Question 1

M.Ltd announced increase in D.A. on 21-03-2017 with retrospective effect from 21-3-2012 and the same were paid on 6-04-2017. The arrears of D.A. shall be taxable in the previous year ________

Accepted Answer

The arrears of D.A. are taxable in the year they are received, which is the financial year 2017-18.

Question 2

Un -commuted pension received by a Government employee is ____________

Accepted Answer

Un-commuted pension received by a Government employee is considered as a regular income and is fully taxable under the Income Tax Act.

Question 3

M.claimed the exemption of gratuity in the past to the extent of Rs.2,50,000.He was entitled to the gratuity from the present employer amounting to Rs.2,00,000 in the previous year 2017-18. M can claim exemption to the maximum extent of ___________

Accepted Answer

The exemption limit for gratuity under the Income Tax Act is cumulative across an individual's lifetime. Since M has already claimed Rs. 2,50,000 in the past, which is above the entitlement from the present employer (Rs. 2,00,000), he can claim the entire amount of Rs. 2,00,000 as exempt, because his current gratuity does not exceed his previous claim.

Question 4

Employee M is neither a government employee nor covered under payment of gratuity Act, 1972. He has completed 16 years and 8 months of service. The number of completed years considered for gratuity exemption shall be _____________

Accepted Answer

For gratuity calculation, only completed years of service are considered. Since M has completed 16 years and 8 months, only 16 years are counted.

Question 5

Compensation received on voluntary retirement is exempt under sec.10 (10c) to the maximum extent of ___________

Accepted Answer

The exemption limit for compensation received on voluntary retirement under section 10(10C) of the Income Tax Act is Rs. 5,00,000.

Question 6

M is entitled to children education allowance @80 p.m per child for 3 children amounting Rs.240p.m. It will be exempt to the extent of ___________

Accepted Answer

The exemption for children's education allowance is limited to Rs.100 per month per child for a maximum of 2 children, which totals Rs.200 per month. Since M is entitled to Rs.240 per month for 3 children, the exemption will only cover Rs.200, leaving Rs.40 as taxable. However, the closest option that reflects the extent of exemption correctly is Rs.160 p.m, which seems to be a mistake in the context of standard exemption limits. The correct standard exemption should be Rs.200 p.m, but based on the provided options, Rs.160 p.m is chosen, indicating a possible error in the question or options.

Question 7

Entertainment allowance in case of government employee is _________________

Accepted Answer

Entertainment allowance for government employees is first included in their gross salary and then a deduction is allowed under section 16(ii) of the Income Tax Act. This makes it partially exempt depending on the conditions specified in the section.

Question 8

Pension received by an employee of the central or state government who has been awarded "Param Vir Chakra" _____________

Accepted Answer

Pension received by an employee of the central or state government who has been awarded "Param Vir Chakra" is exempt from tax under the Income Tax Act of India. This exemption is provided to honor the bravery and service of the awardees.

Question 9

Children education allowance is ____________

Accepted Answer

Children education allowance is exempt to the extent of the lower of the allowance received or the lump sum amount prescribed by tax laws, irrespective of the actual amount spent on education.

Question 10

Leave travel concession is _________

Accepted Answer

Leave travel concession is exempt up to the lower of the amount actually spent or the prescribed limits as per the Income Tax Act.

Question 11

M.has taken a house on rent and sublets the same to A, income of M from such house property shall be taxable under the head _____________

Accepted Answer

The income M earns from subletting the house is considered as income from other sources since M is not the owner of the property.

Question 12

Municipal valuation of the house is Rs.1,00,000 fair rent Rs.1,20,000, fair rent Rs.1,20,000, standard rent Rs.1,10,000 and actual rent received or receivable is Rs.1,40,000. The gross annual value in this case shall be ____________

Accepted Answer

The answer of Municipal valuation of the house is Rs.1,00,000...

Question 13

A has two house properties. Both are self-occupied. The annual value of ____

Accepted Answer

The answer of A has two house properties. Both are...

Question 14

Municipal valuation of the house is Rs.1,20,000, fair rent 1,40,000, standard rent Rs.1,30,000 and actual rent received or receivable is Rs.1,25, 000.The gross annual value in this case shall be ______

Accepted Answer

The answer of Municipal valuation of the house is Rs.1,20,000,...

Question 15

A has two house properties. Both are self-occupied. The annual value of _________

Accepted Answer

Under the Income Tax Act of India, if an individual owns more than one self-occupied property, only one of those properties is considered as self-occupied for the purpose of calculating income from house property. The other property/properties are deemed to be let-out, and a notional rental income is considered for taxation. Therefore, the annual value of one house shall be considered as nil, and the other will have a notional rental income.

Question 16

An assessee has borrowed money for purchase of house and interest is payable outside India. Such as interest shall ____________

Accepted Answer

Interest on borrowed money for the purchase of a house that is payable outside India is allowed as a deduction only if the tax on it is deducted at source.

Question 17

Municipal tax is deducted from__________

Accepted Answer

Municipal tax is deducted from the Gross Annual Value (GAV) of a property to arrive at the Net Annual Value (NAV) for tax purposes.

Question 18

In case the property is owned by co -owners and it is self-occupied by all co -owners. The annual value of such house property ____________

Accepted Answer

For each co-owner, the annual value of a self-occupied property is considered to be nil. This is because the Income Tax Act allows for a self-occupied property to have a nil annual value, which applies to each co-owner's share in the property.

Question 19

A house property with fair rent Rs.1,20,000 is neither let out nor self-occupied throughout the previous year. Its annual value shall be ________

Accepted Answer

The annual value of a house property that is neither let out nor self-occupied is considered to be its fair rent, which is Rs.1,20,000 in this case.

Question 20

Unrealized rent is a deduction from ______-

Accepted Answer

Unrealized rent is deducted from the Gross Annual Value (GAV) to calculate the Net Annual Value (NAV) of a property for income tax purposes.

Quiz 2: Taxation and Exemptions Related to House Property and Employee Benefits