INCOME TAX MCQS I SALARY I NEW INCOME TAX ACT 2025 AND RULES 2026
**1. Which of the following is NOT included in the definition of “Salary” under Section 16 of the Income-tax Act, 2025?**
A) Wages
B) Any advance of salary
C) Winnings from lotteries
D) Any gratuity
**Answer:** C.
**2. What is the maximum amount of standard deduction allowed from salary income when income-tax is computed under the New Tax Regime (Section 202(1))?**
A) ₹50,000
B) ₹75,000 or the salary, whichever is less
C) ₹1,00,000
D) ₹15,000
**Answer:** B.
**3. What is the maximum standard deduction from salary if the taxpayer does NOT opt for the New Tax Regime?**
A) ₹40,000
B) ₹50,000 or the salary, whichever is less
C) ₹75,000
D) ₹1,00,000
**Answer:** B.
**4. Death-cum-retirement gratuity received by members of the defence services is:**
A) Fully taxable
B) Partially exempt
C) Fully allowed as a deduction (entire amount)
D) Taxable at a flat rate of 10%
**Answer:** C.
**5. If an employee receives gratuity, what portion of the commuted pension is normally allowed as a deduction?**
A) The commuted value of one-half of the pension
B) The commuted value of one-third of the pension
C) The commuted value of one-fourth of the pension
D) The entire amount
**Answer:** B.
**6. If an employee does NOT receive any gratuity, what portion of the commuted pension is allowed as a deduction?**
A) The commuted value of one-half of the pension
B) The commuted value of one-third of the pension
C) The commuted value of one-fourth of the pension
D) The entire amount
**Answer:** A.
**7. What is the maximum limit for the deduction of amounts received on voluntary retirement or termination of service by an employee?**
A) ₹2,50,000
B) ₹3,00,000
C) ₹5,00,000
D) ₹10,00,000
**Answer:** C.
**8. Which of the following is considered “profits in lieu of salary”?**
A) Payment received from an employer before joining employment
B) Rent received from house property
C) Dividend income
D) Interest on savings account
**Answer:** A.
**9. For calculating the perquisite value of rent-free unfurnished accommodation provided by a private employer in a city with a population exceeding 40 lakhs, what percentage of the salary is considered?**
A) 15%
B) 10%
C) 7.5%
D) 5%
**Answer:** B.
**10. What is the perquisite value for rent-free unfurnished accommodation provided by a private employer in a city with a population between 15 lakhs and 40 lakhs?**
A) 10% of salary
B) 7.5% of salary
C) 5% of salary
D) 15% of salary
**Answer:** B.
**11. If rent-free accommodation is furnished, how is the value of the perquisite increased in respect of the furniture owned by the employer?**
A) By 5% per annum of the original cost of furniture
B) By 10% per annum of the original cost of furniture
C) By 15% per annum of the original cost of furniture
D) By 20% per annum of the original cost of furniture
**Answer:** B.
**12. If an employer provides a motor car exclusively for the official duties of the employee and maintains the specified documents, what is the perquisite value?**
A) ₹ 1,800 per month
B) ₹ 2,400 per month
C) Nil
D) Actual expenses incurred
**Answer:** C.
**13. The value of any specified security or sweat equity shares allotted free of cost or at a concessional rate by the employer is included under which head?**
A) Capital Gains
B) Income from Other Sources
C) Perquisites under Salaries
D) Profits in lieu of salary
**Answer:** C.
**14. At what rate is the tax deducted at source (TDS) by an employer on the income chargeable under the head “Salaries”?**
A) Flat rate of 10%
B) Flat rate of 20%
C) Average rate of income-tax computed on the basis of the rates in force
D) No TDS is applicable on salary
**Answer:** C.
**15. Is salary, bonus, or commission received by a partner from a firm regarded as “Salary” under Section 15?**
A) Yes, fully taxable as salary
B) No, it shall not be regarded as salary for the purposes of this section
C) Yes, but only up to ₹50,000
D) Yes, if the partner is a working partner
**Answer:** B.
**16. If advance salary is included in the total income of a person in the year of receipt, how is it treated when it actually becomes due?**
A) Taxed again at half rate
B) It is not included again in the total income when the salary becomes due
C) Taxed again at the average rate
D) Exempt up to ₹50,000
**Answer:** B.
**17. How is the contribution made by the Central Government to the Agniveer Corpus Fund account of an individual enrolled in the Agnipath Scheme treated?**
A) Included in the definition of “Salary”
B) Exempt from being classified as income
C) Treated as Income from Other Sources
D) Treated as a business profit
**Answer:** A.
**18. For calculating the limit on the deduction for the cash equivalent of leave salary at the time of retirement, the entitlement of earned leave cannot exceed how many days for every year of actual service?**
A) 15 days
B) 30 days
C) 45 days
D) 60 days
**Answer:** B.
**19. Does the term “employer” for the purpose of taxing salary under Section 15 include a “former employer”?**
A) Yes
B) No
C) Only if the employee worked for more than 5 years
D) Only for government employees
**Answer:** A.
**20. What is the transport allowance limit given to a visually impaired, deaf and dumb, or orthopedically disabled employee to cover commuting expenses between residence and the workplace?**
A) ₹3,000 per month
B) ₹15,000 per month (in metro cities) and ₹8,000 per month (in other cities) plus dearness allowance thereon
C) ₹5,000 per month
D) ₹25,000 per month
**Answer:** B.