Why is a progressive tax system divided into slabs?
A Different bands have different rates
B One flat rate on income
C Tax depends only on age
D Different law for each receipt
Answer: A. Different bands have different rates. A progressive slab system applies different rates to successive portions of taxable income.
Under slab taxation, how is income within a band generally treated?
A Highest rate on all income
B The portion within each band
C Only cash income
D Only the final payment
Answer: B. The portion within each band. Ordinary slab computation applies a rate to the portion falling within that band, rather than applying the highest marginal rate to all income.
Under default section 202 rates for Tax Year 2026–27, what is the nil-rate threshold?
A Up to ₹2 lakh
B Up to ₹5 lakh
C Up to ₹4 lakh
D Up to ₹8 lakh
Answer: C. Up to ₹4 lakh. The default section 202 schedule for Tax Year 2026–27 sets a nil rate up to ₹4 lakh.
Which rate applies to the ₹4,00,001–₹8,00,000 band under default 2026–27 rates?
A 10%
B 15%
C 20%
D 5%
Answer: D. 5%. The default section 202 rate for the band from ₹4,00,001 to ₹8,00,000 is 5%.
What is the default rate for the ₹8,00,001–₹12,00,000 band?
A 10%
B 5%
C 15%
D 25%
Answer: A. 10%. The default section 202 rate for the band from ₹8,00,001 to ₹12,00,000 is 10%.
Under the default 2026–27 schedule, which rate covers ₹12,00,001–₹16,00,000?
A 5%
B 15%
C 10%
D 20%
Answer: B. 15%. The default section 202 rate for the band from ₹12,00,001 to ₹16,00,000 is 15%.
Which default rate applies to the ₹16,00,001–₹20,00,000 band?
A 10%
B 15%
C 20%
D 25%
Answer: C. 20%. The rate for this default section 202 band is 20%.
For default section 202 slabs, what rate applies to ₹20,00,001–₹24,00,000?
A 15%
B 20%
C 30%
D 25%
Answer: D. 25%. The rate for the default section 202 band from ₹20,00,001 to ₹24,00,000 is 25%.
Under the default 2026–27 schedule, what rate applies above ₹24 lakh?
A 30%
B 20%
C 25%
D 35%
Answer: A. 30%. The default section 202 rate for total income above ₹24 lakh is 30%, before other provisions.
At ₹10 lakh total income, what is slab tax before rebate, surcharge, and cess?
A ₹20,000
B ₹40,000
C ₹60,000
D ₹1,00,000
Answer: B. ₹40,000. The first ₹4 lakh has nil tax, the next ₹4 lakh yields ₹20,000, and the next ₹2 lakh yields ₹20,000, totalling ₹40,000 before other provisions.
At ₹8 lakh total income, what is default slab tax before rebate and cess?
A ₹40,000
B ₹10,000
C ₹20,000
D ₹80,000
Answer: C. ₹20,000. The first ₹4 lakh is nil and the next ₹4 lakh is taxed at 5%, producing ₹20,000 before other provisions.
At ₹12 lakh total income, what is default slab tax before rebate and cess?
A ₹20,000
B ₹80,000
C ₹1,20,000
D ₹60,000
Answer: D. ₹60,000. The 5% band contributes ₹20,000 and the 10% band contributes ₹40,000, for ₹60,000 before other provisions.
At ₹16 lakh total income, what is default slab tax before rebate and cess?
A ₹1,20,000
B ₹60,000
C ₹1,60,000
D ₹2,00,000
Answer: A. ₹1,20,000. The cumulative slab tax is ₹20,000 + ₹40,000 + ₹60,000, or ₹1,20,000 before other provisions.
At ₹24 lakh total income, what is default slab tax before rebate and cess?
A ₹2,00,000
B ₹3,00,000
C ₹2,40,000
D ₹4,00,000
Answer: B. ₹3,00,000. Adding the tax across the first six bands gives ₹3,00,000 before other provisions.
If income exceeds ₹24 lakh, does the 30% rate apply to every rupee?
A Yes, all income
B Only to salary
C No, only the top portion
D Only after a rebate
Answer: C. No, only the top portion. The 30% marginal rate applies to the portion above ₹24 lakh under the default schedule, not to all earlier bands.
With taxable income of ₹18 lakh, which default marginal rate applies to the next rupee?
A 10%
B 15%
C 25%
D 20%
Answer: D. 20%. ₹18 lakh lies within the ₹16,00,001–₹20,00,000 band, whose default rate is 20%.
At total income of ₹25 lakh, which default marginal rate applies to additional ordinary slab income?
A 30%
B 20%
C 25%
D 15%
Answer: A. 30%. Income above ₹24 lakh falls in the 30% marginal band under the default section 202 schedule.
What changes when income just crosses a slab boundary?
A Entire income moves upward
B Only excess enters next band
C Earlier tax is cancelled
D The taxpayer changes category
Answer: B. Only excess enters next band. Under progressive slabs, only the amount above a threshold enters the next band; earlier portions retain their rates.
How does the marginal rate differ from the average rate?
A Average rate applies next
B Both always match
C Marginal rate on next income
D Marginal rate includes tax credits
Answer: C. Marginal rate on next income. The marginal rate is the rate on the next unit of ordinary slab income; the average rate compares total tax with total income.
Which figure is needed to apply personal income-tax slabs?
A Gross salary alone
B Tax already withheld
C Household spending
D Taxable total income
Answer: D. Taxable total income. Personal slab rates are applied to total income as computed under the applicable provisions, not simply to gross salary.
For Tax Year 2026–27, which law uses the term “Tax Year”?
A Income-tax Act, 2025
B Income-tax Act, 1961
C Goods and Services Tax Act
D Companies Act, 2013
Answer: A. Income-tax Act, 2025. The Income-tax Act, 2025 uses Tax Year terminology for tax years beginning on or after 1 April 2026.
Under the 2025 Act, default individual rates apply unless what occurs?
A A bank approves it
B A permitted option is exercised
C Salary is paid monthly
D The taxpayer changes residence
Answer: B. A permitted option is exercised. The Department’s rate guidance says section 202 rates are default unless an eligible taxpayer exercises the statutory option.
Under the opting-out schedule, what is the nil threshold for a resident individual below age 60?
A Up to ₹4 lakh
B Up to ₹3 lakh
C Up to ₹2.5 lakh
D Up to ₹5 lakh
Answer: C. Up to ₹2.5 lakh. For the ordinary individual category opting out of default rates, the schedule provides a nil rate up to ₹2.5 lakh.
Under the opting-out schedule, what rate applies from ₹2.5 lakh to ₹5 lakh?
A 10%
B 20%
C 30%
D 5%
Answer: D. 5%. The ordinary individual opting-out schedule taxes the ₹2.5–₹5 lakh band at 5%.
For the ordinary opting-out schedule, which rate covers ₹5–₹10 lakh?
A 20%
B 5%
C 15%
D 30%
Answer: A. 20%. The ordinary individual opting-out schedule applies 20% to the ₹5–₹10 lakh band.
Under the ordinary opting-out schedule, what rate applies above ₹10 lakh?
A 20%
B 30%
C 25%
D 5%
Answer: B. 30%. The ordinary individual opting-out schedule applies 30% above ₹10 lakh.
For a resident individual aged 60–79 using the opting-out schedule, what is the nil threshold?
A Up to ₹2.5 lakh
B Up to ₹4 lakh
C Up to ₹3 lakh
D Up to ₹5 lakh
Answer: C. Up to ₹3 lakh. The opting-out schedule provides a nil threshold of ₹3 lakh for a resident individual aged 60 to below 80.
For a resident individual aged 80 or above using the opting-out schedule, what is the nil threshold?
A Up to ₹3 lakh
B Up to ₹4 lakh
C Up to ₹10 lakh
D Up to ₹5 lakh
Answer: D. Up to ₹5 lakh. The opting-out schedule provides a nil threshold of ₹5 lakh for a resident individual aged 80 or above.
Which broad feature distinguishes the old tax regime from the default regime?
A More deductions may be available
B No tax slabs apply
C Tax is always lower
D Every expense is deductible
Answer: A. More deductions may be available. Official guidance describes the old regime as allowing various deductions and exemptions, while the default regime permits fewer.
What is the default regime for eligible individuals under the new framework?
A The opting-out schedule
B Section 202 default rates
C A flat 5% rate
D No tax regime
Answer: B. Section 202 default rates. Section 202 rates are the default under the Income-tax Act, 2025, subject to statutory options.
How should taxpayers compare the old and default regimes?
A Choose the lowest top rate
B Ignore allowable deductions
C Compare liability using eligible facts
D Use gross salary only
Answer: C. Compare liability using eligible facts. The better outcome depends on the taxpayer’s income and eligible deductions, so compare computations using accurate facts.
A taxpayer’s marginal rate is best described as what?
A Average tax across all income
B Rate on TDS credits
C Rate on gross receipts
D Rate on next income band
Answer: D. Rate on next income band. The marginal rate is the rate applicable to the next portion of ordinary slab income.
For AY 2026–27, what is the maximum section 87A rebate under the new regime?
A ₹60,000, subject to conditions
B ₹12,500 for everyone
C ₹1,00,000 without limits
D No rebate is available
Answer: A. ₹60,000, subject to conditions. The Department’s AY 2026–27 guidance lists a rebate up to ₹60,000 for eligible resident individuals whose taxable income does not exceed ₹12 lakh.
For AY 2026–27, what is the old-regime section 87A rebate limit?
A Up to ₹60,000
B Up to ₹12,500
C Up to ₹25,000
D No rebate applies
Answer: B. Up to ₹12,500. The Department lists an old-regime rebate up to ₹12,500 where an eligible resident individual’s taxable income does not exceed ₹5 lakh.
A tax rebate is applied against which amount?
A Gross annual salary
B Taxable income
C Calculated income tax
D Tax-deducted receipts
Answer: C. Calculated income tax. A rebate reduces calculated income tax when its eligibility conditions are met; it does not reduce taxable income.
Under default section 202 rates, surcharge can begin when income exceeds what?
A ₹10 lakh
B ₹24 lakh
C ₹5 crore
D ₹50 lakh
Answer: D. ₹50 lakh. For individuals under the default section 202 rates, surcharge begins when total income exceeds ₹50 lakh, subject to applicable provisions.
Surcharge is generally calculated as a percentage of what?
A Income tax
B Gross receipts
C Taxable deductions
D TDS credit
Answer: A. Income tax. Surcharge is calculated on income tax at the applicable rate, rather than directly on total income.
What does marginal relief address near a surcharge threshold?
A Missing deduction documents
B A sudden tax increase
C A change in tax year
D Incorrect income classification
Answer: B. A sudden tax increase. Marginal relief limits the tax impact around specified surcharge thresholds when the added tax would otherwise exceed the income increase.
How is Health and Education Cess generally calculated for individuals?
A 4% on gross salary
B 5% on total income
C 4% on tax plus surcharge
D 10% on deductions
Answer: C. 4% on tax plus surcharge. The Finance Act schedule applies Health and Education Cess at 4% on income tax plus applicable surcharge.
In the usual order, cess is added after which calculation?
A Gross salary and deductions
B TDS and advance tax
C Rebate and refund
D Income tax and surcharge
Answer: D. Income tax and surcharge. Cess is calculated on income tax together with surcharge, where applicable.
Does TDS decide a taxpayer’s slab rate?
A No, TDS is a credit
B Yes, it sets the slab
C Only for salaried taxpayers
D Only for senior citizens
Answer: A. No, TDS is a credit. TDS is a tax credit or payment; the applicable slab is determined from income and the governing tax rules.
Can the final tax payable differ from basic slab tax?
A No, slabs settle everything
B Yes, other provisions apply
C Only if income is foreign
D No, unless TDS exists
Answer: B. Yes, other provisions apply. Rebates, surcharge, cess, special-rate income, and tax credits can affect final liability beyond the basic slab calculation.
Why might some income use a special rate instead of ordinary slabs?
A The taxpayer requests it
B All capital income is exempt
C Specific provisions can prescribe rates
D The bank selects a rate
Answer: C. Specific provisions can prescribe rates. The Act can prescribe special rates for specified income, so ordinary slabs do not govern every income item.
Under the opting-out schedule, age-based nil thresholds apply to which taxpayers?
A Every nonresident individual
B All companies
C All HUF members
D Resident senior individuals
Answer: D. Resident senior individuals. The age-based nil thresholds in the opting-out schedule apply to resident senior individuals as specified in the schedule.
A person below 60 opts out of default rates. Which nil threshold generally applies?
A ₹2.5 lakh
B ₹3 lakh
C ₹4 lakh
D ₹5 lakh
Answer: A. ₹2.5 lakh. The ordinary individual opting-out schedule sets a nil threshold of ₹2.5 lakh; resident senior categories have distinct thresholds.
A resident individual below 60 opts out and has ₹7 lakh taxable income. What is slab tax before other reliefs?
A ₹20,000
B ₹52,500
C ₹40,000
D ₹1,12,500
Answer: B. ₹52,500. Under the ordinary opting-out schedule, tax is ₹12,500 through ₹5 lakh plus 20% of the next ₹2 lakh, totalling ₹52,500.
Why must the applicable tax year be confirmed before using a slab chart?
A Tax slabs never change
B It sets the bank account
C Rates and law may change
D It replaces income records
Answer: C. Rates and law may change. Slabs and governing provisions depend on the applicable law and tax period; the Department distinguishes old Act assessment years from new Act tax years.
Which official tool can compare regime computations?
A PAN application tracker
B GST registration tool
C Bank interest calculator
D Income Tax calculator
Answer: D. Income Tax calculator. The Income Tax Department calculator supports computations and comparison between the old and new tax regimes.
When should special-rate income be reviewed separately?
A When a specific provision applies
B Only after getting a refund
C Whenever salary is paid
D Only for resident seniors
Answer: A. When a specific provision applies. Specified income may be taxed at rates set by separate statutory provisions, so check whether a special-rate rule applies.
What is the safest way to use published slab rates?
A Apply them to every country
B Match the law and period
C Ignore eligibility conditions
D Use last year’s figures
Answer: B. Match the law and period. Confirm the taxpayer category, applicable Act, period, and any special provisions before relying on a slab table.