#1
What is the basic concept of income tax?
Compulsory payment to the government based on income
ExplanationTax is mandatory payment to government based on earnings.
#2
Which of the following is a direct tax?
Income Tax
ExplanationIncome tax is a direct tax.
#3
Which of the following is a regressive tax?
Sales tax
ExplanationSales tax is regressive.
#4
Which of the following is an example of a non-taxable income?
Gifts received from relatives
ExplanationGifts from relatives are non-taxable.
#5
What is the primary purpose of the 'Tax Return'?
To inform the government about the taxpayer's income
ExplanationReport income to government.
#6
What is the purpose of tax deductions in income tax?
To reduce taxable income
ExplanationDeductions lessen taxable income.
#7
What is the difference between tax evasion and tax avoidance?
Tax evasion is illegal, while tax avoidance is legal
ExplanationAvoidance legal, evasion illegal.
#8
What is the concept of 'taxable income' in income tax calculation?
The total income before any deductions or exemptions
ExplanationIncome before deductions.
#9
What is the significance of a 'tax year' in income taxation?
It is the calendar year for which income is being taxed
ExplanationYear for income taxation.
#10
What is the concept of 'tax residency' in income taxation?
The location where an individual or entity is subject to tax based on their presence or activities
ExplanationTax jurisdiction based on presence.
#11
In the context of income tax, what does the term 'Assessment Year' refer to?
The year in which income is assessed for tax purposes
ExplanationYear income is evaluated for tax.
#12
What is the difference between a tax credit and a tax deduction?
Tax credit directly reduces the amount of tax owed, while tax deduction reduces taxable income
ExplanationCredit lowers tax; deduction lowers taxable income.
#13
What is the purpose of a 'tax audit' in income taxation?
To verify the accuracy of financial information for tax purposes
ExplanationCheck financial accuracy for tax.
#14
What is the purpose of a 'tax treaty' between two countries?
To prevent tax evasion
ExplanationPrevents tax dodging between countries.
#15
What is the purpose of 'Advance Tax' payments in income taxation?
To estimate and pay taxes in installments before the end of the financial year
ExplanationEstimate and pay tax in installments.