite of rent-free accommodation will be. (a) Rs. 9,000 (b) Rs. 5,000
(a) Rs. 72,000 (b) Rs. 30,000 (c) Rs. 45,000 (d) Nil (c) Rs. Nil (d) Rs. 14,000
Q51. If any employee has been transferred & employer has Q59. Health Insurance Premium paid by employer in
provided him accommodation at the new place also while approved scheme of CG/IRDA is .
the employee continuing to occupy the house at old place. (a) Taxable (b) Exempt
In such cases .
(a) Both houses will be charged to tax as perquisite. Q60. Mr. P took an interest-free loan of Rs. 15,000 from PC
(b) Only one of the accommodation having lower Ltd. (the employer). Market rate of interest on similar loan
perquisite value shall be taxable upto 90 days (three is 10%, the taxable value of the perquisite for Mr. P :
months) & after 90 days, both of the accommodations shall (a) Rs. 150 (b) Rs. 1,500 (c) Nil (d) None
be taxable.
(c) Depends upon the agreement between employee & Q61. For the purpose of determining the perquisite value
employer of loan at concessional rate given to the employee, the
(d) Depends upon the discretion of AO lending rate of State Bank of India as on is required;
(a) 1st day of PY (b) Last day of PY
Q52. Rent-free official residence provided to a Judge of (c) Day on which loan is given (d) 1st day of AY
HC.SC is
(a) Taxable (b) Exempt (c) Exempt upto Rs. 5,000 p.m Q62. In which of the following cases, Interest-free Loan is
(d) Taxable if such judge stays out of India after retirement. not treated as perquisite:
(a) If the amount of loans ≤ Rs. 20,000.
Q53. Rent-free furnished house provided to an Officer of (b) If Loan is given for Medical Treatment of Prescribed
Parliament is . Diseases (Cancer, tuberculosis, etc).
(a) Taxable (b) Exempt (c) Exempt upto Rs. 5,000 p.m (c) Both (a) & (b) (d) None of the above
(d) Taxable if such officer stays o/s India after retirement
Q63. Employee is on official tour & he takes his family
Q54. Mr. P an employee of PC Ltd. of Delhi, received the member with him. Value of perquisite =
following payments during the PY ended 31st March, 2019. (a) Amount incurred for employee & such family member
Basic salary: Rs. 2,40,000 & DA: 40% of basic salary (40% (b) Amount incurred for such family member
forming part of salary). Rent-free unfurnished (c) It is illegal to take family member with him since it will
accommodation provided by employer for which rent paid distract him
by employer being Rs. 50,000. Taxable perquisite: (d) He should ask for the permission of AO before taking
(a) Rs. 41,760 (b) Rs. 50,000 his wife (family member).
(c) Rs. 36,000 (d) Rs. 52,500
46: c 47: a 48: d 49: b 50: d 51: b 52: b 53:b 54: a
55: d 56: d 57: c 58: b 59: b 60: c 61: a 62: c 63: b

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Q64. Any official tour is extended as a vacation. Value of Q76. Mr. P employed in PC Ltd. was permitted to admit his
perquisite = only son in the school run by the employer. No fee was
(a) Amount incurred for the total period. charged on such education provided to the son of Mr. P.
(b) Amount incurred for the extended period. The cost of such education for other children is Rs. 1,800
(c) He cannot extend tour since he will have work in office. per month. The perquisite value of free education shall be:
(d) He should ask for permission of AO. (a) Rs. 1,600 (b) Rs. 12,000
(c) Rs. 36,000 (d) Rs. 9,600
Q65. Training of employees is not a/an perquisite.
(a) Taxable (b) Exempt (c) Exempt upto Rs. 10,000 Q77. Free or concessional tickets granted to Employees of
(d) Depends on the discretion of AO. an airline or the railways is .
(a) Taxable Perquisite. (b) Exempt Perquisite.
Q66. Exemption from leave Salary is given u/s . (c) Partly Exempt. (d) None of the above.
(a) 10(10AB) (b) 10(10AA) (c) 10(15A) (d) 10(10A)
Q78. A company has provided laptop worth Rs. 50,000 to
Q67. Scholarship given by an employer-company to its employee for official as well as personal purposes. The
children of its employees is not a.an perquisite. taxable amount of perquisite will be -
(a) Taxable (b) Exempt (c) Exempt upto Rs. 10,000 (a) Rs. 5,000 (b) Rs. 25,000
(d) Depends on the discretion of AO. (c) Rs. 10,000 (d) Nil

Q68. Exemption in respect of Leave Travel Concession is Q79. Employer has given a video-camera for the personal
available only for going anywhere with . use of the employee. The value of this perquisite is:
(a) In India.outside India; Family. (b) In India; family. (a) 10 % pa of historical cost (b) Nil
(c) In India; friends or family. (d) In India; Alone (c) 10% pa of the WDV (d) Fully Exempt

Q69. Exemption in respect of Leave Travel Concession is Q80. The employer had purchased a car for Rs. 8,00,000 2
available only on . years & 7 months ago. This car is sold to the employee for
(a) Hotel charges (b)Boarding expenses Rs. 2,02,000. The value of this perquisite shall be
(c) Bus.Air.Rail Fare (d) All of the above (a) Rs. 2,80,000 (b) Rs. 1,20,000
(c) Rs. 8,00,000 (d) Rs. 3,10,000
Q70. Credit for unavailed LTC is available in the first
calendar year of Next block. Q81. PC Ltd. acquired a motorcar for Rs. 8 lakh on 30th
(a) One (b) Two (c) Zero (d) Three June, 2018. It sold the said motor car to its employee, Mr.
P, for Rs. 6 lakh on 10th July, 2018. The company claimed
Q71. PC Ltd. gives a gift in kind on the marriage of the son depreciation @ 15% for the year ended 31st March, 2019.
of the employee. Gift so made shall be . The perquisite value in the hands of Mr. P on sale of motor
(a) Taxable if value is Rs. 6,000 or less car would be
(b) Exempt if value is Rs. 5,000 or less (a) Rs. 8,00,000 (b) Rs. 6,00,000
(c) Always fully taxable (d) Fully Exempt (c) Rs. 2,00,000 (d) Rs. 1,40,000

Q72. Cash gifts are . Q82. Mr. P is an employee of JSPC Ltd. which is an oil
(a) Taxable if value is Rs. 6,000 or less manufacturing company. He is provided with free gas for
(b) Exempt if value is Rs. 5,000 or less his personal purpose by the employer. Perquisite value:
(c) Always fully taxable (d) Fully Exempt (a) Fixed by employee (b) Fixed by the employer
(c) Manufacturing cost per unit
Q73. Tea & Snacks are provided by PC Ltd. to employees in (d) Market rate of Gas per unit
the office during office hours. The value of this perquisite
shall be Q83. Employer provides a car (below 1600 CC) along with
(a) Fully taxable (b) Fully Exempt a driver to Mr. P & he uses the car partly for official & partly
(c) Exempt upto Rs. 50 pm for personal purpose. Expenses incurred by employer are.
(d) Exempt upto Rs. 50 per round of tea & snacks (1) running & maintenance expenses of Rs. 84,000
(2) driver's salary of Rs. 1,20,000. Perquisite value:
Q74. An employee has been provided free meal worth Rs. (a) Rs. 21,600 (b) Rs. 10,800
110 per meal for 295 days in the office, during office hours. (c) Rs. 32,400 (d) Rs. 2,04,000
Such facility provided to employees shall be taxable for:
(a) Rs. 60 per day for 295 days Q84. Mr. P is employee of PC Ltd. & he is provided a car of
(b) Rs. 110 per day for 295 days engine of 1.9 litre capacity along with driver. The expenses
(c) Rs. 50 per day for 295 days (d) Not taxable at all of running & maintenance of car are met by Mr. P himself.
Besides using the car for official purpose, Mr. P also uses
Q75. Expenditure pertaining to health club, sports the car for his personal purpose. Perquisite value:
facilities etc.is . (a) Rs. 2,400 pm (b) Rs. 1,800 pm
(a) Taxable Perquisite. (b) Exempt Perquisite. (c) Rs. 600 pm (d) Rs. 900 pm
(c) Partly Exempt. (d) None of the above
64: b 65: a 66: b 67: a 68: b 69: c 70: a 71: b 72: c 73: b 74: a
75: b 76: d 77: b 78: d 79: a 80: d 81: c 82: c 83: c 84: b

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Q85. Mr. P an employee owns a car which he used for his Q94. An employee of a GGC public limited company
private purpose. All expenses of running & maintenance of received total Rs. 3,00,000 as encashment of leave salary
the car are met by the employer. The perquisite shall at the time of retirement. He has 18 months leave to his
(a) Be taxable in case of specified employee only credit at the time of retirement & his average salary for last
(b) Be taxable in case of an employee other than specified 10 months is Rs. 24,000. Taxable Leave encashment is:
employees (a) Rs. 2.4 lacs (b) Rs. 3 lacs (c) Rs. 60,000 (d) Nil
(c) Be taxable in case of all type of employees
(d) Not be taxable at all for any employee Q95. Which of the following leave salary is exempt?
(a) Leave salary paid to legal heir
Q86. Which of the following perquisites will be taxable in (b) Leave salary received by family of government servant
the hands of non-specified employees ? who died in harness (on duty)
(a) Provision of sweeper, gardener, watchman or personal (c) Both (a) & (b)
attendant or Use of motor car (d) None of the above
(b) Facility of use of gas, electricity or water supplied by
employer Q96. Gratuity shall be fully exempt in the case of .
(c) Free or concessional educational facilities or Free or (a) CG & SG Employee (b) Employees of CG & SC & LA
concessional tickets (d) None of the above (c) Employees of CG & SG & LA & statuary corporation
(d) Only central government employee
Q87. Encashment of leave salary at the period of service is
fully taxable in the case of . Q97. Salary for the purposes of exemption of gratuity
(a) CG employee (b) SG employee when employee is covered under Gratuity Act 1972
(c) Both CG & SG employees includes.
(d) Government employee & Non-Government employee (a) Basic salary + DA (forming part of salary for retirement
benefits or not)
Q88. Encashment of leave salary at the time of retirement (b) Basic salary + DA (forming part of salary for retirement
is fully exempt in the case of . benefits) + monthly commission
(a) CG Employee (b) SG Employee (c) Basic salary + DA (forming part of salary for retirement
(c) Both CG & SG Employees benefits) + commission on % basis of sales
(d) Government employee & Non-Government employee (d) Basic salary & commission
Q89. Maximum Exemption in case of leave encashment is: *Q98. An employee is covered under Payment of Gratuity
(a) Rs. 2.4 lac (b) Rs. 3.5 lac (c) Rs. 3 lac (d) Rs. 10 lac Act, 1972. Salary for purpose of calculating 15 days salary
Q90. Payment of premium on personal accident insurance for each completed year of service shall be.
policies of the employee by the employer is . (a) Last drawn Salary (b) Avg. Salary of last 10 months
(a) Taxable perquisite (c) Average Salary of last 3 completed years
(b) Exempt Perquisite since no immediate benefit would (d) Average Salary of last 12 months
become payable to the employee
(c) Partly Exempt (d) None of the above Q99. An employee is covered under Payment of Gratuity
Act, 1972 If the employee has completed service of 16
Q91. Salary for exemption of leave encashment shall be years 6 months & 5 days then to calculate exemption of
taken as. Gratuity the number of completed years shall be taken as.
(a) Last drawn Salary (a) 16 years (b) 17 years
(b) Average Salary of 10 months immediately preceding (c) 16 years 6 months & 5 days (d) 16 years &7 months
the month of retirement
(c) Average Salary of 10 months immediately preceding Q100. An employee is covered under Payment of Gratuity
the date of retirement (d) Any of the above Act, 1972 For purpose of computing 15 days’ salary, the
number of days in a month shall be taken as days.
Q92. Salary for the purpose of exemption of leave (a) 30 (b) 26 (c) 31 (d) Any of the above
encashment shall be taken as.
(a) Basic salary + DA (forming part of salary for retirement Q101. The maximum ceiling limit for exemption u/s
benefits or not) 10(10) in respect of gratuity for employees covered by the
(b) Basic salary + DA (forming part of salary for retirement Payment of Gratuity Act, 1972 is:
benefits) + monthly commission (a) Rs. 10 lac (b) Rs. 5 lac (c) Rs. 3.5 lac (d) Rs. 20 lac
(c) Basic salary + DA (forming part of salary for retirement
benefits) + commission (on % basis of sales) Q102. An employee is Not Covered under Payment of
(d) Basic salary & commission. Gratuity Act, 1972 For purpose of computing half month’s
salary, number of days in a month shall be taken as days.
Q93. An employee availed the exemption of leave (a) 30 (b) 26 (c) 31 (d) Any of the above
encashment of Rs. 1,00,000 in the past. He received from
the second employer a sum of Rs. 2,50,000 as encashment Q103. An employee is Not Covered under Payment of
of leave. He will be entitled to exemption to the extent of Gratuity Act, 1972. Maximum exemption of gratuity is:
(a) Nil (b) Rs. 2.5 lacs (c) Rs. 2 lacs (d) Rs. 1.4 lacs (a) Rs. 10 lac (b) Rs. 3.5 lac (c) Rs. 20 lac (d) None

85: a 86: d 87: d 88: c 89: c 90: b 91: c 92: c 93: c 94: c
95: c 96: c 97: a 98: b 99: b 100: b 101: d 102: a 103: a

INCOME TAX MCQs BY CA PRANAV CHANDAK Queries @ t.me/pranavchandak 15

Q104. Mr. P worked with a previous employer for 3 years Q115. Maximum Standard deduction u/h Salary shall be .
but was not entitled to any gratuity. He worked with the (a) Rs. 40,000 (b) Rs. 50,000
present employer for 8 years & 3 months. The completed (c) Rs. 2,500 (d) Rs. 5,000
years of service for calculating exemption of gratuity, if
employee is covered under Gratuity Act shall be taken as . Q116. The standard deduction is allowed from gross
(a) 11 years (b) 8 years (c) 3 years (d) None salary to the maximum of Rs. 40,000 but
(a) Employee has to prove his all expenses to income tax
Q105. Mr. P who claimed exemption of gratuity in past to department
the extent of Rs. 2,50,000 was entitled to gratuity from the (b) Employee has to prove his all expenses to the employer
present.second employer amounting to Rs. 20,00,000 in AY (c) Employee has to prove his all expenses to income tax
2019-20. Both of employers are covered under the department or employer as per his own discretion
Payment of Gratuity Act 1972. Exemption to Mr. P shall be: (d) Irrespective of any expenses that employee may or may
(a) Rs. 10,00,000 (b) Rs. 15,00,000 not have incurred
(c) Rs. 20,00,000 (d) Rs. 17,50,000
Q117. Standard deduction is not allowed from .
Q106. Un-Commuted Pension received by ANY Employee: (a) Pension (b) Family pension
(a) Fully Exempt (b) Fully Taxable (c) Arrear of salary (d) Gross salary
(c) Partially taxable (d) Partially exempt
Q118. Standard deduction is allowed from .
Q107. An employee was entitled to gratuity. He got 50% of (a) Pension (b) Gross salary
his pension commuted & received a sum of Rs. 1,00,000 as (c) Arrear of salary (d) All of the above
commuted pension. The exemption in his case shall be.
(a) Rs. 50,000 (b) Rs. 33,337 Q119. Max deduction for entertainment allowance u/s .
(c) Rs. 1,00,000 (d) Rs. 66,667 (a) Rs. 3,000 (b) Rs. 5,100
(c) Rs. 2,500 (d) Rs. 5,000
Q108. A government employee was entitled to gratuity. He
got 50% of his pension commuted & received a sum of Rs. Q120. Deduction for entertainment allowance u/s 16(ii) is
1,00,000 as commuted pension. The exemption shall be: allowed to .
(a) Rs. 50,000 (b) Rs. 33,337 (a) Every kind of employee
(c) Rs. 1,00,000 (d) Rs. 66,667 (b) Every government employee
(c) Every non-government employee
Q109. An employee was not entitled to gratuity. He got (d) Every retired employee
60% of his pension commuted & received a sum of Rs.
1,20,000 as commuted pension. The exemption shall be: Q121. Limit u/s 16(ii) for deduction of entertainment
(a) Rs. 1,20,000 (b) Rs. 66,667 allowance in case of government employee is % of salary
(c) Rs. 80,000 (d) Rs. 1,00,000 (a) 12.5 % (b) 20 % (c) 15% (d) 7.5%

Q110. Mr. P retires from private service on 30th April, Q122. Entertainment allowance for govt. employee is.
2018 & his pension has been fixed at Rs. 1,500 p.m. He gets (a) Fully exempt & therefore not included in Gross Salary
a of his pension commuted during January, 2019 & (b) Fully Taxable & therefore added in Gross Salary
receives Rs. 75,000. He also gets Rs. 60,000 as gratuity. The (c) Not added in Gross Salary but deduction is allowed as
total pension taxable including commuted value will be. per limits of section 16(ii)
(a) Rs. 16,500 (b) Rs. 21,500 (d) First added in full in Gross Salary & thereafter
(c) Rs. 39,250 (d) Rs. 14,250 deduction allowed from Gross Salary is allowed u/s 16(ii)

Q111. Pension received by gallantry award winner is. Q123. Professional Tax is charged under which Article of
(a) Fully Taxable (b) Fully Exempt from tax Constitution of India
(c) 50% Exempt & 50% taxable (a) 274 (b) 275 (c) 276 (d) 277
(d) 80% Exempt & 20% taxable
Q124. Professional Tax is charged by .
Q112. Mr. P employed in PC Ltd. took voluntary retirement (a) CG (b) SG (c) LA (d) Statutory corporation
in December 2018 & received Rs. 2,00,000 from NPS Trust.
The amount so received chargeable to income tax is. Q125. The deduction for Professional Tax u/s 16(iii) is for
(a) Nil as 100% is exempt (a) Actual amount paid (b) Actual amount due
(b) Rs. 1,20,000 as 40% is exempt (c) Actual amount charged by SG (d) Always 2,500
(c) Rs. 1,00,000 as 50% is exempt Q126. Employer’s contribution to SPF shall be
(d) Rs. 80,000 as 60% is exempt (a) Fully Exempt (b) Exempt upto 12 % of salary
Q113. Compensation received on Voluntary retirement is (d) Fully Taxable (c) Exempt up to 10% of salary
exempt u/s 10(10C) to the maximum extent of . Q127. Interest credited to SPF shall be .
(a) Rs. 2.4 lac (b) Rs. 3.5 lac (c) Rs. 5 lac (d) Rs. 3 lac (a) Fully Exempt (b) Fully Taxable
Q114. Standard deduction is allowed from gross salary u/s (c) Exempt up to 8.5 % p.a of total contribution
(a) 16(i) (b) 16(ia) (c) 16(ii) (d) 16(iii) (d) Exempt up to 9.5 % p.a of total contribution

104: a 105: d 106: b 107: d 108: d 109: d 110: c 111: b 112: b 113: c 114: b 115: a
116: d 117: b 118: d 119: d 120: b 121: b 122: d 123: c 124: b 125: a 126: a 127: a

INCOME TAX MCQs BY CA PRANAV CHANDAK Queries @ t.me/pranavchandak 16

Q128. Employee’s own contribution to RPF.PPF shall be
(a) Allowed as deduction u/s 80C Q139. Mr. P employed in PC Ltd. as accounts manager. The
(b) Allowed as deduction u/s 80TTA employer paid Rs. 1,60,000 as contribution to approved
(c) Allowed as deduction u/s 10 superannuation fund for the benefit Mr. P. The amount of
(d) Allowed as deduction u/s 16(ia) such contribution liable to tax as perquisite is:
(a) Nil (b) Rs. 10,000
Q129. Employer’s contribution to RPF shall be. (c) Rs. 1,60,000 (d) Rs. 60,000
(a) Fully Exempt (b) Exempt upto 12 % of salary
(d) Fully Taxable (c) Exempt up to 10% of salary Q140. Mr. P was employed since 1st July 2002 in an
establishment. His salary was fixed at Rs. 14,800 in the
Q130. Interest credited to RPF shall be. grade of Rs. 14,000 - Rs. 400 - Rs. 22,000 w.e.f. 1.7.2012. He
(a) Fully Exempt (b) Fully Taxable got the benefit of 15% of salary as DA which is treated as
(c) Exempt up to 8.5 % p.a of total contribution forming part of salary for retirement benefits. He retired
(d) Exempt up to 9.5 % p.a of total contribution on 1.2.2019 & received Rs. 3,40,000 as a Gratuity from his
employer. Calculate his income under the head ‘Salary’ for
Q131. Payment from RPF after 5 years of continuous AY 2019-20 if he is a Central Government employee.
service of employee shall be . (a) Rs. 1,56,420 (b) Rs. 1,70,800
(a) Fully Taxable (b) Fully Exempt (c) Rs. 1,96,420 (d) Fully exempt
(c) Taxable to the extent of employer’s contribution &
interest thereon (d) Exempt up to Rs. 10,00,000 Q141. Anjan joins a service on 1.4.2018 with basic salary
of Rs. 39,100 plus dearness allowance of 107 % of basic
Q132. An employee received payment from URPF on his salary. He has no other income. His taxable income shall be:
retirement. His own contribution to URPF & Interest on his (a) Rs. 9,71,244 (b) Rs. 9,31,244
own contribution will be. (c) Rs. 9,71,240 (d) Rs. 9,31,240
(a) Taxable, Taxable (b) Exempt, Exempt
(c) Taxable, Exempt (d) Exempt, Taxable Q142. Mr. P joins service on 1st April, 2014 in the grade of
Rs. 15,000 Rs. 1,000 - Rs. 18,000 - Rs. 2,000 - Rs. 26,000.
Q133. The year in which URPF is converted in RPF . Total taxable salary for year ended on 31st March, 2019:
(a) The employer’s contribution till date & interest thereon (a) Rs. 2,16,000 (b) Rs. 2,40,000
shall be taxable (c) Rs. 2,00,000 (d) Rs. 1,80,000
(b) The employer’s contribution till date shall be taxable
(c) It will be assumed as if the provident fund was Q143. Mr. P who is a manager of PC Ltd. since 2001 was
recognized right from beginning & excess amount of terminated by the company on 1st August, 2018 by paying
employer’s contribution & interest thereon shall be taxable a compensation of Rs. 200 lakhs. Such compensation is -
(d) None of the above (a) Chargeable under the Wealth-tax Act, 1957
(b) Not chargeable under the Income-tax Act, 1961
Q134. When interest on employee’s own UPRF is received (c) Chargeable u/s 17(3)(i) (d) Chargeable u/s 28(ii)(a).
by employee, it is .
(a) Taxable u/h IFOS (b) Taxable u/h Salary Q144. GGC is a LLP & had taken Keyman Insurance Policy
(c) Exempt (d) Taxable if interest > Rs. 10,000 on the life of it managing partner. The policy got matured
on 13th September, 2018 & an amount of Rs. 75 lakh was
Q135. For PY 2018-19, Mr. P receives a salary of Rs. paid by the insurers to the managing partner. The amount
2,80,000. Mr. P’s contribution to employees’ RPF account so received on maturity of the policy by the managing
Rs. 59,000 & matching contribution has been made by partner is -
employer. Taxable income of Mr. P will be . (a) Fully exempt u/s 10(10D)
(a) Rs. 2,46,400 (b) Rs. 3,05,400 (b) 50% of Rs. 75 lakh exempt
(c) Rs. 3,39,000 (d) Rs. 2,80,000 (c) Rs. 75 lakh taxable as profit in lieu of salary
(d) Rs. 25 lakh exempt & Rs. 50 lakh taxable
Q136. PC Ltd. contributed 15% of salary of Mr. P towards
RPF. Taxable Amt to Mr. P is % of contribution. Q145. Bimal is employed in a factory at a salary of Rs.
(a) 5 (b) 3 (c) Nil (d) 12 2,400 per month. He also gets dearness allowance @ Rs.
600 per month & bonus @ Rs. 200 per month. He retired
*Q137. Employer’s contribution to superannuation fund is
on 31st December, 2018 & received Rs. 75,000 as gratuity
(a) Not taxable to employee (b) Fully Taxable
under the Payment of Gratuity Act, 1972 after serving 31
(c) Taxable to employee provided contribution > Rs. 1.5
years & 4 months in that factory. Exempt gratuity is:
lacs (c) Exempt upto 12% of salary
(a) Rs. 75,000 (b) Rs. 53,654
Q138. Which of the following is not correct about the (c) Rs. 21,346 (d) Rs. 20,00,000
approved superannuation fund ?
(a) Employees’ contribution is deductible u/s 80C
(b) Amount contributed by the employer is Exempt
(c) Interest on accumulated balance is exempt
(d) Under some circumstances, payments from the fund
are chargeable to income tax.
128: a 129: b 130: d 131: a 132: d 133: c 134: a 135: b 136: b 137: b
138: b 139: c 140: a 141: a 142: c 143: c 144: c 145: b