Chapter 29: Taxation – Income Tax/TDS/Deferred Tax (JAIIB – Paper 3)
1. Which section of the Income Tax Act, 1961 deals with the computation of total income of an individual?
A. Section 80C
B. Section 10
C. Section 15
D. Section 4
Section 15 of the Income Tax Act, 1961, provides the provisions for computing total income of an individual including salaries, house property, and other incomes.
2. What is the financial year for Income Tax purposes in India?
A. 1st April to 31st March
B. 1st January to 31st December
C. 1st June to 31st May
D. 1st July to 30th June
The Income Tax Act considers 1st April to 31st March as the financial year for assessing income of individuals and entities in India.
3. Which section of the Income Tax Act provides deductions for specified investments and expenses?
A. Section 80TTA
B. Section 24
C. Section 115BBE
D. Section 80C
Section 80C allows deductions for investments like PPF, ELSS, life insurance premiums, and tuition fees from the total taxable income.
4. What is TDS in the context of the Income Tax Act?
A. Tax Deducted at Sale
B. Tax Deducted at Source
C. Total Direct Sales
D. Tax Deferred Scheme
TDS (Tax Deducted at Source) is a mechanism to collect tax at the point of income payment to the recipient.
5. Deferred Tax arises due to:
A. Immediate payment of all taxes
B. Penalties for tax evasion
C. Timing differences between accounting and tax treatment
D. Tax deduction at source
Deferred Tax occurs because certain items are recognized in accounting books at different times than they are recognized for tax purposes, creating timing differences.
6. Section 80QQB provides deduction for which type of income?
A. Income from agriculture
B. Royalty income of authors of books
C. Capital gains from property
D. Dividend income from shares
Section 80QQB allows a deduction for royalty income received by authors of books other than textbooks.
7. Section 80RRB is applicable to which category of taxpayers?
A. Salaried individuals only
B. All individuals receiving dividends
C. Small business owners
D. Patentees receiving royalty income from patents
Section 80RRB provides deduction for royalty income received by an individual from patents registered in India.
8. Section 80TTA provides a deduction on:
A. Interest income from savings accounts
B. Dividend income from mutual funds
C. Long-term capital gains
D. Rent from property
Section 80TTA allows individuals and HUFs a deduction up to ₹10,000 on interest earned from savings accounts with banks, post offices, or cooperative banks.
9. Section 80U provides deduction to:
A. Taxpayers with long-term investments
B. Authors receiving royalty
C. Individuals with disability
D. Senior citizens on pension income
Section 80U provides a deduction to individual taxpayers who are certified as persons with disability by the medical authorities.
10. The maximum deduction allowed under Section 80TTA for savings account interest is:
A. ₹5,000
B. ₹10,000
C. ₹15,000
D. ₹20,000
The maximum deduction for interest earned on savings accounts under Section 80TTA is ₹10,000 per financial year for individuals and HUFs.
11. TDS stands for:
A. Tax Deducted at Sale
B. Tax Deferred Scheme
C. Tax Deducted at Source
D. Total Direct Sales
TDS (Tax Deducted at Source) is a mechanism under the Income Tax Act to collect tax at the point of income payment.
12. TCS is collected by the seller on certain specified transactions. What does TCS stand for?
A. Taxed at Customer Sale
B. Tax Collected at Source
C. Total Collected Sales
D. Tax Deferred Scheme
TCS (Tax Collected at Source) is collected by the seller from the buyer on specified transactions and deposited with the government.
13. Which of the following forms is used by individuals to file their Income Tax Returns in India?
A. Form 16A
B. Form 26QB
C. Form 27Q
D. Form ITR-1
Individuals with income from salary, one house property, or other sources can file returns using ITR-1 (Sahaj) form.
14. Which section of the Income Tax Act requires the deduction of TDS on salary payments?
A. Section 192
B. Section 194A
C. Section 195
D. Section 206C
Section 192 mandates employers to deduct tax at source from salary payments to employees.
15. TDS/TCS returns are filed with the Income Tax Department within which time frame for the relevant quarter?
A. 15 days after the quarter ends
B. 30 days after the quarter ends
C. 60 days after the quarter ends
D. 90 days after the quarter ends
TDS/TCS returns must be filed within 30 days of the end of the relevant quarter to comply with Income Tax regulations.
16. Form 26AS provides a consolidated statement of:
A. Annual salary breakup
B. Investment details only
C. Tax deducted/collected at source and advance tax paid
D. GST paid
Form 26AS consolidates all TDS/TCS deductions, advance tax, and self-assessment tax paid by the taxpayer in a financial year.
17. Which of the following is true about filing income tax returns?
A. Returns can only be filed physically at the Income Tax office
B. Filing is mandatory only for senior citizens
C. Returns cannot be revised once filed
D. Returns can be filed electronically and revised if needed
Income Tax Returns can be filed electronically using the government portal and can be revised if errors are detected before the due date.
18. Income tax refund arises when:
A. Tax payable exceeds TDS/TCS
B. TDS/TCS/advance tax paid exceeds tax liability
C. Tax is not deducted at source
D. Taxpayer has no taxable income
A refund arises when the total tax paid via TDS, TCS, or advance tax exceeds the actual tax liability computed in the income tax return.
19. Which form is generally used to claim an income tax refund?
A. Form 26AS
B. Form 16
C. Form 15G
D. Income Tax Return (ITR) form
Refunds are claimed through filing the relevant Income Tax Return (ITR) form for the financial year in which excess tax was paid.
20. What is the maximum time limit for the Income Tax Department to issue a refund after filing a return?
A. 6 months from the end of the month in which return is processed
B. 3 months from filing
C. 12 months from assessment year start
D. 24 months from filing
As per the Income Tax Act, refunds are generally processed within 6 months from the end of the month in which the return is processed, unless there are delays due to scrutiny or verification.
21. Recovery of tax can be initiated by the Income Tax Department through:
A. TDS certificate issuance
B. Advance tax deposit
C. Notice under Section 156 and other recovery provisions
D. Form 16 submission
Recovery of tax is initiated by issuing notices such as Section 156 for demand collection, and other provisions allow attachment of assets if the tax is unpaid.
22. Interest on delayed refunds under the Income Tax Act is paid under which section?
A. Section 234A
B. Section 244A
C. Section 201
D. Section 115BBE
Section 244A provides for payment of interest by the Income Tax Department on refunds due to the taxpayer if the refund is delayed beyond the stipulated time.
23. If a taxpayer fails to pay due tax, the department may recover it by:
A. Filing a civil suit
B. Issuing TDS certificate
C. Adjusting future refunds automatically
D. Attaching bank accounts, salary, or property under recovery provisions
The Income Tax Department can recover unpaid tax by attaching the taxpayer’s bank accounts, salary, or movable/immovable property under recovery provisions.
