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Taxation Basics

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Taxation Basics MCQ & Objective Questions

Understanding the fundamentals of taxation is crucial for students preparing for various exams in India. Taxation Basics not only forms a significant part of the curriculum but also helps in developing a clear understanding of financial concepts. Practicing MCQs and objective questions on this topic can enhance your exam preparation, enabling you to score better in important assessments.

What You Will Practise Here

  • Key definitions and concepts related to taxation
  • Types of taxes: direct and indirect taxes
  • Understanding tax brackets and rates
  • Tax deductions and exemptions
  • Filing tax returns and compliance
  • Important formulas related to tax calculations
  • Real-life applications of taxation principles

Exam Relevance

Taxation Basics is a vital topic that frequently appears in CBSE, State Boards, NEET, and JEE exams. Students can expect questions that test their understanding of tax structures, calculations, and implications. Common question patterns include multiple-choice questions that require students to apply concepts to solve practical problems, making it essential to grasp the core principles thoroughly.

Common Mistakes Students Make

  • Confusing direct taxes with indirect taxes
  • Misunderstanding tax brackets and how they affect income
  • Neglecting to consider deductions and exemptions in calculations
  • Overlooking the importance of accurate tax return filing
  • Failing to apply theoretical concepts to practical scenarios

FAQs

Question: What are the main types of taxes in India?
Answer: The main types of taxes in India are direct taxes, such as income tax, and indirect taxes, like GST.

Question: How can I prepare effectively for taxation-related questions?
Answer: Regular practice of MCQs and understanding key concepts will help you prepare effectively for taxation-related questions.

Start your journey towards mastering Taxation Basics by solving practice MCQs today. Test your understanding and boost your confidence for upcoming exams!

Q. An individual is a resident in India if they are in India for how many days or more during the previous year?
  • A. 60 days
  • B. 182 days
  • C. 120 days
  • D. 90 days
Q. An individual is a resident in India if they have stayed in India for how many days or more during the previous year?
  • A. 60 days
  • B. 182 days
  • C. 120 days
  • D. 90 days
Q. How is taxable income calculated for an individual taxpayer?
  • A. Gross income - Deductions
  • B. Gross income + Deductions
  • C. Net income - Exemptions
  • D. Net income + Exemptions
Q. How is taxable income calculated for an individual?
  • A. Gross income - Deductions
  • B. Net income + Exemptions
  • C. Gross income + Deductions
  • D. Net income - Exemptions
Q. How is taxable income calculated?
  • A. Gross income - Deductions
  • B. Gross income + Deductions
  • C. Net income - Exemptions
  • D. Net income + Exemptions
Q. If a person is a resident in India, what is the basic condition for determining their residential status?
  • A. Age
  • B. Income
  • C. Duration of stay
  • D. Occupation
Q. If a resident individual earns income from a foreign source, how is it taxed in India?
  • A. Only the foreign income is taxed
  • B. Only the Indian income is taxed
  • C. Both Indian and foreign income are taxed
  • D. No tax is applicable
Q. If a resident individual has income from foreign sources, how is it taxed in India?
  • A. Only if it is repatriated
  • B. Only if it exceeds Rs. 2,50,000
  • C. Taxed as per Indian tax laws
  • D. Not taxed at all
Q. If a taxpayer has a gross total income of ₹10,00,000 and has made a donation of ₹1,00,000 to a charitable organization, what is the maximum deduction they can claim under Section 80G?
  • A. ₹1,00,000
  • B. ₹50,000
  • C. ₹75,000
  • D. ₹25,000
Q. If a taxpayer has a salary of ₹6,00,000 and earns ₹2,00,000 from other sources, what is their gross total income?
  • A. ₹6,00,000
  • B. ₹8,00,000
  • C. ₹7,00,000
  • D. ₹5,00,000
Q. If a taxpayer's residential status is 'Resident and Ordinarily Resident', which of the following incomes is taxable?
  • A. Income earned in India
  • B. Income earned outside India
  • C. Both A and B
  • D. None of the above
Q. If a taxpayer's total taxable income is ₹10,00,000, what is the income tax liability for an individual below 60 years under the old tax regime?
  • A. ₹1,00,000
  • B. ₹1,50,000
  • C. ₹1,20,000
  • D. ₹1,80,000
Q. If an individual earns a salary of Rs. 6,00,000 and has deductions of Rs. 1,50,000, what is the taxable income?
  • A. 4,50,000
  • B. 5,00,000
  • C. 6,00,000
  • D. 7,50,000
Q. If an individual earns Rs. 6,00,000 in a financial year and has a deduction of Rs. 1,50,000 under Section 80C, what is the taxable income?
  • A. Rs. 4,50,000
  • B. Rs. 5,00,000
  • C. Rs. 6,00,000
  • D. Rs. 7,50,000
Q. If an individual has a total income of 8 lakhs and claims deductions of 1.5 lakhs, what is the taxable income?
  • A. 6.5 lakhs
  • B. 7 lakhs
  • C. 8 lakhs
  • D. 9.5 lakhs
Q. If an individual has a total income of ₹10,00,000 and claims deductions of ₹1,50,000, what is the taxable income?
  • A. ₹8,50,000
  • B. ₹10,00,000
  • C. ₹9,00,000
  • D. ₹7,50,000
Q. If an individual has a total income of ₹8,00,000 and claims deductions of ₹1,50,000, what is the taxable income?
  • A. ₹6,50,000
  • B. ₹8,00,000
  • C. ₹7,50,000
  • D. ₹5,50,000
Q. In the context of GST, what is the rate of GST applicable on the supply of services?
  • A. 5%
  • B. 12%
  • C. 18%
  • D. 28%
Q. In the context of income tax, what does 'taxable income' refer to?
  • A. Total income before deductions
  • B. Total income after deductions
  • C. Income from exempt sources
  • D. Income from capital gains only
Q. Under GST, what is the threshold limit for registration for service providers?
  • A. Rs. 20 lakhs
  • B. Rs. 10 lakhs
  • C. Rs. 15 lakhs
  • D. Rs. 25 lakhs
Q. Under GST, which of the following is a taxable supply?
  • A. Sale of agricultural produce
  • B. Sale of old newspapers
  • C. Sale of luxury goods
  • D. Sale of exempt goods
Q. Under GST, which of the following is considered a supply?
  • A. Sale of goods
  • B. Transfer of property
  • C. Import of services
  • D. All of the above
Q. Under GST, which of the following is eligible for input tax credit?
  • A. Personal expenses
  • B. Goods used for exempt supplies
  • C. Goods used for taxable supplies
  • D. Goods purchased for resale without tax
Q. Under GST, which of the following is true regarding input tax credit?
  • A. It can be claimed for all purchases
  • B. It can only be claimed for capital goods
  • C. It can be claimed only if the supplier has paid the tax
  • D. It cannot be claimed at all
Q. Under Section 80C, which of the following investments qualifies for deduction?
  • A. Public Provident Fund (PPF)
  • B. Savings Bank Account Interest
  • C. Fixed Deposits
  • D. Cash in Hand
Q. Under which section can an individual claim a deduction for contributions made to the National Pension Scheme (NPS)?
  • A. Section 80C
  • B. Section 80D
  • C. Section 80CCD
  • D. Section 80E
Q. What does CGST stand for?
  • A. Central Goods and Services Tax
  • B. Comprehensive Goods and Services Tax
  • C. Common Goods and Services Tax
  • D. Centralized Goods and Services Tax
Q. What does GST stand for?
  • A. Goods and Services Tax
  • B. General Sales Tax
  • C. Gross Sales Tax
  • D. Government Sales Tax
Q. What is the basic exemption limit for individual taxpayers below 60 years of age for the financial year 2022-23?
  • A. 2.5 lakhs
  • B. 3 lakhs
  • C. 5 lakhs
  • D. 10 lakhs
Q. What is the basic exemption limit for individual taxpayers below 60 years of age for FY 2022-23?
  • A. Rs. 2,50,000
  • B. Rs. 3,00,000
  • C. Rs. 5,00,000
  • D. Rs. 1,50,000
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