Wealth Forum

Certified Personal Financial Advisor (CPFA)

Tax and Estate Planning

Q1.

Which of the following is not a direct tax?

Income tax

Wealth tax

Excise tax

Both a & b

Q2.

Which of the following provisions is/are incorporated in ITA, 1961?

Tax holidays

Tax collection

Chargeability

Q3.

Which of the following comprise income tax law in India?

ITA, 1961

Income Tax Rules, 1962

CBDT circulars

All of the above

Q4.

_______ means illegally avoiding paying Taxes through fraudulent techniques to circumvent the Tax laws.

Tax evasion

Tax avoidance

Tax planning

Both a & b

Q5.

Which of the following is/are person/s understood as a unit liable to pay taxes under Income Tax Act?

a company

an individual

a local authority

All of the above

Q6.

Which of the following is considered income under Income tax act, 1961?

Benefits received by an employee

Capital gains

Illegal income

All of the above

Q7.

Assessee means a person:

who earns taxable income

who is liable to pay taxes

against whom any proceeding under ITA has been taken for the assessment of his income

All of the above

Q8.

For resident senior citizen, rate of tax is nil up to:

Rs. 160000

Rs. 190000

Rs. 240000

Rs. 500000

Q9.

A non resident’s total income comprises of:

all his income accrued/ received or deemed to accrue/ received within and outside India

only that income which has accrued/ received or is deemed to have been accrued/received in India

for any income accruing or arising outside India

None of the above

Q10.

An individual will be resident in India if:

He is in India during the previous year for a period of 182 days or more

He is in India during the previous year for a period of 60 days or more and has been in India for 365 days or more days during the four years immediately preceding the previous year

He is in India during the previous year for a period of 60 days or more and has been in India for 182 days or more days during the four years immediately preceding the previous year

a or b

Q11.

A resident shall be ordinarily resident if:

He has been a resident in India for at least 2 out of 10 previous years immediately preceding the relevant previous year; and

He has been in India for a period of 730 days or more during 7 years immediately preceding the relevant previous year.

both a and b

None of the above

Q12.

Which of the following incomes is not exempted from tax under Section 10 of ITA?

Agricultural income

Income from house property

Income of minor child

Leave travel concession

Q13.

Any amount received by an individual as a loan, either in lump sum or in instalments, in a reverse mortgage transaction shall be exempt from income tax.

True

False

Q14.

Which of the following is not a taxable income?

Salaries

Capital gains

Amount received under a Life Insurance Policy

Gains of business

Q15.

Which of the following does not come under salary?

Advance salary

Annuity in the form of pension

Profits in lieu of salary

Gratuity to the extent it is exempt u/s 10

Q16.

Which of the following allowances is not fully taxable?

Uniform allowance

Medical allowance

Overtime allowance

Special allowances

Q17.

HRA will be exempt from tax lower of 1. Actual amount of HRA received 2. Amount equal to 50% of salary for the relevant period, in case the rented house is situated in the four metro cities – Mumbai, Delhi, Kolkata and Chennai, and 40% of salary if the house is situated in any other cities 3. Rent paid in excess of 10% of salary for the relevant period.

1or 2

2 or 3

1 or 3

1 or 2 or 3

Q18.

Which of the following is not a taxable perquisite?

Value of rent-free accommodation provided to the employee by his employer

Any obligations of the employees being met by the employer

Value of any medical facility provided to the employee or any member of his family in a hospital, clinic, dispensary or nursing home maintained by the employer

The value of any specified security or sweat equity shares allotted or transferred, directly or indirectly, by the employer, or former employer, free of cost or at concessional rate to the assessee

Q19.

Which of the following is/are tax free perquisites?

Tea, snacks and other refreshments provided by the employer during office hours

Interest-free or concessional loans to employees up to Rs. 20,000

Expenditure on telephones, including mobile phones, incurred by employers on behalf of employees

All of the above

Q20.

For charging income under Income from house property, which of the following condition is not true?

The person should own the property

The property can be used for the purposes of business by the person

The property should consist of both land and buildings

None of the above

Q21.

The income is always taxable in the hands of the _________ of the property.

Owner

Deemed owner

Both a & b

Not taxable

Q22.

The _______ of the property is the most important factor for calculating the income from property

Annual value

Gross value

Interim value

Fair value

Q23.

Which of the following statements about net annual value for property is incorrect?

Taxes levied by the local authorities, only if they are actually paid by the tenant during the relevant previous year

In case of a let-out property, where any rent is unrealized during the year, the same can be deducted from the GAV,

In case of let out properties, permissible deductions are 30% of the Net Annual Value and the interest paid/ payable for the acquisition / construction of the property

For self occupied properties, Interest paid/payable for the acquisition/construction of the property is the only deduction permissible

Q24.

Which of the following comprise income from business/ profession?

Gross income earned

Total income

Profits/losses

All of the above

Q25.

Which of the following expenses is not expressly allowed as deduction for computation of income from business/ profession?

Bonus or commission paid to employees

Depreciation

Interest paid on borrowed capital

Expenses incurred exclusively for the purposes of the business/ profession

Q26.

Which of the following is not considered for depreciation while computing income from business?

Plant and machinery

Intangible assets

Furniture

None of the above

Q27.

Which of the following expenses is expressly allowed as deduction while computing income from business/profession?

Rent, rates and Taxes, repairs and insurance for building, plant and machinery, furniture

Printing and stationery expenses

Legal expenses relating to the business/ profession

Expenditure in relation to staff welfare

Q28.

Which of the following expenses is/are not deductible while computing profits/gains from business/ profession?

Income Taxes paid on profits or gains of any business or profession

Wealth Taxes paid

Insurance premiums paid against risk of damage or destruction of stocks used for the business

Both a and b

Q29.

Which of the following persons is required to get his accounts compulsorily audited by a chartered accountant and obtain the Tax audit report?

A person carrying on business, if the total sales, turnover or gross receipt in business for the accounting year or years relevant to the assessment year exceed or exceeds Rs. 15 lakh.

A person carrying on profession, if his gross receipts in profession for an accounting year or years relevant to any of the assessment year exceeds Rs. 15 lakh.

A person carrying on business, if the total sales, turnover or gross receipt in business for the accounting year or years relevant to the assessment year exceed or exceeds Rs. 60 lakh.

both b & c

Q30.

Which of the following is not considered a transfer in relation to a capital asset?

Exchange

Sale

Gift

Redemption of a zero coupon bond

Q31.

Which of the following is considered a transfer in relation to a capital asset?

Distribution of capital assets on partition of a HUF

Extinguishment of any rights in the asset

Transfer under a will or an irrevocable trust

Conversion of bonds / debentures/ deposit certificates of a company into shares.

Q32.

Which of the following is considered a capital asset?

Stock-in- trade, raw materials, consumables stores held for business purposes

Agricultural land in a rural area

Quoted securities

Special Bearer Bonds 1991 issued by the Central Government

Q33.

Which of the following is/are considered short term capital asset when it is held for 12 months?

Quoted or unquoted equity or preference shares in a company

Quoted or unquoted Units of Mutual Funds;

Quoted or unquoted zero coupon bonds.

All of the above

Q34.

Which of the following is/are exception/s to the capital gains being charged tax in the year in which the transfer takes place?

Compulsory acquisition

Conversion of capital stock in to stock in trade

Insurance claim

All of the above

Q35.

Which of the following is/are deductions for a short term capital gain?

Expenditure incurred wholly and exclusively in connection with such Transfer

Indexed cost of acquisition

Indexed cost of improvement

All of the above

Q36.

Which of the following exemption/s is/are considered in short term capital gains?

54B

54D

54EC

Both a & b

Q37.

Indexation benefit is not available in:

Bonds

Debentures

Depreciable assets

All of the above

Q38.

Which of the following capital gains is exempted under section 54B?

House property used for residential purpose

Land used for agricultural purposes

Any capital asset

Any capital asset other than residential house

Q39.

Under which of the following section, everybody is exempted from capital gains?

54B

54EC

54F

Q40.

Which of the following fall within Income from other sources?

Salaries

Any sum received from employees by way of contribution to any P.F, ESIC or superannuation fund

Capital gains

Both b& c

Q41.

Which of the following is not a deemed gift?

Amount received from any fund or foundation or university or other educational institution or hospital or other medical institution or any trust or institution

Any sum of money received without consideration from persons in excess of Rs. 50,000 during a given year, the whole of such aggregate sum

Any immovable property without consideration the stamp duty value of which exceeds Rs. 50,000, the stamp duty value of such property

Any movable property without consideration, the aggregate fair market value of which exceeds, Rs. 50,000, the whole of such fair market value

Q42.

Which of the following is an exception to clubbing of income?

Income from assets transferred directly or indirectly to the spouse without adequate consideration.

Income from the assets transferred to son’s wife with adequate consideration

Transfer of assets by an individual to a person for the immediate or deferred benefit of his Spouse

Income of a minor child

Q43.

Which of the following statements is incorrect about losses under ‘Income from house property’?

Losses can be set-off against income from other house properties

Losses can be offset against income from under any other heads in the same year

Losses can be carried forward for a further period of 8 assessment years

None of the above

Q44.

Which of the following statements is/are true about losses from business/profession?

Losses under this head can be set-off against income from any other businesses under the same head

Losses can be offset against income from salaries

Losses arising due to depreciation can be carried forward for 8 assessment years

All of the above

Q45.

Losses arising from speculative businesses can be set-off against any other income.

True

False

Q46.

Which of the following statements is untrue about losses under capital gains?

Any losses arising out of the transfer of short term capital assets can be setoff only against short-term capital gains and not long term capital gains

Long-term capital losses can be set-off against long-term capital gains and not against any short-term capital gains

Any unabsorbed long-term and short-term capital losses can be carried forward for a further period of 8 assessment years

Q47.

Which of the following losses are not allowed to be carried forward?

Losses under income from capital gains

Losses under income from business/profession

Losses under income from other sources with one exception

Losses under Income from house property

Q48.

Profits/losses from the activity of owning and maintaining race horses can be

set-off against any other income

set-off against income from the same activity

cannot be carried forward

Both a & b

Q49.

Stripping provisions are applicable to:

Dividends

Bonuses

Both a & b

None of the above

Q50.

The Gross total income (GTI) of an assessee is arrived at by aggregating the income computed under the five heads of income and after giving effect to the provisions of clubbing and set-off.

True

False

Q51.

Which of the following are deductions under Section 80C?

Life insurance premiums for self, spouse and children

Subscription to NSC (VIII issue)

Contributions to PPF

All of the above

Q52.

A deduction towards the cost of purchase or construction of a residential house property is under:

80C

80CCC

80CCD

80D

Q53.

Deduction due to Subscription to any such deposit scheme of National Housing Bank (NHB), or as a contribution to any such pension fund set up by NHB as notified by Central Government falls under:

80C

80CCC

80CCD

80D

Q54.

Deduction in respect of medical insurance premia falls under:

80CCC

80CCD

80D

80C

Q55.

Deduction in respect of interest on loan taken for higher education falls under:

80C

80G

80D

80E

Q56.

Deduction in respect of donations to certain funds, Charitable institutions, etc falls under:

80C

80G

80D

80E

Q57.

Deduction in respect of rent paid falls under:

80C

80GG

80DD

80E

Q58.

Under section 80G, donation in kind is eligible for deduction.

True

False

Q59.

Extent of deduction under section 80GG is:

Rs. 2,000 per month

25% of the total income (after allowing all deductions except under this section)

Expenditure incurred in excess of 10% of the total income (after allowing all deductions except under this section)

lower of a,b and c

Q60.

Deduction in case of a person with disability falls under:

80D

80G

80E

80U

Q61.

Which of the following incomes are deemed exempt for non residents?

Interest earned on NRE accounts

Interest earned on FCNR and RFC deposits paid by a scheduled bank

Both a & b

None of the above

Q62.

Capital gains arising on transfer of foreign exchange asset shall be exempt in case the Net Consideration is reinvested within a period of twelve months in any other specified asset.

True

False

Q63.

The exchange rate to be applied for sales consideration for calculating the capital gains on transfer of shares/debentures of Indian company is:

Average exchange rate on date of transfer

Average exchange rate on date of purchase

Buying rate on date of transfer

Buying rate on date of purchase

Q64.

The exchange rate to be applied for cost of acquistion for calculating the capital gains on transfer of shares/debentures of Indian company is:

Average exchange rate on date of transfer

Average exchange rate on date of purchase

Buying rate on date of transfer

Buying rate on date of purchase

Q65.

A person whose income is not liable to tax cannot apply for a PAN.

True

False

Q66.

Which of the following is/are the mode/s of collection of taxes?

TDS

Advance tax

Self assessment tax

All of the above

Q67.

Certain items of income are liable for Tax deduction at the prescribed rates at the time of payment thereof. This tax deducted is known as:

TDS

Advance tax

Self assessment tax

None of the above

Q68.

Default in payment of ________ attracts interest liability.

TDS

Advance tax

Self assessment tax

None of the above

Q69.

For a non corporate, non audit assessee, the due date for filing the return of income is:

30th September of the assessment year

31st July of the assessment year

a or b

None of the above

Q70.

For companies, the due date for filing the return of income is:

30th September of the assessment year

31st July of the assessment year

a or b

None of the above

Q71.

A belated return can be filed at any time before the expiry of _________ from the end of the relevant assessment year.

1 year

2 years

3 years

5 years

Q72.

Which of the following provisions relating to signing of returns is incorrect?

In case of an individual’s return, by the individual himself/ herself; however in case s/he is absent from India, by some person duly authorized in this behalf.

In case of a HUF, by the karta and in his absence by any other adult member

In case of a firm, by the managing partner and in his absence by any other partner even being a minor

In case of a company, by the managing director and in his absence by any other director

Q73.

Wealth tax is applicable to:

Individual

HUF

Company

All of the above

Q74.

Which of the following is not an asset as per Wealth Tax act, 1957?

Motor cars

Urban land on which construction of a building is not permissible under any law

Jewellery

Aircrafts

Q75.

Valuation date in respect of wealth tax means:

Last day of the previous year

First day of the current year

First day of the previous year

Last day of the current year

Q76.

Which of the following fall under clubbing of assets in respect of wealth tax?

Assets transferred under revocable transfers

Assets transferred to son’s wife for inadequate consideration

Assets transferred by the assessee to the spouse otherwise than for adequate consideration Assets transferred in consideration or in connection with agreement to live apart is excluded

All of the above

Q77.

If a will made by a Hindu is found to be invalid, then such a person is deemed to have died intestate.

True

False

Q78.

_________ is an instrument made in relation to a Will explaining, altering or adding to its dispositions and is deemed to be a part of the will.

Probate

Testate

Codicil

None of the above

Q79.

A will which is wholly in the handwriting of the testator is:

Conditional will

Individual will

Living wills

Holographic will

Q80.

Wills which are mostly prevalent in the defence services is:

Oral wills

Individual will

Living wills

Holographic will

Q81.

_____ restricts the donee’s authority to act only on a specific transaction.

General POA

Specific POA

Both and b

None of the above

Q82.

Which of the following is/are the purpose/s of a trust?

Benefits the settlor – frees the settlor from managing the trust property.

After death management – Settlor can specify the conditions & timing of the distributions post his death.

Provides skills which the Settlor may not possess – Settlor may lack business acumen to properly handle & invest the trust property; a trust provides a substitute for this vacuum.

All of the above

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