History of Credit Cards

History of Credit Cards – How Credit Cards Have Evolved?

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History of Credit Cards: The root of the word ‘credit’ comes from the Latin word for ‘trust.’ This is as simple as selling something to someone and trusting them to pay you the money in the given time gap. In this article, we will look into credit cards, where the idea came from, how they evolved and much more.

History of Credit

The ancient civilisations of Egypt, Babylon, and Assyria were the first to use credit, and this was about 3000 years ago. This began to spread across to Europe as trade routes began to be developed, thereby putting Europeans in contact with those from the Arab areas, which meant that during the Middle Ages, the concept of credit took off.

12th Century Europe commonly saw large trading fairs with people travelling from afar to take part and buy and sell products. Credit was very important to traders as they moved from one fair to another using credit to buy a few things at one spot, and then they would get money for this by selling the goods at another spot at a profit. Trade agents were found at every large fair in Itlay, and their duty was to record the details of buying, selling, and repayment, a process that was constant.

The idea of paying in installments also gained popularity and acceptance in this area. From the 18th to the 20th century, tallymen now began to sell clothes for weekly payments. As their name suggests, they were called so because they kept a tally of what was bought on sticks of wood. One side of it showed payments and the other side debts. Before organised consumer credit came to be, the major lending sources were limited to mortgage lenders, friends and family, retailers, illegal small-loan lenders, and pawnbrokers.

Credit Cards

Let’s talk about credit cards now, as this is the credit system that is followed today. What laid the foundations for these were actually the earliest plastic credit cards. They were far from what we have today, but, as was said, they laid the foundation of what we have today. In the US, the 1920s saw the introduction of the ‘buy now, pay later’ system but could only be used in the stores that were issuing it. The Encyclopedia Britannica also states that around the same time, credit cards were originated when individual firms like hotel chains and oil companies were issuing these cards to their customers for use, but only within these firms. Western Union is one such firm that began to do so in 1921 for their frequent customers.

The ‘Charge-It’ program was invented by John Biggins of the Flatbush National Bank of Brooklyn for use between local merchants and bank customers. The Charge-Plate, as it was called, was the early predecessor to the current credit cards and was used in the 1930s and the late 1940s. This rectangle sheet metal was 2 1/2″ x 1 1/4″ was embossed with the name, city, and the state of the customer. It looked like a military dog tag too. This card was first laid in the imprinter, then a charge slip was placed on top of which, and finally, the ink ribbon was pressed on.

It was actually very similar to the current credit cards, but the purchases were limited only to being local, and the cardholders of the Charge-It needed to have an account at the Biggins’ Bank. The sales slips were deposited into the bank by merchants, and the customer who used the card was billed by the bank. New York’s Franklin National Bank was where the first bank credit card appeared in 1951, and this was for loan customers. But this too could only be used by the account holders in the bank.

The First Credit Card

Frank McNamara, in 1949, had a business dinner to attend to at the Cabin Grill in New York. Unfortunately for him, when the bill arrived, he realised he hadn’t got his wallet with him. While he managed to settle the bill, he decided that cash required an alternative. This sparked off the idea of the first credit card. The small cardboard card was then invented and was called the Diners Club Card to be mainly used for entertainment and travel. This card holds the title of the very first credit card that was used in a widespread manner.

Credit Cards

Origin of the Idea of the First Credit Card

A merger with Dine and Sign was what caused the partial creation of the Diners Club, and they produced the first charge card that they termed ‘general-purpose,’ where the entire bill had to be paid with every statement. This Diners Club card was replaced with plastic by the 1960s.

1850 saw the formation of American Express, and 1958 was when they emerged into the industry of the credit card with their own product that was a purple card charge for entertainment and travel expenses. The BankAmericard bank credit card, now known as Visa, was issued by the Bank of America in 1958. The next year, the first card made from plastic was introduced by American Express as an alternative to celluloid or cardboard.

The Interbank Card Association was formed in 1966by a number of banks. In 196, the First National Bank of Louisville, Kentucky, licensed the name Maser Charge.  The banks joined the ICA with the help of New York’s Marine Midland Bank, which is now called the HSBC Bank USA, to create the Master Charge: The Interbank Card.

Evolution of Credit Cards

At this age, it takes a few seconds barely to pay for a purchase with a card. Most of the time, there is no need to sign, and multi-layered security can be counted on to keep information safe. Let’s look at a brief timeline about how credit cards have evolved.

  • In the early 1900s to the 1940s, the cards we made from paper, cardboard, and metal only later on. These cards were issued by retail stores and oil companies to only be used there.
  • The Diners Club was started in 1950 for entertainment and travel expenses. This is where the first widely used credit card is said to have been used. A plastic entertainment and travel card was issued later on in the decade by American Express. Both cards needed the balance to be aid of f monthly.
  • The MasterCard and Visa cards joined the marker in the mid-1960s but were called general-purpose credit cards then.
  • Electronic credit card processing was introduced in 1973, allowing merchants to have access to information from the banks to make sure that the users actually had sufficient credit for the purchase. This gave consumers more places to use the credit card, along with more flexibility in using it.
  • The Discover card was launched nationally in 1986 with a television commercial that was played in the Super Bowl XX. This card aimed at the delivery of consumer-friendly services and features like no annual fee and the very first cash rewards program.
  • The EMV chip was developed and launched in the mid-1990s in Europe, giving more security. And this technology caught on to the rest of the world.
  • Today, holders of credit cards can use them across the country and also internationally. There is flexibility to pay balances each month or make monthly payments that fit their budgets. What’s moe is that these cards can be linked to smartphones, and they offer rewards for purchases.

There is constant work done to increase the security of the personal information of cardholders and security in general. The EMV chip is being adopted by merchants in the US as well. The cards with chops feature bot the traditional magnetic strip along with the chop itself, which makes them usable even if the merchant doesn’t have a reader that can support chip technology. If the card issuer and the merchant both supper this technology, the card can simply be inserted into the terminal to go through with the transactional process.

India and Credit Cards

The market for credit cards begun in India in 1981 when the cards were issued by VISA. And the pioneer of these cards in India was Andhra Bank.

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Post Office Savings Bank

Post Office Savings Bank – Core Banking Solution, Internet Banking and Mobile App

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Post Office Savings Bank: A public facility that provides email services, including accepting parcels and letters, contributing post office boxes, and vending postage stamps, packaging, and stationery, is known as the post office. Post offices also grant additional services, which differ from country to country. These involve proffering and receiving government forms (like passport forms), processing government services and expenses (like postal savings, road tax, or bank post office). Postmaster is the chief administrator of the post office.

People opening accounts in different Post office schemes are dealing with Post offices near their house. But the Post office has become modernised. They are proposing a Core Banking Solution. The CBS (Core Banking Solution) Project brings amenities of ATM Banking, Internet Banking, Phone Banking and Mobile Banking to the Post Offices Savings Bank (POSB). Clients can make transactions 24×7 in ATMs and transfer money from their account to any bank account through National Electronic Fund Transfer (NEFT) and Real-Time Gross Settlement (RTGS). This article will inform you about the Modernisation of the Post office, its features, Apps for Banking and Postal Information and CBS in detail.

Core Banking Solution (CBS)

The networking of bank branches, which allows customers to maintain their accounts and use various banking facilities from any part of the world, is known as Core Banking Solutions. In simple terms, there is no obligation to visit the branch to do banking transactions. One can do it from any location, any time and enjoy banking services. Execution of CBS across all units helps speed up most of the everyday transactions of banks and customers. Any depositor of Savings, TD, RD, MIS, SCSS, PPF or Certificates can initiate transactions either Financial or Non-Financial at any CBS Post Office.

When the Account Holder of MIS/SCSS/TD scheme addresses CBS Post Office, the Supervisor or Postmaster inquire the Account holder that, since CBS is implemented in the office, there is no obligation for alteration of Accounts as on maturity, one can receive payment from any CBS Post Office after presenting fresh KYC documents. CBS is expected to adhere to the dynamically changing market & client requirements and develop & simplify banking processes to focus on sales & marketing stuff. In order to expand the presence of postal banking in rural and remote areas and also to improve banking speed, the core banking solutions are convenient for customers.

Post Office Savings Bank and Internet Banking

Post office savings scheme is among the many secure options for those seeking a higher interest rate than banks. Post office investment schemes such as PPF, NSC, and KVP offer a considerable rate of interest. The POSB (Post Office Savings Bank) accounts have reinvented themselves with uncertain times. One can now quickly transfer funds from the Post Office accounts using internet banking. Besides an active post office bank account, one needs an active mobile number and ensures all the KYC documents are in order; a PAN number and an e-mail ID are required for transferring information.

Details on How To Activate Internet Banking for Post Office Account

Here are complete details of how to activate Internet Banking for Your Post Office Savings Account

  • Step 1: Visit the post office branch with the internet banking form. Submit it along with required documents. Once internet banking is activated, an SMS will be sent to the given mobile number.
  • Step 2: The next step after getting the SMS is to visit https://ebanking.indiapost.gov.in and then click on ‘New User Activation’.
  • Step 3: Here, one needs to enter Customer ID, the CIF ID printed on the first page of the passbook. The account ID is the savings account number. One needs to enter the password carefully, as, after five wrong attempts, the user id will be disabled.
  • Step 4: After completing all of these steps, the internet banking account will be activated and is ready to make a fund transfer from the Post Office account. Also, you aren’t required to visit the branch to deposit money in your PPF account or the post office recurring deposit (RD) account.

Withdrawal of Money From Post Office Vs PPF

You can withdraw or encash your money from where you have enrolled for an NSC account. You will have to authorise the person with a signed letter if you send a person to withdraw the NSC on your behalf.

When it comes to PPF Withdrawal, you can get your amount credited to the bank and make a bank withdrawal (if your bank has the facility). You can also visit and download Form C or its corresponding application for cancellation on NSI India.

Mobile App for Post Office Saving Account

To complete the registration for the mobile app, one needs to visit their nearest post office, where your POSB account is present. Once the registration has been completed for mobile banking, you can use the Department of Post Mobile banking application services.

  • Firstly, download the Mobile Banking Application from the Google Play store, open the application, and click on the Activate Mobile Banking button.
  • Next, enter the Security Credentials provided by the Department of Post. The Registered Mobile number will receive an OTP. Enter the OTP and continue further.
  • Once successfully verified, you will be asked to enter a four-digit MPIN. Please enter the four-digit MPIN of your choice, and you will be activated for Mobile Banking Application.
  • The user ID and the newly generated MPIN is needs to be entered to login in the mobile app
  • In situations when one faces any difficulties or have any query, it is advised to contact the postal helpline service at their customer care 18004252440

Post Office and Small Saving Schemes

India Post, which regulates the postal chain of the country, also presents several deposit avenues for investors, generally recognised as post office saving schemes. These schemes were proposed to inject savings discipline and give investment avenues among Indians from across economic classes. Every post office provides these savings schemes to allow individuals from all over India to apply and register quickly. People funding in Small Saving Schemes in the Post office are restrained to dealing only with post offices. India has a network of 154,866 post offices across the nation. Of these, 139,040 are in rural areas. In 1947, there were only 23,344 post offices, which were in the urban areas. The department of posts collects over Rs 6 lakh crore of long-term savings under the numerous postal savings schemes. At present, there are nine postal schemes related to savings offered by the govt. Of India to the masses.

They are mentioned below.

  • Public Provident Fund (PPF)
  • National Savings Certificate (NSC)
  • Post Office Monthly Income Scheme
  • 5-Year Post Office Recurring Deposit Account
  • Post Office Time Deposit Account
  • Sukanya Samriddhi Account
  • Senior Citizen Savings Scheme
  • Post Office Savings Account
  • Kisan Vikas Patra (KVP)

Conclusion on Post Office Savings Bank

Post offices are developing. with the Core Banking Solution, the experience of a Post Office Customer has become compliant. Going to the Post office would now be minimal; submitting a KYC document or Registering for the Internet has become manageable.  The core banking solutions comprising Internet banking and the mobile app are steps in the positive direction of customer convenience and digitisation from the Indian postal service. This article gives the reader a succinct understanding of the steps and procedures involved in availing the core banking service of the post office of India.

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nps tax benefits and schemes

NPS Tax Benefits and Sections: Check National Pension Scheme Benefits

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NPS Tax Benefits and Schemes: The full form of NPS is National Pension Scheme. The main objective of this scheme is to encourage individuals to invest in the National Pension Scheme launched by government officials of India. Before investing in the National Pension Scheme, one must be aware of the NPS schemes and the benefits in order to choose the right scheme before investing. Also, NPS Schemes helps individuals in the term of tax benefits.

To help you understand all the details of NPS Tax Benefits and Schemes here is a detailed article on what are things which one must consider before investing in NPS and what are the NPS Tax Benefit for Government or Private employees. Read on to find out more.

What Are The Types Of NPS Accounts?

Under the NPS Scheme, there are two types of accounts. Tier I & Tier II accounts.

  1. NPS Tier I Account: Any individual who would like to invest under NPS Scheme will have to register for a Tier I account.
  2. NPS Tier II Account: The tier II account is completely optional. An individual can either register for a Tier II account else can ignore it. However in order to register under a Tier II account, one will have to mandatorily register under a Tier I account.

 NPS Tier 1 Tax Benefits

The main objective of the NPS Tier 1 scheme is to invest and save enough money for their retirement period. Thus any individuals wouldn’t be able to withdraw the money from the NPS Tier I account. However, when it comes to the NPS Tier II account, the officials are not offering any tax benefits but one will able to withdraw funds as and when required from the Tier II account, unlike the Tier I account.

NPS Tax Benefits – Tier 1 Account

The investments which are made under Tier 1 NPS accounts are eligible for tax exemption under the following 3 schemes of NPS.

  1. Section 80 CCD (1) or Section 80 C
  2. Section 80 CCD (1b)
  3. Section 80 CCD (2)

Tax Saving Benefits in NPS Tier 1 Account

  1. Section 80CCD(1)(section 80C): This section of income tax supports various tax deductions to the investors. When it comes to a salaried employee, he/she claim 10% of salary i.e., up to 1,50,000. On the other hand, self-employed individuals can claim up to 10% of gross income.
  2. Section 80CCD(1b): As per this scheme, one can avail of the tax benefit up to Rs. 200000. This benefit can be availed after the deduction offered under Section 80C.
  3. Section 80 CCD (2): Section 80 CCD (2) of the Income Tax act supports tax deduction on the employer contributions which can be availed by both private and government employees. Under Section 80 CCD (2) government employees can avail of tax benefits up to 14% on salary whereas private employees can avail the tax benefits up to 10% on salary.

Overview of Tax Deductions Offered By NPS

The highlights of Tax benefits offered by the NPS scheme are tabulated below:

Section Name Tax Deduction Source Maximum Limit
Section 80C The deductions are directly made from salary towards retirement Rs.1,50,000
Section 80CCD Deductions are made over and above after Section 80C Rs. 2,00,000
Section 80CCD (2) The deductions are made on the employer’s contribution. 14% of Gross Salary for Govt employees

10% of Gross Salary for Private employees

NPS Tax Benefits: Difference Between Tier I and Tier II

The difference between Tier I and Tier II account under NPS for Tax benefits are tabulated below:

NPS Tier I Account NPS Tier II Account
NPS Tier I account is otherwise called a Pension account. NPS Tier II account is otherwise called an investment account.
A minimum of Rs.6000 should be contributed annually for NPS Tier I account. A minimum of Rs.12,000 should be contributed annually to the Tier II account.
Funds from NPS Tier I account cannot be withdrawn. Funds from NPS Tier II accounts can be withdrawn as and when required.

NPS Income Tax Benefits

The NPS Income Tax benefits for salaried and self-employed individuals are explained in details below:

NPS Income Tax Benefit for Self-employed Individuals

Self-employed individuals can claim up to 20% tax exemption by contributing their Gross Income which includes basic and dearness allowance under the NPS Section 80 CCD (1). The maximum limit of gross income is up to Rs. 1,50,000.

NPS Income Tax Benefit to Salaried Employees

Under section 80CCD(1), any salaried employee can claim up to 10% of tax exemption by contributing their salary to NPS. The salary which they are contribution will include Basic & Dearness allowance.

Additional Tax Benefits by NPS

The additional Tax benefits by National Pension Scheme are given below:

  1. Any individual, let’s say salaried or self-employed investing up to 50,000 in NPS (National Pension Scheme) will be eligible for additional tax deduction under Income Tax Act –  Section 80CCD (1B). This exemption can also be applied in addition to Section 80C.
  2. Any person voluntarily contributing towards the NPS scheme will get an additional benefit of Rs.500000 under the 80CCD (1B) which would be over and above the cover limit of Rs. 1,50,000 under 80CCE.
  3. Any salaried employee can opt-out of investing in EPF and choose National Pension Scheme.
  4. Any private employee can exit from NPS once they reach the age of 60.
  5. For taxpayers in the tax bracket of 30% can avail of an additional deduction of 50,000. Whereas for the lower tax brackets of 20% to 10%, can save up to 10000 to 5000 under NPS schemes.
  6. Since the NPS investments made in Tier-1 cannot be withdrawn, tax benefits are provided.
  7. Under the NPS scheme, any individual can find a range of investment options. Any individual can also switch from one investment to another.

FAQs on NPS Tax Benefits & Schemes

The frequently asked questions on NPS Tax Benefits and Schemes are given below:

Q. How much should I invest in NPS for tax benefit?
A. Investing in NPS completely depends on the individual. Check out the NPS Scheme tax benefits provided on this page to understand which scheme is suitable for you and invest accordingly.

Q. Can I invest in both NPS and PPF?
A. Yes, any individual can invest in both NPS and PPF.

Q. What is the NPS Tier 2 Tax Benefit? 
A. The NPS Tier 2 tax benefit is applicable only to government employees. Government employees can avail of income tax deduction under Section 80C annually if they have lock in period of 3 years.  However, Private employees cannot avail of any tax benefits under NPS Tier 2 account.

Q. What is the minimum investment that one should make in NPS?
A. Any individual will have to make a minimum investment of Rs.1000 per year in an NPS account.

Now that you are provided with all the necessary information about NPS Contribution Tax Benefit and we hope this detailed article is helpful to you. If you have any queries about NPS Employee Contribution Tax Benefit or in general about this page, ping us through the comment box below and we will get back to you as soon as possible.

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Transfer Of Shares on Death Now Same as Physical Shares

Transfer Of Shares on Death Now Same as Physical Shares

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Transfer Of Shares on Death Now Same as Physical Shares: In the event of a security bearer’s demise, the Securities and Exchange Board of India (Sebi) has successfully transitioned of physical and Demat shares equal.

Transfers of dematerialized shares following the expiration of an individual will presently need to follow a similar technique as transfers of physical shares.

This law permits a succession certificate or probate of will or will to be issued as a statutory prerequisite for the transmission of assets allocated in physical mode. Demat shares will now be required to follow these guidelines in line with the Indian Succession Act 192.

As of recently, the conversion of Demato shares to a beneficiary was monitored by the respective depositories’ bylaws and guidelines, National Securities Depository and Central Depository Services.

What’s Precisely a “Transmission”?

The phrase “transmission” works on the principle of transferring the ownership in shares to the legitimate beneficiaries.

Per Section 56(2), “nothing about subsection (1) shall influence the company’s ability to file, on receiving of an acknowledgement of transmission of any privilege to protections by the activity of law from any individual to whom those rights have been transmitted.”

Throughout the instance of the shareholder’s passing, the following protocol is followed for the transfer of shares:

Case 1 – When a previously mentioned nominee is present

For shares in Demat mode, you must submit the necessary documentation to the Depository Participant (DP).

  • A photocopy of the death certificate that has already been authenticated or notarized
  • Transmission Request Form, duly completed (TRF).
  • Client Master Report for the beneficiary’s Demat account

You will be asked to deliver any of the following documents to the Registrar and Share Transfer Agent (RTA) if you own physical shares.

  • Share credentials and certificates that are original.
  • Dutifully completed Transmission Request Form (TRF).
  • The candidate’s affidavit/declaration of his interests.
  • An authorized copy or notarized copy of the death certificate is necessary.

Case 2 – When there is no Nominated Candidate

You must submit the supporting paperwork for shares owned in Demat mode.

In case the amount of the assets is below Rs. 5,00,000, each one of the supporting documents must be forwarded to the DP:

  • A copy of the death certificate which has been notarized
  • Request for Transmission Type (TRF)
  • Court documents or concerned affidavit– to definitively prove legitimate possession of the shares.
  • Indemnity agreement – Indemnifying the depository and the Depository Participants (DP)
  • NOC* by the lawful heir(s), if relevant, or a family agreement document signed by all legal heirs of the deceased beneficial owner
  • Where the benefits outweigh Rs 5,00,000, the Depository Participants (DP) may also demand one or all of the following documents:
  • Probated will, along with a surety form.
  • A succession certificate.
  • The following documents must be submitted where the worth of the shares is up to Rs. 1 lakh.
  • Accordingly filled transmission request form (TRF)
  • An authorized or notarized Death Certificate
  • Indemnity Deed
  • Affidavit or relevant court papers for the shift of legal ownership
  • No Objection Certificate from the legitimate beneficiaries.
  • The accompanying documents must be submitted when the worth of the shares exceeds Rs. 1 lakh.
  • Certificate of Succession
  • Surety Form along with the Probated Will

For shares held in physical form, you will have to provide proper documents.

Documents Required for RTA

In the case of physical shares, the RTA (Registrar/Share Transfer Agent) may include any of the relevant certificates and documents:

  • First-hand copy of the Share certificates.
  • Appropriately filled Transmission Request Form (TRF).
  • Notarized or authorized copy of the death certificate.
  • Succession document or
  • Probate or letter of administration reasonably authenticated by a Court Officer or Notary.

Procedure to be Adopted for Non-Compliance With The Act

Any organization must essentially and strictly follow such protocol, approve such applications from shareholders, and sell such shares within the time limit prescribed.

In the event that the organization is discovered to have been in default in such circumstances, a compensation of no less than Rs. 25,000 and which can stretch out up to Rs. Five hundred thousand (5,00,000) can be enforced.

Any officer is hence likewise be supposed to be in default if he or she is proven guilty, for which a fine of not less than Rs. 10,000, which the concerned authorities can hike up to Rs. 100,000 is implemented.

Crucial Aspects to Consider About the Subject Matter

  • If there arose an occurrence of shared ownership of shares, the other owner would indicate joint ownership by showcasing the share certificate and transmit the shares in his name.
  • Once the corporation accepts the applicant’s submission, there are two alternatives. One benefit is that it will both authorize the application and acknowledge it and sell the assets.
  • In the event that the organization is not pleased, it will not pass, but it must report that information to the concerned individual within 30 days from the date of receipt of the application.
  • Stamp duty would not even be relevant to the sale of those shares because the transfer is in the transmission process.

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Understanding Form 16 - Tax on income

Understanding Form 16 – Tax on Income

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Understanding Form 16 – Tax on Income: Form 16 is like a certificate that is issued by the employer, and this Form contains all the information that one needs for preparing and filing his/her tax return. Employers must issue this Form every year on or before 15th June of the next year, which is immediately after the financial year in which the tax got deducted. Form 16 has two distinct parts which are Part A and Part B. In case a person loses his/her form 16, then he/she can apply for a duplicate one from his/her employer. Form 16 is meant for dealing with the tax on taxable salary and tax deducted at source.

Understanding Form 16 – Tax on Income Overview

Form 16 contains information that is related to the employer and employee. Information such as name and address of the employer, PAN/TAN of the deductor, name and designation of the employee and PAN information of the employee. People have to disclose their assessment year, period of employment, address of CIT (TDS) and a summary of tax deducted at source in a detailed manner in Form 16. The summary includes quarter-wise information of receipt numbers of quarterly TDS returns in Form No 24Q, amount of tax deducted, and amount of tax deposited or remitted.

Form 16 is meant to show the employee’s gross salary along with the perquisites and profit instead of salary. In the section ‘Income under Head Salaries’, the employee can report his/her income from other sources. Under section 192(2B) and Rule 26B of the Income Tax Act, when an employee is having any other income despite his/her salary (not being a loss) in the same financial year, which is chargeable under any head such as income from capital gain or income from other sources, the employee must give a statement of such income and any tax deducted thereon to the employer so that he/she can take it into consideration while deducting tax from the employee’s salary.

When other incomes are added to the income under head salaries, one can get the gross salary of the employee. Gross salary is the total salary an employee gets after adding all the allowances and benefits but before charging the taxes. This is explained in detail in form 16 – part 1.

Calculating Tax

After calculating the employee’s taxable income, the ones whose income exceeds the amount that is exempted under Income Tax Act is known as assessee. On the income of the assessee, tax is charged at a rate fixed under the finance act for the relevant assessment year. Income tax also depends on the type of assessee. There are different types of assessee such as Individual, Hindu Undivided Family (HUF), Firm, Trust etc. In the case of an individual, the tax calculation depends on:

  • Gender
  • Age
  • Residential status

For the income that is earned between 1st April 2011 and 31st March 2012, the financial year is considered as 2011-2012, and the assessment year is considered as 2012-2013.

For a resident Indian for the assessment year 2012-2013, the income tax slab is as follows:

Tax Men Women Senior Citizen (60 years – 80 years) Very Senior Citizens (More than 80 years)
Basic Exemption 180000 190000 250000 500000
10% tax 180000 – 500000 190001 – 500000 250001 – 500000
20% tax 500001 – 800000 500001 – 800000 500001 – 800000 500001 – 800000
30% tax Above 800000 Above 800000 Above 800000 Above 800000
Surcharge No surcharge is charged in the case of an individual, Hindu undivided family, Association of persons and body of individuals
Education Cess 3% on the income tax

Tax Computation for Males

Tax computation for males in India is as follows:-

Level of Income  Tax
When the total income of the employee does not exceed Rs 1,80,000 Nil
When the total income of the employee exceeds Rs 1,80,000 but does not exceed Rs 5,00,000 10 percent of the amount that exceeds the income  Rs. 1,80,000/-
When the total income of the employee exceeds Rs 5,00,000  but does not exceed Rs 8,00,000 Rs. 32,000/- plus 20 percent of the amount that exceeds the income  Rs. 5,00,000
When the total income of the employee exceeds Rs 8,00,000 Rs. 92,000/- plus 30 percent of the amount that exceeds the income  Rs. 8,00,000

After the tax is calculated, surcharge and education cess is added to it. Let’s discuss these terms in brief:

Surcharge

The surcharge is meant to be an additional charge or payment that is charged on the taxable income of an employee. It acts like an extra fee that is added to another fee or charge. For example:

  • The fuel surcharge is meant for representing additions due to jet fuel prices.
  • Sea freight charges are meant for representing additions due to oil prices.
  • The surcharge is charged when payments are made through cheque, credit or debit card.

Education Cess

It is considered to be a contribution that is made towards the Secondary and Higher Education development in the country’s economy. All taxes that are levied in India are subject to an education cess, which is fixed at 3% of the total tax payable. Please note the 3% is not charged on the income tax but on the income tax payable.

Annexure A or Annexure B

An employee also gets Annexure A or Annexure B along with Form 16 depending on the type of the employer; they are also called the Deductor type because they are the ones who deduct tax from the salary of the employee. Annexure is something which informs about the details of the tax deducted and deposited in the Central Bank account with the help of a challan.

  • Annexure A is used if the employer or deductor type is Government.
  • Annexure B is used if the employer or deductor type is others.

Relief Under Section 89

Relief under Section 89 under the Income Tax Act is considered to be one of the most important tax rebates that are offered to the employees by the Government. It deals with the taxation of the salary when the salary is believed to be paid in arrears or in advance. Government employees are the ones who get higher salaries because of these arrears.

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On Maturity of PPF Account

On Maturity of PPF Account – Closing or Extending The PPF Account

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On Maturity of PPF Account: Individuals, particularly those who are not salaried workers, may benefit from the Public Provident Fund as a medium for long-term savings and as a means of preparing for retirement. PPFs are long-term investments that mature 15 years after the end of the financial year in which they were first purchased. This article has a brief description of PPF and what happens when a PPF account reaches maturity.

PPF’s Maturity

The maturity of a Public Provident Fund (PPF) account is 15 years, but the calculation begins at the financial year’s end in which the account was opened. For example, if you get a PPF account opened on July 15, 2000, your 15-year term would begin on March 31, 2001, at the end of the fiscal year 2000-2001. The lock will be in place until March 31 2015, and you will be able to withdraw only after April 1, 2016.

After 15 years, you can choose between two options:

  1. Withdrawing the maturity account and then closing the account, OR
  2. Keep the current PPF account open for another 5-year block duration. After the first five years have passed, you will continue to extend the PPF account for another five years. There is no limit to the number of extensions that can be created.

Let’s say your PPF account’s term is set to expire on March 31, 2015. The account balance at the time was about Rs 10 lakh. You can now choose to keep the account open for another five years (until March 31, 2020) and continue to invest as you have been. However, you can only withdraw Rs 6 lakh (60 percent of the balance on your credit on March 31, 2015) over five years until March 2020.

E.g., if you started a PPF account in the fiscal year 1999-2000, it will mature on April 1, 2015. You have the option to either cash in your PPF balance or extend the maturity of your PPF for another five years until 2020 from April 1, 2015, to March 31, 2016. You will continue to add to your PPF account after 2020, for example, to the years 2025, 2030, and so on.

Note: Once your PPF account expires, you can open a new one, but you’ll have to start over.

Continuation of PPF

You have two options for keeping your PPF account open:

  • Keep going without making any added contributions – You can choose to receive the tax-free interest but not contribute any additional funds, OR
  • Keep going while making the added contributions – The rules for contributing to the extended account remain the same as they were during the 15-year cycle, i.e., you can demand 80C deductions on amounts invested in PPF and invest up to the maximum limit (which is 1.5 lakh (150,000) for FY 2014-15 and FY 2015-16). Form H must be completed and submitted by the investor.

Online, you can download FormH in pdf format. Please keep in mind that Form H must be completed and submitted within one year of the maturity date. So, if your PPF matured on April 1, 2012, you must fill out Form H to continue your PPF account with a subscription between April 1, 2012, and March 31, 2013. Form H must be completed and sent to the post office or bank where the account is kept. You must enter your PPF account number and the date the 15-year period ended. So, if you began your PPF account in FY 1999-2000, say in November 1999 or February 2000, and your PPF matured 15 years later on 31-Mar-2000, you could write 1-Apr-2015.

Please Note The Following

  • Filling out Form H within one year of the account’s maturity date is the only way to expand the PPF account with a subscription.
  • To renew, you must first complete Form H and then deposit for that year.
  • The choice for no more contribution is the default, which means that if you do not choose the option with a subscription within one year of the maturity period’s conclusion, the second option without a subscription will be applied automatically.
  • It is impossible to reverse a decision taken for five years.
  • The subscriber cannot switch to a with-contributions extension after an account has been continued without contribution for any year.
  • The interest gained on a PPF for a more extended period is also tax-free.

Liquidity for the Extension Period

Unlike the initial duration of the Public Provident Fund Account, when loans were only available after the third year, and partial withdrawals were only permitted after the sixth year, the extension period of the PPF is more liquid.

If the loan is extended without a contribution, that amount may be removed, but only once per year. If the balance is entirely removed, it will continue to earn interest.

If the loan is extended with contributions, you can withdraw up to 60% of the balance at the start of each extended period (block of five years).

Assume the term of your PPF account expired on April 1, 2012. The account balance at the time was about Rs 15 lakh. You can now choose to keep the account open for another five years (until March 31, 2016) and continue to invest as you have been. However, you can only withdraw Rs 9 lakh (60 percent of the balance on your credit on March 31, 2011) over five years until March 2016.

Closing or Extending The Account

Is it better to close this account and open a new one or keep it open for another five years?

I propose extending the contract for another five years. Even if you close this account and open a new one, the maturity will be delayed for another 15 years. You also gain more money if you prolong the account so there is more balance.

Non-resident Indians and Extension

The extension benefit does not apply to NRIs who opened their account before their residency status changed. Returning to PPF Basics, NRIs are unable to open a PPF account. If a resident already has a PPF account and then becomes an NRI, he will continue to invest in the PPF until the initial period (the first 15 years) expires. The PPF account will then be unable to be extended and will have to be liquidated.

The Bottom Line

After 15 years from the end of the financial year in which the initial subscription was made, you will close your Public Provident Fund account. You may also choose to extend the PPF for a 5-year block with or without a subscription.

On Maturity of PPF Account – Closing or Extending The PPF Account Read More »

Revive Lapsed Insurance Policy

Revive Lapsed Insurance Policy, LIC Revival Camp – What is a Lapsed Insurance Policy?

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Revive Lapsed Insurance Policy, LIC Revival Camp: Life Corporation of India (LIC) recently has come up with a new Revival Campaign which can be used for the revival of the lapse policies. This type of revival provides concession in late fees as well as relaxation of medical checkups. Many people don’t have explicit knowledge of this campaign and have certain questions in their mind such as what is Lapsed Insurance Policy, What is Revival of Insurance Policy, How to revive an Insurance Policy which has lapsed and about LIC Revival Camp. In this article, we will cover some of these areas in order to provide the readers with a better understanding of lapse policies.

What is a Lapsed Insurance Policy?

When a policyholder is unable to or fails to pay his/her premium within the grace period, then his/her life insurance policy lapses. This type of policy is termed the lapsed policy. Lapsation of policy is considered to be dangerous because, in this case, the policyholder and his/her beneficiaries might not get any benefit for which they have started the life insurance cover.

When Does a Policy Lapse?

An insurance policy is considered lapsed when the policyholder fails to pay the premium within the grace period. The grace period is considered to be 30 days in case of annual, half-yearly and quarterly renewals and 15 days for monthly renewals.

How Can You Prevent The Policy From Getting Lapsed?

Some ways to prevent lapsation of an insurance policy are as follows:

  • The policyholder must pay his/her premiums within the due date or the grace period.
  • Never wait for a premium due notice because it is only given as a courtesy from the insurance company’s side. It is the duty of the policyholder to pay the premium before the due date without waiting for the notice.
  • Never depend on a second person or an intermediate for submitting the cheque to the insurance company. They might forget to do so because it is not their responsibility. The policyholder must always make his/her own arrangements for paying the premium.
  • If the policyholder has shifted and there is a change in the address, then he/she must inform the insurance company as soon as possible.

Can One Still Have The Rights To File a Claim on a Lapsed Policy?

Policies that are less than three years old but lapses, and if something happens to the policyholder after the lapsation of the insurance policy and a claim is filed to the insurance company; the insurer is not obliged to pay anything to the policyholder. The insurance company might agree to return the premium payments the policyholder had made in the past, but they will not approve the whole insurance amount if the insurance policy has already lapsed due to non-payment of premium. Returning the premium amount is totally upon the insurer’s decision.

If the policy is more than three years old, but lapses and something happens to the policyholder, then there is some chance that the policyholder might still get the benefits promised at the time of the insurance agreement. However, the policyholder will not get the full amount, but a small part of it as decided while signing the agreement.

What If a Policyholder is  Facing A Cash Shortage and Can’t Pay The Premiums?

In this case, the policyholder must inform the insurance company about his/her issues regarding the premium payments and ask them to reduce the insurance amount; thus, the premium amount will also decrease automatically. Once the premium amount is not that huge, it will become easy for the policyholder to continue with the premium payments without any trouble.

Revive Lapsed Insurance Policy

As we all know, revival means getting something back to life; similarly, reviving a lapsed insurance policy means getting the insurance cover back. In order to revive a lapsed insurance policy, the policyholder is entitled to pay the outstanding premiums along with certain interest to the insurance company. The rate at which the policyholder will pay the interest depends on the insurer and its policies. If the policy has lapsed for more than six months, then the person whose life is insured has to go under medical tests one more.

Can an Insurance Policy Revive at Any Time?

One can revive the insurance policy at any time, but sometimes it depends on how many days have passed since the policy has lapsed. According to the insurance laws, if the policy was in force for at least three years, then the policyholder got up to two years to revive the lapsed insurance policy. Some insurers like LIC have special schemes using which one can revive his/her lapsed policy even after 5 years.

If the policyholder revives his/her lapsed insurance policy within six months, then the process might get simpler because he/she only need to pay the premium due and the interest for reviving the policy, but if the revival takes more than six months, then the process might get more complex as it involves penalty fees and interest might go up to 10% depending upon the insurer.

After Revival One’s Insurance Policy is Same?

If the policyholder had purchased the policy before 2013, when the new guidelines were issued, then the same policy will get renewed with the same terms and conditions. This is as per the contractual guidelines, which are governed by the regulator.

If the policyholder has purchased the policy after 2013, then the new premium and policy conditions of the revived lapsed insurance will depend on the periods during which the dues were not being paid, the policyholder’s age and the sum that can be revived with the policy. So if the policyholder’s age band has changed from the date his/her premium was due, then the insurer might increase the mortality rate.

LIC Revival Camp

Like always, Life Insurance Corporation of India, which holds most of the market share in the insurance industry, has come up with a new LIC Revival camp for all its customers. This campaign was started with the objective to reduce lapsation of policies and to renew the relationship with the old customers in order to increase the customer base.  Under this campaign, policyholders can revive their lapsed policies with a concession in the late fee, and they also get some relaxation in different medical requirements. The different types of revival schemes that one can find under LIC are as follows:

  • Ordinary Revival Scheme
  • Special Revival Scheme
  • Loan-cum Revival Scheme
  • Survival Benefit cum Revival Scheme
  • Revival by Installation Method

Revive Lapsed Insurance Policy, LIC Revival Camp – What is a Lapsed Insurance Policy? Read More »

CMA Inter Direct Tax Study Material MCQs

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CMA Inter Direct Tax Study Material MCQs – CMA Inter Direct Tax Study Material is designed strictly as per the latest syllabus and exam pattern.

CMA Inter Direct Tax Study Material MCQs

Question 1.
Choose the most appropriate alternative:
(i) The basic exemption limit for a non-resident super senior citizen above the age of 80 years for the assessment year 2023-24 is
A. ₹ 2,00,000
B. ₹ 2,50,000
C. ₹ 5,00,000
D. ₹ 1,60,000
Answer:
B. ₹ 2,50,000
₹ 2,50,000. Basic exemption limit for all non resident assessee is ₹ 2,50,000.

Question 2.
(ii) When patent is transferred, the amount received is
A. Not chargeable to tax
B. Chargeable under the head ‘Profits and gains of business or profession’
C. Taxable under the head ‘Income from other sources’
D. Adjusted towards the patent value in the block of assets
Answer:
D. Adjusted towards the patent value in the block of assets
Patent is an intangible asset. As per Section 2(11) of the Income Tax Act, there is a block for intangible assets, and it the
asset is transferred, the amount should be adjusted in the same block of assets.

Question 3.
(iii) Rent derived from land located outside India, used exclusively for agricultural purpose is
A. Agricultural income
B. Exempt income
C. Taxable as business income
D. Taxable under the head ‘Income from other sources’.
Answer:
D. Taxable under the head ‘Income from other sources’.
Taxable under the head ‘Income from Other Sources’. As per Section 10(1) of the Income Tax Act, agricultural income in India is fully exempt from tax. Foreign agricultural income will not fall under Section 10(1), hence taxable under the head ‘Income from Other Sources’.

Question 4.
(iv) Ram introduced his building costing ₹ 10,00,000 acquired in April, 2015 into the business newly commenced by him from 01.04.2022. The actual cost of building for the purpose of depreciation for the assessment year 2023-24 would be ₹
A. 10,00,000
B. 5,90,490
C. 6,56,100
D. None of these.
Answer:
C. 6,56,100
(10,00,000 – 10% of 10,00,000 = 9,00,000
9,00,000 – 10% of 9,00,000 = 8,10,000
8,10,000 – 10% of 8,10,000 = 7,29,000
7,29,000 – 10% of 7,29,000 = 6,56,100)

CMA Inter Direct Tax Study Material MCQs

Question 5.
(v) Motor car with more than 1.6 litres cubic capacity is given to the employee both for official and personal use with expenditure on running and maintenance met by the employer. The car was self driven by the employee. The perquisite value shall be
A. ₹ 1,200 p.m.
B. ₹ 1,800 p.m.
C. ₹ 2,400 p.m.
D. Nil
Answer:
C. ₹ 2,400 p.m.
₹ 2,400 pm. As per Rule 3(2)(a) of the Income Tax Act, if employer is providing car with more than 1600 cc capacity to his employee and running and maintenance is borne by employer, the taxable value of perquisite is ₹ 2,400 pm

Question 6.
(vi) The liability for payment of advance tax would arise only when the tax liability of the taxpayer after reducing tax deductible at source exceeds
A. ₹ 10,000
B. ₹ 5,000
C. ₹ 20,000
D. None of these
Answer:
A. ₹ 10,000
As per Section 208 of Income Tax Act, 1961, liability of advance tax arises when estimated tax liability of tax payer exceeds ₹ 10,000.

Question 7.
(vii) Amount is received under the notified reverse mortgage scheme, is
A. Taxable as ‘Income from other sources’
B. Exempt from tax
C. 50% taxable
D. Taxable as capital gain
Answer:
(B) Exempt from tax.

Question 8.
(viii) Azhar, being an employee in a transport company, received ₹ 10,000 per month by way of allowance to meet his personal expenses in the course of running such transport system from one place to another. The amount chargeable to tax is
A. Nil
B. 3,000 p.m.
C. Fully-taxable
D. Fully exempt
Answer:
(B) 3,000 pm.
As per Section 10(14), allowance given to transport employees are exempt to the extent of least of following
i. 70% of allowance or
ii. ₹ 10,000. p.m.

Question 9.
(ix) Rajiv received scholarship of ₹ 20,000 to meet the cost of education. The amount of scholarship chargeable to tax is ₹.
A. Nil
B. ₹ 20,000
C. ₹ 10,000
D. ₹ 5,000
Answer:
(A) Nil, The scholarship granted to meet the cost of education is exempt from tax u/s 10 (16).

Question 10.
(x) Sita received family pension of ₹ 10,000 per month in the capacity of widow of the deceased spouse who died in the course of operational duties in Indian army. The amount c family pension chargeable to tax is
A. ₹ 1,20,000
B. ₹ 1,05,000
C. Nil
D. ₹ 30,000.
Answer:
(C) Nil, the family pension received by the family members of armed forces is exempted from tax u/s 10(19).

Question 11.
(xi) A religious trust received ₹ 2,00,000 by way of anonymous donation. The total amount of donation received during the year was ₹ 15,00,000. The amount of anonymous donation chargeable to tax is
A. ₹ 2,00,000
B. ₹ 1,00,000
C. ₹ 75,000
D. Nil. Not taxable
Answer:
(D) Nil. Not Chargeable. The anonymous donation received for religious purposes is excluded from the ambit of taxable
donation.

CMA Inter Direct Tax Study Material MCQs

Question 12.
(xii) Fees paid to Registrar of Companies for increasing the authorized capital of a company is
A. Capital expenditure
B. Fully deductible
C. 50% deductible
D. 75% deductible (Dec 2012, 1 x 12 = 12 marks)
Answer:
(A) Capital Expenditure. A fee paid to ROC is non-recurring expenses. Hence it is capital expenditure.

(b) Fill up the blanks:

(i) Interest received on delayed payment of enhanced compensation shall be deemed to be ……………………………. (income/not an
income/interest relating to the concerned year alone is income) of the year in which it is received.
Answer:
Income

(ii) Gift received from a trust is ……………………………. (included/not included) in the taxable income of an individual.
Answer:
Included

(iii) Dividend received from a company having only agricultural income is ………………………. (agricultural income/non-agricultural income/50% taxable) in the hands of its shareholder.
Answer:
Nonagricultural income

(iv) There are two schools of Hindu Law, one in Mitakshara and the other is ……………….. .
Answer:
Dayabhaga

(v) The depreciation allowable in respect of an asset used for the purpose of business for less than 180 days shall be restricted
to …………………. (50%/25%/75%) of the normal rate of depreciation.
Answer:
50%

(vi) The rate of TDS will be ………………………….. in all cases, if PAN is not furnished by the deductee.
Answer:
20%

(vii) The minimum alternate tax u/s 115JB for the AX. 2023-24 shall be …………………………………… % of book profit [Basic rate excluding surcharge, educationcess, etc.].
Answer:
15%

(viii) The minimum penalty levied u/s 271A for not maintaining books of account, documents as required u/s 44AA is ……………….. .
Answer:
₹ 25,000

(ix) Prima facie, revision of any order can be made by the Commissioner of Income-tax within ………………………. years.
Answer:
4

(x) Unabsorbed loss under the head ‘Capital gains’ shall be carried forward for a period of ……………………… , assessment years immediately following the assessment year in which such loss was incurred.
Answer:
8

(xi) Loss from gambling ……………………………. (can/cannot) be carried forward and set off in subsequent years under profits from gambling. (Dec 2012, 1 x 12 =12 marks)
Answer:
Cannot

Question 13.
Choose the most appropriate alternative:
(i) The basic Exemption limit for a female below the age of 60 years for the assessment year 2023-24 is
(a) ₹ 1,80,000
(b) ₹ 1,90,000
(c) ₹ 2,00,000
(d) ₹ 2,50,000
Answer:
(d) ₹ 2,50,000

Question 14.
(ii) Under Rule 7A of the Income Tax.Rules, the following %age of income from manufacture of Rubber shall be deemed to be business income and liable to tax
(a) 15%
(b) 25%
(c) 35%
(d) 50%
Answer:
(c) 35%

Question 15.
(iii) Interest is payable to assessee on Refund under the Income Tax Act, 1961 at the rate of
(a) 5%
(b) 6%
(c) 9%
(d) 12%
Answer:
(b) 6%

CMA Inter Direct Tax Study Material MCQs

Question 16.
(iv) The maximum penalty leviable for failure to keep or maintain books of account or document as required u/s. 44AA of the Income Tax Act, 1961 is
(a) ₹ 25,000
(b) ₹ 75,000
(c) ₹ 1,00,000
(d) ₹ 1,50,000
Answer:
(a) ₹ 25,000
The correct answer is ₹ 25,000 u/s. 271A.

Question 17.
(v) Tax on non-monetary benefit paid by the employer is
(a) Fully-taxable
(b) Taxable to the extent of 50%
(c) Taxable to the extent of 60%
(d) Fully exempted from Tax.
Answer:
(d) Fully exempted from Tax.

Question 18.
(vi) The maximum amount of deduction from Gross Total Income available to an individual for interest on savings bank deposit is
(a) ₹ 5,000
(b) ₹ 7,500,
(c) ₹ 10,000
(d) ₹ 12,000
Answer:
(c) ₹ 10,000

Question 19.
(vii) Loss from activity of owning and maintaining race horses can be carried forward for: (Assessment years)
(a) 4
(b) 6
(c) 8
(d) 5
Answer:
(a) 4
4 Assessment years

Question 20.
(viii) Annual value of house property it is not let out s taken as ……………………. .
Answer:
Nil

Question 21.
(ix) No tax is deductible if the amount of rent credited or paid during the financial year does not exceed rupees …………………… u/s 194 I of the Income Tax Act, 1961.
Answer:
₹ 2,40,000

Question 22.
(x) When entire net consideration has been invested by an individual towards subscription of shares of an eligible company the exemption, u/s. 54GB of the Income Tax Act,1961 would be
(a) NIL
(b) 10% of capital gain
(c) 50% of capital gain
(d) 100% of capital gain
Answer:
(d) 100% of capital gain

Question 23.
(xi) Amount received towards share application money when not properly explained it is ……………………. .
(a) taxable u/s. 68
(b) exempt u/s. 10
(c) fully taxable but deduction at 50% u/s. 57 (iii) is allowable
(d) None of the above
Answer:
(a) taxable u/s. 68

Question 24.
(xii) Book profit u/s. 115JB of a domestic company was ₹ 52 lakhs. The tax liability of the company for the assessment year 2023-24 would be
(a) 18.54% including cess
(b) 15.60% including cess
(c) 20% including cess surcharge at 5%
(d) 19.431 % including cess and surcharge at 2% (June 2013, 1 x 12 = 12 marks)
Answer:
(b) 15.60% including cess

(b) Fill up the blanks:
(i) Any sum paid to an approved university, college or other institutions u/s. 35(1) (iii) of the Income Tax Act, 1961 the allowable deduction is ……………………….. (100%/125%)
Answer:
100%

(ii) Interest payable to a partner by a firm shall not exceed …………………………. (18%/12%) per annum.
Answer:
12%

(iii) An assessee ………………………….. (can/cannot) spread over the arrears of rent over the past several years.
Answer:
Cannot

(iv) Chapter VI-A deduction …………………………. (shall/shall not) be allowed in respect of income from short term capital gain.
Answer:
Chapter VIA deduction shall be allowed in respect of short-term capital gain, generally. However, in case it is short-term capital gaiñ in respect of transaction in equity shares in a company chargeable to STT (u/s 111 A) deduction under Chapter VIA shall not be allowed. The question does not mention the type of transaction. Hence, both answers would be possible.

(v) Dividend receives by an Indian Company on shares of a Foreign Company is ……………………. (taxable/exempted)
Answer:
Taxable

(vi) Salary received by Mr. P a foreign national and a non-resident out-side India for services rendered in India for 150 days is …………………….. (chargeable/not chargeable) to tax in India.
Answer:
Chargeable

(vii) Deduction for provision for bad and doubtful debts made by a public financial institution is allowed up to …………………………… % of total income before allowing such deduction and deduction under chapter VIA.
Answer:
5

(viii) Z. Ltd. awarded three contracts for repair work of ₹ 22,000, ₹ 23,000 and ₹ 30,000 respectively to L. Ltd. in the year 2022-23. Z. Ltd. is …………………………. (required/not required) to deduct tax at source under Section 194C of the Income Tax Act 1961.
Answer:
Not Required

(ix) In case of slum sale of any undertaking indexation benefit is ……………………………….. (allowed/not allowed) for the purpose of computation of capital gain.
Answer:
Not allowed

(x) Annual value of any one palace in the occupation of a former ruler is ………………… .
Answer:
Exempt

(xi) A charitable trust must apply at least ……………………….. percent of its income towards its objects.
Answer:
85

(xii) The time limit for issue of notice to assess the income in relation to assets located outside India for reassessment purposes is …………………………… years from the end of the relevant assessment year. (June 2013, 1 x 12 = 12 marks)
Answer:
16

Question 25.
(b) Choose the most appropriate alternative:
(i) Travel expenditure of the patient and the attender for medical treatment abroad is fully exempted, ¡f gross total income before including reimbursement of toreign travel expenditure is
(A) ₹ 2,00,000
(B) ₹ 2,50,000
(C) ₹’ 3,00,000
(D) ₹ 5,00,000
Answer:
(A) ₹ 2,00,000

Question 26.
(ii) Audit of accounts u/s 44AB of the Income-tax Act, 1961 is mandatory for a person carrying on profession where his gross receipts exceed
(A) ₹ 40,00,000
(B) ₹ 60,00,000
(C) ₹ 20,00,000
(D) ₹ 50,00,000
Answer:
(D) ₹ 50,00,000

CMA Inter Direct Tax Study Material MCQs

Question 27.
(iii) Long-term capital gain arising from sale of listed shares in a recognized stock exchange (SU paid) is exempt under Section
……………………….. of the Income-tax Act, 1961:
(A) 10(35)
(B) 10(37)
(C) 112A
(D) 10(36)
Answer:
(C) 112A

Question 28.
(iv) Deduction in respect of interest on deposits in savings account is allowed under Section 80 TTA of the Income-tax Act, 1961 to the maximum extent of
(A) ₹ 5,000
(B) ₹ 10,000
(C) ₹ 15,000
(D) ₹ 20,000
Answer:
(B) ₹ 10,000

Question 29.
(v) An assessee who has no income from business or profession will not be required to pay any advance tax ¡f the said assessee is alan
(A) Firm
(B) AOP
(C) Senior citizen
(D) Indian Company (Dec 2013,1 x 5 = 5 marks)
Answer:
(C) Senior citizen

(a) Fill up the blanks:
(i) Mr. A, a senior citizen, has total income of 8 lacs, earned by way of interest from secured debentures. The advance tax payable by him is ₹ ………………….. .
Answer:
Zero

(ii) A partnership firm will be treated as nonresident, only if the ………………………… of the control and management of its affairs is situate outside India.
Answer:
Whole

(iii) An employee of a partnership firm is treated as “specified employee” if the income under the head “Salaries”, excluding non-monetary perquisites exceeds ₹ ……………………… .
Answer:
50,000

(iv) The maximum amount of retrenchment compensation exempt u/s 10 (10B) in the hands of a person, when received from a private scheme not approved by the Board, is ₹ …………………………. .
Answer:
5,00,000

(v) Where any unrealized rent, earlier allowed as deduction is realized subsequently, the deduction available therefor is ₹ ………………………. .
Answer:
30% deductIon u/s 25A is available

(vi) In the case of a payee not having PAN for whom tax ¡s to be deducted at source u/s 1 94A, the rate applicable is ……………………………… . (June 2014, 6 marks)
Answer:
20%

(b) Choose the most appropriate alternative:

Question 30.
(i) For an employee in receipt of fixed medicál allowance, the maximum amount which is exempt is ₹
(A) 12,000
(B) 15000
(C) 18,000
(D) Nil
Answer:
(D) Nil

Question 31.
(ii) Disallowance for ependìture incurred in relation to exempt income is made under Section
(A) 14A
(B) 14
(C) 80A
(D) 10(33)
Answer:
(A) 14A

Question 32.
(iii) Where any land is located within aerial distance of 7 kms. from municipal limits, to be regarded as capital asset u/s 2(14), the population of the municipality as per last census done before 1.3.2013 should be more than
(A) 9 lacs
(B) 8 lacs
(C) 10 lacs
(D) None of these
Answer:
(C) 10 lacs

Question 33.
(iv) To avail exemption u/s 54, an individual should purchase a new residential house within …………………………. years from the date of sale
(A) 2
(B) 3
(C) 1
(D) 4
Answer:
(A) 2

Question 34.
(v) For an assessee engaged ¡n manufacturing activity, additional depreciation u/s 32(1 )(iv) for second-hand machinery costing ₹ 3 lacs, installed on 12.05.2015 is ₹
(A) 30,000
(B) 45,000
(C) 60,000
(D) Nil (June 2014, 5 marks)
Answer:
(D) Nil.

(a) Fill up the blanks:
(i) Deduction under Section 80G for donation to National Children’s Fund is ……………………… percent.
Answer:
100

(ii) Life Insurance premium paid in excess of ……………. percent of the actual capital sum assured LS not deductible under Section 80C, in respect of policies issued on or after 01.04.2013.
Answer:
10

(iii) Commodities transaction tax is ………………….. even if it is incurred in the course of business.
Answer:
Deductible

(iv) Buyback of unlisted shares by a company is ………………. in the hands of the shareholder.
Answer:
Exempt

(v) Rebate under Section 87 is to be calculated ………………………. the levy of education cess.
Answer:
Before

(vi) Rate of income-tax applicable for foreign institutional investors in respect of income from notified bonds and government securities is ………………………… .
Answer:
20%

(vii) The due date for furnishing Annual Information Return is …………………… .
Answer:
31st August

(viii) Sale of gold coin in excess of ………………………… is liable for tax collection at source. (Dec 2014, 1 x 8= 8 marks)
Answer:
₹ 2 lakhs

(b) Choose the most appropriate alternative:

Question 35.
(i) Deduction for investment in new plant or machinery under Section 32AC is applicable for
(A) all assessees
(B) companies
(C) partnership firms
(D) individuals
Answer:
(B) companies

Question 36.
(ii) Income of securitization trust from the activity of securitization is
(A) exempt [Section 10(23 DA)]
(B) taxable at 20%
(C) taxable at 5%
(D) taxable at the regular rates
Answer:
(A) exempt [Section 10(23 DA)]

CMA Inter Direct Tax Study Material MCQs

Question 37.
(iii) Royalty paid by State Government undertaking to the State Government is
(a) deductible
(B) inadmissible
(C) 50% deductible
(D) 20% deductible
Answer:
(B) inadmissible

Question 38.
(iv) Time limit for setting up undertaking for generation of power to avail deduction under Section 80-IA is available upto
(A) 31.03.2019
(B) 31.03.2018
(C) 31.03.2017
(D) 31.03.2016
Answer:
(C) 31.03.2017

Question 39.
(v) The maximum deduction under Rajiv Gandhi Equity Savings Scheme is
(A) ₹ 10,000
(B) ₹ 50,000
(C) ₹ 1,00,000
(D) ₹ 25,000 (Dec 2014, 1 x 5 = 5 marks)
Answer:
(D) ₹ 25,000

(a) Fill up the blanks:
(i) A company incorporated outside India is said to be resident in India if control and management is …………………. situated in India.
Answer:
Wholly

(ii) A foreign company is liable to surcharge at 5%, if the total income exceeds ……………………. .
Answer:
₹ 10 crores

(iii) A Zero coupon bond is a long-term capital asset, it it is held for more than …………………………… months before transfer.
Answer:
12 months

(iv) If statement of deduction of tax at source is not filed within due date, the deductor is liable to a fee of …………….. per day of default or the amount of tax deductible, whichever is less.
Answer:
200

(v) Maximum amount of exemption under section 10(10C) of the Income-tax Act in respect of compensation received for voluntary retirement is ₹ ……………………. .
Answer:
₹ 5 lacs

(vi) A manufacturing company investing more than ₹ …………………. in new plant and machinery in the previous year 2022-23 is entitled to investment allowance @ 15%.
Answer:
₹ 25 crores

(vii) An assessee can contest an order of the Income-tax Appellate Tribunal on any substantial question of law of filing appeal to the jurisdictional High Court within ……………………. days from the date of receipt of the said order.
Answer:
120

(viii) Royalty payable by Government to a non-resident is liable to be taxed at …………………. % on gross amount of royalty. ( June 2015, 1 x 8 = 8 marks)
Answer:
25

(b) Choose the most appropriate alternative:

Question 40.
(i) Subject to fulfilment of other conditions, remuneration received by a foreign national as an employee of a foreign enterprise for services rendered by him during his stay in India is exempted from income tax, if his stay in India does not exceed a period of
(A) 30 days
(B) 60 days
(C) 90 days
(D) 120 days
Answer:
(B) 60 days

Question 41.
(ii) Long-term capital gain on off-market sale of shares of a listed company without availing of indexation benefit is taxed at
(A) 5%
(B) 10%
(C) 15%
(D) 20%
Answer:
(B) 10%

Question 42.
(iv) Deduction under section 80 JJAA ¡n respect of employment of new workmen can be claimed by a company for an amount equal to
(A) 15% of additional wages to new workmen
(B) 20% of additional wages to new workmen
(C) 25% of additional wages to new workmen
(D) 30% of additional wages to new workmen
Answer:
(D) 30% of additional wages to new workmen

Question 43.
(v) A return of income for Assessment Year 2023-24 filed within the due date specified ¡n Section 139(1) can be revised by the assessee at any time before expiry of
(A) 31 March, 2023
(B) 318t March, 2024
(C) 31st December, 2022
(D) 31st December, 2023 (June 2015, 1 x 4 = 4 marks)
Answer:
(D) 31st December, 2023

(a) Fill up the blanks:
(i) Assessee’s own contribution to the National Pension Scheme is eligible for a maximum deduction of ………………….. .
Answer:
₹ 50,000

(ii) Any payment received from an account opened under Sukanya Samriddhi Açcount Rules, 2014 is ……………………….. .
Answer:
Exempt (Sec. 10(IIA)]

(iii) A charitable trust in order to be eligible for exemption under section 11 must not have more than …………………….. % of aggregate receipts from any activity in the nature of trade, commerce or business.
Answer:
20

(iv) The amount of deduction towards health insurance premium paid by an individual (not being a senior citizen) is limited to ₹ ……………………. .
Answer:
25,000

(v) Fee under section 234E for delay in filing of quarterly TDS/TCS return is ₹ ……………………. per day. . (June 2016, 1 x 5 = 5 marks)
Answer:
200

(b) Choose the most appropriate alternative:
Question 44.
(i) A senior citizen having total income consisting of pension and let out property income aggregating to ₹ 6 lakhs must have paid advance tax during the financial year 2022-23 of
(a) NIL
(b) 90% of ₹ 28,840
(c) 90% of ₹ 44,290
(d) 90% of ₹ 39,140
Answer:
(a) NIL

Question 45.
(ii) Mr. Ramji is employed in ABC Ltd who maintained a hospital for treatment of employees. During the financial year 2022-23, the value of medical benefits availed by Ramji’s family from the hospital was ₹ 2,10,000. The amount of medical perquisite chargeable to income tax would be
(a) ₹ 2,10,000
(b) ₹ 1,05,000
(c) ₹ 21,000
(d) NIL
Answer:
(d) NIL

Question 46.
(iii) Mr. Laxman occupied his apartment till December 2022 and thereafter occupied the quarters provided by the employer. The apartment of Mr. Laxman was let out at ₹ 20,000 per month from 1st January, 2023. The annual value of the property would be
(a) ₹ 60,000
(b) ₹ 2,40,000
(c) ₹ 1,80,000
(d) Nil
Answer:
(a) ₹ 60,000

Question 47.
(iv) When a company paid ₹ 5 lakhs to Indian Institute of Technology to carry on research in a field unrelated to the activity of the company, the amount eligible for deduction paid by way of donation would be
(a) ₹ 5,00,000(100%)
(b) ₹ 6,25,000 (125%)
(c) ₹ 7,50,000 (150%)
(d) ₹ 7,50,000 (150%)
Answer:
(a) ₹ 5,00,000(100%)

Question 48.
(v) Mr. A has loss from regular business of ₹ 8 lakhs and income from speculation business of? 11 lakhs. His total income chargeable to tax would be
(a) ₹ 3,00,000
(b) ₹ 11,00,000
(c) ₹ 7,00,000
(d) ₹ 2,50,000 (June 2016, 1 x 5 = 5 marks)
Answer:
(a) ₹ 3,00,000

CMA Inter Direct Tax Study Material MCQs

(c) State without indicating reason whether the following statements are true or false:
(i) Share of a private limited company held for 15 months before its sale is,a long-term capital asset.
Answer:
False

(ii) A return of income filed without payment of self-assessment tax is a defective return.
Answer:
True

(iii) Profit from growing and manufacturing tea in India is fully exempted from income tax under section 10(1) of the Income-tax Act.
Answer:
False

(iv) Tax is required to be deducted at source from salary at the time of payment and not at the time of crediting salary to the account of the employee.
Answer:
True

(v) Capital gain arising from compulsory acquisition of a property under law is taxab’e in the year of receipt of compensation or part thereof. (June 2016, 1 x 5 = 5 marks)
Answer:
True.

(a) Fill up the blanks:
(i) The maximum amount deductible under section 88 TTA in respect of interest on savings bank account is ₹ ………………. .
Answer:
₹ 10,000

(ii) Monetary limit for exemption in the case of encashment of earned leave on superannuation received by private sector employees is ₹ …………………… .
Answer:
₹ 3,00,000

(iii) When unrealized rent of 50,000 in respect of a let-out property is realized subsequently, the amount liable to tax would be ₹ ………………….. .
Answer:
₹ 35,000

(iv) Interest on enhanced compensation received by Mr. A, a resident individual is ₹ 4,00,000 of which 75% pertains to earlier financial years. The amount of such interest to be included in the total income under the head ‘income from other sources’ is ₹ ……………………… .
Answer:
₹ 2,00,000

(v) Medical expenditure of ₹ 40,000 was incurred by Mr. A on his mother (being a senior citizen). The amount eligible for deduction under section 80D would be …………………….. . (Dec 2016, 1 x 5 = 5 marks)
Answer:
₹ 40,000.

Question 49.
(b) Choose the most appropriate alternative:
(i) When a person having agricultural lands sells the seeds taken from such lands in a nursery, which is pert of the said lands, the income from such sale is treated as
(A) Business income
(B) Agricultural income
(C) Income from other sources
(D) None of the above
Answer:
(B) Agricultural income.

CMA Inter Direct Tax Study Material MCQs

Question 50.
(ii) An employer has paid medical insurance premium of ₹ 12,000 in respect of a salaried employee drawing annual salary of ₹ 6 lakhs. The amount of perquisite charged in the hands of emploiee is
(A) Nil
(B) ₹ 6,000
(C) ₹ 12,000
(D) None of the above
Answer:
(A) Nil

Question 51.
(iii) The rate of depreciation for a block of assets consisting of buildings used as factory is
(A) 2.5%
(B) 5%
(C) 10%
(D) None of the above
Answer:
(C) 10%

Question 52.
(iv) In case of a Hindu Undivided Family, where the return of income cannot be signed by the Karta, the same can be signed by
(A) the next senior-most male member.
(B) Karta’s wife.
(C) any male member of the family.
(D) any adult member of the family.
Answer:
(D) any adult member of the family.

Question 53.
(v) In case of an individual or HUF, to determine whether certain TDS provisions are attracted, what has to be seen is whether the person is subject to tax audit under section 44AB in
(A) the immediately preceding financial year.
(B) current year.
(C) last two continuous financial years.
(D) None of the above. (Dec 2016, 1 x 5 = 5 marks)
Answer:
(A) the immediately preceding financial year.

Question 54.
(c) Match the following:

(i) Securities Transaction Tax (a) Maximum limit ₹ 50 lakhs
(ii) Contribution of Employer to Pension Fund of Central Government (b) Includible as Salary income of employee
(iii) Donation in kind (c) Not deductible while computing income from property
(iv) Ground rent (d) Deductible as business expenditure
(v) Bonds specified in Section 54EC (e) Not eligible for deduction under section 80G

(Dec 2016, 1 x 5 = 5 marks)
Answer:

(i) Securities Transaction Tax (d) Deductible as business expenditure
(ii) Contribution of Employer to Pension Fund of Central Government (b) Includible as Salary income of employee
(iii) Donation in kind (e) Not eligible for deduction under section 80G
(iv) Ground rent (c) Not deductible while computing income from property
(v) Bonds specified in Section 54EC (a) Maximum limit ₹ 50 lakhs

Question 55.
(a) Find the most suitable alternative for the following:
(i) The number of identities included in the definition of persons is
(a) five
(b) six
(c) seven
(d) eight
Answer:
(c) seven

Question 56.
(ii) A trust shall not be considered as charitable trust for according the benefits of Section II when the commercial activities in the previous year exceed ₹ ………………… .
(a) 1o lakhs
(b) 25 lakhs
(c) 15 lakhs
(d) 30 lakhs
Answer:
(ii) There is no option in respect of correct answer as it should be 20% of gross receipt.

CMA Inter Direct Tax Study Material MCQs

Question 57.
(iii) Deduction available under section 24(a) is of NAy.
(a) 30%
(b) 50%
(c) 15%
(d) 70%
Answer:
(a) 30%

Question 58.
(iv) Expenditure incurred by a businessman for ready-to-use software is entitled to benefit of
(a) 15% as depreciation
(b) 30% as depreciation
(c) 60% as depreciation
(d) 100% as revenue expenditure
Answer:
(d) 100% as revenue expenditure

Question 59.
(v) The basic exemption limit for a resident super senior citizen above the age of 80 is
(a) ₹ 2,00,000
(b) ₹ 2,50,000
(c) ₹ 5,00,000
(d) None of the above
Answer:
(c) ₹ 5,00,000

Question 60.
(vi) The provisions relating to interest on delay in payment of refund are given in section
(a) 234A
(b) 234B
(c) 244A
(d) 244B
Answer:
(c) 244A

Question 61.
(vii) Which of the following can be corrected while processing the return of income under section 143(1)?
(a) Any arithmetical error in the return
(b) Any mistake in the return of income
(c) Any error of principle in the return of income
(d) Any claim by the taxpayer which is against law
Answer:
(a) Any arithmetical error in the return

Question 62.
(viii) Notice under section 156 is given for
(a) failure to submit return
(b) tax demand
(c) deferment of tax
(d) None of the above
Answer:
(b) tax demand

Question 63.
(ix) As per Section 271 H, where a person fails to file the statement of tax deducted/collected at source i.e. TDS/TCS return on or before the due dates prescribed in this regard, then he shall be liable to pay penalty under section 271 H. Maximum penalty that can be levied is ₹ ………………… .
(a) 1,00,000, but not exceeding the amount of TDS/TCS.
(b) 2,00,000
(c) 3,00,000
(d) 3,00,000
Answer:
(a) 1,00,000 but not exceeding the amount of TDS/TCS

CMA Inter Direct Tax Study Material MCQs

Question 64.
(x) The threshold exemption limit for Equalization levy is
(a) ₹ 5 lakh
(b) ₹ 3 lakh
(c) ₹ 2 lakh
(d) ₹ 1 lakh (June 2017, 1 x 10 = 10 marks)
Answer:
(d) ₹ 1 Lakh

(b) Match the following:

(i) Section 87A (A) ₹ 5,000
(ii) Section 80GG (B) ₹12,500 (or) Actual Tax (w.e.l.)
(iii) Sukanya Samrudhi Scheme (C) ₹ 1,500
(iv) Minor child exemption (D) 30% deduction
(V) Arrears of rent (E) Section 80 C

(June 2017, 1 x 5 = 5 marks)
Answer:

(i) Section 87A (B) ₹12,500 (or) Actual Tax (w.e.l.)
(ii) Section 80GG (A) ₹ 5,000
(iii) Sukanya Samrudhi Scheme (E) Section 80C
(iv) Minor child exemption (C) ₹ 1,500
(v) Arrears of rent (D) 30% deduction

(c) State whether true or false:
(i) An Indian company is always resident in India.
Answer:
True

(ii) Salary received by a member of Parliament is exempt.
Answer:
False

(iii) Income of a self-occupied property cannot be negative.
Answer:
False

(iv) Preliminary expenditures are allowed deduction in 10 equal instalments.
Answer:
False

(v) Capital gain arises from the transfer of any capital asset. (June 2017, 1 x 5 = 5 marks)
Answer:
True

(d) Fill in the blanks:
(i) In case of an Indian citizen who leaves India during the previous year for employment outside India, the period f 60 days shall be substituted by ………………………. days.
Answer:
182 days

(ii) Scholarship received by a student was ₹ 2,000 p.m. He spends ₹ 16,000 for meeting the cost of education. The Balance ₹ 8,000 is ……………………. .
Answer:
Exempt

CMA Inter Direct Tax Study Material MCQs

(iii) Generally, income is taxable under the head, house property only when the assesse is the ……………………… of such house property.
Answer:
Owner

(iv) Salary, bonus, commission or remuneration due to or received by a working partner from the firm is taxable under the head …………………….. .
Answer:
Profits and gains of Business or profession

(v) Period for holding bonus shares or any other financial asset without any payment shall be reckoned from the date of …………………………. . (June 2017, 1 x 5 = 5 marks)
Answer:
Allotment

(a) Choose the most appropnate alternative:
Question 65.
(i) When Mr. Balu paid royalty to Dr. Peter of Sweden for use of know-how in India, such payment is
(a) exempt from tax.
(b) accruing in India.
(c) accrues in Sweden.
(d) received in India.
Answer:
(b) accruing in India.

Question 66.
(ii) In the case of foreign company with total income of more than ₹ 1 crore but less than 10 crores the surcharge liveable is at
(a) 5%
(b) 12%
(c) 2%
(d) 1%
Answer:
(c) 2%

Question 67.
(iii) Mr. Han resident in India received ₹ 11 lakhs by way of dividend from Indian companies. Such dividend is
(a) exempt from tax.
(b) taxable at regular rates.
(c) taxable at maximum marginal rate.
(d) taxable at 10%.
Answer:
(d) taxable at 10%.

Question 68.
(iv) When an employee receives money on closure of national pension System trust it is
(a) chargeable to tax.
(b) exempt from tax.
(c) 40% is exempt from tax.
(d) 60% is exempt from tax.
Answer:
(c) 40% is exempt from tax.

Question 69.
(v) When employer contributes to approved superannuation fund it is chargeable to tax as perquisite when the contribution exceeds
(a) ₹ 1,50,000
(b) ₹ 1,00,000
(c) ₹ 50,000
(d) ₹ 20,000
Answer:
(a) ₹ 1,50,000

Question 70.
(vi) When the shares are held in unlisted company, it is treated as long-term capital asset when the holding period exceeds
(a) 36 months.
(b) 24 months.
(c) 12 months.
(d) 6 months.
Answer:
(b) 24 months.

CMA Inter Direct Tax Study Material MCQs

Question 71.
(vii) Long-term capital gain arising from transfer of unlisted securities in the hands of non-resident/foreign company is chargeable to tax at
(a) 10%
(b) 20%
(c) 30%
(d) 40%
Answer:
(a) 10%

Question 72.
(viii) Interest on housing loan taken by individual being his first residential house is eligible for deduction under section 80EE up to a maximum of
(a) ₹ 30,000
(b) ₹ 50,000
(c) ₹ 1,50,000
(d) ₹ 72,00,000
Answer:
(b) ₹ 50,000

Question 73.
(ix) A start-up can claim deduction under section 80 – IAC for ……………………. consecutive years beginning from the year in which the eligible start-up was incorporated.
(a) 1
(b) 2
(c) 3
(d) 5
Answer:
(c) 3

Question 74.
(x) When the return of income for the assessment year 2023-24 is filed under section 139(4), the assessee can revise the return on or before
(a) 31.03.2024
(b) 31.12.2023
(c) 31.03.2025
(d) 31.12.2024 (Dec 2017, 1 x 10 = 10 marks)
Answer:
(b) 31.12.2023

(b) Match the following:

(i) Additional depreciation for plant used for more than 180 days (a) 40%
(ii) Basic exemption limit of income for resident individual being senior citizen (b) ₹ 40,000
(iii) Rate of tax for LLP (c) ₹ 3,00,000
(iv) Depreciation for computers (d) 30%
(v) Exemption in respect of Post office SB interest (e) 20%

(Dec 2017, 1 x 5 = 5 marks)
Answer:

(i) Additional depreciation for plant used for more than 180 days (e) 20%
(ii) Basic exemption limit of income for resident individual being senior citizen (c) ₹ 3,00,000
(iii) Rate of tax for LLP (d) 30%
(iv) Depreciation for computers (a) 40%
(v) Exemption in respect of Post office SB interest (b) ₹ 40,000

(c) State whether the following are True or False:
(i) Interest on deposit certificates issued under Gold Monetization Scheme. 2015 is exempt from tax.
Answer:
The Statement is true: Interest on deposit certificates issued under Gold Monetization scheme 2015 is exempt from tax u/s 10(15)(vi).

(ii) The monetary limit of ₹ 5 lakhs in respect of gratuity received by an employee covered by Payment of Gratuity Act, 1972 is exempt from tax.
Answer:
The Statement is false: The Monetary limit is ₹ 20 lakhs.

(iii) Medical insurance premium paid by son for parents who are senior citizens is deductible up to a maximum of ₹ 35,000.
Answer:
The Statement is false: Medical insurance premium paid by son for parents who are senior citizen is deductible upto a maximum of ₹ 50,000. (iii) (ci) Rate of tax for LLP is 30%.

(iv) In order to avail carry forward loss from house property, the return of income must be filed before the due date specified in Section 139(1).
Answer:
The Statement Is false: In order to avail carry forward loss from house property, ¡t Return of income is furnished after the due date.

(v) 30% of the additional employee cost incurred by the employer is deductible under section 80JJAA. (Dec 2017, 1 x 5 = 5 marks)
Answer:
Statement is true: 30% of the additional employee cost incurred by the employer is deductible u/s 80JJAA.

CMA Inter Direct Tax Study Material MCQs

(d) Fill up the blanks:
(i) When a director of a company received ₹ 30 lakhs by way of non-complete fee, it is taxable under the head ……………….. .
Answer:
Profit and Gains of Business or Professional.

(ii) When unrealized rent is received based on court decree but at the time of receipt the property was not owned by the assessee, it is taxable under the head …………………….. .
Answer:
Income from House Property

(iii) When Mr. Ashwin received ₹ 20,000 as scholarship for meeting the cost of education it is ………………….. .
Answer:
Exempt

(iv) The Income Computation Disclosure Standards (ICDS) will apply only when the assesse adopts ……………………… method of accounting.
Answer:
Mercantile

(v) Speculation loss can be carried forward for a maximum period of (number of) years after the year of such loss.
(Dec 2017, 1 x 5 = 5 marks)
Answer:
Four

(a) Choose the most appropriate alternative:
Question 75.
(i) Which of the following ¡s not a case of deemed ownership of house property?
(a) Transfer to spouse for inadequate consideration
(b) Transfer to minor child for inadequate consideration
(c) Co-owner of a Property
(d) None of the above.
Answer:
(c) Co-owner of a Property

Question 76.
(ii) Where assessment has not been completed, belated income tax return for the A.Y. 2023-24 can be filed up to:
(a) 31.03.2024
(b) 31.12.2023
(c) 31.03.2025
(d) Cannot be filed belatedly.
Answer:
(b) 31.12.2023

CMA Inter Direct Tax Study Material MCQs

Question 77.
(iii) An individual estimates that he is required to pay ₹ 1,00,000 as advance tax. By 15th of December, how much amount must be paid by the individual? .
(a) ₹ 30,000
(b) ₹ 75,000
(c) ₹ 1,00,000
(d) Nil.
Answer:
(b) ₹ 75,000

Question 78.
(iv) Section 80 RRB the Income-tax Act, 1961 deals with deduction from gross total income in respect of income by way of
(a) Interest on debentures of a government company
(b) Royalty income on authors
(c) Royalty on patents
(d) Royalty from textbooks.
Answer:
(c) Royalty on patents

Question 79.
(v) Preliminary expenses that can be amortized under the Income-tax Act 1961 has to be restricted to ……………………… of the cost of the Project.
(a) 5%
(b) 15%
(c) 20%
(d) None of the above.
Answer:
(a) 5%

Question 80.
(vi) Maximum Marginal Rate for the AY. 2023-24 is
(a) 34.5%
(b) 33.99%
(c) 42.74%
(d) None of the above.
Answer:
(c) 42.74%

Question 81.
(vii) Rebate u/s 87A can be claimed by
(a) Any resident
(b) Resident Individual
(c) Any person
(d) Any person other than non resident
Answer:
(b) Resident lndividual

Question 82.
(viii) As per Section 115 BBDA dividend from lndian companies is taxable in the hands of certain recipients at ………………….. when the aggregate dividend exceeds ……………………. .
(a) 10%, 1 lakh
(b) 15%, 10 lakhs
(c) 10%, 10 lakhs
(d) 5%, 5 lakhs
Answer:
(c) 10%, 10 lakhs

Question 83.
(ix) ICDS VIII deals with …………………….. .
(a) Government Grants
(b) Securities
(c) Revenue recognition
(d) Construction Contract
Answer:
(b) Securities

Question 84.
(x) Income escaping assessment is covered under section
(a) 144
(b) 156
(c) 143 (3)
(d) 147 (June 2018, 1 x 10 = 10 marks)
Answer:
(d) 147

(b) Match the following:

(i) ALTERNATE MINIMUM TAX (A) SECTION 44AD
(ii) RETURN BY WHOM TO BE VERIFIED (B) SECTION 263
(iii) REVISION BY COMMISSIONER (C) SECTION 140
(iv) PRESUMPTIVE TAX (D) SECTION 80EE
(v) ₹ 50,000 (E) SECTION 115JC

(June 2018, 1 x 5 = 5 marks)
Answer:

(i) Alternate Minimum Tax (E) Section 115JC
(ii) Return by Whom to be Verified (C) Section 140
(iii) Revision by Commissioner (B) Section 263
(iv) Presumptive Tax (A) Section 44AD
(v) ₹ 50,000 (D) Section 88EE

(c) State whether True or False:
(i) All incomes that accrue to a minor child will be included ¡n the total income of that parent whose total income is greater.
Answer:
False

(ii) Caution money forfeited by the assessee is taxable in the year of forfeiture under the head capital gains.
Answer:
False

(iii) Paintings are not considered as rersonal effects in the context of “capital asset” definition.
Answer:
True

(iv) In the hands of a manufacturer, factory building newly constructed is not eligible for additional depreciation.
Answer:
True

(v) Income from assets acquired by spouse out of pin money or household savings ¡s not subject to clubbing. (June 2018, 1 x 5 = 5 marks)
Answer:
True.

CMA Inter Direct Tax Study Material MCQs

(d) Fill in the blanks:
(i) Deduction under section 80GGB in respect of house rent paid is applicable to ………………………. .
Answer:
Individual (Note: Deduction for house rent paid is under Section 80GG, not under Section 80GGB.)

(ii) Unabsorbed depreciation shall be allowed to be carried forward for any number of years and such carried forward unabsorbed depreciation may be set off against any income, other than …………………….. .
Answer:
Income from salary, winning from lotteries, crossword puzzles, etc.

(iii) Income referred to in Sec. 68 to Sec. 69D shall be taxable @ …………………………. (Excluding SC and Cess)
Answer:
60%.

(iv) ……………………………… received by an electoral trust shall be exempted.
Answer:
Any voluntary contributions.

(v) Income from sub-letting of a house property by a salaried employee is taxable under the head …………………… .
(June 2018, 1 x 5 = 5 marks)
Answer:
Income from other sources.

(a) Choose the most appropriate alternative:
Question 85.
(i) Short-term capital gain on sale of listed shares (STT paid) in a recognized stock exchange is chargeable to income-tax @ …………………………….. %.
(a) 10
(b) 15
(c) 20
(d) 30
Answer:
(b) 15

Question 86.
(ii) When the total income of an individual exceeds ₹ 50 lakhs, the surcharge is payable @
(a) 5%
(b) 7%
(c) 10%
(d) 12%
Answer:
(c) 10%

Question 87.
(iii) When the amount is withdrawn from National Pension System Trust, it is chargeable to tax to the extent the withdrawal exceeds ……………………. % of the contribution of the assessee.
(a) 10
(b) 25
(c) 15
(d)20
Answer:
(b) 25

Question 88.
(iv) Ms. Jothi (aged 23) got married and left India to join her husband in the United Kingdom on 10.06.2022. She had never left India earlier. Her residential status for the assessment year 2023-24 is:
(a) Resident and ordinarily resident
(b) Resident but not ordinarily resident
(c) Non-resident
(d) None of the above.
Answer:
(a) Resident and Ordinary Resident

Question 89.
(v) While computing TDS on salary paid to employees, the losses given below to the applicable extent would be considered by the employer:
(a) Loss from business
(b) Loss from house property
(c) Long-term capital loss
(d) Short-term capital loss
Answer:
(b) Loss from house property

Question 90.
(vi) When tax is not deducted at source on annual rent of ₹ 2 lakhs paid to landlord by a company, the amount liable for dis allowance under section 40(a) (ia) is
(a) Nil
(b) ₹ 2,00,000
(c) ₹ 20,000
(d) ₹ 60,000
Answer:
(d) ₹ 60,000

Question 91.
(vii) When the assessee has loss, from house property, the maximum amount of such loss eligible for set of against other permissible incomes would be
(a) ₹’ 30,000
(b) ₹ 1,50,000
(c) ₹’ 2,00,000
(d) No Limit
Answer:

Question 92.
(viii) When a capital asset was acquired on 01.04.2001 and sold in June, 2022, the cost of acquisition or the fair market value of the asset as on at the option of the assessee is to be adopted for indexation purpose:
(a) 01.04.2012
(b) 01.04.2001
(c) 01.04.1992
(d) 01.04.1982
Answer:

Question 93.
(ix) When a motor car is sold for ₹’ 12 lakhs by a dealer to a buyer holding PAN the amount of tax collectible as source shall be ……………………… .
(a) ₹’ 12,000 (1%)
(b) ₹’ 24,000 (2%)
(c) ₹’ 1,20,000 (10%)
(d) Nil
Answer:

Question 94.
(x) Cash donation given to a charitable trust (approved under section 80G) is eligible for deduction under that section, when the amount of donation does not exceed ₹’ …………………………. .
(a) 2,000
(b) 5,000
(c) 7,000
(d) 10,000 (Dec 2018, 1 x 10 = 10 marks)
Answer:
(a) 2,000

(b) Match the following (Sufficient to give the corresponding item in column 3 for column 1; reproducing columns 2 and 4
are not required):

(i) Depreciation on patents (A) 40%
(ii) Amount received by an individual as a loan in a reverse mortgage (B) Valuation of inventories
(iii) Interest partner on capital (C) 25%
(iv) Depreciation on solar power generating system (D) Exempted since there is no transfer
(v) ICDS II (E) Allowed up to 12% p.a.

(Dec 2018, 1 x 5 = 5 marks)
Answer:

(i) Depreciation on patents (c) 25%
(ii) Amount received by an individual as a loan in a reverse mortgage (d) Exempted, since there is no transfer
(iii) Interest partner on capital (e) Allowed up to 12% p.a.
(iv) Depreciation on solar power generating system (a) 40%
(v) ICDS II (b) Valuation of inventories

CMA Inter Direct Tax Study Material MCQs

(c) State whether following statements are True or False.
(i) Cost of self-generated goodwill of business is deemed to be Nil.
Answer:
True

(ii) Reimbursement of ordinary medical expenses’by the employer is fully exempted.
Answer:
False

(iii) Where capital gain arises to an individual from the transfer of a capital asset, being immovable property under a joint developmen agreement, the capital gain ¡s chargeable to tax in the previous year in which the certificate of completion for whole or part of the project is issued by the competent authority.
Answer:
True

(iv) In order to avail carry forward of unabsorbed depreciation, the assessee must lurnish the return of income within the due date specified in section 139(1).
Answer:
False

(v) In order to claim exemption under section 54B, the agricultural land, which is transferred, must have been used by the assessee or his parents for at least 3 years prior to the date of transfer. (Dec 2018, 1 x 5 = 5 marks)
Answer:
False

(d) Fill in the blanks.
(i) The total income computed will have to be rounded off to the nearest multiple of …………………….. .
Answer:
10

(ii) Domestic company means alan …………………………. company.
Answer:
Indian

(iii) Additional depreciation on factory building for ₹ 30 lakhs, acquired by a manufacturer on 1 Dec., 2022 is …………………….. .
Answer:
Nil

(iv) Unabsorbed depreciation can be carried forward for ………………………. years.
Answer:
any number of

(v) An assessee, who receives leave encashment during continuation of his service, can also claim . (Dec 2018, 1 x 5 = 5 marks)
Answer:
Relief under Section 89

(a) Choose the most appropriate alternative for the following (option to be given only in capital letter A, B, C or D; entire
answer need not be reproduced):
Question 95.
(i) In the case of a domestic company (turnover/gross receipts ₹ 70 crores), the basic rate of income-tax applicable for computing as per normal provisions would be ……………………….., when the turnover of the company has been ₹ 45 crores in the previous year relevant to the assessment year 2020-21. (Note: ignore surcharge, education cess, etc.)
(a) 30%
(b) 29%
(c) 25%
(d) 35%
Answer:
(c) 25%

Question 96.
(ii) The maximum marginal rate of tax applicable for individual taxpayer having total income of ₹ 1.5 crore (including surcharge and health & education cess) is ………………………. .
(a) 34.32%
(b) 35.88%
(c) 34.944%
(d) 29.12%
Answer:
(b) 35.88%

Question 97.
(iii) When a charitable trust pays ₹ 50,000 per month towards rent to a resident for the premises occupied by it without deduction of tax at source for the entire previous year 2022-23, the amount of rental expenditure liable for disallowance would be ……………………. .
(a) Nil
(b) ₹ 6,00,000
(c) ₹ 4,20,000
(d) ₹ 180,000
Answer:
(d) ₹ 18,00,00

CMA Inter Direct Tax Study Material MCQs

Question 98.
(iv) The lock-in-period for capital gain bonds issued by National Highway Authority of India for the purpose of deduction under section 54EC is ……………….. .
(a) 5 years
(b) 3 years
(c) 7 years
(d) 1 year
Answer:
(a) 5 years

Question 99.
(v) The TDS rate for payments made to a non-resident sportsman is …………………………….. %.
(a) 20
(b) 20.8
(c) 30
(d) Nil
Answer:
(b) 20.8

Question 100.
(vi) Where a partner of a firm transfers any capital asset to the firm by way of capital contribution, for the purpose of computing capital gain in the hands of the partner, the amount of deemed consideration is
(a) cost to the partner.
(b) fair market value of the asset on the date of transfer.
(c) the amount recorded in the books of the firm.
(d) value as determined by the Stamp Valuation Authority.
Answer:
(c) the amount recorded in the books of the firm.

Question 101.
(vii) When the gross receipts from profession exceed …………………………. lakhs, it is liable for audit under section 44AB and the provisions of section 44ADA will not apply.
(a) 50
(b) 25
(c) 100
(d) 20
Answer:
(a) 50

Question 102.
(viii) Medical insurance premium incurred for senior citizen is eligible for deduion up to ₹ ………………………. under section 80D.
(a) 30,000
(b) 50,000
(c) 1,00,000
(d) 60,000
Answer:
(b) 50,000

Question 103.
(ix) When a resident senior citizen having gross total income of ₹ 5,56,000, has derived interest from savings account in a nationalized bank of ₹ 8,200 and fixed deposit interest of ₹ 47,000 from such bank, he is eligible for deduction of ………………………….. from the gross total income.
(a) 55,200
(b) 8,200
(c) 47,000
(d) 50,000
Answer:
(d) 50,000

Question 104.
(x) Seshan, a retired civil servant received monthly pension of ₹ 60,000 during the previous year 2022-23. The amount of pension liable to tax after standard deduction would be ₹ ………………………….. .
(a) 7,10,000
(b) 7,00,000
(c) 6,70,000
(d) 6,30,000 (June 2019, 1 × 10 = 10 marks)
Answer:
(c) 6,70,000

(b) Match the following (sufficient to give the corresponding item in column 3 for column 1; reproducing columns 2 and 4
are not required):

(i) ICDS IX A. Quoting of A adhaar number
(ii) Section 139AA B. ₹1500 per child u/s 10(32)
(iii) Minor son/daughter clubbing C. Borrowing cost
(iv) Sec 45(2) D. Exempted from tax u/s 10(17)
(v) Any allowance received by MP/MLA E. Conversion of Capital asset into Stock in trade

(June 2019, 1 x 5 = 5 marks)
Answer:

(i) ICDS IX (C) Borrowing Cost
(ii) Section 139 AA (A) Quoting of Aaclhar number
(iii) Minor son/daughter clubbing (B) ₹ 1500 per child u/s 10(32)
(iv) Sec 45(2) (E) Conversion of Capital asset into stock in trade
(v) Any allowance received by MP/MLA (D) Exempted from tax u/s 10(17)

(c) State whether the following are True or False:
(i) In applicable situations of TDS, such TDS is to be deducted on amount including GST component.
Answer:
False

(ii) Contribution made to political party by way of cash to the extent of ₹ 10,000 is allowed as business expenditure.
Answer:
False

(iii) Unabsorbed depreciation can be carried forward for any number of years.
Answer:
True

(iv) Interest on normal compensation/enhanced compensation is fully chargeable to tax in the year of receipt.
Answer:
False

(v) Long-term capital gain arising from sale of Usted shares (STT paid) is not fufly exempted from tax. (June 2019, 1 x 5 = 5 marks)
Answer:
True

(d) Fill up the blanks:
(i) Payment of royalty to a person resident in India requires deduction of tax at source at the rate of ………………………. .
Answer:
10%

(ii) The amount of wages paid to eligible new workmen by an assessee engaged in non-seasonal manufacturing activity is deductible u/s 80JJAA @ ……………………………… % of the wages so paid.
Answer:
30

(iii) An expenditure, for which cash payment is made for a sum exceeding …………………… on a single day is disallowed.
Answer:
10,000

(iv) If a return of income is not furnished within the due date prescribed in Section 139(1), such return can be filed on or before …………………… provided the assessment is not completed.
Answer:
31st December 2022

(v) Maximum amount of exemption under section 10(10C) in respect of compensation received for voluntary retirement is ₹ ………………………… . (June 2019, 1 x 5 = 5 marks)
Answer:
₹ 5,00,000.

(a) Choose the most appropriate alternative for the following (Option to be given only ¡n capital letter A,B,C or D; entire
answer need not be reproduced):
Question 105.
(i) Mr. Atul (aged 63), a resident Indian, paid for himself through account payee cheque, health insurance premium of ₹ 2,10,000 for 5 years in one lump sum on 28.03.2023. The eligible amount of deduction under section 80-D for the Assessment Year 2023-24 would be ₹ …………………….. .
(a) 50,000
(b) 30,000
(c) Nil
(d) 42,000
Answer:
(d) 42,000

Question 106.
(ii) Ramesh Tea Ltd., acquired a motor car for ₹ 6,20,000 on 30.08.2022. The company is engaged in manufacture of tea in India. The amount of depreciation allowable on such motor car would be.
(a) 93,000
(b) 37,200
(c) 46,500
(d) Nil
Answer:
(a) 93,000

Question 107.
(iii) When an individual non-resident has total income exceeding ₹ 50 lakhs, the amount of surcharge payable on income tax would be
(a)17%
(b) 15%
(c) 12%
(d) 10%
Answer:
(d) 10%

CMA Inter Direct Tax Study Material MCQs

Question 108.
(iv) When a charitable trust paid rent of ₹50,000 per month throughout the previous year 2022-23 and no tax was deducted at source, the amount of expenditure to be considered for computing the application of income by the trust would be ……………………….. .
(a) 6,00,000
(b) 1,80,000
(c) 3,00,000
(d) 4,20,000
Answer:
(d) 4,20,000

Question 109.
(v) Manoj a resident employee in ABC Ltd., an Indian Company, has gross annual salary income of ₹ 20,60,000. Tue standard deduction available under section 16(1) would be ₹ …………………… .
(a) Nil
(b) 30,000
(c) 40,000
(d) 50,000
Answer:
(d) 50,000

Question 110.
(vi) Shares in unlisted companies, in order to be treated as long-term capital asset, should be held for a minimum period of …………………… immediately prior to the date of transfer.
(a) 365 days
(b) 12 months
(c) 24 months
(d) None of the above
Answer:
(c) 24 months

Question 111.
(vii) Padmaja Power Co. (P) Ltd. is engaged in generation and distribution of electrical power. It avails deduction under section 80-IA. The gross receipts of the company is ₹ 89 lakhs. The last date for filling the return of income in order to be eligible to avail deduction under section 80-IA is …………………… . (Note: Assume there is no extension of time for filing the return of income)
(a) 31.10.2023
(b) 31.07.2023
(c) 30.11.2023
(d) 31.03.2024
Answer:
(a) 31.10.2023

Question 112.
(viii) Mr. Harivallabh incurred medical expenditure of ₹ 1,20,000 in respect of the disease specified in rule 11 DD for his father (aged 66) who is wholly dependent on him. The amount eligible for deduction from his gross total income would be ………………………. .
(a) 40,000
(b) 60,000
(c) 80,000
(d) 1,00,000
Answer:
(d) 1,00,000

Question 113.
(ix) When Mr. Avinash earned long-term capital gain of ₹ 1,80,000 on sale of listed shares, his total income being ₹ 10 lakhs, the amount of income-tax (including cess) on the said long-term capital gain would be ……………………. .
(a)Nil
(b) 18,720
(c) 8,320
(d) 10,400
Answer:
(c) 8,320

Question 114.
(x) Mr. Seshan received a loan of ₹ 2 Lakhs from Seshan Trading (P) Ltd. in which he has 35% equity shareholding (with voting power). The accumulated profits of the company on the date of loan was ₹ 10 lakhs. The amount of tax (ignore cess) payable on such loan would be ₹ ……………………….. .
(a) @ 10% by Mr. Seshan
(b) @ 20% by the company
(c) @ 30% by the company
(d) depended upon other income earned by Mr. Seshan. (Dec 2019, 1 x 10=10 marks)
Answer:
(c) @ 30% by the company

(b) Match the following (Sufficient to give the corresponding item in column 3 for column 1; reproducing columns 2 and 4 are not required):

(i) Threshold limit for TDS deduction on commission/brokerage under section 194H (A) 18,000
(ii) Rate of tax on royalty from registered patent in india. (B) 2,000
(iii) Rate of tax deduction at source for participating in a Television channel game show in case of residents. (C) 10%
(iv) Cash donation exceeding this amount is not admissible under section 80G. (D) 30%
(v) Taxable amount where enhanced compensation of ₹ 36,000 has been received. (E) ₹ 15,000

(Dec 2019, 1 x 5 = 5 marks)
Answer:

(i) Threshold limit for T.D.S deduction on commission/brokerage under Section 194-H (E) ₹ 15,000
(ii) Rate of tax on Royalty from registered patent in India (C) 10%
(iii) Rate of tax deduction at Source for participating in a Television Channel game show in case of residents (D) 30%
(iv) Cash donation exceeding this amount is not admissible under Section 80-G (B) 2,000
(v) Taxable amount where enhanced compensation of ₹ 36,000 has been received (A) 18,000

(c) State whether the following statements are True or False:
(i) Income from sale of seeds derived from a nursery adjacent to agricultural lands is an agricultural income.
Answer:
Income from sale of seeds derived from a nursery adjacent to agricultural lands is an agricultural income – True

(ii) Unabsorbed depreciation can be carried forward for a maximum period of eight assessment years.
Answer:
Unabsorbed depreciation can be carried forward for a maximum period of eight assessment year – False

(iii) Cash gifts of ₹ 1,00,000 received from uncle’s son by a resident individual is taxable as income from other sources.
Answer:
Cash gift of ₹ 1,00,000 received from uncle’s son by a resident individual is taxable as income from other sources – True

(iv) A firm, resident in India, having total income of ₹ 1,46,000 is eligible to claim deduction u/s 80D.
Answer:
A firm, resident in India, having total income of ₹ 1,46,000 is eligible to claim deduction u/s 80-D – False

(v) For adjusting brought forward business loss with current year business income, one of the conditions is that such business must be continued during the current year. (Dec 2019, 1 x 5 = 5 marks)
Answer:
For adjusting brought forward business loss with current year business income, one of the conditions is that such business must be continued during the current year – False.

CMA Inter Direct Tax Study Material MCQs

(d) Fill in the blanks:
(i) A resident Indian aged 62, who has received interest of ₹ 12,000 from savings bank account and ₹ 43,000 as interest on bank fixed deposits, is eligible to a deduction of ………………………. from his gross total income.
Answer:
A resident Indian aged 62, who has received interest of ₹ 12,000, from saving bank account and ₹ 43,000 as interest on bank deposits, is eligible to a deduction of ₹ 50,000 from his gross total income.

(ii) Daily allowance received by a member of parliament is ………………………….. .
Answer:
Daily allowance received by a member of parliament is exempt.

(iii) An expenditure, for which cash payment is made for a sum exceeding ₹……………………. on a single day is disallowed u/s 40A(3).
Answer:
An expenditure for which cash payment is made for a sum exceeding ₹ 10,000 on a single day is disallowed u/s 40A(3).

(iv) If a return of income for the AY 2023-24 is not filed within the due date prescribed in section 139(1), such return can be filed on or before ………………………….. provided assessment is not completed.
Answer:
If a return of income for the A.Y. 2023-24 is, not filed within the due date prescribed in Section 139(1), such return can be filed on or before 31.12.2023, provided assessment is not completed.

(v) Maximum amount of exemption under section 10(10C) in respect of compensation received for voluntary retirement is ₹ ……………………….. . (Dec 2019, 1 x 5 = 5 marks)
Answer:
Maximum amount of exemption under Section 10(10C) in respect of compensation received for voluntary Retirement is ₹ 5,00,000.

Question 115.
When ₹ 4 lakh is paid by resident Mr. X (having PAN) towards overseas tour program, how much must be collected by the tour operator by way of TCS?
(1) @20% ₹ 80,000
(2) @ 10% ₹ 40,000
(3) @ 0.50% ₹ 2,000
(4) @ 5% ₹ 20,000
Answer:
(3)@ 0.50% ₹ 2,000

Question 116.
When a member of AOP receives share income it is exempt from tax when
(1) When shares of members in the AOP is determinate.
(2) AOP paid tax at the maximum marginal rate .
(3) When AOP does not pay tax.
(4) AOP paid tax at the regular rates
Answer:
(2) AOP paid tax at the maximum marginal rate.

Question 117.
When the resident individual has total income of ₹ 60 lakhs, the rate of surcharge applicable is
(1) 10%
(2) 15%
(3) 37%
(4) 25%
Answer:
(1) 10%

Question 118.
When a company opts for section 115BAB for the assessment year 2023-24, the maximum rate of depreciation allowable for
the eligible assets owned by it is
(1) NIL
(2) 40%
(3) 30%
(4) 15%
Answer:
(2) 40%

Question 119.
R gifted his house property to his married minor daughter. The income from such house properly shall be included in the hands of:
(1) it will be first computed as minor daughter’s income and clubbed in the income of the R or Mrs R depending upon whose total income is higher.
(2) income of married minor daughter
(3) R as deemed owner
(4) R. However, ¡t will be first computed as minor daughter’s income and then clubbed in the income of R
Answer;
(1) it will be first computed as minor daughter’s income and clubbed in the income of the R or Mrs R depending upon whose total income is higher.

Question 120.
When an employee receives ₹ 18,700 from the employer by way of reimbursement of medical expenditure incurred by him for his family, the amount liable for inclusion by way of perquisite is:
(1) ₹ 18,700
(2) ₹ 15,000
(3) ₹ 3,700
(4) NIL
Answer:
(4) NIL

CMA Inter Direct Tax Study Material MCQs

Question 121.
Gift of money amounting to ₹ 2,00,000 given in India by a resident on 16.08.2022 to a non-resident (non-relative) shall be:
(1) taxable to the extent of ₹ 1,50,000
(2) exempt
(3) be fully taxable in the hands of the resident
(4) fuLly taxable in the hands of non-resident
Answer:
(4) fully taxable ¡n the hands of non-resident

Question 122.
In the case of charitable trust registered under section 12AA when the amount of anonymous donation received is Z20 Iakhs, the quantum of anonymous donation liable to tax would be:
(1) ₹ 1 lakh
(2) ₹ 19 lakhs
(3) ₹ 20 lakhs
(4) Nil
Answer:
(2) ₹ 19 lakhs

Question 123.
Where a part of the block of asset is sold for a price less than the opening W.D.V. plus cost of assets, if any, acquired during the year, the balance amount shall be treated as:
(1) Terminal/balancing depreciation
(2) None of the given options
(3) W.D.V for the purpose of charging current year deprecation
(4) short-term capital loss
Answer:
(3) W.D.V for the purpose of charging current year deprecation

Question 124.
The following income shan be exempt under Section 10(23FC) of Income-tax Act, 1961:
1. Interest received from special purpose vehicle
2. Dividend received or receivable from a special purpose vehicle
(1) Both 1 and 2
(2) 2 only
(3) Neither 1 nor 2
(4) 1 only
Answer:
(1) Both 1 and 2

Question 125.
What is the monetary limit for transactions between eligible holding company and subsidiary company to trigger the provisions of
specified domestic transactions?
(1) ₹ 200 lakhs
(2) ₹ 500 lakhs
(3) ₹ 2000 Iakhs
(4) ₹ 100 lakhs
Answer:
(3) ₹ 2000 lakhs

Question 126.
A business loss can be curried forward and set off in the subsequent assessment year when the business on account of which this
loss has arisen:
(1) None of the given options
(2) is continued for any part of the previous year
(3) is continued or not
(4) is continued in the assessment year in hick the such loss is set off
Answer:
(3) is continued or not

CMA Inter Direct Tax Study Material MCQs

Question 127.
Alternate Minimum Tax is applicable in case of
(1) individual or HUF
(2) Firm and individual
(3) any person other than a company
(4) firm and a company
Answer:
(3) any person other than a company’

Question 128.
Suresh incurred ₹’ 90,000 by way of salary paid to employees which has not been accounted for in th business. The amount
of income-tax payable on such salary (Ignore HEC but consider surcharge)
(1) NIL
(2) None of the given options
(3) ₹’ 67,500
(4) ₹ 54,000
Answer:
(3) ₹’ 67,500

Question 129.
While computing the capital gains, an eligible assessee is allowed to opt for market value as on 1.4.2022 in case of:
(1) all capital assets other than depreciable assets, goodwill of a business, trademark or brand name, right to manufacture, right to carry on any business or profession tenancy rights, loom hours, and route permits.
(2) all capital assets other than depreciable asset
(3) None of the given options
(4) all capital assets
Answer:
(1) all capital assets other than depreciable assets, goodwill of a business, trademark, or brand name, right to manufacture, right to carry on any business or profession tenancy rights, loom hours, and route permits.

Question 130.
An undertaking was owned and operated for 28 months before it was sold on slump sale basis. Land and buildings form part of its assets. The resultant gain would be
(1) Short-term capital gain
(2) Exempted income
(3) Long-term capital gain
(4) Business income
Answer:
(1) Short-term capital gain

Question 131.
An award of ₹ 1,00,000 was announced for tracing a missing person. R traced the person and received the award amount. In the hands of R, such receipt shall be:
(1) exempt up to ₹ 50,000
(2) casual income
(3) fully taxable
(4) fully exempt
Answer:
(3) fully taxable

Question 132.
Which of the following propositions are correct for availing deduction under section 80-IAC:
(1) 80-IAC provides for a deduction of an amount equal to 100% of the profits or gains derived from an eligible startup for 3 consecutive assessment years out of 10 years beginning from the year of incorporation.
(2) The deduction shall be available to an eligible start-up if the total turnover of its business does not exceed ₹ 25 crores in any of the previous years beginning from the year of incorporation
(1) 1 only
(2) Neither 1 nor 2
(3) 2 only
(4) Both 1 and 2
Answer:
1 only

Question 133.
Ram commenced construction of residential building on 01.04.2016. Interest on housing loan up to 31.03.2022 was ₹ 4,40,003. Interest for the period from 01.04.2022 to 30.09.2022 (being the date of completion of construction of the residential house) was ₹ 60,000. Interest for the period from 01.10.2022 to 31.03.2023 amounts to ₹ 50,000. How much is the interest eligible for deduction under section 24 for the assessment year 2023-24 for this let-out property?
(1) ₹ 1,50,000
(2) ₹ 1,98,000
(3) ₹ 5,00,000
(4) ₹ 1,00,000
Answer:
(2) ₹ 1,98,000

Question 134.
A company makes regular payments of brokerage to a person for purchase of raw materials. When does the company become liable to deduct tax at source on such brokerage?
(1) When the aggregate brokerage paid or payable exceeds ₹ 50,000
(2) When the aggregate brokerage paid or payable exceeds ₹ 15,000
(3) When the brokerage payable exceeds ₹ 10,000
(4) When the aggregate brokerage paid exceeds ₹ 30,000 (Dec 2021, 1 x 20 =20 marks)
Answer:
(2) When the aggregate brokerage paid or payable exceeds ₹ 15,000

Question 135.
Maintenance of specified books of accounts compulsory if gross receipts in all three preceding PY exceeds ………………….. in case of
persons carrying on the profession of technical consultancy.
Answer:
₹ 1,50,000.

Question 136.
Compensation received under Voluntary Retirement Scheme by an individual shall be regarded as …………………. while computing the income under the head USalariesI
Answer:
Profit in lieu of salary

Question 137.
The rate (excluding surcharge and Cess) of tax applicable on the total income of local authority is …………………….. .
Answer:
30%

Question 138.
A surgeon (doctor) has aggregate annual receipt of ₹ 48 lakhs (₹ 20 lakhs through cash and rest through bank) for the year ended 31.03.2023. His presumptive income under section 44ADA is ₹ …………………………. .
Answer:
₹ 24 lakhs

CMA Inter Direct Tax Study Material MCQs

Question 139.
When a partnership firm pays salary to working partners of ₹ 6 lakhs when the partnership deed permits payment of 5,40,000. The Book profit of the firm is ₹ 6,00,000. The quantum of remuneration allowable in the hands of firm will be …………………… .
Answer:
₹ 4,50,000

Question 140.
An agricultural land situated beyond ………………….. from the limits of municipality is not regarded as a capital asset, even though the population of municipality as per the last preceding census exceeds ₹ 1 lakh but less than ₹ 10 lakhs.
Answer:
6Kms

Question 141.
When the assessment under section 143(3) is made on 10th December, 2022 by the National Faceless Assessment Centre (NFAC), the time limit for filing petition for rectification of mistake under section 154 would expire by (date).
Answer:
31 .3.2027

Question 142.
When a senior resident individual incurs medical expenditure of ₹ 60,000 towards cataract surgery to his mother (super senior citizen) the amount eligible for deduction under section 80-D is ……………………. if there is no health insurance policy coverage for her.
Answer:
₹ 50,000.

Question 143.
In case of a capital asset, being land or building or both, the fair market vafue of such asset on 1-04-2023 shall not exceed the ……………………… of such asset as on 1- 04-2023 where such stamp duty value is available.
Answer:
Stamp duty value

Question 144.
Royalty of ₹ 1oo lakhs was paid outside India to Andrew, a non-resident for sale of his cinematographic films; -iL such films are to be telecasted in Indian TV channels then the said amount shall be …………………….. (taxable/exempt! partially taxable) ¡n the hands of Andrew
Answer:
Taxable

Question 145.
Mr. Veer, a salaried employee made own contribution to the National Pension Scheme of 50,000 when his basic salary and DA in the previous year is ₹ 480,000. Where the employer contribution is Nil, then he is eligible for a maximum deduction of …………………. under section 80CC D (1).
Answer:
₹ 48,000

Question 146.
Loss from speculation business is eligible for carry forward and set off for subsequent …………………. assessment years
Answer:
4

Question 147.
When an Indian company earns ₹ 20 lakhs by way of income from transfer of carbon credits, the rate of tax applicable on such
income would be ……………………… % (ignore surcharge and cess)
Answer:
10

Question 148.
Person authorized to verity the Return of Income [Section 140] for Political party is ………………… of such party
Answer:
The chief executive officer

Question 149.
Mr. A, a resident individual has sold his vacant site to his friend Mr. B, for ₹ 60,00,000. The stamp duty valuation of the house is ₹ 62,00,000. The amount assessable as income in the hands of Mr. B is …………………. as per section 56(2)(viib) of Income tax Act, 1961.
Answer:
Nil

Question 150.
Mr. A, a senior citizen (Resident), having total income of 8 lacs, earned by way of interest from secured debentures. The advance tax payable by him is ₹ …………………… .
Answer:
NIL

Question 151.
When the actual rent is (per annum) ₹ 72,000, fair rent is ₹ 96,000 and standardrent is ₹ 84,000 and no property tax has been paid, the chargeable income from house property is ………………….. .
Answer:
₹ 58,800.

Question 152.
In case of assessee who has securities partly in physical form and partly in dematerialized form, FlEO method will be applied in respect of the …………………… .
Answer:
Dematerialized holding

Question 153.
When a domestic company deriving business income pays ₹ 30,000 to an approved institution engaged in scientific research it is eligible for deduction of ………………………… % under section 35 of Income tax Act,1 961.
Answer:
100%

CMA Inter Direct Tax Study Material MCQs

Question 154.
When fees for cost audit paid to a resident was ₹ 40,000, the amount of income-tax deductible at source on the said amount would be
Answer:
₹ 4,000 (Dec 2021, 1 × 20 = 20 marks)

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Divorce Process - Mutual Consent or Contested, Fees and Documents

Divorce Process – Mutual Consent or Contested, Fees and Documents

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Divorce Process: Divorce is a legal procedure of ending a marriage or matrimonial union. Divorce usually involves the cancelling or restructuring of a marriage’s legal responsibilities and duties under the rule of law of a particular country or state. A divorce is a legal action between married people to end their marriage before the spouse’s death. Divorce laws differ considerably around the world, but in most nations, divorce requires the sanction of a court or other authority in a legal process, which may involve issues of distribution of property, alimony (spousal support), child custody, child visiting/access, child support, parenting time, and division of debt. In most nations, the law expects monogamy, so divorce enables each ex-partner to marry another. It takes a minimum of six months for mutually consented divorce; however, for contested divorces, the total duration of the process could extend from 2-5 years, case-specific.

Constituents of Divorce

Divorce is the adjournment of marriage constitutionally. In India, marriage and divorce come under personal matters, and the laws are based on customs and rights of different religions discussed below. There are three significant factors to be classified at the time of divorce:

  • Property settlements, liabilities and assets: In case of a mutual consent divorce, the parties are free to choose how they wish to distribute their marital assets. However, if there is a deficit of consent in how matters are to be resolved, the court may help the parties in the same. Nevertheless, the division can be demanded only of the joint conjugal property and not of the individual self-acquired property of a spouse. A Hindu woman may assert her husband’s property after his death under the Hindu Succession Act, 1956. Section 125 of the Code of Criminal Procedure grants support to wives, and there exist maintenance provisions even under the Hindu Adoption and Maintenance Act, 1956. For this, the property and the remuneration of the husband are considered by the court.
  • Alimony: When two people are married, they have a responsibility to support each other. In 1973 under the Code of Criminal Procedure, the right of maintenance was extended to any form economically reliant on marriage. The claim of either spouse depends on the husband having adequate means. When settling the payment on the alimony, the court will take into account the earning potential of the man and his capacity to restore his fortune and liabilities.
  • Child Custody: The Guardians and Wards Act, 1890, determines custody and guardianship aspects in India. The protection of a child either be sole, where only one parent has the custody, and the other may have the visiting rights. Shared or joint custody is where both parents share the custody, and third-party custody is where neither of the parents gets the custody. Usually, the custody of children below five years of age is given to the mother. Under the Muslim Women Act, 1986, the custody of boys below two years is given to the mother and after that to the father, but the daughter’s custody remains with the mother.

Divorce Process

Types of Divorce

In some areas, the courts will surprisingly apply principles of fault but might voluntarily hold a party responsible for a breach of fiduciary responsibility to his or her spouse. A judge must order a divorce by a court of law to come into force. The courts generally set the divorce terms, though they may take into account prenuptial contracts or post-nuptial contracts or simply approve terms that the spouses may have consented to privately.

The Indian Divorce system can be divided into two separate divisions.

  • Divorce by Mutual Consent: When both mates approve of dissolving a troubled marriage, they can pursue the Indian divorce procedure with Mutual Consent. One needs to register a joint divorce request. The court will provide a six to eighteen months period to the parties, called the cooling-off phase, to adjust. If they cannot settle, then they have to go through the terms of the agreement. And also have to file a second motion, and the court announces a Decree of Divorce. Divorce by mutual consent requires a minimum of six months to settle, whereas if it takes the court route, it might take around 2-5 years, depending on the situation.
  • Contested Divorce: The divorce where the husband or the wife wants separation but the other doesn’t is known as a contested divorce. It also applies when both the partners want a divorce but cannot accept issues like alimony or the custody of the children. In a contested divorce, one has to explicate, prove and justify reasons to the court, known as grounds, for wanting to separate. Reasons to get a divorce can be desertion, cruelty, adultery, impotence, chronic diseases like leprosy, venereal disease, etc. The other party can also challenge these types of problems. This makes contested divorce procedures long, stressful and comparatively expensive. It often appears that a couple starts the divorce procedures by way of a contested divorce, but throughout the trial, they agree to separate by mutual consent. In India, the grounds of divorce are determined based on the religion of the couple.

The legal method in India is considerably repulsive, lengthy and costly. A couple can control their legal expenses if they mutually handle a financial settlement.

Indian Marriage Acts

In India, marriage and dissolution of marriage come under personal matters, and the laws are based on customs and rights of different religions such as – The Hindu Marriage Act, 1955 rules for the Hindus, Sikhs, Jains and Buddhists.  For the Muslim community, the dissolution of Muslim Marriages Act, 1939. The Parsis are administered by the Parsi Marriage and Divorce Act, 1936. The Christians are governed by the Indian Divorce Act, 1869 and all the inter-community and civil marriages are governed by the Special Marriage Act from the year 1956. Due to the presence of different religious convictions in India, the Indian Judiciary has implemented laws distinctly for couples belonging to different religions. The mutual consent divorce procedure is slightly more effortless and fast, while the contested divorce method takes longer and depends on the religions of the partners.

Cost to Get a Divorce

The Court fees for listing a divorce are cheap; the cost is essentially in the expenses you pay your attorney. Lawyers tend to credit charges for arriving in court and doing any other work. Depending on how profoundly it works, therefore, it may cost anywhere from the low ten thousand to lakhs of rupees. One can hire lawyers walking around the premises of any family court who assure a win-win situation for a lump-sum amount of money. Such advocates usually trick the clients. Different lawyers in different cities have separate fees according to their High Court or Civil Court practice. For hearings related to the Supreme court, the fee increase is proportional.

  • Mutual Consent Divorce: The complete process for the mutual consent divorce by attorneys with experience for 1 to 3 years takes around from Rs 15,000 to Rs 30,000.
  • Contested Divorce: The contested Divorce is expensive as there are arguments and cross pieces of evidence. The Prosecution cost is directly proportional to the time duration of the case. The Prosecutor with 3 to 5 years experience charges a minimum of Rs 3000-7000 per hearing. Hiring an experienced advocate can cost you about Rs 35,000 per hearing.

Documents Required for Divorce

In a divorce petition, the parties are asked to submit the following documentary proofs:

  • Address proof of husband and wife
  • Marriage certificate
  • The marriage proof in terms of four passport photos of the marriage
  • Separate residence proof for spouses living separately for more than a year
  • Evidence of failed attempts of settlement
  • Last 2-3 years income tax statements
  • Profession and present remuneration details
  • Family background Information
  • Details of assets owned by the claimant

Conclusion on Divorce Process

The personal law associated with marriage and divorce is manifested properly in India with adequate legislation and case laws on the matter. However, these laws need to evolve with the changing society, and the family courts of India have done an exceptional job in identifying the same.

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How to Nominate Bank Account, Mutual Funds

How to Nominate Bank Account, Mutual Funds?

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How to Nominate Bank Account, Mutual Funds?: Every time an individual fills up a form for an investment, whether it is a mutual fund, shares, fixed deposit, or bank account, there is a separate section to mention a nominee. The nominee is only the custodian of the investment until the legal heir claims them legally. It means that the process of nomination enables the appointed person to take care of one’s investments when he/she dies refers to the nomination. All financial institutions and banks of India have standard processes for settling death claims, where the nomination is specified clearly in the folio or account. Learn more about how to nominate, cancel or change the process of nomination in a bank account and mutual funds.

What Exactly Is the Nomination Process?

The nomination facility permits an investor in a mutual fund or a deposit account holder to nominate an individual who can claim the investment of the safe deposit locker or the earnings of the deposit account. The nominee can be anyone a person considers to be the first relative- spouse, parents, siblings, children, or other. Before nominating anyone, an individual must be familiar to:

  • Start of Investment: There is a separate column in an application form. So, a person should appoint the nominee while opening an account or during investment.
  • Multiple Nominees: Some investments like mutual funds enables a person to have multiple nominees where he/she can assign money percentage to each of them.
  • Minor Nominee: If the guardian is mentioned in the form, then a minor can be a nominee.
  • Nominee Change: One can change the nominee assigned at any time or multiple times without even notifying the earlier nominee about the change.
  • Cancellation of Nomination: One has the right to cancel the nomination at any time without even informing the individual nominated.

How To Make Nomination in Savings Bank Account?

Nomination is the right of the bank account holder to appoint one or more persons who will be allowed to receive money upon the account holder’s death. While opening the saving account in any Indian bank, an individual can apply for nomination. The opening form of every bank account has a different section for nomination.

  • Appoint the Nominee: One should fill the nomination form DA-1 to appoint a nominee for any saving account. A person can appoint a nominee while opening an account or later. If an individual did not nominate anyone during the account’s opening and wants to nominate in the future, then he/she has to visit the bank. From the bank, they will get the DA-1 nomination form. An individual should fill the form and then submit it to the bank.
  • Changing the Nominee: In case, if anyone wants to change the nominee made already, he/she has to fill the DA-3 form. One can download the DA-3 form from the official website of the bank or can obtain it by visiting the bank. The form involves the signature of two witnesses. After filling the form, one needs to submit it to the bank.
  • Nomination Cancelling: An individual has to fill the form DA-2 to cancel the nomination made already. One can get the DA-2 form from the bank or can download it from the website of the bank. The form that involves two witnesses’ signatures should get submitted to the bank once filled completely.

Making A Nomination In a Bank Account

Some points to remember while making a nomination in a bank account:

  • The facility of nomination is available for accounts opened as single or joint accounts. It is not accessible for a representative account. It is vital to note that the nomination forms either for opening, change, or cancellation should get filled up by all joint holders.
  • The account holder can add a new nominee during their lifetime. DA-1 form allows the account holder to make a nomination if he/she has not made it yet. This form requires the details of the account holder and the nominee’s information.
  • A nominee is eligible to receive the funds on the death of the account holder. In the case of joint accounts, a nominee will obtain the funds on the death of all account holders.

How to Make Nominations in Mutual Fund Investments?

Securities and Exchange Board of India (SEBI) revised its Mutual Funds Regulations in 2002. The regulations amended permit the nomination option to the unitholders of mutual funds. Since that time, Asset Management Company (AMC) offers a facility to the unitholder to choose a nominee in whom the units held by an individual shall vest if he/she dies. However, nomination asset does mean that nominee acquire title or any beneficial interest in the mutual fund.

  • Only those individuals can make nomination who are holding or applying for units on their own behalf.
  • If the unitholder is choosing a minor as a nominee, then he/she must provide the name and address of the minor nominee’s guardian.
  • Nomination is compulsory and since April 2011, different investors are applying in solo holding.
  • A non-resident Indian can become a nominee in regard to the force exchange controls from time to time.
  • Non-individuals such as trust, partnership firm, society, body, holder of Power of Attorney, corporate, and, Karta of Hindu Undivided Family can neither become a nominee nor can nominate.
  • When an individual is a nominee, KYC requirements are not necessary during that time. However, due to the death of the unitholder, when a nominee steps into the shoes of a unitholder, then he/she has to complete the KYC necessities. If the nominee is still a minor at that time, then the guardian should be KYC compliant.
  • The process of nomination is at the folio level. If an investor has various schemes in a folio, then all units get transferred to the nominee. The nomination becomes valid to the new units also if an investor makes more investment in the same folio.
  • One can select the multiple nominees for mutual funds with a percentage to be allocated to each individual mentioned. In case, if the percentage is less than 100% and there are multiple nominations, then the balance gets rebalanced to the first unit holder. However, if the percentage is more than 100%, then nomination gets forbidden.
  • The unit transfer in courtesy of a nominee would be legal discharge as per the asset management company against the legal beneficiary.
  • Individuals who hold units on their own behalf or made the original nomination hold a right to cancel the nomination. On the cancellation, the nomination should get considered as canceled. The Asset Management Company should not be any compulsion to transfer the units in the nominee’s favor. Generally, it takes 7 working days from the receipt date of filled forms in the process of change or cancellation of nomination.

Can One Make Nomination Later After Filling the Form?

While filing the form, if someone forgets to appoint a nominee, then they can do it later by filling the form for the Asset Management Company. The investor can request the registrar or transfer agent for the form or can download it from the websites of mutual funds.

Benefits of Nomination Registration

With the registration of nomination, the process of funds transferring becomes trouble-free to the nominee or nominees in the event of the investor’s demise. However, if no nomination is made, the claimant/ heir has to create different documents like a legal heir certificate, a will, or a no-objection certificate from other legal heirs to get the units transferred. Thus, a nomination facility is an efficient way to lessen the hardships of the legal heirs in claim settlement.

Conclusion

Nomination is not mandatory; however, it is advisable to nominate a person in a saving bank account or mutual fund investment. It simplifies the process of claim settlement and gives a nominee right of legal heirs of the investor. One can nominate anyone- an acquaintance, a friend, or a relative.

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2 uan numbers

2 UAN Numbers: How To Merge Two UAN EPF Accounts Online?

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2 UAN Numbers: The full form of UAN is Universal Account Number. As the name suggests, UAN is a 12 digit number allocated to EPFO members for a lifetime to track their PF accounts. The main objective of the UAN number is to provide all the information about Provident Fund in one place irrespective of the organization he/she works. Any EPF member must have only one UAN number whose all EPF accounts are linked to it. Having two UAN numbers is against the EPFO rules. Thus, any employee with 2 UAN numbers will have to merge them to one of the UAN numbers. The steps to deactivate two UAN Numbers and merge them into one single UAN number online have been discussed in detail in this post. Read on to find out more about how to combine 2 UAN numbers online.

Reasons Why Two UAN Numbers Allotted For Same Person

In recent times, many people have witnessed the allotment of 2 UAN numbers to one single person. The reasons why 2 UAN numbers are allotted to one person are given below:

  1. Not Disclosing the Previous UAN Number: It is quite common for one employee to switch multiple jobs. So whenever an employee joins a new company, he/she should disclose his/her UAN and EPF Member ID number to the employer. Failing to provide this information to the employer will make an employer create a new UAN Number under UAN Registration. If an employer creates a new UAN number, then the employee will end up having 2 UAN numbers.
  2. Failed To Update Date of Exit by the Previous Employer: The previous employer will have to mention the date of exit in the ECR – Electronic Challan and Return. If the employer fails to provide this information, then the new organization allocates a new UAN to the employee.

What Happens If You Have 2 UAN Numbers?

Any EPF member must not have 2 active UAN numbers and having 2 UAN numbers that are active is against the rules of EPFO. According to EPFO, any person should have only one UAN number throughout his lifetime. That is, any member who has an account under EPF must have only a UAN number whose all EPF accounts are linked to it.  Any member having 2 UAN numbers will end up in a problematic situation. Thus it is important to deactivate 1 UAN number and merge the old UAN number to the new UAN number.

How Can I Deactivate My 2 UAN Number?

There are two methods, where one can deactivate and merge them into one UAN Number online. Let’s first go through Method 1 followed by Method 2.

Method 1 To Deactivate 2 UAN Numbers

  1. Once you come to know that you have 2 UAN numbers, immediately report the issue to your employer or EPFO officials.
  2. If you are reporting to the EPFO officials, you can simply write an email to uanepf@epfindia.gov.in.
  3. While writing the email to EPFO officials, you will have to mention your current UAN number and previous UAN number.
  4. Once the mail is sent to the EPFO officials, the EPFO will scrutinize your mail.
  5. Soon after scrutinizing the mail, the previous UAN will be blocked and the current UAN number will be kept active.
  6. Once your old UAN number is blocked, you will have to submit a claim of transfer to the EPF accounts linked with the blocked UAN to the new UAN account.

The above-listed process is time taking and the resolution rate is quite low when compared to Method 2.  Thus members looking for a faster solution can opt for Method 2, where he/she can merge 2 UAN numbers easily in online.

Method 2 To Merge Two UAN Numbers

  1. Employees who end up having two UAN numbers will have to request EPFO officials for the transfer of the EPF amount from the old UAN number to the new UAN number.
  2. Soon after sending the request, the EPFO officials will identify the duplicate UAN number.
  3. Once the identification process is completed, the Old UAN number from where EPF funds are transferred will get deactivated.
  4. Soon after the deactivation of Old UAN number, the old EPF account will be linked to the new UAN number account.
  5. The officials of EPFO will notify the same to the EPF members by sending an SMS.
  6. However, if officials find that the new UAN number is not activated by the EPF member, then he/she will be sent a request to activate the new UAN.
  7. In case if the EPF member has to receive some EPF arrears from their old employer, then the new UAN Number will be auto-populated in the ECR. Once this process is completed, the EPF arrears will be affixed to the EPF account which is linked to the new UAN number.

2 UAN Numbers: How To Transfer EPF Online?

Any EPF member will be able to transfer their EPF funds online from old employer to new employer through e-SEWA portal. Check our article on How To Transfer EPF Account Online to know the detailed process about EPF Transfer online.

FAQs on 2 UAN Numbers

The frequently asked questions on two UAN numbers are given below:

Q. Unfortunately, I got 2 UAN numbers on the same PAN number. What should I do?
A. If you have two UAN Numbers, then you must immediately report to your current employer or also can write a mail to EPFO official to the email ID – uanepf@epfindia.gov.in mentioning your old UAN number and new UAN number.

Q. What happens if you have two UAN numbers?
A. According to the EPFO officials, any EPF member should have only one UAN number throughout his lifetime. If he/she has 2 UAN numbers then they will end up in a problematic situation while withdrawing funds or online EPF transfer. So if any EPF member has 2 UAN numbers, then they will have to report the issue to EPFO officials.

Q. Can I have 2 UAN numbers for same person?
A. No, no EPF member cannot have two active UAN numbers at the same time.

Now that you are provided with all the necessary information about two UAN numbers and we hope this detailed article is helpful to you. If you have any queries about two UAN numbers, ping us through the comment box below and we will get back to you as soon as possible.

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