JKSSB Accounts Assistant (Finance) - Taxation & Tax Laws (Direct & Indirect) Practice Test 50MCQs

JKSSB Accounts Assistant (Finance) - Taxation & Tax Laws (Direct & Indirect) Practice Test

Targeted 50 MCQ Practice Module focusing on: Direct Tax Fundamentals (Income Tax Act), Heads of Income & Computation, GST Fundamentals, GST Procedures & Compliance, and Customs/Excise & Tax Administration.

Select your answers and click Submit Assessment Answers at the bottom to calculate your total score and review explanations.

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SECTION I: Direct Tax Fundamentals - Income Tax Act, 1961 [Questions 1 to 10]

1. Which of the following best describes a Direct Tax?

Tax whose burden can be shifted to another person Tax levied on goods and services at the point of sale Tax where liability and burden fall on the same person and cannot be shifted Tax collected only from companies

Explanation: In direct taxes, incidence and impact fall on the same person; liability cannot be shifted to another party (e.g., Income Tax).

2. In which year was the Income Tax Act, which governs direct taxation of income in India, enacted?

1956 1961 1972 1991

Explanation: The Income Tax Act, 1961 came into force on 1st April 1962 and is the primary law governing income tax in India.

3. Which apex statutory body functions under the Department of Revenue to administer direct taxes in India?

Reserve Bank of India (RBI) Central Board of Direct Taxes (CBDT) Securities and Exchange Board of India (SEBI) Comptroller and Auditor General (CAG)

Explanation: CBDT, functioning under the Central Board of Revenue Act, 1963, is the apex authority administering direct tax laws in India.

4. Under the Income Tax Act, the "Previous Year" refers to:

The year immediately following the assessment year The financial year in which income is earned The financial year in which income is assessed and taxed Any 12-month period chosen by the assessee

Explanation: Previous Year (Section 3) is the financial year in which income is actually earned; it is taxed in the subsequent Assessment Year.

5. The "Assessment Year" under the Income Tax Act is defined as the period of twelve months:

In which income is earned by the assessee Commencing on 1st April and ending on 31st March, following the previous year, in which income is assessed That coincides exactly with the calendar year Determined by the assessee's choice of accounting period

Explanation: Section 2(9) defines Assessment Year as the 12-month period starting April 1, immediately following the previous year, during which income of the previous year is assessed and taxed.

6. As per the basic condition for determining "Resident" status of an individual under Section 6, a person must stay in India for at least:

60 days in the previous year 90 days in the previous year 182 days in the previous year 240 days in the previous year

Explanation: One basic condition is that the individual is in India for 182 days or more during the relevant previous year (subject to certain exceptions/alternative conditions).

7. Under Section 2(31) of the Income Tax Act, the term "Person" includes all of the following EXCEPT:

An Individual A Hindu Undivided Family (HUF) A Firm and Company A Foreign Government exercising sovereign functions

Explanation: Section 2(31) lists individual, HUF, company, firm, AOP/BOI, local authority, and every artificial juridical person; a foreign sovereign government is not covered under this definition.

8. The charging section that levies Income Tax on the total income of every person for the relevant previous year is:

Section 2 Section 4 Section 10 Section 14

Explanation: Section 4 is the charging section which provides that income tax shall be charged for any assessment year at rates prescribed by the Finance Act.

9. Agricultural income earned in India is generally:

Fully taxable under the head "Income from Other Sources" Exempt from tax under Section 10(1), though considered for rate purposes in certain cases Taxable only for companies Taxable at a flat rate of 30%

Explanation: Section 10(1) exempts agricultural income from tax, although it may be aggregated for computing the tax rate applicable to non-agricultural income in specific situations (partial integration).

10. PAN, a ten-character alphanumeric identifier mandatory for most financial transactions, stands for:

Personal Account Number Permanent Account Number Public Assessment Number Provisional Allotment Number

Explanation: PAN (Permanent Account Number) is issued by the Income Tax Department under Section 139A to track financial transactions of taxpayers.

SECTION II: Heads of Income & Computation [Questions 11 to 20]

11. As per Section 14 of the Income Tax Act, income of a person is classified and computed under how many heads?

Three Four Five Six

Explanation: Section 14 classifies income under five heads: Salaries, House Property, PGBP, Capital Gains, and Other Sources.

12. Under the head "Salaries," income is chargeable to tax under which basis?

Accrual basis only Due or receipt basis, whichever is earlier Receipt basis only Cash basis exclusively for government employees

Explanation: Section 15 charges salary to tax on "due" basis or "receipt" basis, whichever occurs earlier, to prevent double taxation or escapement.

13. Under "Income from House Property," the Annual Value of a self-occupied property used for own residence is normally taken as:

Municipal value Fair rent Nil Standard rent

Explanation: For a self-occupied house (not let out), the Annual Value under Section 23(2) is taken as Nil, since no benefit accrues from letting.

14. What is the standard deduction available under Section 24(a) while computing Income from House Property?

20% of Net Annual Value 30% of Net Annual Value 50% of Gross Annual Value A fixed sum of ₹50,000

Explanation: Section 24(a) allows a flat deduction of 30% of the Net Annual Value towards repairs and maintenance, irrespective of actual expenditure.

15. Income earned from carrying on a business or profession is chargeable to tax under which head?

Income from Salary Income from Other Sources Profits and Gains of Business or Profession (PGBP) Capital Gains

Explanation: Section 28 brings profits and gains from any business or profession carried on by the assessee under the head PGBP.

16. For a listed equity share to qualify as a Long-Term Capital Asset, it must be held for a minimum period of:

12 months 24 months 36 months 6 months

Explanation: As per Section 2(42A), listed equity shares held for more than 12 months are classified as long-term capital assets, attracting concessional long-term capital gains treatment.

17. Income which does not fall under any of the first four specific heads is chargeable under:

Income from Salary Income from Capital Gains Income from Other Sources Income from House Property

Explanation: Section 56 is a residuary head covering income such as interest, dividends, and winnings that do not fit into the other four specific heads.

18. What is the maximum aggregate deduction available to an individual under Section 80C of the Income Tax Act (under the old tax regime)?

₹1,00,000 ₹1,50,000 ₹2,00,000 ₹2,50,000

Explanation: Section 80C allows a maximum aggregate deduction of ₹1,50,000 for eligible investments/payments like PPF, LIC premium, and tuition fees, under the old regime.

19. "Gross Total Income" differs from "Total Income" in that Total Income is arrived at by:

Adding exempt incomes to Gross Total Income Deducting Chapter VI-A deductions from Gross Total Income Adding all deductions to Gross Total Income Subtracting agricultural income from Gross Total Income

Explanation: Total Income = Gross Total Income minus deductions allowable under Chapter VI-A (Sections 80C to 80U).

20. Under Section 192 of the Income Tax Act, an employer is required to deduct tax at source on:

Rent paid to landlords Salary paid or payable to employees Professional fees paid to consultants Dividend distributed to shareholders

Explanation: Section 192 mandates deduction of TDS by an employer at the time of payment of salary, based on the employee's estimated total income and applicable tax slab.

SECTION III: Indirect Tax - GST Fundamentals [Questions 21 to 30]

21. The Goods and Services Tax (GST) was implemented across India with effect from:

1st April 2016 1st July 2017 1st January 2018 1st October 2019

Explanation: GST was rolled out nationwide from 1st July 2017, replacing multiple indirect taxes with a unified tax structure.

22. GST was introduced in India through which Constitutional Amendment?

42nd Amendment Act 73rd Amendment Act 101st Amendment Act 86th Amendment Act

Explanation: The Constitution (101st Amendment) Act, 2016 inserted Article 246A and enabled the introduction of GST in India.

23. For an intra-state supply of goods, which taxes are simultaneously levied?

IGST only CGST and SGST/UTGST Customs Duty and CGST SGST only

Explanation: On intra-state supplies, both Central GST (CGST) by the Centre and State/Union Territory GST (SGST/UTGST) by the respective State/UT are levied concurrently.

24. The GST Council, constituted under Article 279A of the Constitution, is chaired by:

The Prime Minister of India The Union Finance Minister The Governor of RBI The Chairman of CBIC

Explanation: The Union Finance Minister chairs the GST Council, with State Finance Ministers as members, to recommend rates and policy matters.

25. Under the GST regime, the taxable event that triggers levy of tax is:

Manufacture of goods Sale of goods Supply of goods or services Provision of services only

Explanation: Under GST, "Supply" as defined in Section 7 of the CGST Act is the taxable event, replacing the earlier separate concepts of manufacture, sale, and service provision.

26. What is the general threshold limit of aggregate turnover for mandatory GST registration for a supplier of goods in most States (normal category)?

₹10 lakh ₹20 lakh ₹40 lakh ₹75 lakh

Explanation: The threshold for mandatory GST registration for suppliers of goods is generally ₹40 lakh (₹20 lakh for suppliers of services), subject to state-specific variations.

27. A registered person can opt for the Composition Scheme under GST if their aggregate turnover in the preceding financial year does not exceed:

₹20 lakh ₹75 lakh ₹1.5 crore (for most States) ₹5 crore

Explanation: The Composition Scheme is available to eligible taxpayers with aggregate turnover up to ₹1.5 crore in most States, allowing payment of tax at a fixed lower rate with simplified compliance.

28. "Input Tax Credit" (ITC) under GST refers to:

A subsidy given by the government to exporters Credit of tax paid on inward supplies that can be set off against output tax liability A penalty levied for late filing of returns A refund granted only to composition dealers

Explanation: ITC allows a registered taxable person to reduce the tax paid on purchases (inputs) from the tax payable on sales (output), avoiding cascading effect of tax.

29. A GST Identification Number (GSTIN) is a unique registration number consisting of how many characters/digits?

10 12 15 18

Explanation: GSTIN is a 15-digit alphanumeric code, structured with the state code, PAN of the taxpayer, entity code, and a check digit.

30. Under the Reverse Charge Mechanism (RCM) in GST, the liability to pay tax shifts from the supplier to the:

GST Council Recipient of goods or services Central Government directly Transporter of goods

Explanation: Under RCM, instead of the supplier, the recipient of specified goods or services is liable to pay GST directly to the government.

SECTION IV: Indirect Tax - GST Procedures & Compliance [Questions 31 to 40]

31. GSTR-1 is a return that a registered taxpayer files to report:

Details of outward supplies of goods and/or services Annual consolidated financial statements Details of Input Tax Credit availed only Tax deducted at source by government departments

Explanation: GSTR-1 captures details of all outward supplies (sales) made by a registered taxpayer during the tax period.

32. GSTR-3B is best described as:

An annual return filed once a year A self-declared summary monthly (or quarterly) return of outward and inward supplies with tax payment A return exclusive to composition dealers A return for claiming export refunds only

Explanation: GSTR-3B is a simplified summary return where taxpayers declare summary GST liabilities and pay tax for a tax period.

33. Generation of an E-Way Bill is mandatory for movement of goods where the consignment value exceeds:

₹25,000 ₹50,000 ₹1,00,000 ₹2,00,000

Explanation: As per GST rules, an E-Way Bill is required for movement of goods worth more than ₹50,000 in a single consignment.

34. "HSN Code," used to classify goods systematically under GST, stands for:

Harmonised System of Nomenclature Home Sales Number Highest Sale Notification Home Supply Norms

Explanation: HSN (Harmonised System of Nomenclature) is an internationally standardized system of names and numbers used to classify traded goods for GST purposes.

35. Which of the following is NOT one of the standard GST rate slabs applicable to goods and services in India?

5% 12% 18% 22%

Explanation: The standard GST slabs are 5%, 12%, 18%, and 28% (with cess on select items); 22% is not a standard GST slab.

36. An "Exempt Supply" under GST differs from a "Zero-Rated Supply" primarily because:

Exempt supply allows ITC claim, zero-rated does not Zero-rated supply (like exports) allows the supplier to claim ITC/refund, whereas exempt supply does not Both are treated identically for ITC purposes Exempt supply attracts a reduced GST rate of 0.1%

Explanation: Zero-rated supplies (exports and SEZ supplies) are taxed at 0% but allow the supplier to claim refund of input tax credit, unlike exempt supplies where ITC is not available.

37. Determination of whether a transaction is an intra-state or inter-state supply under GST is governed by rules relating to:

Time of Supply Value of Supply Place of Supply Composition of Supply

Explanation: "Place of Supply" provisions under the IGST Act determine whether a transaction is intra-state (CGST+SGST) or inter-state (IGST).

38. Which of the following is NOT a mandatory particular required on a GST Tax Invoice?

GSTIN of the supplier HSN/SAC Code Signature or digital signature of the supplier Bank statement of the recipient

Explanation: A GST invoice must contain particulars like GSTIN, invoice number, HSN/SAC code, description, taxable value, tax rate, and signature; the recipient's bank statement is not required on the invoice.

39. The annual return that most regular registered taxpayers under GST are required to file is:

GSTR-9 GSTR-2A GSTR-3B GSTR-1A

Explanation: GSTR-9 is the annual return consolidating information furnished in monthly/quarterly returns during the financial year.

40. An appeal against an order passed by an Adjudicating Authority under GST first lies before the:

Supreme Court of India High Court Appellate Authority (First Appellate Authority) GST Council directly

Explanation: The first appeal against an adjudicating authority's order under GST lies with the Appellate Authority, before proceeding further to the Appellate Tribunal, High Court, and Supreme Court.

SECTION V: Customs, Excise & Tax Administration [Questions 41 to 50]

41. The law governing the levy and collection of duties on import and export of goods into/from India is the:

Central Excise Act, 1944 Customs Act, 1962 Finance Act, 1994 Foreign Trade Act, 1992

Explanation: The Customs Act, 1962 provides the legal framework for levy, assessment, and collection of customs duty on imports and exports.

42. The basic duty levied on goods imported into India, calculated generally as a percentage of the assessable value, is known as:

Countervailing Duty Basic Customs Duty (BCD) Anti-Dumping Duty Safeguard Duty

Explanation: Basic Customs Duty (BCD) is the primary duty levied under the Customs Tariff Act on the assessable value of imported goods.

43. After the introduction of GST, Central Excise Duty continues to be levied primarily on:

All manufactured consumer goods Petroleum products and alcoholic liquor for human consumption Textiles and garments Information technology services

Explanation: With most goods brought under GST, Central Excise now mainly survives on petroleum crude, high-speed diesel, petrol, natural gas, aviation turbine fuel, and alcoholic liquor for human consumption.

44. The power of the Union Government to levy duties of customs, including export duties, is derived from which Entry of the Union List in the Seventh Schedule of the Constitution?

Entry 82 Entry 83 Entry 84 Entry 92A

Explanation: Entry 83 of the Union List empowers Parliament to legislate on "Duties of customs including export duties."

45. CBIC, the apex body administering Customs and Central GST/Excise in India, stands for:

Central Board of Indirect Taxes and Customs Central Bureau of Income and Commerce Council of Business and Industrial Compliance Central Board of Investment and Credit

Explanation: The Central Board of Indirect Taxes and Customs (CBIC), under the Department of Revenue, administers GST, Customs, and Central Excise matters.

46. A taxpayer seeking clarity in advance on the applicability/rate of GST for a proposed transaction may approach the:

Central Bureau of Investigation Authority for Advance Ruling (AAR) National Company Law Tribunal GST Appellate Tribunal directly

Explanation: The Authority for Advance Ruling (AAR) allows a taxpayer to seek a binding ruling in advance regarding tax liability, applicable rate, or classification for a proposed transaction.

47. Which of the following best distinguishes "Tax Planning" from "Tax Evasion"?

Tax planning is illegal, while tax evasion is legal Tax planning uses legitimate provisions of law to minimize tax liability, while tax evasion involves illegal suppression or misrepresentation of facts Both terms mean the exact same thing Tax planning applies only to companies, evasion only to individuals

Explanation: Tax planning is the lawful arrangement of financial affairs to reduce tax liability using legitimate exemptions/deductions, whereas tax evasion involves illegal means like concealment of income.

48. A "Double Taxation Avoidance Agreement" (DTAA) is primarily entered into by India with other countries to:

Increase the total tax burden on foreign investors Prevent an assessee's same income from being taxed twice in two different countries Abolish customs duty on bilateral trade Replace GST with a uniform international tax

Explanation: DTAAs are bilateral agreements that allocate taxing rights between countries and provide relief so that income is not taxed twice in both the source and residence countries.

49. With effect from GST implementation, indirect taxation in the Union Territory of Jammu & Kashmir is governed by:

Only the Central GST Act applicable to all states uniformly, with no separate UT law The J&K GST Act along with CGST/IGST Acts, on lines similar to other States A special exemption from GST for the entire UT Excise laws alone, with no GST applicability

Explanation: J&K enacted its own State GST law (J&K GST Act) aligned with the CGST Act, and CGST/IGST Acts apply as in other States/UTs.

50. The most fundamental distinction between Direct Tax and Indirect Tax lies in:

Direct tax is collected by State Governments only; indirect tax by the Centre only In direct tax, incidence and impact fall on the same person, whereas in indirect tax, the burden can be shifted to another person Direct taxes apply only to companies, indirect taxes only to individuals Indirect taxes are always higher in rate than direct taxes

Explanation: The classic distinguishing feature is that direct tax burden cannot be shifted (payer = bearer), while indirect tax liability can be shifted from the person paying it to the ultimate consumer.

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