INCOME TAX
2 Marks Important Questions
1. What is Previous Year?
2. Expand PAN and CBDT.
3. Name any two incomes taxable under other sources.
4. List any two deductions u/s 80 G.
5. What is Municipal rent?
6. List any two exceptions to the general rule of the Previous Year.
7. State the amount of deduction U/s 80D.
8. Define the term “Assessee”.
9. Name any four Canons of Taxation.
10. Explain the deductions U/s 24A and 24B.
11. Name any two Professional receipts of doctor.
12. How much is the exempted limit in case of children hostel allowance and tribal area
allowance.
13. What is Municipal rent?
14. What do you mean by Profession?
15. Name any four exempted allowances.
16. List five heads of Income under Income tax act of 1961.
17. What is Unrealized rent?
18. State the provision under section 24 of Income tax Act.
19. List any four admissible expenses in income from business.
20. What is LTCG and STCG?
21. What is short term capital gain? give example.
22. What are deductions?
23. Define Salary.
24. Compare GAV with NAV.
25. What is Total Income?
26. Define Assessment year.
27. What is taxable income?
28. What are perquisites?
29. Explain the tax treatment for SPF.
Here are brief and clear answers to your questions on the Indian Income Tax Act:
1. Previous Year: The financial year in which income is earned, taxed in the following
assessment year.
2. PAN & CBDT:
o PAN: Permanent Account Number
o CBDT: Central Board of Direct Taxes
3. Two incomes under 'Other Sources':
o Interest from savings/fixed deposit
o Lottery winnings
4. Two deductions u/s 80G:
o Donation to PM National Relief Fund
o Donation to registered charitable trusts
5. Municipal Rent: Rent value fixed by municipal authority for tax purposes.
6. Exceptions to Previous Year rule:
o Non-resident shipping companies
o Persons leaving India permanently
7. Deduction u/s 80D:
o ₹25,000 (₹50,000 for senior citizens) for medical insurance premium
8. Assessee: A person liable to pay tax under the Income Tax Act.
9. Four Canons of Taxation:
o Equity
o Certainty
o Convenience
o Economy
10. Section 24A & 24B:
o 24(a): 30% standard deduction on Net Annual Value
o 24(b): Interest on home loan (max ₹2 lakh for self-occupied)
11. Professional receipts of a doctor:
o Consultation fees
o Surgery charges
12. Exempted limits:
o Children hostel allowance: ₹300/month per child (max 2)
o Tribal area allowance: ₹200/month
13. (Repeat) Municipal rent: Value fixed by municipality for taxation.
14. Profession: A vocation requiring specialized knowledge, e.g., doctor, lawyer.
15. Four exempted allowances:
o House Rent Allowance (subject to conditions)
o Transport allowance (for disabled)
o Uniform allowance
o Academic/research allowance
16. Five heads of income:
o Salary
o House Property
o Business/Profession
o Capital Gains
o Other Sources
17. Unrealized Rent: Rent not received from tenant despite being due.
18. Section 24:
o Allows 30% standard deduction and home loan interest deduction from income of
house property.
19. Four admissible business expenses:
o Rent of business premises
o Salaries to staff
o Office electricity
o Depreciation on assets
20. LTCG & STCG:
o LTCG: Long-Term Capital Gain (asset held >36/24/12 months)
o STCG: Short-Term Capital Gain (asset held ≤ that period)
21. Short Term Capital Gain: Profit from sale of short-term asset
o Example: Selling shares held for 8 months at profit.
22. Deductions: Amounts reduced from gross total income to arrive at taxable income under
various sections (80C, 80D, etc.)
23. Salary: Compensation received from employer including basic pay, allowances, perquisites.
24. GAV vs NAV:
o GAV (Gross Annual Value): Expected rent from property
o NAV (Net Annual Value): GAV minus municipal taxes
25. Total Income: Income after deductions, chargeable to tax.
26. Assessment Year: Year in which income of the previous year is assessed and taxed.
27. Taxable Income: Total income after deductions on which tax is calculated.
28. Perquisites: Non-monetary benefits given by employer, e.g., rent-free house, car.
29. Tax Treatment for SPF (Statutory Provident Fund):
o Contributions, interest, and withdrawals are fully exempt under certain conditions.
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