In a basic Indian tax computation, taxable income usually means what?
A Income chargeable after computation
B Every receipt before review
C Tax already paid
D Only salary received
Answer: A. Income chargeable after computation. Taxable income is the amount chargeable under the applicable tax rules after required computations and eligible adjustments.
Which amount forms the charge base under the Income-tax Act, 2025?
A Gross bank deposits
B Total income for tax year
C Tax withheld during year
D Total household spending
Answer: B. Total income for tax year. The 2025 Act charges income tax on a person’s total income for the relevant tax year.
A business receives ₹12 lakh but reports lower taxable profit. Which explains the difference?
A Receipts are never recorded
B The difference is always exempt
C Taxable profit after allowed adjustments
D Tax is based on deposits
Answer: C. Taxable profit after allowed adjustments. Gross receipts and taxable business income can differ because the law prescribes computation rules and allows qualifying adjustments.
How does an exemption differ from a deduction?
A It increases tax paid
B It changes residential status
C It replaces the tax return
D It excludes qualifying income
Answer: D. It excludes qualifying income. An exemption excludes qualifying income from tax when statutory conditions are met.
What does an eligible deduction generally reduce?
A Taxable income
B Taxpayer category
C Tax already deducted
D The financial year
Answer: A. Taxable income. A deduction reduces income to the extent permitted by the provision and applicable conditions.
A tax rebate affects which figure?
A Gross receipts
B Tax payable
C Income source
D Residential status
Answer: B. Tax payable. A rebate is applied against tax payable when the taxpayer meets the applicable conditions.
Can every personal expense be claimed as a deduction?
A Yes, all expenses qualify
B Only cash expenses qualify
C No, specific rules apply
D Yes, without records
Answer: C. No, specific rules apply. A personal expense is deductible only when an applicable provision allows it and its conditions are met.
Which income head appears in the Income Tax Department calculator?
A Personal shopping
B Household transfers
C Unverified deposits
D House property income
Answer: D. House property income. The Department’s advanced calculator lists income from house property among its income heads.
Why classify income sources before computing tax?
A Computation rules can differ
B Every source is tax-free
C Classification removes records
D Sources use identical rules
Answer: A. Computation rules can differ. Income heads can have different computation, set-off, and reporting rules.
Gross Total Income generally appears at what stage in a standard computation?
A After tax payment
B Before eligible deductions
C Before income is identified
D After refund is issued
Answer: B. Before eligible deductions. Gross Total Income is the aggregate before eligible deductions are applied, subject to the rules for the relevant Act.
After eligible deductions, what does a standard computation determine?
A Gross receipts only
B Tax deposited by employer
C Total income under applicable rules
D Household net worth
Answer: C. Total income under applicable rules. Eligible deductions are considered under applicable provisions to arrive at total income for tax computation.
If assumed Gross Total Income is ₹10 lakh and eligible deductions are ₹2 lakh, what is the simplified amount before other rules?
A ₹12 lakh
B ₹2 lakh
C ₹10 lakh
D ₹8 lakh
Answer: D. ₹8 lakh. Subtracting the assumed ₹2 lakh of eligible deductions from ₹10 lakh gives ₹8 lakh before any other applicable rules.
Does a ₹1 deduction always save ₹1 in tax?
A No, tax effect varies
B Yes, in every regime
C Only for businesses
D Only when paid in cash
Answer: A. No, tax effect varies. A deduction generally reduces income; the tax effect depends on applicable rates and other provisions.
Before claiming relief for a payment, what should be checked?
A Only the payment date
B Current eligibility and regime
C Last year’s tax result
D The bank’s branch code
Answer: B. Current eligibility and regime. Check current-year eligibility, limits, documentation, and the tax regime that applies to the claim.
Why retain proof for a claimed deduction?
A Increase the deduction amount
B Change the tax year
C Support the claim if reviewed
D Replace income records
Answer: C. Support the claim if reviewed. Supporting records help substantiate eligibility and the amount claimed.
Why can deductions differ between tax regimes?
A Income sources disappear
B Tax years become shorter
C All deductions are doubled
D Regimes permit different deductions
Answer: D. Regimes permit different deductions. The old and new tax regimes can allow different deductions and exemptions under their provisions.
After taxable income is computed, what helps determine income tax?
A Applicable rates and provisions
B Bank account balance
C Number of receipts
D Prior refund amount
Answer: A. Applicable rates and provisions. Tax payable is calculated using the applicable rates and other provisions for that taxpayer and period.
Which statement distinguishes taxable income from tax payable?
A Both mean tax deducted
B Tax base versus final amount
C Both are gross receipts
D Tax payable is income
Answer: B. Tax base versus final amount. Taxable income is a computation base; tax payable is the amount calculated under applicable law.
TDS credited to a taxpayer is generally treated as what?
A A deduction from income
B An income exemption
C Credit against tax liability
D A business expense
Answer: C. Credit against tax liability. Tax deducted at source is treated as tax already paid and credited, subject to matching and verification.
After liability is computed, eligible advance tax usually helps do what?
A Increase taxable receipts
B Replace a tax return
C Create an exemption
D Reduce remaining amount due
Answer: D. Reduce remaining amount due. Eligible advance tax payments are credited against tax liability when the final amount due is calculated.
Does TDS normally change the income that was earned?
A No, it is tax paid
B Yes, it removes income
C Only for salary income
D Yes, it changes residence
Answer: A. No, it is tax paid. TDS is a tax payment or credit; it does not by itself change the underlying income amount.
When an asset is sold, is the full sale price automatically the taxable gain?
A Yes, the full price
B No, gain uses statutory computation
C Only if paid in cash
D No sale is reportable
Answer: B. No, gain uses statutory computation. A taxable capital gain is computed under applicable provisions; it is not automatically equal to gross sale proceeds.
Why might salary credited differ from salary included in taxable income?
A Banks deduct all income
B Salary is never taxable
C Allowances and exemptions may differ
D The tax year changes daily
Answer: C. Allowances and exemptions may differ. Salary computation can depend on applicable rules for allowances, exemptions, and other adjustments.
An individual’s residential status may affect what?
A The bank’s interest rate
B The employer’s payroll system
C The return’s language
D Income taxable in India
Answer: D. Income taxable in India. Residential status can affect the scope of income taxable in India under detailed statutory rules.
Can exempt income still require disclosure in a return?
A Yes, disclosure may be required
B No, never disclose it
C Only cash income is disclosed
D Only businesses report it
Answer: A. Yes, disclosure may be required. Some exempt income may still need to be reported, depending on current return forms and disclosure rules.
What should be reviewed for foreign-source income?
A Only the currency symbol
B Residence, source, and treaty rules
C The taxpayer’s bank branch
D Only the payment date
Answer: B. Residence, source, and treaty rules. Tax treatment may depend on residence, source, applicable treaty provisions, and current domestic law.
What does loss set-off mean in a tax computation?
A Converting income to receipts
B Cancelling every tax payment
C Applying eligible loss to income
D Changing the tax year
Answer: C. Applying eligible loss to income. Set-off means adjusting an eligible loss against income as permitted by applicable rules.
Can any loss be carried forward automatically?
A Yes, with no filing
B Only if paid in cash
C Yes, for every year
D No, conditions must be met
Answer: D. No, conditions must be met. Carry-forward eligibility can depend on the type of loss, filing requirements, and other statutory conditions.
Why can’t every loss be offset against every income type?
A Rules restrict heads and types
B All income is identical
C Losses are never allowed
D Tax rates prevent reporting
Answer: A. Rules restrict heads and types. Set-off restrictions depend on the kind of loss and income and the governing statutory provisions.
How are eligible losses from earlier tax years treated after the 2025 Act transition?
A All losses are cancelled
B Old rules preserve eligible losses
C Every loss becomes salary
D Losses become tax credits
Answer: B. Old rules preserve eligible losses. The Department explains that eligible losses from pre-transition periods retain their character and continue under the applicable saved rules.
For tax periods beginning before 1 April 2026, what happens to the earlier law?
A New Act cancels all filings
B Only state tax applies
C Old Act governs earlier years
D No law remains applicable
Answer: C. Old Act governs earlier years. The Department says the 1961 Act continues to govern tax years beginning before 1 April 2026, subject to transition provisions.
Under the 2025 Act, which term replaces “previous year”?
A Assessment Month
B Calendar Year
C Filing Quarter
D Tax Year
Answer: D. Tax Year. The 2025 Act uses “Tax Year” in place of “previous year” for the relevant periods.
How long is a tax year ordinarily under the 2025 Act?
A 12 months within financial year
B One calendar quarter
C Two assessment years
D A rolling five-year period
Answer: A. 12 months within financial year. A tax year is ordinarily a period of twelve months within a financial year; special cases can have a shorter period.
Income earned during FY 2026–27 is called what under the 2025 Act?
A Assessment Year 2026–27
B Tax Year 2026–27
C Calendar Year 2026
D Previous Year 2025–26
Answer: B. Tax Year 2026–27. The Department identifies FY 2026–27 as Tax Year 2026–27 under the 2025 Act.
A return for FY 2025–26 filed as AY 2026–27 follows which Act?
A Income-tax Act, 2025
B Companies Act, 2013
C Income-tax Act, 1961
D GST law alone
Answer: C. Income-tax Act, 1961. The Department states that FY 2025–26 income is filed for AY 2026–27 under the 1961 Act.
To calculate tax under the 1961 Act on the official calculator, what should be selected?
A Select tax year only
B Select bank and branch
C Select refund amount
D Select Act and assessment year
Answer: D. Select Act and assessment year. The calculator manual instructs users to select the 1961 Act and the applicable assessment year.
Which information does the official calculator request for a basic computation?
A Category and residential status
B Favourite investment product
C Employer’s office location
D Monthly household budget
Answer: A. Category and residential status. The calculator requests taxpayer category and residential status, along with applicable tax-period and income details.
Which income head appears in the Department’s advanced calculator?
A Household gifts
B Capital gains
C Personal savings goals
D Credit-card limits
Answer: B. Capital gains. Capital gains is one of the income heads listed in the official advanced calculator.
Why can the calculator show different fields for different taxpayers?
A Every user has identical entries
B Income is not considered
C Some calculator fields change
D The portal ignores residence
Answer: C. Some calculator fields change. The calculator enables or disables relevant fields based on taxpayer category and residential status.
What calculator feature helps compare tax regimes?
A Download a bank statement
B Check a PAN application
C Upload a salary slip
D View a regime comparison
Answer: D. View a regime comparison. The Department’s calculator provides a comparison of tax under the old and new regimes.
What makes an online tax estimate useful?
A Accurate data and correct year
B A rounded bank balance
C An old deduction list
D An estimated tax refund
Answer: A. Accurate data and correct year. A calculator’s result depends on the selected Act and period and on accurate information entered by the user.
Why compare prefilled tax information with source records?
A Assume every entry is final
B Compare it against source records
C Delete all supporting documents
D Ignore mismatches
Answer: B. Compare it against source records. Taxpayers should check prefilled information against their own records and correct discrepancies through the filing process.
Why may taxable business income differ from gross receipts?
A Receipts are always exempt
B Tax is based on expenses
C Allowed costs and tax adjustments
D Profit equals bank deposits
Answer: C. Allowed costs and tax adjustments. Business income is computed under applicable rules, so qualifying costs and statutory adjustments can make taxable income differ from gross receipts.
Under the current Act, how are total deductions limited against Gross Total Income?
A Always exceed gross income
B Equal tax already paid
C Unrelated to income
D Limited to Gross Total Income
Answer: D. Limited to Gross Total Income. The Department explains that total deductions under the relevant provision cannot exceed Gross Total Income.
For an individual whose bank-deposit interest is not business income, which head commonly applies?
A Income from other sources
B Income from salary
C Income from house property
D Capital gains
Answer: A. Income from other sources. Interest not classified under another applicable head is generally considered under income from other sources.
What is a sound approach to last year’s deduction list?
A Copy every old claim
B Verify current-year eligibility
C Assume limits never change
D Skip supporting documents
Answer: B. Verify current-year eligibility. Eligibility and limits can change; check current official rules for the relevant Act, regime, and tax year.
Where should a conflicting tax-computation rule be checked first?
A An undated social post
B An unrelated calculator
C Current department guidance
D A general discussion thread
Answer: C. Current department guidance. Use current official guidance for the applicable Act and tax period when sources conflict.
Two taxpayers have equal taxable income. Is their tax payable always identical?
A Yes, in every case
B Only age can decide
C Tax payable is always zero
D No, category and regime matter
Answer: D. No, category and regime matter. The applicable tax can also depend on taxpayer category, regime, rates, rebates, and other statutory provisions.
If eligible tax payments exceed the computed liability, what may result?
A A possible refund
B A higher taxable income
C An automatic deduction
D A new income head
Answer: A. A possible refund. Where eligible credits and payments exceed final liability, a refund may be due under the applicable process.
Once the computation is complete, what can comparing tax paid with liability identify?
A A new income source
B Balance payable or refund
C A change in residence
D An automatic exemption
Answer: B. Balance payable or refund. Comparing computed liability with eligible tax payments can show whether additional tax may be due or a refund may be available.