1.

INTRODUCTION TO ACCOUNTING STANDARDS

1. Read the following three statements:

i. Strategies have short-range implications.
ii. Strategies are action oriented.
iii. Strategies are rigidly defined.
From the combinations given below select an alternative that represents statements that are true:
(a) (i) and (ii)
(b) (i) and (iii)
(c) (ii) and (iii)
(d) (i), (ii) and (iii)

2. The statement “where we want to go “denotes company

(a) Objective
(b) Policy
(c) Strategy
(d) Vision

3. The philosophical base of strategic management falls within the concept of -

(a) Strategic Intent
(b) Portfolio Analysis
(c) Globalisation
(d) Vision Statement

4. Which one of the following cannot be considered as a part of proactive approach in strategy?
(a) Planned strategy
(b) Deliberate management design
(c) Forecast about future market condition
(d) Adaptive reactions to changing circumstances

5. Which of the following are responsible for formulating and developing realistic and attainable
strategies?
(a) Corporate level and business level managers
(b) Corporate level and functional level managers
(c) Functional managers and business level managers
(d) Corporate level managers, business level managers and functional level managers

6. Dee Limited is an international clothing retailer. The company is making the following decisions:
i. Should another range of shops be established?
ii. Should the company float more share capital?
iii. How will the premises be fi ed out for the new range of shops?
Which of the above decisions will be taken by corporate level managers?
(a) Only (i)
(b) Only (ii)
(c) (i) & (ii)
(d) (ii) & (iii)

1.1 INTRODUCTION TO ACCOUNTING STANDARDS

7. Kanchan is the finance head for marketing strategies of a company. Which level of management is
she working at?
(a) Corporate Level
(b) Functional Level
(c) Shopfloor Level
(d) Consultant Level

8. Strategy is a game plan used for which of the following?

(a) To take market position
(b) To attract and satisfy customers
(c) To respond to dynamic and hostile environment
(d) All of the above

9. Reactive strategy can also be termed as-

(a) Planned strategy
(b) Adaptive strategy
(c) Sound strategy
(d) Dynamic strategy

10. Which statement should be created first and foremost?

(a) Strategy
(b) Vision
(c) Objectives
(d) Mission

11. What is one of the key purposes of having an organizational mission?

(a) Ensuring unanimity of purpose within the organization.
(b) Setting short-term operational goals.
(c) Providing a basis for marketing strategies.
(d) Specifying financial forecasts.

12. Velvet Limited is a full-service airline. The company is making the following decisions:
Should a ‘no-frills’, ‘low-fare’ subsidiary be set-up?
If it is set-up, how should the cabin staff be recruited?
Which of the above decisions will be taken by corporate level managers?
(a) Only (i)
(b) Only (ii)
(c) (i) & (ii)
(d) Neither (i) nor (ii)

13. Greg was heading the Global Biscuits SBU for Jonky’s Ltd. and he got an email congratulating him for
being promoted as the head of entire business of Jonky’s in India. Which of the following statements
is true about Greg’s position?
(a) Greg was a business level manager but now he is a corporate level manager
(b) Greg was a functional level manager but now he is a corporate level manager
(c) Greg was a business level manager and now also he is a business level manager
(d) Greg was a corporate level manager and now also he is a corporate level manager

INTRODUCTION TO ACCOUNTING STANDARDS 1.2

14. McDonalds is deciding whether to expand into manufacturing kitchen equipment in China. At what
level is this decision likely to be made?
(a) Business
(b) Corporate
(c) Functional
(d) International

15. Mr. Prakash and Mr. Pal are partners in a thriving business venture. Recently, they have become
aware of their employees’ dissatisfaction with their working conditions. Mr. Prakash believes that the
situation should be dealt with before the employees explode. Mr. Pal, on the other hand, believes
that if the employees have an outburst, then they will handle it. Mr. Prakash and Mr. Pal business
philosophy is:
(a) Reactive, Proactive
(b) Reactive, Reactive
(c) Proactive, Proactive
(d) Proactive, Reactive

16. Strategy is
(a) Proactive in action
(b) Reactive in action
(c) A blend of proactive and reactive actions
(d) None of the above

17. Drishti Care is a not-for profit eye hospital and research centre. Which one of the following statements
is likely to relate to Drishti Care’s vision, rather than its mission statement?
(a) Drishti Care places patient care before all else
(b) Drishti Care will be the global leader in cutting edge eye surgery
(c) Drishti Care offers the highest level of patient care throughout country
(d) Drishti Care consultants strive to continually improve surgical techniques

18. Shreya, the owner of Kalakaari boutiques, delegated tasks as per competencies of her team. What
is she covering here?
(a) Risk
(b) Work Culture
(c) Employee friendly vision
(d) Proper use of mission statement

19. Ever Grand Group is a diversified company active in a wide range of business lines, including Financial
Services, Fertilizers, Information Technology enabled Services (ITeS), FMCG and Real Estate. The
Board of Directors understand the need of the hour and are determined to further develop the ITeS
business, whereby they want better allocation of human resources and provision of industry-best
customer services. To achieve the same, they have suggested implementation of specific business
strategies but the managers are facing difficulties in allocating the responsibility for implementation
of the business strategy amongst them. You being a management expert, indicate the appropriate
persons responsible for translating general statements and business strategies pertaining to the ITeS
Strategic Business Unit (SBU) and ensure a smooth implantation.

1.3 INTRODUCTION TO ACCOUNTING STANDARDS

 (a) Corporate level managers
(b) Functional level managers
(c) General level managers
(d) Business level managers

20. Which one of the following, focuses on present business scope- ‘who we are and what we do’?
(a) Mission Statement
(b) Vision Statement
(c) Goals and objectives
(d) Purpose

Answer Key:
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15
a d a d d c b d b b a a a b d
16 17 18 19 20
c b d b a

INTRODUCTION TO ACCOUNTING STANDARDS 1.4

 2. FRAMEWORK FOR PREPARATION AND PRESENTATION OF FINANCIAL STATEMENTS

1. An item that meets the definition of an element of financial statements should be recognised in the
financial statements if:
(a) It is probable that any future economic benefit associated with the item will flow to the
enterprise
(b) Item has a cost or value that can be measured with reliability
(c) Both 1and 2
(d) It is probable that no future economic benefit associated with the item will flow to the enterprise.

2. Liabilities are recorded at the undiscounted amount of cash expected to be paid on settlement of
liability in the normal course of business under:
(a) Present value.
(b) Realizable value.
(c) Current cost.
(d) Fair value.

Answer Key:
1 2
c b

FRAMEWORK FOR PREPARATION AND

2.1 PRESENTATION OF FINANCIAL STATEMENTS
 3. APPLICABILITY OF ACCOUNTING STANDARDS

1. The following Accounting Standard is not applicable to Non-corporate Entities falling in Level II in
its entirety
(a) AS 10.
(b) AS 17.
(c) AS 2.
(d) AS 13.

2. All non-corporate entities engaged in commercial, industrial or business activities having borrowings
(including public deposits) in excess of rupees two crores but does not exceed rupees ten crores at any
time during the immediately preceding accounting year.
(a) Level II entities.
(b) Level IV entities.
(c) Level III entities.
(d) Level I entities.

3. Small and Medium Sized Company. (SMC) means, a company.

(a) which may be a bank, financial institution or an insurance company.
(b) whose turnover (excluding other income) does not exceed rupees two-fifty crores in the
immediately preceding accounting year;
(c) whose turnover (excluding other income) does not exceed rupees fifty crores in the immediately
preceding accounting year;
(d) whose turnover (excluding other income) does not exceed rupees five hundred crores in the
immediately preceding accounting year.

4. All non-corporate entities engaged in commercial, industrial and business reporting entities, whose
turnover (excluding other income) exceeds rupees 250 crores in the immediately preceding accounting
year, are classified as
(a) Level II entities.
(b) Level I entities.
(c) Level III entities.
(d) Level IV entities.

Answer Key:
1 2 3 4
b c b b

3.1 APPLICABILITY OF ACCOUNTING STANDARDS

 4. PRESENTATION & DISCLOSURES BASED ACCOUNTING STANDARDS

1. Following is not part of Minimum component of an Interim Financial Report:

(a) Condensed Cashflow statement
(b) Condensed Director’s Report
(c) Condensed profit & loss statement
(d) Selected Explanatory Notes

2. XYZ Co. Ltd is a financial institution and has given loans and advances to its subsidiary and earned
interest of Rs. 5 lacs on that loan. Interest earned by XYZ Co. Ltd is shown as
(a) Operating Cash Flow.
(b) Investing Cash Flow.
(c) Financing Cash Flow
(d) cash and cash equivalent

3. Which of the following items is not considered as cash or cash equivalent?

(a) Cash on hand
(b) Cash at Bank
(c) Securities deposits for 4 months
(d) Investments with a maturity of two months from the date of acquisition.

4. In case potential equity shares have been cancelled during the year, they should be:
(a) Ignored for computation of Diluted EPS..
(b) Considered from the beginning of the year till the date they are cancelled.
(c) The company needs to make an accounting policy and can follow the treatment in (a) or (b) as
it decides.
(d) Considered for computation of diluted EPS only if the impact of such potential equity shares
would be material.

5. Following is not included in Segment Expense

(a) Income tax expense
(b) The expense resulting from the operating activities of a segment that is directly attributable
to the segment
(c) The relevant portion of enterprise expense that can be allocated on a reasonable basis to the
segment
(d) Expense relating to transactions with other segments of the enterprise

6. Which of the following statements is correct?

(a) In case of 10% test based on profit/loss, we need to consider that any segment whose profit or
loss is 10% or more than the net profit or net loss respectively of all segments taken together
becomes reportable segment.
(b) In case of 10% test based on profit/loss, we need to consider that any segment whose profit or
loss is 10% or more than the net profit (after netting the losses) of all segments taken together
becomes reportable segment.
(c) In case of 10% test based on profit/loss, we need to consider that any segment whose profit
or loss is 10% or more than the net profit or loss (whichever is higher in absolute figures) of all
segments taken together becomes reportable segment.
(d) In case of 10% test based on profit/loss, we need to consider that any segment whose profit

PRESENTATION & DISCLOSURES BASED

4.1 ACCOUNTING STANDARDS
 or loss is 10% or more than the net profit or loss (whichever is lower in absolute figures) of all
segments taken together becomes reportable segment.

7. It is essential to standardize the accounting principles and policies in order to ensure

(a) Transparency
(b) Consistency
(c) Comparability
(d) All of the three.

8. Fundamental accounting assumption is

(a) Materiality
(b) Business entity
(c) Going concern
(d) Dual aspect

9. Which of the following statements is correct? 1. Options are generally dilutive in nature. 2. Options
are generally more dilutive as compared to other potential equity shares.
(a) Both (1) and (2) are correct.
(b) Both (1) and (2) are incorrect.
(c) Only (1) is correct.
(d) Only (2) is correct.

10. Yash Ltd. wants to prepare its cash flow statement. It sold equipment of book value of Rs. 60,000 at
a gain of Rs. 8,000. The amount to be reported in its cash flow statement under operating activities is
(a) Nil
(b) -8,000
(c) 8,000
(d) 60,000

11. Contingent Liability is disclosed

(a) In Directors Report
(b) Auditors Report
(c) In Notes to Accounts
(d) In Liabilities Side of the Balance Sheet

12. Which of the following disclosure is required as per AS 18?

(a) Disclosure of Intra-group transactions in Stand alone Financial Statements.
(b) Transaction of one Central government controlled enterprise with other State government
controlled enterprise.
(c) Transaction of one Central government controlled enterprise with other Central government
controlled enterprise.
(d) Transaction of one State government controlled enterprise with other State government
controlled enterprise.

PRESENTATION & DISCLOSURES BASED

ACCOUNTING STANDARDS 4.2
13. As per AS 3 on Cash Flow Statements, cash received by a manufacturing company from sale of shares
of ABC Company Ltd. should be classified as
(a) Operating activity.
(b) Financing activity.
(c) Investing activity.
(d) None of the above.

14. In which of the following scenario, calculation of basic and diluted earnings per share for prior period
is not restated?
(a) If the number of equity shares outstanding increases as a result of a bonus issue
(b) If the number of potetial equity shares outstanding decreases as a result of a reverse share
split
(c) If Bonus shares are issued after the balance sheet date but before the date on which the
financial statements are approved by the board of directors
(d) If the number of equity shares outstanding increases as a result of a right issue

15. The major considerations governing the selection and application of accounting policies are
(a) Prudence.
(b) Substance over form.
(c) Materiality.
(d) All of the three.

16. Which of the following statements is correct?

(a) Reported Diluted EPS is always less than reported Basic EPS.
(b) Reported Diluted EPS can be greater than reported Basic EPS.
(c) Reported Diluted EPS is always greater than reported Basic EPS.
(d) Reported Diluted EPS is always equal to or more than reported Basic EPS.

17. Which of the following may be treated as Related party as per AS 18?
(a) A Limited & B Limited only because Mr. X is a common director in both the company
(b) A Limited & B Limited are totally independent company, however, majority of the Board of
Directors of both the company are same
(c) Mr. S & A limited only because Mr. S purchases majority of the products of A Limited.
(d) ABC Bank & N Limited because all borrowings of N Limited is financed by ABC Bank.

18. Which of the following is not a Potential Equity Share?

(a) Employee stock option
(b) Share warrants
(c) Cumulative Preference Shares
(d) Shares issuable under a loan contract upon default of payment of principal or interest

19. A Ltd. sold goods for Rs. 90 lakhs to B Ltd. during financial year ended 31-3-2023. The Managing
Directors of A Ltd. exercise 100% control in B Ltd. The sales were made to B Ltd. at normal selling
prices followed by A Ltd. What should be treatment for this transaction in the financial statements
of A Ltd.?

PRESENTATION & DISCLOSURES BASED

4.3 ACCOUNTING STANDARDS
 (a) Sales need not require a different treatment from the other sales made by the company.
(b) A Ltd. and B Ltd. are related parties and hence disclosure of transaction between them is
required irrespective of whether the transaction was done at normal selling price.
(c) A Ltd. and B Ltd. are related parties but no disclosure is necessary as per the accounting
standard because sales are made at normal selling prices.
(d) A Ltd. and B Ltd. are related parties but no disclosure is necessary as per the accounting
standard because sales are made at normal selling prices.

20. In the cash flow statement of a financial enterprise, interest paid and dividends received should be
(a) classified as operating cash flows
(b) classified as financing cash flows
(c) Not shown in cash flow statement
(d) classified as investing cash flows

Answer Key:
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15
b a c b a c d c a a c a c d d
16 17 18 19 20
a b c c a

PRESENTATION & DISCLOSURES BASED

ACCOUNTING STANDARDS 4.4
 5. ASSETS BASED ACCOUNTING STANDARDS

1. As per AS 10 (Revised) Property, plant and equipment, which of the following costs is not included in
the carrying amount of an item of PPE
(a) Costs of site preparation
(b) Costs of relocating
(c) Installation and assembly costs.
(d) initial delivery and handling costs

2. X limited has taken machinery on Operating lease for 3 years. Initial yearly rent is Rs. 10,000. Rent
is subject to 5% escalation every year. General inflation rate in the country is also 5% per year. What
amount will be charged in the statement of P&L in the first year? Present value of Total rent payment
over 3 years is Rs. 26051.
(a) Rs. 10508.33
(b) Rs. 10000
(c) Rs. 26051
(d) Rs. 11302.55

3. Read the statements given below: 1. Goodwill cannot be tested for impairment without allocation to
CGU. 2. Corporate assets cannot be tested for impairment without allocation to CGU.
(a) 1 Both statements (1) and (2) are correct.
(b) 2 Both statements (1) and (2) are incorrect.
(c) 3 Only 1is correct.
(d) 4 Statements (1) correct and (2) is incorrect.

4. A Ltd. acquired 2,000 equity shares of Omega Ltd. on cum-right basis at ₹ 75 per share. Subsequently,
omega Ltd. made a right issue of 1:1 at ₹ 60 per share, which was subscribed for by A. Total cost of
investments at the year end will be ₹
(a) 2,70,000.00
(b) 1,50,000.00
(c) 1,20,000.00
(d) 1,70,000.00

5. N Limited has taken a lease of land from S Limited for 15 years. Following are the terms of lease
agreement: - N Limited to make payment of Rs. 1 lakh for 15 years. - N Limited to reimburse Rs.
10,000 tax to S limited every year. - If N Limited makes petrol pump on the land, then it has to pay
Rs. 50,000 extra every year. N Limited is not sure about the receipt of approval for making petrol
pump. N Limited has option to purchase land for extra Rs. 10 lakh after end of lease. It is beneficial
for N Limited to purchase land. Present Value of Rs. 1 lakh for 15 years is Rs. 12 lakh, Present value
of Rs. 10 lakh after 15th year is 5.5 lakh.Calculate Minimum Lease Payment for N Limited.
(a) Rs. 25 Lakh
(b) Rs. 17.5 Lakh
(c) Rs. 34 Lakh
(d) Rs. 24.7 Lakh

5.1 ASSETS BASED ACCOUNTING STANDARDS

6. Identify the statement(s) which is/are incorrect.
(a) Storage costs which is a necessary part of the production process is included in inventory
valuation.
(b) Administration overheads are never included in inventory valuation.
(c) Full amount of variable production overheads incurred are included in
(d) Administration overheads are always included in inventory valuation.

7. Gain or loss arising from the disposal of an intangible asset is

(a) recognised as income or expense in the Statement of Profit and Loss in the year of disposal.
(b) deferred over a period of five years
(c) capitalized
(d) not recognized at all

8. Which of the following statement is correct:

(a) Entire exchange gain is reduced from the cost of the Qualifying asset.
(b) Entire exchange loss is added to the cost of a Qualifying asset.
(c) No adjustment is done for the exchange loss while computing cost of Qualifying asset.
(d) None of the above

9. All of the following costs are excluded while computing value of inventories except?
(a) Selling and Distribution costs
(b) Allocated fixed production overheads based on normal capacity.
(c) Abnormal wastage
(d) Storage costs (which is necessary part of the production process)

10. Total expense to be recognised by M/s AV is

(a) ₹ 360 lakh
(b) ₹ 400 lakh
(c) ₹ 320 lakh
(d) ₹ 360 lakh

11. As per AS 26 there is a rebuttable presumption that the useful life of an intangible asset will not
exceed
(a) 2 years
(b) 5 years
(c) 10 years
(d) 15 years

12. An entity purchase a licnese for 12 years. However, entity estimates that license can be used only for
8 years because fast growing technology. What should be the amortisation period of license?
(a) 12 years
(b) 10 years as per rebutable presumption
(c) 8 years
(d) Should be charged off in first year.

ASSETS BASED ACCOUNTING STANDARDS 5.2

13. N Limited has entered into lease agreement for machinery from S Limited for 10 years for Rs. 1 lakh
per year. Guaranteed scrap value of machinery after 15 years is Rs. 0.5 lakh unguaranteed scrap
value is Rs. 0.2 lakh. Present Value of Rs. 1 lakh for 10 years is Rs. 7 lakh, Present value of Rs. 0.5
lakh after 15th year is 0.18 lakh & of Rs. 0.2 lakh is 0.07 lakh. Calculate Unearned Finance Income
for S Limited.
(a) Rs. 3.45 Lakh
(b) Rs. 3 Lakh
(c) Rs. 3.32 Lakh
(d) Rs. 3.13 Lakh

14. Which item of inventory is under the scope of AS-2?

(a) WIP arising under construction contracts
(b) Raw material including maintenance suppliesn
(c) Shares, Debentures held as stock in trade
(d) Machinery spares exclusively used with/for fixed assets.

15. The cost of Right shares is

(a) added to the cost of investments.
(b) subtracted from the cost of investments.
(c) no treatment is required.
(d) added to cost of investments at market value.

16. In the books of seller-lessee, If a sale and leaseback transaction results in a finance lease, any excess
or deficiency of sales proceeds over the carrying amount is:
(a) immediately recognised as income or loss in the financial statements.
(b) deferred and amortised over the lease term in proportion to the depreciation of the leased
asset.
(c) If there is loss, then immediately recognized in P&L statement and if there is gain, then
amortised over the lease term.
(d) Either A or B

17. A current investment is an investment

(a) That is readily realisable.
(b) That is intended to be held for not more than one year from the date on which such investment
is made.
(c) Both 1and 2
(d) That is intended to be held for not more than two years from the date on which such investment
is made.

18. N Limited has taken a lease of land from S Limited for 15 years. Following are the terms of lease
agreement: - N Limited to make payment of Rs. 1 lakh for 15 years. - N Limited to reimburse Rs.
10,000 tax to S limited every year. - If N Limited makes petrol pump on the land, then it has to pay
Rs. 50,000 extra every year. N Limited is not sure about the receipt of approval for making petrol
pump. N Limited has option to purchase land for extra Rs. 10 lakh after end of lease. However, N
Limited is not sure about purchase of land. Present Value of Rs. 1 lakh for 15 years is Rs. 12 lakh,
Present value of Rs. 10 lakh after 15th year is 5.5 lakh. Calculate Minimum Lease Payment for N
Limited.

5.3 ASSETS BASED ACCOUNTING STANDARDS

 (a) Rs. 15 Lakh
(b) Rs. 12 Lakh
(c) Rs. 34 Lakh
(d) Rs. 24.7 Lakh

19. In determining the cost of inventories in accordance with AS 2, it is appropriate to exclude certain
costs and recognize them as expenses in the period in which they are incurred. An example of such
cost is
(a) Fixed production overheads.
(b) Freight inwards.
(c) Selling and distribution costs.
(d) Costs of designing products for specific customers.

20. Inventory consists of

(a) Raw materials and consumables and loose tools.
(b) Work in process.
(c) Finished goods.
(d) All of the above.

Answer Key:
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15
b b b a a b a c b d c c a b a
16 17 18 19 20
b c a c d

ASSETS BASED ACCOUNTING STANDARDS 5.4

 7. ACCOUNTING STANDARDS BASED ON ITEMS IMPACTING FINANCIAL STATEMENTS

1. Which of the following is a Prior Period item?

(a) Arrears payable to workers as a result of revision of wages with retrospective effect during the
current period
(b) Change in the useful life of the asset in current year based on 3 years old technical estimate.
(c) Income or expense recognised on the outcome of a contingency which previously could not be
estimated reliably
(d) Change in the estimate of the amount of bad debts based on court order in current year

2. Which of the following may not be considered as an extra ordinary item?f

(a) Attachment of property of the enterprise
(b) Losses sustained as a result of an earthquake
(c) Claims from policyholders arising from an earthquake for an insurance enterprise that insures
against such risks
(d) Loss due to major fire in an important plant of the company

3. Following is not required to be disclosed separately in the statement of P&L?

(a) Profit or loss from ordinary activities
(b) Profit or loss from extraordinary activities
(c) The nature and amount of prior period items
(d) Impact of change in estimate in the normal course of transaction.

4. Which of the following circumstances may not give rise to the separate disclosure of items of income
and expense
(a) The write-down of inventories to net realisable value
(b) Legislative changes having retrospective application
(c) Litigation settlements
(d) Separation cost paid to CEO of the company

5. What will be the treatment of the balance in the foreign currency translation reserve on disposal of
the foreign operation?
(a) Transfer the balance in foreign currency translation reserve to reserves without impacting P/L
(b) Record the balance in foreign currency translation reserve as income or expense in P/L
(c) Foreign currency translation reserve will continue; no change will be made to the balance and
it will continue to appear as such even after disposal of the foreign operation
(d) Any method from the above can be adopted

6. Which is adjusting event as per AS 4.

(a) Decline in market value of investments between the balance sheet date and the date on which
the financial statements are approved
(b) Dividend declared after the balance sheet date but before the financial statements are
approved for issue.
(c) Filing of Bankruptcy by a major customer between the balance sheet date and the date on
which the financial statements are approved
(d) Loss from fire which tookplace between the balance sheet date and the date on which the
financial statements are approved

ACCOUNTING STANDARDS BASED ON ITEMS

7.1 IMPACTING FINANCIAL STATEMENTS
7. Deferred payment liabilities will be shown in the balance sheet of a company under the heading
(a) Other long term liability
(b) Long term borrowings.
(c) Short term borrowings
(d) Current Liabilities

Answer Key:
1 2 3 4 5 6 7
b c d d b c b

ACCOUNTING STANDARDS BASED ON ITEMS

IMPACTING FINANCIAL STATEMENTS 7.2
 9. OTHER ACCOUNTING STANDARDS

1. What is accounting treatment of government grant refundable which was in the nature of promoters’
contribution?
(a) Debited to profit & loss account
(b) Added in the Cost of Fixed asset
(c) Reduced from Deferred Government Grant account
(d) Reduced from Capital Reserve

2. Entity X purchased a fixed asset of Rs. 160 Cr having useful life of 10 years. Government provided
grant of Rs. 60 Cr. After 4 years, entity had to refund the grant of Rs. 20 Cr due to non-fulfilment
of a condition. Kindly provide the amount of depreciation to be charged in year 5. Assume Company
follows SLM method of depreciation & grant amount is reduced from the gross block of fixed asset.
(a) Rs. 16 Cr
(b) Rs. 12 Cr
(c) Rs. 13.33 Cr
(d) Rs. 15 Cr

3. Entity A received government grant of Rs. 500 Cr on 01.10.2022 for investment in capital assets
having useful life of 10 years. As on 31.03.2023, no amount could be capitalized in the books as the
assets were not ready for use. What should be the amount to be credited to statement of Profit &
Loss out of Deferred Government Grant account in FY 2022-23?
(a) Rs. 500 Cr
(b) ZERO
(c) Rs. 50 Cr
(d) Rs. 25 Cr

4. A government grant that becomes refundable is treated as:

(a) Ordinary item
(b) Prior Period Item
(c) Change in Accounting Policy
(d) Extra Ordinary item

5. At what value government grant is recorded in books in case a non-monetary asset is given free of
cost?
(a) Fair value
(b) Nominal Value
(c) Concessional rate
(d) Should not be recorded

6. AS 12 “Accounting for Government Grants” is not applicable for following:

(a) Subsidy from Government
(b) Cash incentives from Government
(c) Government participation in the ownership of the company
(d) Duty Drawback from Government

9.1 OTHER ACCOUNTING STANDARDS

7. Following is not a government grant:
(a) Purchase of Diesel by Indian Railways
(b) Amount from government for establishing setup in backward area
(c) Land from Rajasthan government at a concessional rate
(d) Subsidy from Ministry of External Affairs to purchase from Indian Vendor

Answer Key:
1 2 3 4 5 6 7
d c b d b c a

OTHER ACCOUNTING STANDARDS 9.2

 10. ACCOUNTING STANDARDS FOR CONSOLIDATED FINANCIAL STATEMENTS

1. If there remains any unrealized profit in the inventory, of any of the Group Company,
(a) Unrealized profit is added to value of inventory to compute consolidated profit.
(b) Unrealized profit is reduced from value of inventory to compute consolidated profit.
(c) No adjustment needs to be done.
(d) Unrealized profit is added to revenue profit.

2. A Ltd. is holding 90% share in B Ltd. and 10% shares in C Ltd., and B Ltd. is holding 11% shares in C
Ltd Identity which of the statements are incorrect.(i) In this case, A Ltd. is parent of B Ltd. (ii) As far
as the relationship between A Ltd. and C Ltd. is concerned; A Ltd. has a total of direct and indirect
holding of (10% + 90% of 11%) 19.9 % in C Ltd. (iii) C Ltd. is an associate of A Ltd.
(a) Statement (ii) is incorrect.
(b) Statement (iii) is incorrect.
(c) Statement (ii) and (iii) both are incorrect.
(d) All statements are incorrect.

3. If the subsidiary company follows weighted average method for valuation of inventories and the
holding company follows FIFO method, then while consolidating,
(a) Financial statements of subsidiary company should be restated by adjusting the value of
inventories to bring the same in line with the valuation procedure adopted by the holding
company.
(b) Financial statements of holding company should be restated by adjusting the value of
inventories to bring the same in line with the valuation procedure adopted by the subsidiary
company.
(c) Financial statements of both companies may continue as per the basis followed by them.
(d) No changes are required to be done for consolidation purposes.

4. Goodwill is equal to
(a) Cost of Investment less Parents share in the equity of the subsidiary on date of investment.
(b) Cost of investment less Parents share in the debentures of subsidiary on date of investment.
(c) Parents share in the equity of subsidiary on date of investment less Cost of investment.
(d) Parents share in the debentures of subsidiary on date of investment

5. Issue of bonus shares by the subsidiary company out of capital profits will
(a) Decrease Goodwill or increase capital reserve.
(b) Increase Goodwill or decrease capital reserve.
(c) Have no effect on Goodwill or capital reserve.
(d) Have no effect on Goodwill.

6. Identity which of the statements are correct. An enterprise can influence the significant economic
decision making by many ways like: (i) Representation on the board of directors or governing body of
the investee.(ii) Participation in policy-making processes.(iii) Interchange of managerial personnel.(iv)
Provision of essential technical information.
(a) Statement (i) and (ii) are correct.
(b) Statement (i), (ii) and (iii) are correct.

ACCOUNTING STANDARDS FOR CONSOLIDATED

10.1 FINANCIAL STATEMENTS
 (c) Statement (i), (ii), (iii) and (iv) are correct.
(d) Statement (ii) and (iii) are correct.

7. A Ltd. acquired 10% stake of B Ltd. on April 01 and further 15% on October 01 of the same year.
Other information is as follows: Cost of Investment for 10% ` 1,00,000 and for 15% ` 1,55,000.
Net asset on April 01 ` 8,50,000 and on October 01 ` 10,00,000. What is the amount of goodwill or
capital reserve arising on significant influence?
(a) Goodwill = ` 10,000.
(b) Goodwill = ` 20,000
(c) Capital Reserve = ` 10,000.
(d) Capital Reserve = ` 20,000.

8. Identify which of the following is not a feature of a Jointly controlled operations (JCO):
(a) Each venturer has his own separate business.
(b) There is a separate entity for joint venture business.
(c) Each venturer record only his own transactions without any separately set of books maintained
for the joint venture business.
(d) There is a common agreement between all of them.

9. Identity which of the statements are correct. (i) In case an associate has made a provision for proposed
dividend (i.e. dividend declared after the reporting period but it pertains to that reporting year) in
its financial statements, the investor’s share of the results of operations of the associate should be
computed without taking into consideration the proposed dividend. (ii) In case an associate has made
a provision for proposed dividend (i.e. dividend declared after the reporting period but it pertains
to that reporting year) in its financial statements, the investor’s share of the results of operations
of the associate should be computed after taking into consideration the proposed dividend. (iii) The
potential equity shares of the investee held by the investor should not be taken into account for
determining the voting power of the investor. (iv) The potential equity shares of the investee held by
the investor should be taken into account for determining the voting power of the investor.
(a) Statement (i) and (iii).
(b) Statement (ii) and (iv).
(c) Statement (i) only.
(d) Statement (iii) only.

10. Identify which of the following is/are not a feature of a Jointly controlled assets (JCA):
(i) There is a separate legal identity.
(ii) There is a common control over the joint assets.
(iii) Expenses on jointly held assets are shared by the venturers as per the contract.
(iv) In their financial statement, venturer shows only their share of the asset and total income
earned by them along with total expenses incurred by them.
(a) Point no. (i) only.
(b) Point no. (i) and (iii).
(c) Point no. (iii) and (iv).
(d) Point (i) and (ii).

ACCOUNTING STANDARDS FOR CONSOLIDATED

FINANCIAL STATEMENTS 10.2
11. Minority interest should be presented in the consolidated balance sheet of Holding Company (with
its subsidiary)
(a) As a part of liabilities
(b) As a part of equity of the parents shareholders
(c) Separately from liabilities and the equity of the parents shareholders
(d) As a part of assets

12. A Ltd. acquired 10% stake of B Ltd. on April 01 and further 15% on October 01 during the same
year. Other information is as follow: Cost of Investment for 10% ` 1,00,000 and for 15% ` 1,45,000
Net asset on April 01 `8,50,000 and on October 01 ` 10,00,000. What is the amount of goodwill or
capital reserve arising on significant influence?)
(a) Goodwill = ` 10,000.
(b) Goodwill = ` 20,000.
(c) Capital Reserve = ` 10,000.
(d) Capital Reserve = ` 20,000.

13. Identify the correct statements. From the date of discontinuing the use of the proportionate
consolidation method: (i) If interest in entity is more than 50%, investments in such joint ventures
should be accounted for in accordance with AS 21, Consolidated Financial Statements. (ii) If interest is
20% or more but upto 50%, investments are to be accounted for in accordance with AS 23, Accounting
for Investment in Associates in Consolidated Financial Statements. (iii) For all other cases investment
in joint venture is treated as per AS 13, Accounting for Investments. (iv) For this purpose, the fair
value of the investment at the date on which joint venture relationship ceases to exist should be
regarded as cost thereafter.
(a) Point no. 1 and 2.
(b) Point no. 1, 2 and 3.
(c) Point no. 1, 2, 3 and 4.
(d) None of the above.

14. State which of the following statements are incorrect. (i) The requirements relating to accounting for
joint ventures in consolidated financial statements according to proportionate consolidation method,
as contained in AS 27, applies only when consolidated financial statements are prepared by venturer.
(ii) The requirements relating to accounting for joint ventures in consolidated financial statements
according to proportionate consolidation method, as contained in AS 27, applies irrespective whether
consolidated financial statements are prepared by venturer or not. (iii) An investor in joint venture,
which does not have joint control, should report its interest in a joint venture in its consolidated
financial statements in accordance with AS 13, AS 21 and AS 23as the case may be.
(a) Point (i) is incorrect.
(b) Point (ii) is incorrect.
(c) Point (iii) is incorrect.
(d) None of the above

15. Dividend paid by subsidiary to its parent, out of capital profits, should be credited by the parent
company in its
(a) Profit and loss account.
(b) Dividend account.
(c) Shares invested in subsidiary account.

ACCOUNTING STANDARDS FOR CONSOLIDATED

10.3 FINANCIAL STATEMENTS
 (d) Capital reserve.

16. Identify which is/ are features of a Jointly controlled entity (JCE): (i) Venturer creates a new entity
for their joint venture business. (ii) All the venturers pool their resources under new banner and this
entity purchases its own assets, create its own liabilities, expenses are incurred by the entity itself
and sales are also made by this entity. (iii) The revenues and expenses of the entity is shared by the
venturers in the ratio agreed upon in the contractual agreement.
(a) Point no. (i) only.
(b) Point no. (i) and (ii).
(c) Point no. (iii).
(d) Point no. (iii).

Answer Key:
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15
b a a a c c b b a a c a b b c
16
c

ACCOUNTING STANDARDS FOR CONSOLIDATED

FINANCIAL STATEMENTS 10.4
 11. FINANCIAL STATEMENTS OF COMPANIES

1. Fixed assets held for sale will be classified in the companys balance sheet as
(a) Current asset
(b) Non-current asset
(c) Capital work- in- progress
(d) Deferred tax assets

2. All of the following would be included in a companys operating activities except:

(a) Income tax payments
(b) Collections from customers or Cash payments to suppliers
(c) Dividend payments
(d) Office and selling expenses.

3. Which item will form part of Share capital as per Schedule III to the Companies Act, 2013?
(a) Share options outstanding account
(b) Forfeited Shares
(c) Share application money pending allotment
(d) Capital work-in-progress.

4. Trade payables as per Schedule III will include:

(a) Dues payable in respect to statutory obligation
(b) Interest accrued on trade payables
(c) Bills payables.
(d) Bills receivables

5. As per the Schedule III, separate disclosure is required in the financial statements for an item of
income or expenditure which exceeds
(a) 5 % of Revenue from operations or Rs. 1,00,000 whichever is lower
(b) 1% of Revenue or Rs. 5,000
(c) 1% of Revenue from operations or Rs. 1,00,000 whichever is higher.
(d) 1% of Revenue from operations or Rs. 50,000 whichever is higher.

6. Which of the following would be considered a cash-flow item from an investing” activity?
(a) Cash outflow to the government for payment of taxes.
(b) Cash outflow to purchase bonds issued by another company.
(c) Cash outflow to shareholders as dividends
(d) Cash outflow to make payment to trade payables.

7. Current maturities of long- term debt will come underty?

(a) Current Liabilities.
(b) Short term borrowings.
(c) Long term borrowings.
(d) Short term provisions

11.1 FINANCIAL STATEMENTS OF COMPANIES

8. While preparing cash flow statement, conversion of debt to equity
(a) Should be shown as a financing activity.
(b) Should be shown as an investing activity.
(c) Should not be shown as it is a non-cash transaction
(d) Should not be shown as operating activity.

9. Securities Premium Account is shown on the liabilities side in the Balance Sheet under the heading:
(a) Reserves and Surplus.
(b) Current Liabilities.
(c) Share Capital.
(d) Share application money pending allotment

10. Hari Uttam, a stock broking firm, received ₹1,50,000 as premium for forward contracts entered for
purchase of equity shares. How will you classify this amount in the cash flow statement of the firm?
(a) Operating Activities.
(b) Investing Activities.
(c) Financing Activities.
(d) Non-cash transaction

11. As per AS 3 on Cash Flow Statements, cash received by a manufacturing company from sale of shares
of ABC Company Ltd. should be classified as
(a) Operating activity.
(b) Financing activity.
(c) Investing activity.
(d) Non-cash transaction

12. Declaration of dividends for current year is made after providing for
(a) Depreciation of past years only.
(b) Depreciation on assets for the current year and arrears of depreciation of past years (if any).
(c) Depreciation on current year only and by forgoing arrears of depreciation of past years.
(d) Excluding current year depreciation

13. Which of the following is not a current liability as per Schedule III?
(a) Bank overdraft
(b) Net deferred tax liability
(c) Dividend declared.
(d) Provisions for employee benefits

Answer Key:
1 2 3 4 5 6 7 8 9 10 11 12 13
a c b c c b b c a a c b b

FINANCIAL STATEMENTS OF COMPANIES 11.2

 12. BUY BACK OF SECURITIES

1. Premium (excess of buy-back price over the par value) paid on buy-back should be adjusted against
(a) Free reserves.
(b) Securities premium.
(c) Both (a) and (b).
(d) Neither (a) nor (b).

2. As per section 68(1) of the Companies Act, buy back of own shares by the company, shall not exceed
(a) 25% of the total paid-up capital and free reserves of the company.
(b) 20% of the total paid-up capital and free reserves of the company.
(c) 15% of the total paid-up capital and free reserves of the company.
(d) 10% of the total paid-up capital and free reserves of the companys

3. The companies are permitted to buy-back their own shares out of

(a) Free reserves and Securities premium
(b) Proceeds of the issue of any shares.
(c) Both (a) and (b)
(d) (d) Neither (a) nor (b).

4. Advantages of Buy-back of shares include to

(a) Encourage others to make hostile bid to take over the company.
(b) Decrease promoters holding as the shares which are bought back are cancelled.
(c) Discourage others to make hostile bid to take over the company as the buy-back will increase
the promoters holding.
(d) All of the above.

5. State which of the following statements is true?

(a) Buy-back is for more than twenty-five per cent of the total paid-up capital and free reserves
of the company.
(b) Partly paid shares cannot be bought back by a company.
(c) Buy-back of equity shares in any financial year shall exceed twenty-five per cent of its total
paid-up equity capital in that financial year.
(d) Partly paid shares can be bought back by a company.

6. When a company purchases its own shares out of free reserves; a sum equal to nominal value of
shares so purchased shall be transferred to
(a) Revenue redemption reserve.
(b) Capital redemption reserve.
(c) Buyback reserve
(d) General reserve.

Answer Key:
1 2 3 4 5 6
c a c c b b

12.1 BUY BACK OF SECURITIES

 13. AMALGAMATION OF COMPANIES

1. In case of amalgamation, the entry for elimination of unrealized profit or loss on stock is made
(a) By the vendor company
(b) By the purchasing company
(c) By the third party
(d) By the court

Answer Key
1
b

13.1 AMALGAMATION OF COMPANIES

 14. ACCOUNTING FOR RECONSTRUCTION OF COMPANIES

1. In case of internal reconstruction

(a) Only one company is liquidated.
(b) Two or more companies are liquidated.
(c) No company is liquidated.
(d) Two companies amalgamated.

2. A process of reconstruction, which is carried out without liquidating the company and forming a new
one is called
(a) Internal reconstruction.
(b) External reconstruction.
(c) Amalgamation in the nature of merger.
(d) Amalgamation in the nature of purchase.

3. The accumulated losses under scheme of internal reconstruction are written off against
(a) Capital Reduction account
(b) Share Capital account
(c) Shareholders account
(d) General Reserves.

4. Reconstruction is a process by which affairs of a company are reorganized by

(a) Revaluation of assets and Reassessment of liabilities.
(b) Writing off the losses already suffered by reducing the paid-up value of shares and/or varying
the rights attached to different classes of shares.
(c) Both (a) and (b).
(d) None of the above.

5. When the object of reconstruction is usually to re-organise capital or to compound with creditors or
to effect economies then such type of reconstruction is called
(a) Internal reconstruction with liquidation
(b) Internal reconstruction without liquidation of the company
(c) External reconstruction
(d) None of the above.

6. For reduction of the share capital, the permission has to be sought from
(a) Court.
(b) Controller.
(c) State government.
(d) Shareholders.

Answer Key
1 2 3 4 5 6.
c a a c b a

ACCOUNTING FOR RECONSTRUCTION OF

14.1 COMPANIES
 15. ACCOUNTING FOR BRANCHES INCLUDING FOREIGN BRANCHES

1. Under branch trading and profit loss account method

(a) H.O prepares profit and loss account.
(b) Each branch is treated separate entity.
(c) Both (a) and (b).
(d) Either (a) or (b).

2. Goods may be invoiced to branch at

(a) Cost or Selling price.
(b) Wholesale price.
(c) Both (a) and (b).
(d) Either (a) or (b).

3. Under debtors method, opening balance of debtors is

(a) Debited to branch account.
(b) Credited to branch account.
(c) Debited to H.O account.
(d) Credited to H.O account.

4. If goods are invoiced to branches at cost, trading results of branch can be ascertained by
(a) Debtors method.
(b) Stock and debtors method.
(c) Either (a) or (b).
(d) Both (a) and (b).

5. Cost of goods returned by branch will have the following effect

(a) Goods sent to branch account will be debited.
(b) Branch stock account will be credited.
(c) Both (a) and (b).
(d) Either (a) or (b).

Answer Key
1 2 3 4 5
c c a c c

ACCOUNTING FOR BRANCHES INCLUDING

15.1 FOREIGN BRANCHES
 1. PRELIMINARY

1. Abridged prospectus means a memorandum containing such salient features of a prospectus as may
be specified by:
(a) The Company issuing such prospectus
(b) The Auditor of the company
(c) The Promoter of the Company
(d) The SEBI by making regulations in this behalf

Answer Key:
1
(d)

1.1 PRELIMINARY
 2. INCORPORATION OF COMPANY AND MATTERS INCIDENTAL THERETO

1. Anshika Pvt Ltd wants to amend its article of association (AOA) to contain some provisions for
entrenchment to the effect that specified provisions of the articles can be altered only if procedure
that are stricter than those applicable in the case of a special resolution are met. Now Advise them
whether Anshika Pvt Ltd can entrench is AOA.
(a) No, As Entrenchment is only possible at the time of formation of Company
(b) Yes, Anshika Pvt ltd can amend its AOA by adding entrenchment provisions by passing a special
resolution
(c) Yes, Anshika Pvt ltd can-do amendment in its AOA agreed to by ALL the members of company
and company also has to give Notice of such entrenchment to ROC
(d) No, Private companies cannot do entrenchment of its AOA

2. Miss Priya has incorporated a one-person company. She has given her Brothers Name as nominee
in her OPC, her brother Mr. Rahul earlier gave consent to be nominee in Priyas one person company,
but now due to some personal reasons Mr. Rahul wants to withdraw his name from Priyas OPC. Priya
has an opinion that once Rahul has given consent to be nominee in her company now he cannot
withdraw the same. So now Priya wants your advice that whether Rahul can do so?
(a) Yes, Rahul can withdraw his name any time by giving notice to company
(b) Yes, Rahul can withdraw his name within 3 months from his consent by giving notice to company
(c) No, Rahul cannot withdraw his name.
(d) Yes, Rahul can withdraw his name within 20 Days from his consent by giving notice to company

3. Grow Skills Pvt Ltd wants to shift the place of its registered office from Rajkot, Gujarat to Ahmedabad,
Gujarat (Jurisdiction is same). The Board of Directors of Grow Skills Pvt Ltd have a view that there
is no need to report this activity to ROC as there is no change in state of companys place. You are a
consultant of Grow Skills Pvt Ltd, advise company regarding compliance of this activity as per the
companies act,2013
(a) company shall pass special resolution and give notice to ROC within 30 Days of such change
(b) company shall pass Board resolution and give notice to ROC within 30 Days of change
(c) company shall pass special resolution and seek permission of Regional Director and give notice
to ROC within 30 Days of change
(d) company shall pass special resolution and approval of central government and give notice to
ROC within 30 Days of change

4. Mr. Ritik wants to incorporate a Private Limited company, he wants to keep his companys name
Growskillz Edutech Pvt Ltd. Now Mr. Ritik has a query that for how many days he can reserve this
name so that this name is not taken by anyone else
(a) 20 Days from the date of Approval
(b) 7 Days from the date of Approval
(c) 60 Days from the date of Approval
(d) 90 Days from Date of Approval

5. Win Limited bought 15% shares of Om Limited in the year 2018. In the year 2020 it formed a trust for
its employees and donated its 15% shares of Om Limited along with Rs. 10,00,000 to the trust and
became its trustee. In February 2023, Om Limited acquired 55% stake in Win Limited through an in-
house deal. Can a subsidiary company hold shares in its holding company justifiably in this situation?

INCORPORATION OF COMPANY AND MATTERS

2.1 INCIDENTAL THERETO
(a) Win Limited cannot represent itself as a trustee after it becomes a subsidiary of Om Limited.
(b) Win Limited can represent itself as a trustee only after it was a holding company of Om Limited.
(c) Win Limited cannot hold shares as a trustee even though it is a subsidiary company.
(d) Win Limited can do so as it is holding shares in Om Limited prior to becoming a subsidiary of it.

Answer Key:
1 2 3 4 5
c a a a d

INCORPORATION OF COMPANY AND MATTERS

INCIDENTAL THERETO 2.2
 3. PROSPECTUS AND ALLOTMENT OF SECURITIES

1. A prospectus which does not include complete particulars of the quantum or price of the securities
included therein is called:
(a) A deemed Prospectus
(b) A Shelf Prospectus
(c) An Abridged Prospectus
(d) A Red Herring Prospectus

2. Swastik Runners Ltd is a company engaged in manufacturing of trade mill. The company plans to
issue equity shares to the public in a phased manner during the time period of one year. The company
do not want to issue prospectus every time. What is the best option available to the company:
(a) Issue Red-herring Prospectus
(b) Issue Shelf Prospectus
(c) Issue Abridged Prospectus
(d) Issue any other document

3. A shelf prospectus filed with the ROC shall remain valid for a period of:
(a) one year from the date of registration
(b) one year from the date of closing of first issue
(c) one year from the date of opening of first issue
(d) Ninety days from the date on which a copy was delivered to ROC

4. Which of the following statement is contrary to the provisions of the Companies Act, 2013?
(a) A private company can make a private placement of its securities.
(b) The company has to pass a special resolution for private placement.
(c) Minimum offer per person should have Market Value of ` 20,000.
(d) A public company can make a private placement of its securities.

5. A Private Company cannot issue securities through:

(a) Private Placement
(b) Public Offer
(c) Right Issue
(d) Bonus Issue

Answer Key:
1 2 3 4 5
d b c c b

3.1 PROSPECTUS AND ALLOTMENT OF SECURITIES

 4. SHARE CAPITAL AND DEBENTURES

1. Rajesh Infrastructure Limited wants to issue preference shares for a period exceeding 20 years for
financing its proposed infrastructure project. On the basis of which statement, company can do so?
(a) Yes, the company can issue irredeemable preference shares by passing a special resolution
(b) Yes, company can issue preference shares for a period exceeding 20 years with the prior
approval of Central Government
(c) Yes, the company can issue irredeemable preference shares for infrastructure project
(d) Yes, the company can issue preference shares for financing an infrastructure project for a period
exceeding to 20 years.

2. A company enter into process of reducing capital. Mr. Shah is concerned officer designated for
preparing the list of creditor to records their reservation and reach to a settlement under section 66
of the Companies Act, 2013. Mr. Shah while preparing such list deliberately conceal the name of Ms.
Ramya who is one of the company’s creditor and object to the reduction, whereas make misstatement
in context of some other creditors’ claims. The offence committed by Mr. Shah is punishable under;
(i) Under section 447 of the Companies Act, 2013 and (ii) Also under sections 417 read with 415 of
Indian Penal Code 1860 (as dishonest concealment is involved). You are required to select the most
appropriate option out of given below in context of offence committed by Mr. Shah:
(a) Mr. Shah shall be liable to be prosecuted under both of the Companies Act, 2013 and the
Indian Penal Code 1860, but shall be punished under either of the Companies Act, 2013 or the
Indian Penal Code, 1860.
(b) Mr. Shah shall be liable to be prosecuted under both of the Companies Act, 2013 and the
Indian Penal Code, 1860, but shall be punished under the Companies Act, 2013 or the Indian
Penal Code, 1860 where maximum punishment is lower.
(c) Mr. Shah shall be liable to be prosecuted and punished under either of the Companies Act,
2013 or the Indian Penal Code, 1860.
(d) Mr. Shah shall be liable to be prosecuted and punished under both of the Companies Act, 2013
and the Indian Penal Code,1860.

3. Keshika, the original allottee and owner of 1000 equity shares of ` 50 each in Modern Biscuits
Private Limited, wanted to transfer these shares to her younger sister Vanshika by way of gift. She
completed the transfer deed in all respects and delivered the same to the company along with the
share certificates on 17th July, 2023. However, the company did not register the transfer even after
the expiry of more than one month nor did it send any notice of refusal. The lone reminder to the
company remained unanswered. An appeal is to be filed against the company with the National
Company Law Tribunal (NCLT) against this failure to register transfer of the said shares. Who has the
right to file the appeal in this regard?
(a) Keshika, who continues to remain owner and transferor of the said equity shares till they
are registered in the name of Vanshika, has the right to file an appeal with NCLT against the
company.
(b) Vanshika, as transferee and potential owner of equity shares, has the right to file an appeal
with NCLT against the company.
(c) Both Keshika and Vanshika have to file a joint appeal with NCLT against the company, for
neither Keshika nor Vanshika are authorised to file the appeal individually.
(d) As per its discretion, NCLT may allow either Keshika or Vanshika to file an appeal against the
company.

4.1 SHARE CAPITAL AND DEBENTURES

4. ABC Limited issued 10,000 shares of Rs. 100 each at a premium of Rs. 20 per share. The company
received
the application money and the allotment money on all the shares. However, the company was not
able to issue the shares due to some unforeseen circumstances. The company decided to forfeit the
shares and reissue them at a later date. How can the company use the securities premium account
as per the provisions of sub-section (2) of section 52 of the Companies Act, 2013, in this scenario?
(a) The securities premium account can be used to write off the expenses of issuing the forfeited
shares
(b) The securities premium account can be used to write off the commission paid on issuing the
forfeited shares
(c) The securities premium account cannot be used to write off the expenses of issuing the forfeited
shares.
(d) The securities premium account cannot be used to write off the commission paid on issuing the
forfeited shares.

5. Raman, the original allottee of 2000 equity shares in ABC Limited has transferred the same to
Ruchi. The instrument of transfer dated 21st August, 2022, duly stamped and signed by Raman was
handed over to Ruchi. Advise Ruchi regarding the latest date by which the instrument of transfer
along with share certificates must be delivered to the company, to register the transfer in its register
of members.
(a) 21st August, 2022
(b) 20th September, 2022
(c) 20th October, 2022
(d) 19th November, 2022

6. Which of the following statements is not true?

(a) in case of shares, the rate of underwriting commission to be paid shall not exceed five percent
of the issue price of the share.
(b) underwriting commission should not be more than the rate specified by the Article of
Association.
(c) in case of debentures, the rate of underwriting commission shall not exceed five percent of the
issue price of the debentures.
(d) amount of commission may be paid out of profits of the company.

7. Goals Limited, a listed company has authorised share capital of ` 25,00,000 (issued, subscribed and
paid up
capital of ` 20,00,000). The company has planned to buy back shares
worth ` 10,00,000. What is the maximum amount of equity shares that the
company is allowed to buy back based on the total amount of equity shares?
(a) ` 2,00,000
(b) ` 5,00,000
(c) ` 6,25,000
(d) ` 8,00,000

SHARE CAPITAL AND DEBENTURES 4.2

8. A Limited made a public issue of Debentures. The articles of the company authorises the payment
of underwriting commission at 2 per cent of the issue price. The company has negotiated with the
proposed underwriters, Gama Brokers and has finalised the rate at 2.25 per cent. The amount that
the company is eligible to pay as underwriting commission is:
(a) 5%
(b) 2%
(c) 2.50%
(d) 2.25%

9. Shreem Lakshmi Jewellery Store Private Limited was incorporated on 27th August, 2022 with 30
persons as subscribers to the Memorandum of Association and with an Authorised share capital
of ` 1 crore divided into equal number of shares off ` 1 each. Each subscriber subscribed for ` 1.00
lakh shares. Advise the company about by what date it needs to deliver the share certificates to the
subscribers.
(a) 17th September, 2022.
(b) 30th September, 2022.
(c) 27th October, 2022.
(d) 27th November, 2022.

10. Krishna Religious Publishers Limited has received application money of ` 20,00,000 (2,00,000 equity
shares of ` 10 each) on 10th October, 2022 from the applicants who applied for allotment of shares
in response to a private placement offer of securities made by the company to them. Select the latest
date by which the company must allot the shares against the application money so received.
(a) 9th November, 2022
(b) 24h November, 2022
(c) 9th December, 2022
(d) 8th January, 2023

11. Innovative Tech Sol Limited intends to invite subscription for ` 1.10 crore equity shares of ` 10 each
on private placement basis. The persons identified as potential subscribers are within the statutory
limit and also include the two other categories to which such statutory limit is not applicable One
such category is employees of the company who are offered equity shares under Employees Stock
Option Scheme. The other excluded category is:
(a) Quality Institutional Buyers
(b) Qualified Institutional Buyers.
(c) Qualificational Institutional Buyers.
(d) Qualified Investing Institutional Buyers.

12. Such shares which are issued by a company to its directors or employees at a discount or for a
consideration other than cash for working extraordinary hard and achieving desired output is
honoured with:
(a) Equity Shares
(b) Preference Shares
(c) Sweat Equity Shares
(d) Redeemable preference shares

4.3 SHARE CAPITAL AND DEBENTURES

13. In a company if any change of right of one class also affects the right of other class, then:
(a) A resolution should be passed in general meeting in this case
(b) Company need not to do anything else
(c) Written consent of three fourth majority of that other class should be obtained
(d) A resolution in joint meeting of both the classes should be passed

14. Ruchir Developers Ltd issued shares of face value of 10 rupees each to the public at a price of
200 rupees per share. The Share Premium Account was credited for 190 rupees. Now the company
want to utilise this Share Premium Account. Which of the following mode is permitted under the
Companies Act, 2013:
(a) Share Premium Account can be utilised only at the time of winding up of the company
(b) It can be used for distribution of dividend
(c) It can be used for the purpose of buying back of its own shares
(d) It can be used for spending on CSR Activities

15. Where a share capital of the company is divided into different classes of shares, the rights attached
to the shares of any class may be varied with the consent in writing of the holders of not less than
----------of the issued shares of that class or by means of a special resolution passed at a
separate meeting of the holders of the issued shares of that class:
(a) One-fourth
(b) 50%
(c) Three-fourths
(d) 75%

16. Neptune Metal Tools Limited was incorporated on 2nd December, 2022 with twenty-five subscribers
and authorised capital of ` 50,00,000 (5,00,000 equity shares of ` 10 each). The directors of the
company are in a dilemma whether to issue share certificates to the subscribers in physical form or
in dematerialized form. Advise them correctly on this matter:
(a) Being an unlisted company, Neptune may either issue physical share certificates to the
subscribers or alternatively, issue them in dematerialized form.
(b) Neptune needs to issue shares to the subscribers only in dematerialized form.
(c) A company having more than 100 shareholders needs to issue shares in dematerialized form
and therefore, Neptune may issue physical share certificates to the subscribers.
(d) A company having authorised capital of fifty lakhs and above needs to issue shares in
dematerialized form and therefore,Neptune may issue physical share certificates to the
subscribers.

17. Newage Private Limited issued 9% Non-convertible Debentures worth ` 10 lakh and thereafter,
the directors contemplated to get them listed. After due formalities, these privately placed non-
convertible debentures of ` 10 lakh were listed. Which of the following options is applicable in the
given situation:
(a) Newage Private Limited shall be considered as a listed company.
(b) Newage Private Limited shall not be considered as a listed company.
(c) Newage Private Limited shall be considered as a listed company only when minimum amount
of listed privately placed non convertible debentures is Rs. 15 lakh.

SHARE CAPITAL AND DEBENTURES 4.4

 (d) Newage Private Limited shall be considered as a listed company only when minimum amount
of listed privately placed non convertible debentures is minimum Rs. 20 lakh.

18. A company may issue sweet equity shares of a class of shares already issued if the issue is authorised
by:
(a) An Ordinary Resolution passed by the company
(b) A Special Resolution passed by the company
(c) A Resolution passed by the Board of Directors of the company
(d) A Resolution passed by the Audit Committee of the Board of the company

19. The time limit within which a copy of the contract for the payment of underwriting commission is
required to be delivered to the Registrar is:
(a) Three days before the delivery of the prospectus for registration
(b) At the time of delivery of the prospectus for registration
(c) Three days after the delivery of the prospectus for registration
(d) Five days after the delivery of the prospectus for registration

Answer Key:
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15
d c b b c c b b c c b c c c c
16 17 18 19
b b b b

4.5 SHARE CAPITAL AND DEBENTURES

 6. REGISTRATION OF CHARGES

1. Vijay Ltd has created a charge on 01-6-2023 in favour of Bank. Advise Vijay Ltd in how many days
they have to register this charge with ROC?
(a) 16.6.2023
(b) 1.7.2023
(c) 16.7.2023
(d) 31.7.2023

Answer Key:
1
b

6.1 REGISTRATION OF CHARGES

 7. MANAGEMENT AND ADMINISTRATION

1. Apple Limited is an unlisted public company. It has 3500 members. The Article of the company
provides that the quorum for the general meeting of the shareholders shall be at least forty members.
What shall be the quorum for the General Meeting of the Shareholders:
(a) 5
(b) 15
(c) 30
(d) 40

2. Vichar Vimarsh Ltd called on its Annual General Meeting on 20th September 2022 to consider and
adopt the financial result as of 31st March, 2022. Due to want to quorum the meeting was adjourned
and the adjourned meeting was held on 27th September, 2022. What is the last date of filing of
Annual Return with the Registrar of Companies:
(a) 60 days from the date of 31st March, 2022
(b) 60 days from the date of 20th September, 2022
(c) 60 days from the date of 27th September, 2022
(d) 60 days from the date of 30th September, 2022

3. Due to the management disputes, Flow Writing Industries Limited could not hold its current Annual
General Meeting by the latest due date. Even after lapse of the due date, it seemed rather impossible
to convene the AGM. In such a grim situation, one option available was to approach National
Company Law Tribunal (NCLT) and seek direction for the calling of AGM. Out of the following four
options, which one is applicable in the given case:
(a) Any member of the company can make an application to the National Company Law Tribunal
(NCLT) and seek direction for the calling of AGM.
(b) A member of the company holding at least 1% of the total paid-up share capital must make
an application to the National Company Law Tribunal (NCLT) and seek direction for the calling
of AGM.
(c) Minimum two members of the company holding at least 1% of the total paid-up share capital
must make a joint application to the National Company Law Tribunal (NCLT) and seek direction
for the calling of AGM.
(d) Minimum five members of the company holding at least 1% of the total paid-up share capital
must make a joint application to the National Company Law Tribunal (NCLT) and seek direction
for the calling of AGM

4. In case of a Private company, quorum of Annual General Meeting is:

(a) 1 member personally present
(b) 2 members personally present
(c) 3 members personally present
(d) 5 members personally present

5. Every listed company shall file with the Registrar a copy of the report on each annual general
meeting within ______ of the conclusion of the annual general meeting.
(a) 7 days
(b) 30 days
(c) 60 days
(d) 90 days

7.1 MANAGEMENT AND ADMINISTRATION

6. Which one of the following transactions requires the passing of an ordinary resolution?
(a) To change the name of the company
(b) To alter the articles of association
(c) To reduce the share capital
(d) To declare dividends.

7. Awareness Limiteds General Meetings are held at its registered office situated in Delhi. The minute
book of General meetings of Awareness Limited will be kept at:
(a) That place where members of Awareness Limited will decide.
(b) That place where all employees of Awareness Limited will decide.
(c) Registered office of Awareness Limited.
(d) That place where senior officials of Awareness Limited will decide.

8. Which among the following companies is not required to provide its members the facility to exercise
right to vote by electronic mode under the provisions of the Companies Act, 2013?
(a) B Limited, whose equity shares (the company is having both equity as well as preference
shares) are listed on a recognised stock exchange.
(b) A Limited, whose equity shares (only type of share the company is having) are listed on a
recognised stock exchange
(c) C Limited, whose preference shares (the company is having both equity as well as preference
shares) are listed on a recognised stock exchange
(d) D Limited, whose equity shares as well as preference shares are listed on a recognised stock
exchange.

9. Vichar Vimarsh Limited called its Annual General Meeting on 20th September, 2022 to consider
and adopt the financial result as of 31st March, 2022. Due to want of quorum the meeting was
adjourned and the adjourned meeting was held on 27th September, 2022. What is the last date of
filing of Annual Return with the Registrar of Companies:
(a) 60 days from the date of 31st March, 2022
(b) 60 days from the date of 20th September, 2022
(c) 60 days from the date of 27th September, 2022
(d) 60 days from the date of 30th September, 2022

10. For appointing an auditor other than the retiring auditor,

(a) Special notice is required.
(b) Ordinary notice is required.
(c) Neither ordinary nor special notice is required
(d) Approval of Central Government is required.

11. A resolution shall be a special resolution when the votes cast in favour of the resolution by members
are not less than ________ the number of votes, if any, cast against the resolution:
(a) Twice
(b) Three times
(c) Three fourth of
(d) Two third of

MANAGEMENT AND ADMINISTRATION 7.2

12. ______________ is the cardinal rule of construction that words, sentences and phrases of a statute
should be read in their ordinary, natural and grammatical meaning so that they may have effect in
their widest amplitude.
a) Rule of Literal Construction b) Rule of Harmonious Construction
c) Rule of Beneficial Construction d) Rule of Exceptional Construction
(a) Rule of Literal Construction
(b) Rule of Harmonious Construction
(c) Rule of Beneficial Construction
(d) Rule of Exceptional Construction

13. Popat Ram Comics Ltd is a company engaged in publishing of comic journals for the entertainment
of the children. The company have its Registered Office at Gandhinagar Gujarat. However according
to the addresses of the shareholders it is revealed that more than 10% shareholders are from Jaipur.
The company also have its branch office at Jaipur. Which among the following statement is correct:
(a) The Registers or copies of return may be kept at Jaipur with the order of the Managing Director
(b) The Registers or copies of return may be kept at Jaipur with the approval of the Board of
Directors
(c) The Registers or copies of return may be kept at Jaipur if approved by an Ordinary resolution
passed at the General Meeting of the Company
(d) The Registers or copies of return may be kept at Jaipur if approved by a Special resolution
passed at the General Meeting of the Company

14. Amber Limited, a listed company, is a manufacturer of glassware. Its paid up share capital is divided
into 20,0000 shares of ` 100 each. The company is maintaining its register of members as per the
provisions of the Companies Act, 2013. The company wanted to close its register of members for
declaring dividend. It may do so by giving minimum days notice.
(a) 7 days
(b) 10 days
(c) 15 days
(d) The register of members cannot be closed.

15. A resolution shall be a special resolution when the votes cast in favour of the resolution by members
are not less than ________ the number of votes, if any, cast against the resolution:
(a) Twice
(b) Three times
(c) Three fourth of
(d) Two third of

16. Namesake Limited, an unlisted public limited company finalized its accounts for the financial year
ending on 31 March, 2023. The meeting of the Board of Directors was convened and approved the
financial accounts of the company and proposed to convene the Annual General Meeting of the
shareholders on Thursday, the 25 August, 2023 at 10 am.
In the light of the given facts, the General Meeting of the shareholders was decided to be scheduled.
Determine by which date the notices to the shareholder should have been given to the members:
(a) 1st August, 2023
(b) 2nd August, 2023

7.3 MANAGEMENT AND ADMINISTRATION

 (c) 3rd August, 2023
(d) 4th August, 2023

17. Apple Limited is an unlisted public company. It has 3500 members. What shall be the quorum for
the General Meeting of the Shareholders:
(a) 5
(b) 15
(c) 30
(d) 45

Answer Key:
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15
d c a b b d c c c a b a d a b
16 17
c c

MANAGEMENT AND ADMINISTRATION 7.4

 8. DECLARATION AND PAYMENT OF DIVIDEND

1. Dividend once declared, should be paid within_____________ days from the date of declaration.
(a) 14
(b) 21
(c) 30
(d) 60

2. Dividend once declared, should be paid within_____________ days from the date of declaration
(a) 14 days
(b) 21 days
(c) 30 days
(d) 45 days

3. The amount accumulated in the Investor Education and Protection Fund shall not be used for:
(a) refunds in respect of unclaimed dividends, matured deposits, matured debentures, application
money due for refund and interest thereon.
(b) reimbursement of legal expenses incurred in pursuing class action suits under section 37 and
245.
(c) grants or donation to the Central Government for the purpose of investor’s education and
training.
(d) distribution of any disgorged amount among eligible and identifiable applicants who have
suffered losses.

4. Annual General meeting of the shareholders of A Limited was convened on 26th August, 2023, in
which the annual accounts of the company were presented before the shareholders. The shareholders
have approved dividend @ 10%.
By what date should the amount be deposited in a separate account maintained with the
scheduled bank for dividend purposes?
(a) By 31st August 2023
(b) By 1st September 2023
(c) By 7th September 2023
(d) By 24th September 2023

5. Which of the following amount need not be credited to Investor Education and Protection Fund
Account (IEPF)?
(a) Amount in unpaid dividend account (UDA) of company
(b) Amount of matured deposits with the company
(c) Profit on sale of asset
(d) Amount of matured debentures with the company.

6. Annual General meeting of the shareholders of M Limited was convened on 1st September 2023, in
which the annual accounts of the company were presented before the shareholders. The shareholders
have approved dividend @ 3%.
By what date should the amount be deposited in a separate account maintained with the
scheduled bank for dividend purposes?
(a) By 31st August 2023 (i.e. before the date of approval by shareholders)
(b) By 6th September 2023

8.1 DECLARATION AND PAYMENT OF DIVIDEND

 (c) By 7th September 2023
(d) By 24th September 2023

7. Amount to be transferred to reserves out of profits before any declaration of dividend is ___________
(a) 5%
(b) 7.50%
(c) 10%
(d) at the discretion of the company

8. The Board of Directors of Vidyut Limited are contemplating to declare interim dividend in the last
week of July, 2022 but the company has incurred loss during the current financial year up to the end
of June, 2022. However, it is noted that during the previous five financial years i.e., 2017-18, 2018-
19, 2019-20, 2020-21 and 2021-2022 the company had declared dividend at the rate of 8%, 9%,
12%, 11% and 10% respectively. Advise the Board as to the maximum rate at which they can declare
interim dividend despite incurring loss during the current financial year.
(a) Maximum at the rate of 10%.
(b) Maximum at the rate of 11%.
(c) Maximum at the rate of 10.5%.
(d) Maximum at the rate of 11.5%.

9. The amount accumulated in the Investor Education and Protection Fund shall not be used for:
(a) refunds in respect of unclaimed dividends, matured deposits, matured debentures, application
money due for refund and interest thereon.
(b) reimbursement of legal expenses incurred in pursuing class action suits under section 37 and
245.
(c) grants or donation to the Central Government for the purpose of investor’s education and
training.
(d) distribution of any disgorged amount among eligible and identifiable applicants who have
suffered losses

10. The authorised and paid-up share capital of Avantika Ayurvedic Products Limited is ` 50.00 lakh
divided into 5,00,000 equity shares of ` 10 each. At its Annual General Meeting (AGM) held on
24th September, 2022, the company declared a dividend of ` 2 per share by passing an ordinary
resolution. Mention the latest date by which the amount of dividend must be deposited in a separate
account maintained with a scheduled bank
(a) Latest by 29th September, 2022
(b) Latest by 4th October, 2022
(c) Latest by 9th October, 2022
(d) Latest by 24th October, 2022

Answer Key:
1 2 3 4 5 6 7 8 9 10
c c c a c b d b c a

DECLARATION AND PAYMENT OF DIVIDEND 8.2

 9. ACCOUNTS OF COMPANIES

1. During the half year ended September 2022, the board of directors (BOD) of Gold Leaf Limited has
made an application to the Tribunal for revision in the accounts of the company for the financial
year ending on March 2020. Further during the year ended March 2023, the BOD has again made an
application to the Tribunal for revision in the boards report pertaining to the year ended March 2022.
You are required to state the validity of the acts of the Board of directors.
(a) The act of the BOD is valid only to the extent of application made for revisions in accounts as
boards report are not eligible for revision.
(b) The act of the BOD is valid as application made for revision in the accounts and boards report
pertains to two different financial year.
(c) The act of the BOD is invalid as the law provides for only one time application to be made in a
financial year for revision of accounts and boards report.
(d) The act of the BOD is invalid as to the application made for revision in accounts pertains to a
period beyond 2 years immediately preceding the year 2023. The application made for revision
in the Board report is however valid in law.

2. Shine Ltd is an unlisted public company with a paid-up share capital of more than Rs. 40 crore, a
turnover of less than 200 crores along with outstanding loans from XYZ bank of 105 crore rupees
during the preceding financial year. The company has not appointed an internal auditor, citing that
it is not mandatory for them to do so. Does Shine Ltd need to appoint an internal auditor as per the
Companies Act, 2013?
(a) No, as the company is unlisted company.
(b) Yes, as the company share capital is more than 40 crore during the preceding financial lyear.
(c) No, as the company’s turnover is less than 200 crore rupees during the ?preceding financial
year.
(d) Yes, as the company has outstanding loans from banks exceeding 105 crore rupees preceding
financial year.

3. ABC Limited has its shares listed on a recognized stock exchange in India. During the current financial
year ending on 31 March 2023, the Securities and Exchange Board of India (SEBI) has found some
irregularities in the filings made by the company. Accordingly, SEBI proposes to make an application
to the Tribunal for reopening of the books of accounts of the Company. You, as an expert, are
called upon by SEBI to advise with which last financial year for reopening of books of accounts an
application can be made?
(a) 2018-2019
(b) 2016-2017
(c) 2013-2014
(d) 2014-2015

4. A Limited is a listed company. In April, 2023, the company had destroyed all the books of account
together with relevant vouchers up to financial year ending on 31st March, 2018. As per provisions
of the Companies Act, 2013, the act of the company in destruction of all books of account together
with relevant vouchers was not correct because:
(a) The books of accounts etc. relating to a period not less than 6 preceding financial years are
required to be kept in good order.
(b) The books of accounts etc. relating to a period not less than 8 preceding financial years are
required to be kept in good order.

9.1 ACCOUNTS OF COMPANIES

 (c) The books of accounts etc. relating to a period not less than 10 preceding financial years are
required to be kept in good order.
(d) The books of accounts etc. relating to a period not less than 12 preceding financial years are
required to be kept in good order.

5. Which of the following statments is/are corrrect w.r.t. the constitution of Corporate Social
Responsibility Committee of the board :
Statement I: Two or more directors out of which at one shall be Independent Director
Statement II: Three or more directors out of which at least one director shall be Independent
Director.
Statement III: Three or more directors with majority of Independent Directors
Statement IV: Three or more directors with condition of not a single director should be Independent
Director
(a) Answer - 1 : Statement I
(b) Answer - 2 : Statement II
(c) Answer - 3 : Statement III
(d) Answer - 4 : Statement IV

6. Calendar year starts from:

(a) January
(b) April
(c) June
(d) September

7. The Corporate Social Responsibility Committee of the board shall consist of:
(a) Three or more directors out of which at two directors shall be Independent Director
(b) Three or more directors out of which at least one director shall be Independent Director.
(c) Three or more directors and all should be Independent Directors
(d) Three or more directors with condition of not a single director should be Independent Director

8. ABC Limited has its shares listed on a recognized stock exchange in India. During the current financial
year ending on 31st March 2023, the Securities and Exchange Board of India (SEBI) has found some
irregularities in the filings made by the company. Accordingly, SEBI proposes to make an application
to the Tribunal for reopening of the books of accounts of the Company. You, as an expert, are
called upon by SEBI to advise with which last financial year for reopening of books of accounts an
application can be made?
(a) 2016-2017
(b) 2014-2015
(c) 2011-2012
(d) 2012-2013

9. One Person Company shall file a copy of the duly adopted financial statements to the Registrar in:
(a) 30 days of the date of meeting in which it was adopted.
(b) 90 days of the date of meeting in which it was adopted.
(c) 90 days from the closure of the financial year.
(d) 180 days from the closure of the financial year.

ACCOUNTS OF COMPANIES 9.2

10. As per the provisions of the Companies Act, 2013, which of the following statement is correct with
respect to the surplus arising out of the CSR activities:
(a) The surplus cannot exceed five percent of total CSR expenditure of the company for the
financial year.
(b) The surplus shall not form part of the business profit of a company
(c) The surplus cannot exceed 10 percent of total CSR expenditure of the company for the financial
year.
(d) The surplus shall form part of the business profit of a company

11. As per provisions of the Companies Act, 2013, the act of the company in destruction of all books of
account together with relevant vouchers was not correct because
(a) The books of accounts etc. relating to a period not less than 6 preceding financial years are
required to be kept in good order.
(b) The books of accounts etc. relating to a period not less than 8 preceding financial years are
required to be kept in good order.
(c) The books of accounts etc. relating to a period not less than 10 preceding financial years are
required to be kept in good order.
(d) The books of accounts etc. relating to a period not less than 12 preceding financial years are
required to be kept in good order.

12. Compute the minimum amount the company (Natraj Limited) is required to spend on account of
Corporate Social responsibility year 2022-2023, if during the financial years 2019-2020, 2020-2021
and 2021-2022 net profits are ` 30 crore, ` 25 crore and ` 32 crore respectively.
(a) Rs. 87 lac
(b) Rs. 1.14 crore
(c) Rs. 1.64 crore
(d) Rs. 58 lac

13. Ayush Power Limited has reported a net profit of ` 6 crore, ` 7.5 crore and ` 3 crore for the financial
year(s) ended on March 2020, March 2021 and March 2022 respectively. The boards report of the
company for the year ended March 2023 did not disclose the composition of the CSR Committee
on the grounds that company is not required to constitute CSR committee as net profit during the
immediately preceding financial year is less than the statutory requirements laid down in section
135. You are required to examine in the given scenario whether the Act of non composition and non-
disclosure of the composition of CSR committee in the Boards Report is valid in law?
(a) No, the act of the company is not valid in law as every company is required to constitute a CSR
committee and disclose the constitution of same in the boards report in every financial year
irrespective of the profits earned by the company.
(b) Yes, the act of the company is valid in law as the net profit of the company is less than ` 5
crore in the immediately preceding financial year.
(c) No, the act of the company is not valid in law as composition and disclosure of composition of
CSR Committee will be required only if the profits of the company are not less than ` 5 crore
for a consecutive period of 3 financial years.
(d) The act of the company is valid only to the extent of non-disclosure of the composition of CSR
committee as the net profit of the company is less than ` 5 crore in the immediately preceding
financial year.

9.3 ACCOUNTS OF COMPANIES

14. Ganesh Company Ltd, a public company incorporated under the Companies Act, 2013 has Mr. Jay
Director, Mr. Sagar Independent Director, Mr. Abhishek Nominee Director and Mr. Yash Whole time
director. Mr. Abhishek wants to inspect the books of account of Shankar Company Limited, the
subsidiary of Ganesh Company Limited. You are required to state whether Mr. Abhishek is eligible to
inspect the books of accounts of Ganesh Company Limited?
(a) Yes, Mr. Abhishek can inspect the books of account of Shankar Company limited only on
authorization of the public financial institution on whose behalf he has been so appointed in
the board of the Ganesh Company Ltd.
(b) No. Mr. Abhishek being a nominee director can only inspect the books of account of Ganesh
Company Ltd and not its subsidiary company.
(c) Yes, Mr. Abhishek can inspect the books of account of Shankar Company limited only on
authorization by way of resolution of the board of directors.
(d) Yes, Mr. Abhishek can inspect the books of account of Shankar Company limited only on
authorization by way of resolution of the members holding not less than 25% of the paid up
share capital of the company.

15. One Person Company shall file a copy of the duly adopted financial statements to the Registrar in:
(a) 30 days of the date of meeting in which it was adopted.
(b) 90 days of the date of meeting in which it was adopted.
(c) 90 days from the closure of the financial year.
(d) 180 days from the closure of the financial year.

16. Primus Limited dealing with Fast Moving Consumable Goods (FMCG) has its registered office at
Mumbai. The composition of its Board of Directors and Key Management Personnel are: Mr. P
(Managing Director), Mr. Q (Director), Mr. R (Director), Mr. S (Nominee Director), Mr. V (Chief Financial
Officer), Mr. W (Whole time Company Secretary). If any compliance relating to Maintenance and
Keeping of Books of Accounts of Companies, 2013, is not followed by the Company then penalty for
contravention will be imposed on the following persons:
(a) Mr. P and Mr. V
(b) Mr. P, Mr. Q, Mr. R & Mr. S
(c) Mr. P, Mr. S, Mr. V & Mr. W
(d) Mr. P, Mr. Q, Mr. R & Mr. S, Mr. V & Mr. W

Answer Key:
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15
b d d b b a b b d b b d b c d
16
b

ACCOUNTS OF COMPANIES 9.4

 10. AUDIT AND AUDITORS

1. Which of the following is a prohibited service to be rendered by the auditor of the Company?
(a) Design and implementation of any financial information system
(b) Making report to the members of the company on the accounts examined by him
(c) Compliance with the auditing standards
(d) Reporting of fraud against the company by officers or employees to the Central Government

2. Birthday Card Limited, a listed company can appoint or re-appoint, Mishra & Associates (a firm of
Chartered Accountants), as their statutory auditors for:
(a) One year only
(b) One term of 3 consecutive years only
(c) One term of 4 consecutive years only
(d) Two terms of 5 consecutive years

3. The auditor of a Government Company shall be appointed or re-appointed by:

a) The Central Government
b) (CAG)
c) Comptroller and Auditor General of India Central Government on the advice of Comptroller and
Auditor General of India
d) Chairman of the Board of Directors
(a) The Central Government
(b) Comptroller and Auditor General of India (CAG)
(c) Central Government on the advice of Comptroller and Auditor General of India
(d) Chairman of the Board of Directors

4. Every company shall, at the first annual general meeting, appoint an individual or a firm as an
auditor who shall hold office from the conclusion of that meeting till the conclusion of its:
(a) Second annual general meeting
(b) Fourth annual general meeting
(c) Sixth annual general meeting
(d) Eight annual general meeting

5. The auditor of a Government Company shall be appointed or re-appointed by

(a) The Central Government
(b) Comptroller and Auditor General of India (CAG).
(c) Central Government on the advice of Comptroller and Auditor General of India.
(d) Chairman of the Board of Directors

Answer Key:
1 2 3 4 5
a d b a b

10.1 AUDIT AND AUDITORS

 11. COMPANIES INCORPORATED OUTSIDE INDIA

1. Who may exempt any class of Foreign Company:

(a) The Registrar of Companies
(b) The Regional Director
(c) The Central Government
(d) The President of India

2. A foreign company shall in every _________ make out a balance sheet and profit and loss account
and the prescribed documents and deliver a copy those documents to the Registrar:
(a) Financial Year
(b) Calendar Year
(c) Fiscal Year
(d) Lunisolar Year

Answer Key:
1 2
c b

11.1 COMPANIES INCORPORATED OUTSIDE INDIA

 12. THE LIMITED LIABILITY PARTNERSHIP ACT, 2008

1. In case of any change in name or address of any partner, that partner shall inform LLP within ______
(a) 7 days
(b) 10 days
(c) 15 days
(d) 30 days

2. How many designated partners are required in LLP:

(a) At least two designated partners
(b) Seven designated partners
(c) Two designated partners
(d) At least seven designated partners

3. LLP Bill was passed by the Parliament on ______

(a) 9th January 2007
(b) 12th December, 2008
(c) 31st March, 2009
(d) 1st July, 2008

4. Whether a HUF can become partner in LLP:

(a) HUF may become partner of LLP provided the Registrar may grant permission in this behalf
(b) No, HUF can’t become partner in the LLP
(c) Yes, HUF may become partner of LLP
(d) None of the above

5. What is the minimum required capital for formation of LLP?

(a) Rs.1,00,000
(b) Rs.2,00,000
(c) Rs.5,00,000
(d) No such requirement

6. When did LLP Act 2008, come into force?

(a) 01-Apr-08
(b) 31-Mar-09
(c) 01-May-09
(d) 23-Apr-08

7. Who shall sign the Statement of Account and Solvency prepared by the LLP:
(a) By any one partner, authorised in this behalf
(b) By at least two partners, authorised in this behalf
(c) By all the partners
(d) By the designated partners

8. For the purpose of LLP, Resident in India means:

(a) Person who has stayed in India for a period of not less than 182 days during the current year.
(b) Person who has stayed in India for a period of not less than 180 days during the immediately
preceding one year.

12.1 THE LIMITED LIABILITY PARTNERSHIP ACT, 2008

 (c) Person who has stayed in India for a period of not less than 181 days during the immediately
preceding one year.
(d) Person who has stayed in India for a period of not less than 120 days during the financial year.

9. What is the maximum limit of number of partners in LLP?

(a) 20
(b) 50
(c) 100
(d) No Limit

10. In case of any change in name or address of any partner, LLP shall inform Registrar within _______
(a) 7 days
(b) 10 days
(c) 15 days
(d) 30 days

11. A LLP shall be governed by the provisions of:

(a) The Companies Act, 2013
(b) The Limited Liability Partnership Act, 2008
(c) The Co-operative Societies Act, 1912
(d) The Indian Partnership Act, 1932

12. CG may direct such LLP to change its name, and LLP shall comply with the said direction within
________ after the date of the direction or such longer period as CG may allow.
(a) 1 month
(b) 3 months
(c) 6 months
(d) 9 months

13. When the requirements of section 11 of LLP Act, 2008 have been complied with, the Registrar shall
give incorporation certificate within ______
(a) 7 Days
(b) 10 Days
(c) 14 Days
(d) 30 Days

14. What is the periodicity of preparing the Statement of Account and Solvency by the LLP:
(a) Within 3 months from the end of each F.Y.
(b) Within 9 months from the end of each F.Y.
(c) Within 12 months from the end of each F.Y.
(d) Within 6 months from the end of each F.Y.

Answer Key:
1 2 3 4 5 6 7 8 9 10 11 12 13 14
c a b b d b d d d d b b c d

THE LIMITED LIABILITY PARTNERSHIP ACT, 2008 12.2

 13. THE GENERAL CLAUSES ACT, 1897

1. Which legislation authorises the use of the General Clauses Act, 1897:
(a) The Indian Penal Code, 1860
(b) The Constitution of India
(c) The Indian Evidence Act, 1872
(d) The Code of Civil Procedure, 1908

2. Where an act of parliament does not expressly specify any particular day as to the day of coming into
operation of such Act, then it shall come into operation on the day on which:
(a) It receives the assent of the President
(b) It receives the assent of the Governor General
(c) It receives assent of both the houses of Parliament
(d) It receives assent of the Prime Minister

3. In all Central Acts and Regulations, unless there is anything repugnant in the subject or context,
words importing the masculine gender shall be taken:
(a) To exclude females
(b) To exclude girl child
(c) To include females
(d) To exclude boy child

4. The Preamble is most important in any legislation, it:

a) Provides definitions in the Act.
b) Expresses scope, object and purpose of the Act.
c) Provides explanation of all the sections of the entire Act.
d) Provides side notes often found at the side of a section.
(a) Provides definitions in the Act.
(b) Expresses scope, object and purpose of the Act.
(c) Provides explanation of all the sections of the entire Act.
(d) Provides side notes often found at the side of a section.

5. Calendar year starts from:

(a) January
(b) April
(c) June
(d) September

6. Which of the following is not an Immovable Property?

(a) Land
(b) Building
(c) Timber
(d) Machinery permanently attached to the land

7. A company enter into process of reducing capital. Mr. Shah is concerned officer designated for
preparing the list of creditor to records their reservation and reach to a settlement under section 66
of the Companies Act 2013. Mr. Shah while preparing such list deliberately conceal the name of Ms
Ramya who is one of the companys creditor and object to the reduction, whereas make misstatement

13.1 THE GENERAL CLAUSES ACT, 1897

 in context of some other creditors claims. The offence committed by Mr. Shah is punishable under;
(i) Under section 447 of the Companies Act 2013 and (ii) Also under sections 417 read with 415 of
Indian Penal Code 1860 (as dishonest concealment is involved). You are required to select the most
appropriate option out of given below in context of offence committed by Mr. Shah:
(a) Mr. Shah shall be liable to be prosecuted under both of the Companies Act 2013 and Indian
Penal Code 1860, but shall be punished under either of the Companies Act 2013 or Indian
Penal Code 1860
(b) Mr. Shah shall be liable to be prosecuted under both of the Companies Act 2013 and Indian
Penal Code 1860, but shall be punished under the Companies Act 2013 or Indian Penal Code
1860 where maximum punishment is lower.
(c) Mr. Shah shall be liable to be prosecuted and punished under either of the Companies Act
2013 or Indian Penal Code 1860
(d) Mr. Shah shall be liable to be prosecuted and punished under both of the Companies Act 2013
and Indian Penal Code 1860

8. Where, by any Central Act, a power to make any appointment is conferred, then, unless a different
intention appears, the authority having for the time being power to make the appointment shall also
have power:
(a) To appoint the members of that family
(b) To grant increment to any family members
(c) To suspend or dismiss any person appointed
(d) No other power is appointed except for appointment

Answer Key:
1 2 3 4 5 6 7 8
c a c b a c c c

THE GENERAL CLAUSES ACT, 1897 13.2

 14. INTERPRETATION OF STATUTES

1. According to the ___________ rule, the words of the statute are to be given their plain and ordinary
meaning.
(a) Literal rule
(b) Golden rule
(c) Natural rule
(d) Mischief rule

2. When the law is clear and unambiguous the court shall construe the meaning of a provision based
on strict
(a) grammatical meaning
(b) logical meaning
(c) alternative interpretation
(d) hypothetical meaning

3. A method of interpretation which brings into effect provisions for improving the conditions of certain
classes of people who are under privileged or who have not been treated fairly in the past.
(a) Rule of Literal Construction
(b) Rule of Harmonious Construction
(c) Rule of Beneficial Construction
(d) Rule of Exceptional Construction

4. Pick the odd one out of the following aids to interpretation:

(a) Preamble
(b) Marginal Notes
(c) Proviso
(d) Usage

5. The preamble is most important in any legislation, it:

(a) Provides definitions in the Act.
(b) Expresses scope, object and purpose of the Act.
(c) Provides summary of the entire Act.
(d) provides side notes often found at the side of a section.

6. Which rule of construction is applicable where there is a real and not merely apparent conflict
between the provisions of an Act, and one of them has not been made subject to the other
(a) Rule of Beneficial construction
(b) Rule of Literal construction
(c) Rule of Harmonious construction
(d) Rule of Exceptional construction

7. When there is a conflict between two or more statues or two or more parts of a statute then which
rule is applicable:
(a) Welfare construction
(b) Strict construction
(c) Harmonious construction
(d) Mischief Rule

14.1 INTERPRETATION OF STATUTES

8. Doctrine of Mischief Rule was given under:
a) Foss vs. Harbottle
b) Thomson vs. Clan Morris
c) Foster vs. DiphwysCasson
d) Heydon’s Case
(a) Foss vs. Harbottle
(b) Thomson vs. Clan Morris
(c) Foster vs. DiphwysCasson
(d) Heydon’s Case

9. A clause that begins with the words Notwithstanding anything contained is called:
(a) An obstacle clause
(b) A non- obstante clause
(c) An objectionable clause
(d) A superior clause

10. interpretation concerns itself with what the law says and interpretation, seeks to ascertain what
the law means.
(a) Grammatical, Logical
(b) Legal, usual
(c) Usual, legal
(d) Logical, grammatical

11. ________means that when two or more words that are susceptible of analogous meaning, are
coupled together they are understood to be used in their cognate sense
a) Noscitur a Sociis
b) Contemporanea Expositio
c) prima facie
d) absoluta sententia expositore non indiget
(a) Noscitur a Sociis
(b) Contemporanea Expositio
(c) prima facie
(d) absoluta sententia expositore non indiget

12. Statutory interpretation is a practice through which the courts break down the words of a legislation
and give true intent to it. While the legislature makes the laws, the judiciary performs the art of
interpretation to give meaning to the words of the law maker. It is correctly said that The purpose
of Interpretation of Statutes is to help the Judge to ascertain the intention of the Legislature not to
control that intention or to confine it within the limits, which the Judge may deem reasonable or
expedient. For interpretation of statutes various tools are used, you are required to pick the option
depicting correct sequence of tools in order their application.
(a) Internal Aids to Construction, External Aids to Constructions, and Literal Construction
(b) Literal Construction, Internal Aids to Construction, and External Aids to Constructions
(c) Internal Aids to Construction, Literal Construction, and External Aids to Constructions
(d) External Aids to Constructions, Internal Aids to Construction, and Literal Construction

INTERPRETATION OF STATUTES 14.2

13. According to ________ rule of interpretation, meaning of words should be known from its
accompanying or associated words.
(a) Mischief rule
(b) Primary Rule
(c) Noscitur a Sociis
(d) Golden Rule

14. An internal aid that may be added to include something within the section or to exclude something
from it, is
(a) Proviso
(b) Explanation
(c) Schedule
(d) Illustrations

15. When there is a conflict between two or more statues or two or more parts of a statute then which
rule is applicable:
a)Welfare construction
b)Strict construction
c)Harmonious construction
d)Mischief Rule
(a) Welfare construction
(b) Strict construction When there is a conflict between two or more statues or two or more parts
of a statute then which rule is applicable:
(c) Harmonious construction
(d) Mischief Rule

16. Which among the following is an External Aid to interpretation:

a) Illustrations
b) Dictionary
c) Proviso clause
d) Title
(a) Illustrations
(b) Dictionary
(c) Proviso clause
(d) Title

17. Pick the odd one out of the following aids to interpretation
(a) Preamble
(b) Marginal Notes
(c) Proviso
(d) Usage

18. Which amongst the following is not a the cardinal rule of construction that words, sentences and
phrases of a statute should be read in their ordinary, natural and grammatical meaning so that they
may have effect in their widest amplitude.

14.3 INTERPRETATION OF STATUTES

 a) Rule of Literal Construction
b) Rule of Grammatical Construction
c) Rule of Plain Construction
d) Rule of logical Construction
(a) Rule of Literal Construction
(b) Rule of Grammatical Construction
(c) Rule of Plain Construction
(d) Rule of logical Construction

19. ________________________ is the cardinal rule of construction that words, sentences and phrases
of a statute should be read in their ordinary, natural and grammatical meaning so that they may
have effect in their widest amplitude.
(a) Rule of Literal Construction
(b) Rule of Harmonious Construction
(c) Rule of Beneficial Construction
(d) Rule of Exceptional Construction

20. ____________ means that when two or more words that are susceptible of analogous meaning,
are coupled together they are understood to be used in their cognate sense.
a) Noscitur a Sociis
b) Contemporanea Expositio
c) prima facie
d) absoluta sententia expositore non indiget
(a) Noscitur a Sociis
(b) Contemporanea Expositio
(c) prima facie
(d) absoluta sententia expositore non indiget

Answer Key:
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15
a a c d b c c d b a a b c b c
16 17 18 19 20
b d d a a

INTERPRETATION OF STATUTES 14.4

 15. THE FOREIGN EXCHANGE MANAGEMENT ACT, 1999

1. Which among the following is not treated as Capital Account Transaction:

(a) A transaction which alters the assets outside India of persons resident in India
(b) A transaction which alters the contingent liabilities outside India of persons resident in India
(c) A transaction which alters the liabilities in India of persons resident outside India
(d) A transaction of remittance for living expenses of parents residing abroad

2. No person shall draw foreign exchange for a transaction included in ________ of the FEM (Current
Account Transactions) Rules, 2000 without the prior approval of Government of India:
(a) Schedule I
(b) Schedule II
(c) Schedule III
(d) Schedule IV

3. Every drawal of foreign exchange for transactions included in Schedule III of the FEM (Current Account
Transactions) Rules, 2000 shall require prior approval of RBI. Which among the following transaction
no approval of RBI is required:
(a) Where the payment is made out of funds held in Resident Foreign Currency (RFC) Account of
the remitter.
(b) Where the remittance of USD 275000 is made for maintenance of close relatives abroad
(c) Where the drawal of foreign currency of USD 400000 is for studies abroad
(d) Drawal of USD 260000 for private visit to USA

4. A requires U.S. $ 2,000 for payment related to call back services of telephones. Choose the correct
option:
(a) A cannot obtain US $ 2,000 for the said purpose as withdrawal of foreign exchange for payment
related to call back services of telephone is a prohibited transaction.
(b) A can freely withdraw the amount freely for the said purpose
(c) A can obtain US $ 2,000 for the said purpose as withdrawal of foreign exchange for payment
related to call back services of telephone can be done with the prior approval of Central
Government.
(d) A can obtain US $ 2,000 for the said purpose as withdrawal of foreign exchange for payment
related to call back services of telephone can be done since the amount is less than USD
2,50,000.

5. Which among the following transaction is not prohibited:

(a) Remittance out of lottery winnings
(b) Remittance of income from racing
(c) Availment of foreign exchange of USD 250000 for private visit to Europe
(d) Remittance of dividend by any company to which the requirement of dividend balancing is
applicable

6. No person shall draw foreign exchange for a transaction included in the Schedule II of the FEM
(Current Account Transactions) Rules, 2000 without prior approval of:
(a) The Authorised Person
(b) The Reserve Bank of India
(c) The Government of India
(d) The Foreign Exchange Dealers Association of India

15.1 THE FOREIGN EXCHANGE MANAGEMENT ACT, 1999

7. Making any payment to, or for the credit of any person, or receiving any payment for, by order or on
behalf of any person, or drawing, issuing or negotiating any bill of exchange or promissory note, or
transferring any security or acknowledging any debt, is called as:
(a) Financial Commitment
(b) Financial Instruments
(c) Financial Transaction
(d) Financial Promises

8. Which among the following is not prohibited under the FEM (Current Account Transactions) Rules,
2000:
(a) Remittance for purchase of lottery tickets, banned / proscribed magazines, football pools,
sweepstakes etc.
(b) Expenses of USD 2,00,000 in connection with medical treatment abroad
(c) Payment related to “Call Back Services” of telephones
(d) Remittance of interest income on funds held in Non Resident Special Rupee Account Scheme

9. Which among the following transaction is not termed as Current Account Transaction:
(a) Payments due in connection with foreign trade, other current business, services, and short-
term banking and credit facilities in the ordinary course of business
(b) Payments due as interest on loans and as net income from investments
(c) Expenses in connection with foreign travel, education and medical care of parents, spouse and
children
(d) Changes in alteration of contingent liabilities outside India of persons resident in India

Answer Key:
1 2 3 4 5 6 7 8 9
d b a a c c c b d

THE FOREIGN EXCHANGE MANAGEMENT ACT, 1999 15.2

 DIRECT TAX MCQ'S

1. Ms. Sowmya has three farm buildings situated in the immediate vicinity of a rural agricultural land.
In the P.Y.2023-24, she earned `3 lakh from letting out her farm building 1 for storage of food
grains,`10 lakh from letting out her farm building 2 for storage of dairy products and ` 15 lakh from
letting out her farm building 3 for residential purposes of Mr. Sumanth, whose food grain produce is
stored in farm building 1. What is the amount of agricultural income exempt from income-tax?
a) Nil b) `3,00,000 c) `13,00,000 d) `18,00,000

2. The Gupta HUF in Maharashtra comprises of Mr. Harsh Gupta, his wife Mrs. Nidhi Gupta, his son
Mr. Deepak Gupta, his daughter-in-law Mrs. Deepti Gupta, his daughter Miss Preeti Gupta and his
unmarried brother Mr. Gautam Gupta. Which of the members of the HUF are eligible for co-parcenary
rights?
a) Only Mr. Harsh Gupta, Mr. Gautam Gupta and Mr. Deepak Gupta
b) Only Mr. Harsh Gupta, Mr. Gautam Gupta, Mr. Deepak Gupta and Miss Preeti Gupta
c) Only Mr. Harsh Gupta, Mr. Gautam Gupta, Mr. Deepak Gupta, Mrs. Nidhi Gupta and Mrs. Deepti Gupta
d) All the members are co-parceners

3. Which of the following is agriculture income ?

a) Income from breeding of livestock
b) Income from fisheries
c) Income from juice centre
d) Income derived from saplings or seedlings grown in a nursery

4. The rates of income-tax are mentioned in –

a) The Income-tax Act, 1961 only
b) The First Schedule to the Annual Finance Act
c) Both Income-tax Act, 1961 and the First Schedule to the Annual Finance Act
d) Both Income-tax Act, 1961 and Income-tax Rules, 1962

5. For A.Y. 2024-25, Mr. Hari, a resident Indian, earns income of `10 lakhs from sale of rubber
manufactured from latex obtained from rubber plants grown by him in India and`15 lakhs from sale
of rubber manufactured from latex obtained from rubber plants grown by him in Malaysia.
a) `3,50,000 b) `4,00,000 c) `8,75,000 d) `18,50,000

6. Mr. Raman, aged 64 years, was not able to provide satisfactory explanation to the Assessing Officer
for the investments of Rs. 7 lakhs not recorded in the books of accounts. What shall be the tax
payable by him on the value of such investments considered to be deemed income as per section 69?
a) `2,18,400 b) `55,000 c) `5,46,000 d) `54,600

7. Which of the following statements is/are true in respect of taxability of agricultural income under
the Income-tax Act, 1961? (i) Any income derived from saplings or seedlings grown in a nursery is
agricultural income exempt from tax u/s 10(1). (ii) 60% of dividend received from shares held in a tea
company is agricultural income exempt from tax u/s 10(1). (iii) While computing income tax liability
of an assessee aged 50 years, agricultural income is required to be added to total income only if net
agricultural income for the P.Y. exceeds Rs. 5,000 and the total income (including net agricultural
income) exceeds the basic exemption limit. (iv) While computing income tax liability of an assessee
aged 50 years, agricultural income is required to be added to total income only if net agricultural

1.1 GST IN INDIA-AN INTRODUCTION

 income for the P.Y. exceeds Rs. 5,000 and the total income (excluding net agricultural income) exceeds
the basic exemption limit.
a) (i) and (iii) b) (ii) and (iii) c) (i) and (iv) d) (i), (ii) and (iv)

8. For A.Y.2024-25, Mr. Rajesh, a resident Indian, earns income of Rs.12 lakhs from sale of coffee grown
and cured in India. His friend, Mr. Ganesh, a resident Indian, earns income of Rs. 25 lakhs from sale
of coffee grown, cured, roasted and grounded by him in India. What would be the business income
chargeable to tax in India of Mr. Rajesh and Mr. Ganesh?
a) Rs. 3,00,000 and Rs. 6,25,000, respectively
b) Rs. 3,00,000 and Rs. 10,00,000, respectively
c) Rs. 4,80,000 and Rs. 10,00,000, respectively
d) Rs. 9,00,000 and Rs. 15,00,000, respectively

9. Income derived from farm building situated in the immediate vicinity of an agricultural land (not
assessed to land revenue) would be treated as agricultural income if such land is situated in?
a) an area at a distance of 3 kms from the local limits of a municipality and has a population of
80,000 as per last census
b) an area within 1.5 kms from the local limits of a municipality and has a population of 12,000
as per last census
c) an area within 2 kms from the local limits of a municipality and has a population of 11,00,000
as per last census
d) an area within 8 kms from the local limits of a municipality and has a population of 10,50,000
as per last census

10. Mr. Nekinsaan, aged 43 years, provides the following income details for P.Y. 2023-24 as follows:
Particulars ` (in lakhs)
Capital Gains under section 112A 120 120
Capital Gains under section 111A 110 110
Other Income 520 520
What shall be the tax liability of Mr. Nekinsaan under optional tax regime as per normal provisions
of the Income-tax Act, 1961 for A.Y. 2024-25?
a) `260.06 lakhs b) `253.68 lakhs c) `256.52 lakhs d) `253.56 lakhs

11. Miss Nisha (45 years) is a non resident individual. For the A.Y.2024-25, she has following income:
Long-term capital gain on transfer of listed equity shares (STT has been paid on acquisition and
transfer of the said shares) - `1,80,000 Other income - `2,75,000 Calculate the tax liability of Miss
Nisha for A.Y. 2024-25 under default tax regime.
a) Nil b) `9,620 c) `5,720 d) `8,320

12. Mr. Ashutosh, aged 65 years and a resident in India, has a total income of `3,20,00,000, comprising
long term capital gain taxable under section 112 of `57,00,000, long term capital gain taxable
under section 112A of `65,00,000 and other income of `1,98,00,000. What would be his tax liability
for A.Y. 2024-25 under default tax regime.
a) `88,74,320 b) `89,19,170 c) `96,46,000 d) `94,60,880

13. Aashish earns the following income during the P.Y. 2023-24: Interest on U.K. Development Bonds
(1/4th being received in India): `4,00,000 Capital gain on sale of a building located in India but
GST IN INDIA-AN INTRODUCTION 1.2
 received in Holland: ` 6,00,000 If Aashish is a resident but not ordinarily resident in India, then what
will be amount of income chargeable to tax in India for A.Y. 2024-25?
a) `7,00,000 b) `10,00,000 c) ` 6,00,000 d) `1,00,000

14. Raman, a citizen of India, was employed in Hindustan Lever Ltd. He resigned on 27.09.2023. He
received a salary of` 40,000 p.m. from 1.4.2023 to 27.9.2023 from Hindustan Lever Ltd. Thereafter
he left for Dubai for the first time on 1.10.2023 and got salary of rupee equivalent of `80,000 p.m.
from 1.10.2023 to 31.3.2024 in Dubai. His salary for October to December 2023 was credited in his
Dubai bank account and the salary for January to March 2024 was credited in his Mumbai
account directly. He is liable to tax in respect of –
a) income received in India from Hindustan Lever Ltd.
b) income received in India and in Dubai
c) income received in India from Hindustan Lever Ltd. and income directly credited in India
d) income received in Dubai.

15. Determine residential status of Sundaram (HUF) which carries out its transactions in Malaysia. Its
affairs are partly controlled from India. The Karta of HUF, Mr. Sundaram who is from Chennai visits
India on 01.06.2023 and leaves for Malaysia on 10.02.2024. He has not visited India for the past 11
years.
a) Non-resident b) Resident but not ordinarily resident
c) Deemed resident d) Resident and ordinarily resident

16. Income from a business in Australia, controlled from Australia is taxable in case of
a) resident and ordinarily resident only
b) resident and ordinarily resident and resident but not ordinarily resident
c) non-resident
d) All the above

17. If Anirudh, a citizen of India, has stayed in India in the P.Y. 2023-24 for 181 days, and he is non-
resident in 9 out of 10 years immediately preceding the current previous year and he has stayed in
India for 365 days in all in the 4 years immediately preceding the current previous year and 420 days
in all in the 7 years immediately preceding the current previous year, his residential status for the A.Y.
2024-25 would be –
a) Resident and ordinarily resident b) Resident but not ordinarily resident
c) Non-resident d) Deemed resident but not ordinarily resident

18. Mr. Tejas, an Indian Citizen, left India permanently with his wife and two children, for extending his
retail trade business of toys in Canada in the year 2016. From Canada, he is managing his retail
business of toys in India. For the purpose of his Indian business, he visits India every year from 1st
September to 31st January. His business income is Rs. 23.50 lakhs and Rs. 18 lakhs from retail trade
business in Canada and in India, respectively for the F.Y. 2023-24. He has no other income during the
P.Y. 2023-24. Determine his residential status and income taxable in his hands for the A.Y. 2024-25.
a) Resident and ordinarily resident in India and income of Rs. 18 lakhs and Rs. 23.50 lakhs would
be taxable
b) Non-Resident and Rs. 18 lakhs from Indian retail trade business would only be taxable.

1.3 GST IN INDIA-AN INTRODUCTION

 c) Resident but not ordinarily Resident and Rs. 18 lakhs from Indian retail trade business would
only be taxable
d) Deemed resident and Rs. 18 lakhs from Indian retail trade business would only be taxable

19. Mr. Rajesh, aged 53 years, and his wife, Mrs. Sowmya, aged 50 years, are citizens of Country X.
They are living in Country X since birth. They are not liable to tax in Country X. Both of them have
keen interest in Indian Culture. Mr. Rajesh’s parents and grandparents were born in Country X. Mrs.
Sowmya visits India along with Mr. Rajesh for four months every year to be with her parents, who
were born in Delhi and have always lived in Delhi. During their stay in India, they organize Cultural
Programme in Delhi- NCR. Income of Mr. Rajesh and Mrs. Sowmya from the Indian sources for the P.Y.
2023-24 is Rs. 18 lakhs and Rs. 16 lakhs, respectively. What is the residential status of Mr. Rajesh
and Mrs. Sowmya for A.Y. 2024-25?
a) Both are resident and ordinarily resident in India
b) Both are non-resident in India
c) Mr. Rajesh is resident but not ordinarily resident in India and Mrs. Sowmya is non-resident
d) Mrs. Sowmya is resident but not ordinarily resident in India and Mr. Rajesh is resident and
ordinarily resident in India

20. Mr. Sumit is an Indian citizen and a member of the crew of an America bound Indian ship engaged
in carriage of freight in international traffic departing from Chennai on 25th April, 2023. From the
following details for the P.Y. 2023-24, what would be the residential status of Mr. Sumit for A.Y.
2024-25, assuming that his stay in India in the last 4 previous years preceding P.Y. 2023- 24 is
365 days and last seven previous years preceding P.Y. 2023-24 is 730 days? Date entered in the
Continuous Discharge Certificate in respect of joining the ship by Mr. Sumit: 25th April, 2023 Date
entered in the Continuous Discharge Certificate in respect of signing off the ship by Mr. Sumit: 24th
October, 2023. Mr. Sumit has been filing his income tax return in India as a resident for the preceding
2 previous years.
a) Resident and ordinarily resident b) Resident but not-ordinarily resident
c) Non-resident d) Deemed resident but not-ordinarily Resident

21. Mr. Square, an Indian citizen, currently resides in Dubai. He came to India on a visit and his total stay
in India during the F.Y. 2023-24 was 135 days. He is not liable to pay any tax in Dubai. Following is
his details of stay in India in the preceding previous years:
Financial Year Days of Stays in India
2022-23 100
2021-22 125
2020-21 106
2019-20 83
2018-19 78
2017-18 37
2016-17 40
What shall be his residential status for the P.Y. 2023- 24 if his total income (other than income from
foreign sources) is Rs. 10 lakhs?
a) Resident but not ordinary resident b) Resident and ordinary resident
c) Non-resident d) Deemed resident but not ordinarily resident

GST IN INDIA-AN INTRODUCTION 1.4

22. Mr. Sushant is a person of Indian origin, residing in Canada. During P.Y. 2023-24, he visited India on
several occasions and his period of stay, in total, amounted to 129 days during P.Y. 2023- 24 and
his period of stay in India during P.Y. 2022-23, P.Y.2021- 22, P.Y. 2020-21 and P.Y. 2019- 20 was 135
days, 115 days, 95 days
and 125 days, respectively. He earned the following incomes during the P.Y. 2023-24:
Source of Income Amount (Rs.)
Income received or deemed to be received in India 2,50,000
Income accruing or arising or which is deemed to accrue or arise in India 3,75,000
Income accruing or arising and received outside India from business controlled 5,50,000
from India
Income accruing or arising and received outside India from business controlled 6,50,000
outside India
What is the residential status of Mr. Sushant for A.Y. 2024-25 and his income liable to tax in India
during A.Y. 2024-25?
a) Non-Resident; Rs. 6,25,000 is liable to tax in India
b) Resident and ordinary resident; Rs.18,25,000 is liable to tax in India
c) Resident but not ordinarily resident; Rs. 11,75,000 is liable to tax in India
d) Non-Resident; Rs. 11,75,000 is liable to tax in India

23. Who among the following will qualify as non-resident for the P.Y. 2023-24? Mr. Bob, an Italian
dancer, came on visit to India to explore Indian dance on 15.09.2023 and left on 25.12.2023. For
past four years, he visited India for dance competition and stayed in India for 120 days each year.
Mr. Samrat born and settled in USA, visits India each year for 100 days to meet his parents and
grandparents, born in India in 1946, living in Delhi. His Indian income is Rs. 15,20,000 Mr. Joseph, an
American scientist, left India to his home country for fixed employment there. He stayed in India for
study and research in medicines from 01.01.2018 till 01.07.2023
a) Mr. Bob and Mr. Joseph b) Mr. Samrat
c) Mr. Bob, Mr. Samrat and Mr. Joseph d) None of the three
24. The HRA paid to an employee residing in Patna is exempt up to the lower of actual
HRA, excess of rent paid over 10% of salary and –
a) 30% of salary b) 40% of salary c) 50% of salary d) 60% of salary

25. Mr. Kashyap received basic salary of Rs. 20,000 p.m. from his employer. He also received children
education allowance of Rs. 3,000 for three children and transport allowance of Rs. 1,800 p.m. Assume
he exercises the option of shifting out of the default regime provided under section 115BAC(1A). The
amount of salary
chargeable to tax for P.Y. 2023-24 is –
a) Rs. 2,62,600 b) Rs. 2,12,600 c) Rs. 2,11,600 d) Rs. 2,12,200

26. Ganesh and Rajesh are co-owners of a self-occupied property. They own 50% share each. The
interest paid by each co-owner during the previous year 2023-24 on loan (taken for acquisition of
property during the year 2004) is Rs. 2,05,000. The amount of allowable deduction in respect of
each co-owner, if they have exercised the option of shifting out of the default regime provided under
section 115BAC(1A), is –
a) Rs. 2,05,000 b) Rs. 1,02,500 c) Rs. 2,00,000 d) Rs. 1,00,000

1.5 GST IN INDIA-AN INTRODUCTION

27. Mr. Hari received voluntary retirement compensation of Rs. 8,00,000 after 30 years 2 months of
service. He still has 5 years of service left. At the time of voluntary retirement, he was drawing
basic salary Rs. 15,000 p.m.; Dearness allowance (which forms part of pay) Rs. 3,000 p.m. Compute
his taxable voluntary retirement compensation, assuming that he does not claim any relief under
section 89 –
a) Rs. 8,00,000 b) Rs. 5,00,000 c) Rs. 3,00,000 d) Nil

28. Mr. Vikas received a gold ring worth Rs. 60,000 on the occasion of his daughter’s wedding from his
best friend Mr. Vishnu. Mr. Vishnu also gifted a gold chain to Kavya, daughter of Mr. Vikas, worth Rs.
80,000 on the said occasion. Would such gifts be taxable in the hands of Mr. Vikas and Ms. Kavya?
a) Yes, the gift of gold ring and gold chain is taxable in the hands of Mr. Vikas and Ms. Kavya,
respectively
b) Such gifts are not taxable in the hands of Mr. Vikas nor in the hands of Ms. Kavya
c) Value of gold ring is taxable in the hands of Mr. Vikas but value of gold chain is not taxable in
the hands of Ms. Kavya
d) Value of gold chain is taxable in the hands of Ms. Kavya but value of gold ring is not taxable
in the hands of Mr. Vikas

29. Mr. Kashyap has acquired a building from his friend on 10.10.2023 for Rs. 15,00,000. The stamp duty
value of the building on the date of purchase is Rs. 16,20,000. Income chargeable to tax in the hands
of Mr. Kashyap is
a) Rs. 70,000 b) Rs. 50,000 c) Nil d) Rs. 1, 20,000

30. For an assessee, who is a salaried employee who invests in equity shares, what is the benefit available
in respect of securities transaction tax paid by him on sale and acquisition of 100 listed shares of X
Ltd. which has been held by him for 14 months before sale?
a) Rebate under section 88E is allowable in respect of securities transaction tax paid
b) Securities transaction tax paid is treated as expenses of transfer and deducted from sale
consideration
c) Capital gains without deducting STT paid is taxable at a concessional rate of 10% on such
capital gains exceeding Rs. 1 lakh
d) Capital gains without deducting STT paid is taxable at concessional rate of 15%

31. Mr. Mayank has received a sum of Rs. 75,000 on 24.10.2023 from his friend on the occasion of his
marriage anniversary. What would be the taxability of the said sum in the hands of Mr. Mayank?
a) Entire Rs. 75,000 is chargeable to tax b) Entire Rs. 75,000 is exempt from tax
c) Only Rs. 25,000 is chargeable to tax d) Only 50% i.e., Rs. 37,500 is chargeable to tax

32. Mr. Raghav has three houses for self-occupation. What would be the tax treatment for A.Y.2024-25
in respect of income from house property?
a) One house, at the option of Mr. Raghav, would be treated as self-occupied. The other two
houses would be deemed to be let out
b) Two houses, at the option of Mr. Raghav, would be treated as self-occupied. The other house
would be deemed to be let out.
c) One house, at the option of Assessing Officer, would be treated as self-occupied. The other
two houses would be deemed to be let out.

GST IN INDIA-AN INTRODUCTION 1.6

 d) Two houses, at the option of Assessing Officer, would be treated as selfoccupied. The other
house would be deemed to be let out.

33. Mr. Ramesh, a citizen of India, is employed in the Indian embassy in Australia. He is a non-resident
for A.Y. 2024-25. He received salary and allowances in Australia from the Government of India for
the year ended 31.03.2024 for services rendered by him in Australia. In addition, he was allowed
perquisites by the Government. Which of the following statements are correct?
a) Salary, allowances and perquisites received outside India are not taxable in the hands of Mr.
Ramesh, since he is non-resident.
b) Salary, allowances and perquisites received outside India by Mr. Ramesh are taxable in India
since they are deemed to accrue or arise in India.
c) Salary received by Mr. Ramesh is taxable in India but allowances and perquisites are exempt.
d) Salary received by Mr. Ramesh is exempt in India but allowances and perquisites are taxable

34. Under section 54EC, capital gains on transfer of land or building or both are exempted if invested in
the bonds issued by NHAI & RECL or other notified bond –
a) within a period of 6 months after the date of such transfer
b) within a period of 6 months from the end of the relevant previous year
c) within a period of 6 months from the end of the previous year or the due date for filing the
return of income under section 139(1), whichever is earlier
d) At any time before the end of the relevant previous year

35. Mr. X, a retailer, acquired furniture on 10th May 2023 for Rs. 10,000 in cash and on 15th May
2023, for Rs. 15,000 and Rs. 20,000 by a bearer cheque and account payee cheque, respectively.
Depreciation allowable for A.Y. 2024-25 would be –
a) Rs. 2,000 b) Rs. 3,000 c) Rs. 3,500 d) Rs. 4,500

36. In case of a Member of Parliament –

a) Daily allowance is exempt but constituency allowance received as per applicable Rules is
taxable.
b) Constituency allowance received as per applicable Rules is exempt but daily allowance is
taxable.
c) Both daily allowance and constituency allowance received as per applicable Rules are taxable
d) Both daily allowance and constituency allowance received as per applicable Rules are exempt

37. For the purpose of determining the perquisite value of loan at concessional rate given to the
employee, the lending rate of State Bank of India as on __________ is required;
a) 1st day of the relevant previous year b) Last day of the relevant previous year
c) the day the loan is given d) 1st day of the relevant assessment year

38. An electricity company charging depreciation on straight line method on each asset separately, sells
one of its machinery in April, 2023 at `1,20,000. The WDV of the machinery at the beginning of the
year i.e., on 1st April, 2023 is `1,35,000. No new machinery was purchased during the year. The
shortfall of `15,000 would be –
a) Terminal depreciation
b) Normal depreciation

1.7 GST IN INDIA-AN INTRODUCTION

 c) Always a short-term capital loss
d) Short-term capital loss or long-term capital loss, depending upon the period of holding

39. Mr. X acquires an asset in the year 2017-18 for the use for scientific research for Rs.2,75,000. He
claimed deduction under section 35(1)(iv) in the previous year 2017-18. The asset was brought into
use for the business of Mr. X in the P.Y.2023-24, after the research was completed. The actual cost
of the asset to be included in the block of assets is –
a) Nil
b) Market value of the asset on the date of transfer to business
c) Rs. 2,75,000 less notional depreciation under section 32 upto the date of transfer
d) Actual cost of the asset i.e., Rs. 2,75,000

40. Unexhausted basic exemption limit of a resident individual can be adjusted againsta
a) only LTCG taxable @20% u/s 112 b) only STCG taxable @15% u/s 111A
c) both (a) and (b) d) casual income taxable @30% u/s 115BB

41. Anirudh stays in New Delhi. His basic salary is Rs. 10,000 p.m., D.A. (60% of which forms part of pay)
is Rs. 6,000 p.m., HRA is Rs. 5,000 p.m. and he is entitled to a commission of 1% on the turnover
achieved by him. Anirudh pays a rent of Rs. 5,500 p.m. The turnover achieved by him during the
current year is Rs. 12 lakhs. The amount of HRA exempt under section 10(13A), if he exercises the
option of shifting out of the default regime provided under section 115BAC(1A), is –
a) Rs. 48,480 b) Rs. 45,600 c) Rs. 49,680 d) Rs. 46,800

42. Anand is provided with furniture to the value of Rs. 70,000 along with house from 1st April, 2023.
The actual hire charges paid by his employer for hire of furniture is Rs. 5,000 p.a. The value of
furniture to be included along with value of unfurnished house for A.Y.2024-25 is
a) Rs. 5,000 b) Rs. 7,000 c) Rs. 10,000 d) Rs. 14,000

43. Vidya received Rs. 90,000 in May, 2023 towards recovery of unrealised rent, which was deducted
from actual rent during the P.Y. 2021-22 for determining annual value. Legal expense incurred in
relation to unrealized rent is Rs. 20,000. The amount taxable under section 25A for A.Y. 2024-25
would be –
a) Rs. 70,000 b) Rs. 63,000 c) Rs. 90,000 d) Rs. 49,000

44. Mr. A, an eligible assessee, following mercantile system of accounting, carrying on eligible business
u/s 44AD provides the following details:
- Total turnover for the F.Y.2023-24 is Rs. 130 lakh
- Out of the above:
Rs. 25 lakh received by A/c payee cheque during the F.Y.2023-24;
Rs. 50 lakh received by cash during the F.Y.2023-24;
Rs. 25 lakh received by A/c payee bank draft before the due date of filing of return;
Rs. 30 lakh not received till due date of filing of return.
What shall be the amount of deemed profits of Mr. A under section 44AD(1) for A.Y. 2024-25?
a) Rs. 10.4 lakh b) Rs. 7.0 lakh c) Rs. 5.5 lakh d) Rs. 9.4 lakh

GST IN INDIA-AN INTRODUCTION 1.8

45. Mr. X, aged 61 years, earned dividend of Rs. 12,00,000 from ABC Ltd. in P.Y. 2023- 24. Interest on
loan taken for the purpose of investment in ABC Ltd., is Rs. 3,00,000. Income includible in the hands
of Mr. X for P.Y. 2023-24 would be -
a) Rs. 12,00,000 b) Rs. 9,60,000 c) Rs. 9,00,000 d) Rs. 2,00,000

46. Mr. Harry and Mr. Sujoy, resident and Indian citizens, have been appointed as senior officials of
County A embassy and County B embassy, respectively, in India in October, 2023. Mr. Harry and Mr.
Sujoy are subjects of Country A and County B, respectively, and are not engaged in any other business
or profession in India. The remuneration received by Indian officials working in Indian embassy in
County A is exempt but in County B is taxable. The tax treatment of remuneration received by Mr.
Harry and Mr. Sujoy from embassies of Country A and Country B, respectively, in India for the P.Y.
2023-24 is –
a) Exempt from income-tax under section 10
b) Taxable under the Income-tax Act, 1961
c) Remuneration received by Mr. Harry is exempt but remuneration received by Mr. Sujoy is taxable
d) Remuneration received by Mr. Sujoy is exempt but remuneration received by Mr. Harry is taxable

47. The W.D.V. of a block (Plant and Machinery, rate of depreciation 15%) as on 1.4.2023 is Rs. 3,20,000. A
second-hand machinery costing Rs. 50,000 was acquired on 1.9.2023 through account payee cheque
but put to use on 1.11.2023. During January 2024, part of this block was sold for Rs. 2,00,000. The
depreciation for A.Y.2024-25 would be –
a) Rs. 21,750 b) Rs. 25,500 c) Rs. 21,125 d) Rs. 12,750

48. Unexhausted basic exemption limit of a non-resident individual can be adjusted against –
a) only LTCG taxable @20% u/s 112 b) only STCG taxable @15% u/s 111A
c) both (a) and (b) d) neither (a) nor (b)

49. Mr. Virat has a house property in Chennai which he let out to Mr. Sumit. For acquisition of this house,
Mr. Virat has taken a loan of Rs. 30,00,000 @10% p.a. on 1-4-2017. He has further taken a loan of
Rs. 5 lakhs @12% p.a. on 1.7.2023 towards repairs of the house. He has not repaid any amount of
loan so far. The
amount of interest deduction u/s 24(b) to Mr. Virat for A.Y. 2024-25 is –
a) Rs. 2,00,000 b) Rs. 2,30,000 c) Rs. 3,45,000 d) Rs. 3,60,000

50. Mr. Jagat is an employee in accounts department of Bharat Ltd., a cellular company operating in
the regions of eastern India. It is engaged in manufacturing of cellular devices. During F.Y. 2023-
24, following transactions were undertaken by Mr. Jagat: (i) He attended a seminar on “Perquisite
Valuation”. Seminar fees of Rs. 12,500 was paid by Bharat Ltd. (ii) Tuition fees of Mr. Himanshu
(son of Mr. Jagat) paid to private coaching classes (not having any tie-up with Bharat Ltd.) was
reimbursed by Bharat Ltd. Amount of fees was Rs. 25,000. (iii) Ms. Sapna (daughter of Mr. Jagat)
studies in Bharat Public School (owned and maintained by Bharat Ltd.). Tuition fees paid for Ms.
Sapna was Rs. 750 per month by Mr. Jagat. Cost of education in similar institution is Rs. 5,250 per
month. What shall be the amount which is chargeable to tax under the head “Salaries” in hands of
Mr. Jagat for A.Y. 2024-25?
a) Rs. 25,000 b) Rs. 37,500 c) Rs. 66,500 d) Rs. 79,000

1.9 GST IN INDIA-AN INTRODUCTION

51. XYZ Pvt. Ltd. provides a car (below 1.6 ltr cc) along with a driver to Mr. Sanjay, employee of XYZ Pvt.
Ltd., partly for official and partly for personal purpose. The expenses incurred by the company are:
Running and maintenance expenses - Rs. 32,000 and driver’s salary - Rs. 36,000. The taxable value
of car facility for A.Y. 2024-25 will be –
a) Rs. 21,600 b) Rs. 10,800 c) Rs. 32,400 d) Rs. 39,600

52. Mr. Vikas transferred 600 unlisted shares of XYZ (P) Ltd. to ABC (P) Ltd. on 15.12.2023 for Rs. 3,50,000
when its fair market value was Rs. 5,15,000. The indexed cost of acquisition of shares for Mr. Vikas
was computed at Rs. 4,25,000. Determine the income chargeable to tax in the hands of Mr. Vikas and
ABC (P) Ltd. in respect of the above transaction.
a) Rs. 90,000 chargeable to tax in the hands of Mr. Vikas as long-term capital gains and nothing
is taxable in the hands of ABC (P) Ltd.
b) Rs. 75,000 chargeable to tax in the hands of Mr. Vikas as long-term capital gains and nothing
is taxable in the hands of ABC (P) Ltd.
c) Rs. 90,000 chargeable to tax in the hands of Mr. Vikas as long-term capital gains and Rs.
1,65,000 is taxable under the head “Income from other sources” in the hands of ABC (P) Ltd.
d) Rs. 75,000 chargeable to tax in the hands of Mr. Vikas as long-term capital gains and
Rs.1,65,000 is taxable under the head “Income from other sources” in the hands of ABC (P) Ltd.

53. Mr. Vikas took a loan of Rs. 50,00,000 @10% p.a. on 1-4-2021 for the construction of residential
house for self occupation. The construction of the house began in June, 2021 and was completed on
30-6-2023. He has not repaid any amount of loan so far. The amount of interest deduction u/s 24(b)
for A.Y. 2024-25, if he has exercised the option of shifting out of the default regime provided under
section 115BAC(1A), is –
a) Rs. 1,50,000 b) Rs. 1,80,000 c) Rs. 2,00,000 d) Rs. 2,10,000

54. K is a working partner in a firm on behalf of his HUF and the HUF has contributed Rs. 3,00,000 as
its capital contribution. Apart from this, K has given a loan of Rs. 50,000 to the firm in his individual
capacity. The firm pays interest as per market rate of 15% per annum on capital as well as loan.
Compute the amount of interest that shall be allowed to the firm while calculating its business
income assuming that the interest is authorized by the partnership deed.
a) Rs. 42,000 b) Rs. 51,000 c) Rs. 52,500 d) Rs. 43,500

55. Mr. A purchased equity shares of a listed company on 01.05.2023 through Bombay Stock Exchange.
He will sell the said shares after holding them for 18 months on BSE. Mr. A is predicting that he will
make a profit of Rs. 1,20,000 by selling the equity shares and further, is of the view that the said
profit shall be exempt from income-tax. Determine whether Mr. A’s view is correct in the light of the
tax implications that shall arise in his hands in the year of transfer of the said equity shares.
a) Mr. A’s view is correct. The resultant gain would be a long-term capital gain arising from sale
of STT paid listed equity shares, which is fully exempt from tax.
b) Mr. A’s view is incorrect. The resultant gain would be a long-term capital gain, chargeable to
tax in his hands at the rate of 20%
c) Mr. A’s view is incorrect. The resultant gain would be a short term capital gain, chargeable to
tax in his hands at the rate of 15%.
d) Mr. A’s view is partially correct. The resultant gain would be a long term capital gain, exempt
to the extent of Rs. 1,00,000. The long term capital gain in excess of Rs. 1,00,000 would be
taxable @10%.
GST IN INDIA-AN INTRODUCTION 1.10
56. A building was acquired on 1.4.1995 for Rs. 20,00,000 and sold for Rs. 80,00,000 on 01.06.2023.
The fair market value of the building on 1.4.2001 was Rs. 25,00,000. Its stamp duty value on the
same date was Rs. 22,00,000. Determine the capital gains on sale of such building for the A.Y. 2024-
25? CII for F.Y. 2001-02: 100; F.Y. 2023-24:
a) Rs. 3,44,000 b) Rs. 10,40,000 c) Rs. 60,00,000 d) Rs. 7,00,000

57. Mr. Raja, a proprietor, commenced operation of the business of a new three star hotel in Mumbai on
1.7.2023. He had made a total investment of Rs. 7.58 crores till 30.6.2023. Out of total investment
of Rs. 7.58 crores, Rs. 1.58 crores was used for purchase of land in P.Y.2022- 23. Rs. 4.70 crores was
used for constructing Hotel and balance of Rs. 1.30 crore used for purchasing the furniture in P.Y.
2023-24. He wants to avail the benefit of deduction under section 35AD as he satisfied with all the
conditions prescribed u/s 35AD and has exercised the option of shifting out of the default regime
provided under section 115BAC(1A). His profit and gains from the business for P.Y. 2023-24 is Rs. 50
lakhs before claiming deduction u/s 35AD. He wants to file his income-tax return on 12.12.2024.
How much deduction Mr. Raja
can claim for A.Y. 2024-25 and the losses which he can carry forward to A.Y. 2025-26?
a) He can claim the deduction of Rs. 7.58 crores from his business income but he would not be
able to carry forward the business loss of Rs. 7.08 crores
b) He can claim the deduction of Rs. 6.00 crores from his business income and can carry forward
the business loss of Rs. 5.50
c) He can claim the deduction of Rs. 6.00 crores from his business income but cannot carry
forward the business loss of Rs. 5.50
d) He can claim the deduction of Rs. 7.58 crores from his business income and can carry forward
the business loss of Rs. 7.08 crores

58. Mr. A (aged 45 years) sold an agricultural land for Rs. 52 lakhs on 04.10.2023 acquired at a cost of Rs.
49.25 lakhs on 13.09.2022 situated at 7 kms from the jurisdiction of municipality having population
of 4,00,000 and also sold another agricultural land for Rs. 53 lakhs on 12.12.2023 acquired at a
cost of Rs. 46 lakhs on 15.02.2022 situated at 1.5 kms from the jurisdiction of municipality having
population of 12,000. What would be the amount of capital gain chargeable to tax in the hands of
Mr. A for the A.Y. 2024-25? CII for F.Y. 2021-22: 317; 2022-23: 331; 2023-24:
a) Short-term capital gain of `9.75 lakhs b) Short-term capital gain of `7 lakhs
c) Long-term capital gain of `2,72,212 d) Long-term capital gain of `2,50,158

59. Mr. Vishal and Mr. Guha sold their residential house property in Pune for Rs. 3 crore and Rs. 4 crore,
respectively, in January, 2024. The house property was purchased by them 25 months back. The
indexed cost of acquisition is Rs. 1 crore and Rs. 1.75 crore, respectively. Mr. Vishal purchased two
residential flats, one in Delhi and one in Agra for Rs. 70 lakhs and Rs. 80 lakhs, respectively, in April,
2024. On the same date, Mr. Guha also purchased two residential flats, one in Mumbai and the other
in Pune, for Rs. 80 lakhs and Rs. 75 lakhs, respectively. Both of them invested Rs. 30 lakhs in bonds
of NHAI in March, 2024 and Rs. 30 lakhs in bonds of RECL in April, 2024. What is the income taxable
under the head “Capital Gains” for A.Y.2024-25 in the hands of Mr. Vishal and Mr. Guha?
a) Rs. 70 lakhs and Rs. 95 lakhs, respectively
b) Rs. 60 lakhs and Rs. 85 lakhs, respectively
c) Nil and Rs. 95 lakhs, respectively
d) Nil and Rs. 20 lakhs, respectively

1.11 GST IN INDIA-AN INTRODUCTION

60. In P.Y. 2023-204, Mr. A has transferred the following assets:
Asset transferred Full Value of Indexed Cost of Transfer Date
Consideration (Rs.) Acquisition (Rs.)
Residential house 8 crores 6 crores 25.11.2023
property
Jewellery 3 crores 2 crores 05.01.2024
Mr. A bought a new residential house property on 01.04.2022 for Rs. 1 crore and on 28.02.2024
deposited Rs. 3 crores in a capital gains deposit account scheme. On 30.07.2024, Mr. A has withdrawn
Rs. 3 crores from capital gains deposit account and acquired a residential house property worth Rs.
2.5 crore. Mr. A filed his return of income on 31.7.2024 for A.Y. 2024-25. What would be the capital
gains in the hands of Mr. A for A.Y. 2024-25, if the expenses in connection with transfer of jewellery
were Rs. 2,00,000?
a) Rs. 80,50,000 b) Rs. 81,55,705 c) Rs. 98,00,000 d) Rs. 48,00,000

61. Mr. Ram, an Indian resident, purchased a residential house property at Gwalior on 28.05.1999
for Rs. 28.5 lakhs. The fair market value and the stamp duty value of such house property as on
1.4.2001 was Rs. 33.5 lakhs and Rs. 32.4 lakhs, respectively. On 05.02.2012, Mr. Ram entered into
an agreement with Mr. Byomkesh for sale of such property for Rs. 74 lakhs and received an amount
of Rs. 3.9 lakhs as advance.However, as Mr. Byomkesh did not pay the balance amount, Mr. Ram
forfeited the advance. What would be the indexed cost of acquisition of Mr. Ram if he sells the
property in F.Y. 2023-24? Cost Inflation Index for F.Y. 2001-02: 100; F.Y. 2023-24:
a) Rs. 1,16,58,000 b) Rs. 1,12,75,200 c) Rs. 1,03,00,800 d) Rs. 99,18,000

62. Mr. Kumar, engaged in wholesale business of clothes and speculative business, discontinued its
operations on 19.10.2023 and 30.09.2023, respectively. The cloth business loss upto 19.10.2023
for P.Y. 2023-24 is Rs. 8,000 and speculative business loss upto 30.09.2023 for P.Y. 2023-24 was
Rs. 40,000. Out of total bad debts of Rs. 1,00,000 that were claimed by Mr. Kumar in respect of a
particular debtor, Rs. 60,000 was allowed by the Assessing Officer in P.Y. 2022-23. On 29.01.2024,
Mr. Kumar received a sum of Rs. 68,000 from the debtor in full and final settlement of cloth business.
How much amount would be taxable in the hands of Mr. Kumar for A.Y. 2024-25?
a) Rs. 28,000 b) Rs. 20,000 c) Rs. 60,000 d) Rs. 68,000

63. Mr. Karan completed his MBA in April 2023 and joined XYZ Ltd from 01.05.2023. His basic salary
is Rs. 2,25,000 p.m. He is paid 12% of basic salary as D.A forming part of retirement benefits. He
contributed 11% of his pay and D.A. towards recognized provident fund and the company contributes
the same amount. Accumulated interest on provident fund as on 31.3.2024 is Rs. 49,325. What
would be the income chargeable to tax under the head “Salaries” of Mr. Karan for the A.Y. 2024-25,
if he exercises the option of shifting out of the default regime provided under section 115BAC(1A)?
a) Rs. 27,26,442 b) Rs. 27,30,884 c) Rs. 27,22,000 d) Rs. 27,71,325

64. Mr. Shahid, a wholesale supplier of dyes, provides you with the details of the following cash payments
made throughout the year - 12.06.2023: loan repayment of Rs. 27,000 taken for business purpose
from his friend Kunal. The repayment also includes interest of Rs. 5,000. 19.08.2023: Portable dye
machinery purchased for Rs. 15,000. The payment was made in cash in three weekly instalments.
26.01.2024: Payment of Rs. 10,000 made to electrician due to unforeseen electric circuit at shop.
28.02.2024: Purchases made from unregistered dealer for Rs. 13,500. What will be disallowance

GST IN INDIA-AN INTRODUCTION 1.12

 under 40A(3), if any, if Mr. Shahid declares his income as per the provisions of section 44AD?
a) Rs. 18,500 b) Rs. 28,500 c) Rs. 13,500 d) Nil

65. Mr. C aged 35 years is a working partner in M/s BCD, a partnership firm, with equal profit sharing
ratio. During the P.Y. 2023-24, the firm has paid remuneration to Mr. B, Mr. C and Mr. D, being the
working partners of the firm, of Rs. 2,00,000 each. The firm has paid interest on capital of Rs.
1,20,000 in total to all the three partners and the same is within the prescribed limit of 12%. The firm
had a loss of Rs. 1,12,000 after debiting remuneration and interest on capital. Note - Remuneration
and interest on capital is authorized by the partnership deed. You, being the CA of Mr. C, are in the
process of computing his total income. What would be his taxable remuneration from the firm?
a) Rs. 2,00,000 b) Rs. 1,51,600 c) Rs. 1,27,600 d) Rs. 1,50,000

66. On 20.10.2023, Pihu (minor child) gets a gift of Rs. 20,00,000 from her father’s friend. On the same
day, the amount is deposited as fixed deposit in Pihu’s bank account. On the said deposit, interest of
Rs. 13,000 was earned during the P.Y. 2023-24. In whose hands the income of Pihu shall be taxable?
Also, compute the
amount of income that shall be taxable under default regime under section 115BAC.
a) Income of Rs. 20,11,500 shall be taxable in the hands of Pihu’s father
b) Income of Rs. 20,13,000 shall be taxable in the hands of Pihu’s father
c) Income of Rs. 20,11,500 shall be taxable in the hands of Pihu’s father or mother, whose
income before this clubbing is higher
d) Income of Rs. 20,13,000 shall be taxable in the hands of Pihu’s father or mother, whose
income before this clubbing is higher

67. Mr. Aarav gifted a house property valued at Rs. 50 lakhs to his wife, Geetha, who in turn has gifted
the same to her daughter-in-law Deepa. The house was let out at Rs. 20,000 per month throughout
the P.Y.2023-24. Compute income from house property for A.Y.2024-25. In whose hands is the income
from house property chargeable to tax?
a) Rs. 2,40,000 in the hands of Mr. Aarav b) Rs. 1,68,000 in the hands of Mr. Aarav
c) Rs. 1,68,000 in the hands of Geetha d) Rs. 1,68,000 in the hands of Deepa

68. Mr. Arvind gifted a house property to his wife, Mrs. Meena and a flat to his daughter in law, Mrs.
Seetha. Both the properties were let out. Which of the following statements is correct?
a) Income from both properties is to be included in the hands of Mr. Arvind by virtue of section 64
b) Income from property gifted to wife alone is to be included in Mr. Arvind’s hands by virtue of section 64
c) Mr. Arvind is the deemed owner of house property gifted to Mrs. Meena and Mrs. Seetha
d) Mr. Arvind is the deemed owner of property gifted to Mrs. Meena. Income from property gifted
to Mrs. Seetha would be included in his hands by virtue of section 64

69. Mr. A, a member of his father, Mr. C’s HUF, converts his individual property into property of the HUF.
If the converted property is subsequently partitioned among the members of the HUF, the income
derived from such converted property as is received by Mrs. A will be taxable –
a) as the income of Mr. C b) as the income of Mrs. A
c) as the income of the HUF d) as the income of Mr. A

1.13 GST IN INDIA-AN INTRODUCTION

70. Mr. Vishal started a proprietary business on 01.04.2022 with a capital of Rs. 5,00,000. He incurred
a loss of Rs. 1,00,000 during the year 2022-23. To overcome the financial position, his wife Mrs.
Kamini, a Chartered Accountant, gave a gift of Rs. 4,00,000 on 01.04.2023, which was immediately
invested in the business by Mr. Vishal. He earned a profit of Rs. 2,00,000 during the year 2023-24.
What is the amount to be clubbed in the hands of Mrs. Kamini for the Assessment Year 2024-25?
a) Rs. 88,888 b) Rs. 1,00,000 c) Rs. 2,00,000 d) Nil

71. Mrs. Shivani, wife of Mr. Anurag, is a partner in a firm. Her capital contribution is Rs. 5 lakhs to the
firm as on 1.4.2023 which includes Rs. 3.5 lakhs contributed out of gift received from Anurag. The
firm paid interest on capital of Rs. 50,000 and share of profit of Rs. 60,000 during the F.Y.2023-24.
The entire interest has been allowed as deduction in the hands of the firm. Which of the following
statements is correct?
a) Share of profit is exempt but interest on capital is taxable in the hands of Mrs. Shivani
b) Share of profit is exempt but interest of Rs. 39,286 is includible in the income of Mr. Anurag and
interest of Rs. 10,714 is includible in the income of Mrs. Shivani.
c) Share of profit is exempt but interest of Rs. 35,000 is includible in the income of Mr. Anurag and
interest of Rs. 15,000 is includible in the income of Mrs. Shivani
d) Share of profit to the extent of Rs. 42,000 and interest on capital to the extent of Rs. 35,000 is
includible in the hands of Mr. Anurag

72. Mrs. Bhawna, wife of Mr. Sonu, is a partner in a firm. Her capital contribution of Rs. 10 lakhs to the
firm as on 31.3.2023 included Rs. 6 lakhs contributed out of gift received from Sonu. On 1.4.2023,
she further invested Rs. 2 lakh out of gift received from Sonu. The firm paid interest on capital of
Rs. 1,20,000 and share of profit of Rs. 1,00,000 during the F.Y.2023- 24. The entire interest has been
allowed as deduction in the hands of the firm. Which of the following statements is correct?
a) Share of profit is exempt but interest on capital is taxable in the hands of Mrs. Bhawna
b) Share of profit is exempt but interest of Rs. 80,000 is includible in the income of Mr. Sonu and
interest of Rs. 40,000 is includible in the income of Mrs. Bhawna
c) Share of profit is exempt but interest of Rs. 72,000 is includible in the income of Mr. Sonu and
interest of Rs. 48,000 is includible in the income of Mrs. Bhawna
d) Share of profit to the extent of Rs. 60,000 and interest on capital to the extent of Rs. 72,000 is
includible in the hands of Mr. Sonu

73. Ram owns 500, 15% debentures of R Industries Ltd. of Rs. 500 each. Annual interest of Rs. 37,500
was payable on these debentures for P.Y. 2023-24. He transfers interest income to his friend Shyam,
without transferring the ownership of these debentures. While filing return of income for A.Y. 2024-
25, Shyam showed Rs. 37,500 as his income from debentures. As tax advisor of Shyam, do you agree
with the tax treatment done by Shyam in his return of income?
a) Yes, since interest income was transferred to Shyam, therefore, after transfer, it becomes his
income.
b) No, since Ram has not transferred debentures to Shyam, interest income on the debentures is
not taxable income of Shyam. It would be included in the hands of Ram.
c) Yes, if debentures are not transferred, interest income on debentures can be declared by
anyone, Ram or Shyam, as taxable income depending upon their discretion
d) No, since Shyam should have shown the income as interest income received from Mr. Ram and
not as interest income earned on debentures

GST IN INDIA-AN INTRODUCTION 1.14

74. Mr. Raj makes a gift of Rs. 25,000 to his wife, Mrs. Rama, on 27.03.2023. Mrs. Rama, on 1.4.2023,
invests Rs. 75,000 (Rs. 25,000 out of gift and Rs. 50,000 of her own) in a partnership firm as capital
which is her total capital contribution in the firm. During the year ended 31.03.2024 she earns an
interest of Rs.12,000 and salary of Rs. 1,20,000 from the firm, both of which are approved by the
partnership deed. What amount shall form part of total income of Mr. Raj for the previous year
2023-24?
a) Rs. 3,000 as interest on capital from firm
b) Rs. 4,000 as interest on capital from firm
c) Rs. 3,000 as interest on capital from firm and Rs. 40,000 as salary from firm
d) Rs. 4,000 as interest on capital from firm and Rs. 40,000 as salary from firm

75. Pankaj gifted an amount of Rs.3,00,000 to his wife, Pinky and Rs. 2,00,000 to his daughter, Rinky
aged 20 years, on 1st April 2020. Both Pinky and Rinky invested the amounts on the same date in
Government of India 11% Taxable Bonds. The interest accrues yearly and is reinvested in the same
bonds. Determine what will be the amount taxable in hands of Pinky for A.Y.2024-25.
a) Rs. 4,473 b) Rs. 12,132 c) Rs. 33,000 d) Rs. 36,630

76. Brought forward loss from house property of Rs. 3,10,000 of A.Y. 2023-24 is allowed to be set-off
against income from house property of A.Y. 2024-25 of Rs. 5,00,000 to the extent of –
a) Rs. 2,00,000 b) Rs. 3,10,000 c) Rs. 2,50,000 d) Rs. 1,00,000

77. A Ltd. has unabsorbed depreciation of Rs. 4,50,000 for the P.Y.2023-24. This can be carried forward –
a) for a maximum period of 8 years and set off against business income.
b) indefinitely and set-off against business income.
c) indefinitely and set-off against any head of income
d) indefinitely and set-off against any head of income except salary.

78. During the A.Y.2023-24, Mr. A, exercising the option of shifting out of the default tax regime provided
under section 115BAC(1A), has a loss of Rs. 8 lakhs under the head “Income from house property”
which could not be set off against any other head of income as per the provisions of section 71. The
due date for filing return of income u/s 139(1) in case of Mr. A has already expired and Mr. A forgot
to file his return of income within the said due date. However, Mr. A filed his belated return of income
for A.Y.2023-24. Now, while filing return of income for A.Y.2024-25, Mr. A wishes to set off the said
loss against income from house property for the P.Y. 2023-24. His income from house property
(computed) for the P.Y. 2023-24 is ` 5 lakhs and interest on bank fixed deposits is `1 lakh. Determine
whether Mr. A can claim the said set off
a) No, Mr. A cannot claim set off of loss of Rs. 8 lakhs during A.Y. 2024-25 as he failed to file his
return of income u/s 139(1) for A.Y. 2023-24.
b) Yes, Mr. A can claim set off of loss of Rs. 2 lakhs, out of Rs. 8 lakhs, from his income from house
property during A.Y. 2024-25 and the balance loss of Rs. 6 lakhs has to be carried forward to
A.Y.2025-26.
c) Yes, Mr. A can claim set off of loss of Rs. 2 lakhs, out of Rs. 8 lakhs, from his income from any
head during A.Y. 2024-25 and the balance loss of Rs. 6 lakhs has to be carried forward to
A.Y.2025-26.
d) Yes, Mr. A can claim set off of loss of Rs. 5 lakhs during A.Y. 2024-25 from his income of Rs.
5 lakhs from house property and the balance loss of Rs. 3 lakhs has to be carried forward to
A.Y.2025-26
1.15 GST IN INDIA-AN INTRODUCTION
79. According to section 80, no loss which has not been determined in pursuance of a return filed in
accordance with the provisions of section 139(3), shall be carried forward. The exceptions to this are–
a) Loss from specified business under section 73A
b) Loss under the head “Capital Gains” and unabsorbed depreciation carried forward under
section 32(2)
c) Loss from house property and unabsorbed depreciation carried forward under section 32(2)
d) Loss from speculation business under section 73

80. Mr. Ravi incurred loss of Rs. 4 lakh in the P.Y.2023-24 in leather business. Against which of the
following incomes earned during the same year, can he set-off such loss?
(i) Profit of Rs. 1 lakh from apparel business
(ii) Long-term capital gains of
Rs. 2 lakhs on sale of jewellery (iii) Salary income of Rs. 1 lakh
a) First from (ii) and thereafter from (i); the remaining loss has to be carried forward.
b) First from (i) and thereafter from (ii) and (iii)
c) First from (i) and thereafter from (iii); the remaining loss has to be carried forward
d) First from (i) and thereafter from (ii); the remaining loss has to be carried forward

81. Mr. Rohan incurred loss of Rs. 3 lakh in the P.Y. 2023-24 in retail trade business. Against which of the
following income during the same year, can he set-off such loss?
a) profit of Rs. 1 lakh from wholesale cloth business
b) long-term capital gains of Rs. 1.50 lakhs on sale of land
c) speculative business income of Rs. 40,000
d) all of the above

82. Mr. A incurred short-term capital loss of Rs. 10,000 on sale of shares through the National Stock
Exchange - Such loss –
a) can be set-off only against short-term capital gains.
b) can be set-off against both short-term capital gains and long-term capital gains
c) can be set-off against any head of income
d) not allowed to be set-off

83. Virat runs a business of manufacturing of shoes since the P.Y. 2021-22. During the P.Y. 2021-22 and
P.Y. 2022-23, Virat had incurred business losses. He also hasunabsorbed depreciation. For P.Y. 2023-
24, he earned business profit (computed) of Rs. 3 lakhs. Considering he may/may not have sufficient
business income to set off his earlier losses and unabsorbed depreciation, which of the following
order of set off shall be considered: (He does not have income from any other source)
a) First adjustment for loss of P.Y. 2021-22, then loss for P.Y. 2022-23 and then unabsorbed
depreciation.
b) First adjustment for loss of P.Y. 2022-23, then loss for P.Y. 2021-22 and then unabsorbed
depreciation
c) First adjustment for unabsorbed depreciation, then loss of P.Y. 2022-23 and then loss for P.Y. 2021-22.
d) First adjustment for unabsorbed depreciation, then loss of P.Y. 2021-22 and then loss for P.Y. 2022-23.

84. During the A.Y. 2024-25, Mr. Kabir has a loss of Rs. 6 lakhs under the head “Income from
house property”, loss of Rs. 5 lakhs from business of profession and income of Rs. 3 lakhs from

GST IN INDIA-AN INTRODUCTION 1.16

 long term capital gains. He filed his return of income for the A.Y. 2024-25 on 31.12.2024.
Determine the total income of Mr. Kabir for A.Y. 2024-25 assuming that he has exercised
the option of shifting out of the default regime provided under section 115BAC(1A) and
the amount of loss which can be carried forward in a manner most beneficial to him?
a) Total income Nil; loss of Rs. 4,00,000 from house property and loss of Rs. 4,00,000 from
business or profession.
b) Total income Rs. 1,00,000; loss of Rs. 4,00,000 from house property.
c) Total income Nil; No loss is allowed to be carried forward.
d) Total income Nil; loss of Rs. 6,00,000 from house property

85. Mr. Arpan (aged 35 years) submits the following particulars for the purpose of computing his total
income:
Particulars ₹
Income from salary (computed) 4,00,000
Loss from let-out house property (-) 2,20,000
Brought forward loss from let-out house property for the A.Y. 2023-24 (-)2,30,000
Business loss (-)1,00,000
Bank interest (FD) received 80,000
Compute the total income of Mr. Arpan for the A.Y.2024-25 and the amount of loss that can be
carried forward for the subsequent assessment year if he pays tax under section 115BAC?
a) Total income Rs. 2,00,000 and loss from house property of Rs. 2,50,000 and business loss of
Rs. 20,000 to be carried forward to subsequent assessment year.
b) Total income Rs. 1,60,000 and loss from house property of Rs. 2,30,000 to be carried forward
to subsequent assessment year.
c) Total income Rs. 4,00,000 and loss from house property of Rs. 4,50,000 and business loss of
Rs. 20,000 to be carried forward to subsequent assessment year.
d) Total income is Nil and loss from house property of Rs. 70,000 to be carried forward to
subsequent assessment year.

86. The details of income/loss of Mr. Kumar for P.Y.2023-24 are as follows:
Particulars ₹
Income from Salary (computed) 5,20,000
Loss from self-occupied house property 95,000
Loss from let-out house property 2,25,000
Loss from specified business u/s 35AD 2,80,000
Loss from medical business 1,20,000
Long term capital gain 1,60,000
Income from other sources 80,000
What shall be the gross total income of Mr. Kumar for A.Y. 2024-25 assuming that he has exercised
the option of shifting out of the default regime provided under section 115BAC(1A)?
a) Rs. 4,40,000 b) Rs. 3,20,000 c) Rs. 1,60,000 d) Rs. 4,80,000

87. An individual has paid life insurance premium of Rs. 25,000 - during the previous
year for a policy of Rs. 1,00,000 taken on 1.4.2019. If he pays tax under default
tax regime under section 115BAC, he shall –

1.17 GST IN INDIA-AN INTRODUCTION

 a) not be allowed deduction u/s 80C
b) be allowed deduction of Rs. 20,000 u/s 80C
c) be allowed deduction of Rs. 25,000 u/s 80C
d) be allowed deduction of Rs. 10,000 u/s 80C

88. Mr. Shiva made a donation of Rs. 50,000 to PM Cares Fund and Rs. 20,000 to Prime Minister’s Drought
Relief Fund by cheque. He made a cash donation of Rs. 10,000 to a public charitable trust registered
under section 80G. If Mr. Shiva has exercised the option of shifting out of the default regime provided
under section 115BAC(1A), the deduction allowable to him under section 80G for A.Y.2024-25 would
be –
a) Rs. 80,000 b) Rs. 70,000 c) Rs. 60,000 d) Rs. 35,000

89. Mr. Suhaan (aged 35 years), a nonresident, earned dividend income of Rs. 12,50,000 from an Indian
company which was declared on 30.09.2023 and credited directly to his bank account on 05.10.2023
in France and Rs. 15,000 as interest on savings A/c from State Bank of India for the P.Y. 2023-24.
Assuming that he has no other income, what will be amount of income chargeable to tax in his
hands in India for A.Y. 2024-25 if Mr. Suhaan has exercised the option of shifting out of the default
regime provided under section 115BAC?
a) Nil b) Rs. 12,65,000 c) Rs. 12,50,000 d) Rs. 12,55,000

90. Gross total income of Arpita for P.Y. 2023-24 is Rs. 6,00,000. She had taken a loan of Rs. 7,20,000
in the financial year 2020-21 from a bank for her husband who is pursuing MBA course from IIM,
Kolkata. On 02.04.2023, she paid the first installment of loan of Rs. 45,000 and interest of Rs.
65,000. Compute her total income for A.Y. 2024-25, if she has exercised the option of shifting out of
the default regime provided under section 115BAC(1A)
a) Rs. 6,00,000 b) Rs. 5,35,000 c) Rs. 4,90,000 d) Rs. 5,55,000

91. Mr. X has two units, one unit at Special Economic Zone (SEZ) and other unit at Domestic Tariff Area
(DTA). The unit in SEZ was set up and started manufacturing from 12.3.2016 and unit in DTA from
15.6.2017. Total turnover of Mr. X and Unit in DTA is Rs. 8,50,00,000 and Rs.3,25,00,000, respectively.
Export sales of unit in SEZ and DTA is Rs. 3,50,00,000 and Rs.1,25,00,000, respectively and net profit
of Unit in SEZ and DTA is Rs. 80,00,000 and Rs.45,00,000, respectively. Proceeds from export sales
in SEZ received in convertible foreign exchange by 30.9.2024 is Rs. 2,50,00,000. Assuming that Mr. X
would file his return on or before 31.10.2024 exercising the option of shifting out of the default tax
regime provided under section 115BAC(1A), he would be eligible for deduction under section 10AA
for P.Y. 2023-24 of an amount equal to
a) Rs. 38,09,524 b) Rs. 19,04,762 c) Rs. 23,52,941 d) Rs. 11,76,471

92. Mr. Ramesh pays a rent of Rs. 5,000 per month. His total income is Rs. 2,80,000 (i.e., Gross Total
Income as reduced by deductions under Chapter VI-A except section 80GG). He is also in receipt of
HRA. If he exercises the option of shifting out of the default tax regime u/s 115BAC, he would be
eligible for a deduction under section 80GG of an amount of
a) Rs. 60,000 b) Rs. 32,000 c) Rs. 70,000 d) Nil

93. Mr. Srivastav, aged 72 years, paid medical insurance premium of Rs. 52,000 by cheque and Rs. 4,000
by cash during May, 2023 under a Medical Insurance Scheme of the General Insurance Corporation.

GST IN INDIA-AN INTRODUCTION 1.18

 The above sum was paid for insurance of his own health. If he has exercised the option of shifting out
of the default tax regime provided under section 115BAC(1A), he would be entitled to a deduction
under section 80D of a sum of –
a) Rs. 30,000 b) Rs. 50,000 c) Rs. 52,000 d) Rs. 56,000

94. Rajan, a resident Indian, has incurred Rs. 15,000 for medical treatment of his dependent brother,
who is a person with severe disability and has deposited Rs. 20,000 with LIC for his maintenance. For
A.Y.2024-25, if Mr. Rajan exercises the option of shifting out of the default regime provided under
section 115BAC(1A), he would be eligible for deduction under section 80DD of an amount equal to –
a) Rs. 15,000 b) Rs. 35,000 c) Rs. 75,000 d) Rs. 1,25,000

95. Mr. Krishna, a resident Indian aged 61 years, maintains a saving account with a cooperative land
development bank and he earns Rs. 20,000 as interest on saving account for the Financial Year
2023-24. Mr. Krishna also maintains a fixed deposit and recurring deposit account with Mani Finance
(A Non-Banking Finance Company) and earns Rs. 25,000 and Rs. 10,000 as interest on fixed deposit
and recurring deposit, respectively. What would be the deduction allowable to Mr. Krishna under
Chapter VI-A if he has exercised the option of shifting out of the default regime provided under
section 115BAC(1A) for the A.Y. 2024-25?
a) Rs. 55,000 b) Rs. 10,000 c) Rs. 20,000 d) Rs. 50,000

96. Mr. Arpit, an employee of MNO Ltd. has contributed Rs. 1,61,280 towards NPS and similar amount
is contributed by his employer. His basic salary is Rs. 80,000 p.m. and dearness allowance is 40% of
basic salary which forms part of retirement benefits. He also paid Rs. 55,000 towards LIC premium
for himself and his wife and medical insurance premium of Rs. 35,000 by crossed cheque for his
mother, being a senior citizen during the previous year 2023-24. How much deduction is available
under Chapter VI-A while computing total income of Mr. Arpit for the A.Y. 2024-25 if he exercises the
option of shifting out of the default regime provided under section 115BAC(1A)?
a) Rs. 3,46,280 b) Rs. 3,69,400 c) Rs. 3,19,400 d) Rs. 3,96,280

97. The benefit of payment of advance tax in one installment on or before 15th March is available to
assessee computing profits on presumptive basis
a) only under section 44AD b) under section 44AD and 44ADA
c) under section 44AD and 44AE d) under section 44AD, 44ADA and 44AE

98 An interior decorator declares profits from profession under presumptive taxation scheme under
section 44ADA for A.Y. 2024-25. –
a) He is liable to pay advance tax on or before 15.3.2024
b) He is not liable to advance tax
c) He is liable to pay advance tax in three instalments i.e., on or before 15.9.2023, 15.12.2023
and 15.3.2024
d) He is liable to pay advance tax in four instalments i.e., on or before 15.6.2023, 15.9.2023,
15.12.2023 and 15.3.2024

99. Mr. T, an Indian Citizen and resident of India, earned dividend income of Rs. 4,500 from an Indian
company, which was declared on 1.10.2023 and paid in cash to Mr. T. What are the tax implications
with respect to the dividend in the hands of Mr. T and Indian Company?

1.19 GST IN INDIA-AN INTRODUCTION

 a) Such dividend is taxable in the hands of Mr. T and Indian company is required to deduct tax at
source @5%.
b) Such dividend is taxable in the hands of Mr. T and Indian company is required to deduct tax at
source @10%.
c) Such dividend is taxable in the hands of Mr. T. However, Indian company is not required to
deduct tax at source since it does not exceed Rs. 5,000.
d) Such dividend is exempt in the hands of Mr. T. Hence, Indian company is not required to deduct
tax at source.

100. Mr. X paid fees for professional services of Rs. 40,000 to Mr. Y, who is engaged only in the business
of operation of call centre, on 15.7.2023. Tax is to be deducted by Mr. X at the rate of –
a) 10% b) 5% c) 2% d) 1%

101. Mr. X, a resident Indian, wins - Rs.10,000 in a lottery. Which of the statement is true?
a) Tax is deductible u/s 194B@30% b) Tax is deductible u/s 194B@30.9%
c) No tax is deductible at source d) Tax is deductible u/s 194BB@30%

102. Mr. Vyas, aged 80, is a retired government employee. On 1st April 2023, he received the maturity
amount of his LIC policy amounting to Rs. 3,50,000. This policy was taken by Mr. Vyas on 1st April
2016 on which the sum assured was Rs. 3,00,000 and the annual premium was Rs. 40,000. His other
income comprised of pension amounting to Rs. 85,000. Mr. Vyas furnishes a declaration in Form 15H
for nondeduction of tax at source to the insurance company stating that his net tax liability for the
year is NIL. Choose the correct statement from below:
a) The declaration made by Mr. Vyas is wrong and the insurance company has to deduct tax of
Rs.3,500 under section 194DA
b) The claim by Vyas is right and insurance company is not required to deduct tax at source
c) The insurance company has to deduct tax under section 194DA since declaration in Form 15H
cannot be made for tax deduction under section 194DA
d) The declaration made by Mr. Vyas is wrong and the insurance company has to deduct tax of
Rs. 1,000 under section 194DA

103. A firm pays salary and interest on capital to its resident partners. The salary and interest paid fall
within the limits specified in section 40(b). Which of the following statements is true
a) Tax has to be deducted u/s 192 on salary and u/s 194A on interest
b) Tax has to be deducted u/s 192 on salary but no tax needs to be deducted on interest
c) No tax has to be deducted on salary but tax has to be deducted u/s 194A on interest
d) No tax has to be deducted at source on either salary or interest

104. Mr. Nihar maintains a savings A/c and a current A/c in Mera Bank Ltd. The details of withdrawals on
various dates during the previous year 2023-24 are as follows:
Date of Cash withdrawal Saving Account Current Account
05.04.2023 15,00,00 -
10.05.2023 -- 22,00,000
25.06.2023 20,00,000 -
17.07.2023 -- 5,00,000
28.10.2023 35,00,000 -

GST IN INDIA-AN INTRODUCTION 1.20

 10.11.2023 -- 38,00,000
12.12.2023 25,00,000 -
Mr. Nihar regularly files his return of income. Is Mera Bank Limited required to deduct tax at source
on the withdrawals made by Mr. Nihar during the previous year 2023-24? If yes, what would the
amount of tax deducted at source?
a) TDS of Rs. 3,20,000 is required to be deducted
b) No, TDS is not required to be deducted as the cash withdrawal does not exceed Rs. 1 crore
neither in saving account nor in current account
c) TDS of Rs. 3,00,000 is required to be deducted
d) TDS of Rs. 1,20,000 is required to be deducted

105. Mr. A has two bank accounts maintained with ICICI Bank and HDFC Bank. From 01.04.2023 till
31.03.2024, Mr. A withdrew the following amounts as cash from both the said accounts; HDFC Bank:
Rs. 50 lakh on 1.2.2024 ICICI Bank: Rs. 120 lakh on 1.3.2024 What shall be the amount of tax to
be deducted at source u/s 194N by HDFC Bank and ICICI Bank, respectively, while making payment
in cash to Mr.A assuming Mr. A has filed his return of income for P.Y. 2020-21, P.Y. 2021-22 and P.Y.
2022-23?
a) Rs. 1,00,000 and Rs. 2,40,000 b) Nil and Rs. 40,000
c) Rs. 60,000 and Rs. 1,00,000 d) Rs. 50,000 and Rs. 1,20,000

106. Mr. X, a resident, is due to receive Rs. 6 lakhs on 31.3.2024, towards maturity proceeds of LIC policy
taken on 1.4.2021, for which the sum assured is Rs. 5 lakhs and the annual premium is Rs. 1,50,000.
Mr. Z, a resident, is due to receive Rs. 99,000 on 1.10.2023 towards maturity proceeds of LIC policy
taken on 1.10.2015 for which the sum assured is Rs. 90,000 and the annual premium is Rs. 10,000.
a) Tax is required to be deducted on income comprised in maturity proceeds payable to Mr. X and Mr. Z
b) Tax is required to be deducted on income comprised in maturity proceeds payable to Mr. X
c) Tax is required to be deducted on income comprised in maturity proceeds payable to Mr. Z
d) No tax is required to be deducted on income comprised in maturity proceeds payable to either
Mr. X or Mr. Z

107. Mr. Raj (a non-resident and aged 65 years) is a retired person, earning rental income of Rs. 40,000
per month from a property located in Delhi. He is residing in Canada. Apart from rental income, he
does not have any other source of income. Is he liable to pay advance tax in India? Assume that he
pays tax under the default regime u/s 115BAC.
a) Yes, he is liable to pay advance tax in India as he is a non-resident and is not eligible for rebate
under section 87A
b) No, he is not liable to pay advance tax in India as his tax liability in India is less than Rs. 10,000
c) No, he is not liable to pay advance tax in India as he has no income chargeable under the head
“Profits and gains of business or profession” and he is of the age of 65 years
d) Both (b) and (c)

108. Mr. Jha, an employee of FX Ltd, attained 60 years of age on 15.05.2023. He is resident in India during
F.Y. 2023-24 and earned salary income of Rs. 5 lakhs (computed). During the year, he earned Rs. 7
lakhs from winning of lotteries. What shall be his advance tax liability for A.Y. 2024-25, if all tax
deductible at source has been duly deducted and remitted to the credit of Central Government on
time?

1.21 GST IN INDIA-AN INTRODUCTION

 Assume that he pays tax under the default regime u/s 115BAC.
a) Rs. 2,20,000 + Cess Rs. 8,800 = Rs. 2,28,800, being the tax payable on total income of Rs. 12
lakhs
b) Rs. 2,10,000 + Cess Rs. 8,400 = Rs.2,18,400, being the tax payable on lottery income of Rs. 7
lakhs
c) Rs. 10,000 + Cess Rs. 8,800 = Rs.18,800, being the net tax payable on salary income
d) Nil

109. Mr. Ram acquired a house property at Chennai from Mr. Satyam, a resident, for a consideration of
Rs. 85 lakhs, on 23.8.2023. On the same day, Mr. Ram made two separate transactions, thereby
acquiring an urban plot in Gwalior from Mr. Vipun, a resident, for a sum of Rs. 50 lakhs and rural
agricultural land from Mr. Danish, a resident, for a consideration of Rs. 75 lakhs. Which of the
following statements are correct assuming that in the consideration amounts as aforementioned all
the charges incidental to transfer of the immovable property are included and there is no difference
between the stamp duty value and actual consideration?
a) No tax deduction at source is required in respect of any of the three payments.
b) TDS@1% is attracted on all the three payments.
c) TDS@1% on Rs. 85 lakhs and Rs. 50 lakhs are attracted. No TDS on payment of Rs. 75 lakhs
for acquisition of rural agricultural land.
d) TDS@1% on Rs. 85 lakhs is attracted. No TDS on payments of Rs. 50 lakhs and Rs. 75 lakhs.

110. Mr. Kumar, aged 62 years resident and ordinarily resident, is a retired employee with a monthly
pension of Rs. 22,000. He has no other source of income. He has a house property in Bhatinda and
his only son is living in London and has a house over there. His son met with an accident and died
and thereby leaving the house at London in the name of Mr. Kumar. Mr. Kumar seeks your advice, as
to whether he is required to file his income-tax return u/s 139?
a) Yes, he is mandatorily required to file his income-tax return as he is a resident and ordinarily
resident in India and has asset located outside India
b) No, he is not required to file return of income as his income is below basic exemption limit
c) Yes, he is required to file his return of income as his income exceeds the basic exemption limit
d) No, he is not required to file his return of income as he is a senior citizen and retired employee

111. Which of the following returns can be revised under section 139(5)? (i) A return of income filed u/s
139(1) (ii) A belated return of income filed u/s 139(4) (iii) A return of loss filed u/s 139(3) Choose the
correct answer:
a) Only (i) b) Only (i) and (ii) c) Only (i) and (iii) d) (i), (ii) and (iii)

112. Mr. Z, a salaried individual, has a total income of Rs. 8 lakhs for A.Y. 2024-25. He furnishes his return
of income for A.Y. 2024-25 on 28th August, 2024. He is liable to pay fee of
a) upto Rs. 1,000 under section 234F b) Rs. 5,000 under section 234F
c) Rs. 10,000 under section 234F d) Not liable to pay any fee

113. Arun’s gross total income of P.Y. 2023-24 is Rs. 2,45,000. He exercises the option of shifting out
of the default regime provided under section 115BAC(1A). He deposits Rs. 45,000 in PPF. He pays
electricity bills aggregating to Rs. 1.20 lakhs in the P.Y.2023-24. Which of the statements is correct?

GST IN INDIA-AN INTRODUCTION 1.22

 a) Arun is not required to file his return of income u/s 139(1) for P.Y. 2023-24, since his total income
before giving effect to deduction under section 80C does not exceed the basic exemption limit.
b) Arun is not required to file his return of income u/s 139(1) for P.Y. 2023-24, since his electricity
bills do not exceed Rs. 2,00,000 for the P.Y.2023-24.
c) Arun is not required to file his return of income u/s 139(1) for P.Y. 2023-24, since neither his
total income before giving effect to deduction under section 80C exceeds the basic exemption
limit nor his electricity bills exceed Rs. 2 lakh for the P.Y. 2023-24.
d) Arun is required to file his return of income u/s 139(1) for P.Y. 2023-24, since his electricity bills
exceed Rs. 1 lakh for the P.Y.2023- 24

114. Mr. Pawan is engaged in the business of roasting and grinding coffee beans. During F.Y. 2023-24, his
total income is Rs. 4.5 lakhs. Mr. Pawan filed his return of income for A.Y. 2024- 25 on 3rd December,
2024. What shall be the fee payable for default in furnishing in return of income for A.Y. 2024-25?
a) Rs. 5,000
b) Not exceeding Rs. 1,000
c) No fee is payable as tax on total income is Nil
d) No fees payable as total income is below Rs. 5,00,000

115. Mr. Dinesh, a resident in India, has gross total income of Rs. 2,30,000 comprising of interest on saving
A/c and rental income during the previous year 2023-24. He incurred expenditure of Rs. 2,00,000 for
his son for a study tour to Europe. Whether he is required to file return of income for the assessment
year 2024-25? If yes, what is the due date?
a) Yes, 31st July of A.Y b) Yes, 30th September of A.Y
c) Yes, 31st October of A.Y d) No, he is not required to file
return of income

116. Mr. X is a working partner and Mr. Y is a non-working partner of XYZ partnership firm. XYZ Partnership
firm is subject to tax audit under section 44AB for the P.Y. 2023-24. What is the due date for filing
return of income for Mr. X and Mr. Y for the A.Y. 2024-25?
a) 31st July, 2024 for both Mr. X and Mr. Y
b) 31st October, 2024 for both Mr. X and Mr. Y
c) 31st July, 2024 for Mr. X and 31st October, 2024 for Mr. Y
d) 31st July, 2024 for Mr. Y and 31st October, 2024 for Mr. X

117. An individual client has consulted you on the matter of PAN. He is carrying on the business of sale
& purchase of electronic appliances. His turnover is Rs. 3,00,000 and the profit is Rs. 75,000 for the
P.Y. 2023-24. He has asked you to provide him threshold of turnover, if any, exceeding which he has
to apply for PAN.
a) Rs. 2,00,000 b) Rs. 2,50,000 c) Rs. 3,00,000 d) Rs. 5,00,000

118. In which of the following transactions, quoting of PAN is mandatory by the person entering into the
said transaction?
(I) Opening a Basic savings bank deposit account with a bank
(II) Applying to a bank for issue of a credit card.
(III) Payment of Rs. 40,000 to mutual fund for purchase of its units
(IV) Cash deposit with a post office of Rs. 1,00,000 during a day.

1.23 GST IN INDIA-AN INTRODUCTION

 (V) A fixed deposit of Rs. 30,000 with a NBFC registered with RBI aggregating the total deposits to
Rs. 3,50,000 for the F.Y upto to the date of this deposit made.
(VI) Sale of shares of an unlisted company for an amount of Rs. 60,000.
Choose the correct answer:
a) II, IV b) II, III, IV c) I, II, III, V, VI d) II, IV, VI

119. Iskon Inc., a foreign company and non-resident in India for A.Y. 2024-25, engaged in the business
of trading of tube-lights outside India. The principal officer of the company has approached you to
enlighten him regarding the provisions of the Income-tax Act, 1961 pertaining to the person who is
required to verify the return of income in case of Iskon Inc. Advise him as to which of the following
statements are correct, assuming that the company has a managing directorI The return of income in
case of Iskon Inc. can be verified by the managing director. II The return of income in case of Iskon Inc.
can be verified by any director, irrespective of the availability or otherwise of the managing director.
III The return of income in case of Iskon Inc. may be verified by a person who holds a valid power of
attorney from such company to do so, irrespective of the availability or otherwise of the managing
director. Choose the correct answer:
a) I or II or III b) Only I c) I or III d) Only III

120. Mr. X, who has opted out of the default tax regime under section 115BAC and pays tax under the
optional tax regime, can carry forward the AMT credit for
a) 8 assessment years b) 10 assessment years
c) 12 assessment years d) 15 assessment years

121. Mr. Raj, aged 32 years, presents you the following data for A.Y. 2024-25:
Particulars Rs.(in lakhs)
Gross receipts from business conducted entirely banking channels (opted for 70
section 44AD)
Capital gains under section 112A 5 5
Capital gains under section 111A 3 3
Winnings from horse races 1
What would be the tax liability under optional tax regime as per the regular provisions of the
Income-tax Act, 1961 of Mr. Raj for the A.Y.2024-25?
a) Rs. 1,28,440 b) Rs. 1,05,560 c) Rs. 1,38,840 d) Rs. 1,45,080

122. Mr. Uttam presents you the following data related to his tax liability for A.Y. 2024-25:
Particulars (Rs)
Tax Liability as per regular provisions of Income-tax Act 15 15
Tax Liability as per section 115JC 12 12
AMT credit brought forward from A.Y. 2023-24 5 5
What shall be the tax liability of Mr. Uttam for A.Y. 2024-25?
a) Rs. 12 lakhs b) Rs. 15 lakhs c) Rs. 10 lakhs d) Rs. 7 lakhs

123. Mr. Bandu, aged 37 years, provides the following details for P.Y. 2023-24:
Particulars Rs.(in lakhs)
Textile business income 22 70
Speculative business loss (4) 5

GST IN INDIA-AN INTRODUCTION 1.24

 Textile business loss b/f from P.Y. 2019-20 (5) 3
Business income of spouse included in the income Mr. Bandu as per section 64(1)(iv) 1
Deductions available under Chapter VI-A 3
TDS
TCS
Advance tax paid
What shall be the net tax payable/(refundable) under optional tax regime as per
regular provisions of the Income-tax Act, 1961 for A.Y. 2024-25 for Mr. Bandu?
Ignore interest.
a) Rs. 24,200 b) Rs. 1,00,600 c) Rs. 2,11,400 d) Rs. 12,500

124. The tax liability of Nirlep Co-operative Society (does not opt to pay tax under section 115BAD) on the
total income of ` 90,000 for P.Y. 2023-24 is –
(a) ` 24,000 (b) ` 28,080 (c) ` Nil (d) ` 24,960

125. What is the amount of marginal relief available to Sadvichar Ltd., a domestic company, on the total
income of `10,03,50,000 for P.Y. 2023-24 (comprising only of business income) whose turnover in P.Y.
2021-22 is `450 crore, paying tax as per regular provisions of Income-tax Act?
(a) ` 9,98,000 (b) ` 12,67,600 (c) `3,50,000 (d) `13,32,304

126. The tax payable by Dharma LLP on total income of ` 1,01,00,000 for P.Y. 2023-24 is –
(a) ` 35,29,340 (b) ` 32,24,000 (c) ` 33,21,500 (d) ` 31,51,200

127. Mr. Ajay is a recently qualified doctor. He joined a reputed hospital in Delhi on 01.01.2022. He earned
total income of ` 3,40,000 till 31.03.2022. His employer advised him to claim rebate u/s 87A while
filing return of income for A.Y. 2022-23. He approached his father, a tax professional, to enquire
regarding what is rebate u/s 87A of the Act. What would have his father told him?
(i) An individual who is resident in India and whose total income does not exceed `5,00,000 is
entitled to claim rebate under section 87A.
(ii) An individual who is resident in India and whose total income does not exceed `3,50,000 is
entitled to claim rebate under section 87A.
(iii) Maximum rebate allowable under section 87A is ` 5,000.
(iv) Rebate under section 87A is available in the form of exemption from total income.
(v) Maximum rebate allowable under section 87A is ` 12,500.
(vi) Rebate under section 87A is available in the form of deduction from basic tax liability.
Choose the correct option from the following:
(a) (ii), (iii), (vi) (b) (i), (v), (vi) (c) (ii), (iii), (iv) (d) (i), (iv), (v)

1.25 GST IN INDIA-AN INTRODUCTION

 Answer Key :
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15
b b d c d c c b a d d a a b b
16 17 18 19 20 21 22 23 24 25 26 27 28 29 30
a b c d a c a b b b c c c c c
31 32 33 34 35 36 37 38 39 40 41 42 43 44 45
a b c a b d a a a c a a b d b
46 47 48 49 50 51 52 53 54 55 56 57 58 59 60
b a d c d c c c d d a c b c b
61 62 63 64 65 66 67 68 69 70 71 72 73 74 75
d b a d c d b d d b c b b a b
76 77 78 79 80 81 82 83 84 85 86 87 88 89 90
b d d c d d b a d c a a c d b
91 92 93 94 95 96 97 98 99 100 101 102 103 104 105
b d b d c b b a b c c b d d b
106 107 108 109 110 111 112 113 114 115 116 117 118 119 120
b b d c a d b d b d b d a c d
121 122 123 124 125 126 127
a a a d b b b

GST IN INDIA-AN INTRODUCTION 1.26

 1. GST IN INDIA-AN INTRODUCTION

1. CGST and UTGST is leviable in case the supply of goods takes place within:
(a) Delhi
(b) Puducherry
(c) Jammu and Kashmir
(d) Lakshadweep

2. ________of the total number of Members of the GST Council shall constitute the quorum at its
meetings
(a) One-half
(b) One-third
(c) One-fourth
(d) Two-third

3. ________________ provides that no tax shall be levied or collected except by authority of law.
(a) 269
(b) 245
(c) 265
(d) 246

4. Alcoholic liquor for human consumption is subjected to ___________.

(a) State excise duty
(b) Central Sales Tax/Value Added Tax
(c) Both (a) and (b)
(d) GST

5. Presently, _________________ is leviable on ______________ of natural gas.

(i) GST; supply
(ii) Central excise duty; manufacture/production
(iii) Central sales tax; inter-State sale
(iv) Value Added Tax; intra-State sale
(a) (v) State excise duty; manufacture Choose the most appropriate option.
(b) (ii), (iii) and (iv)
(c) (i)
(d) (i) and (ii)
(e) (i) and (v)

6. Various taxes have been subsumed in GST to make one nation one tax one market for consumers. Out
of the following, determine which taxes have been subsumed in GST.
(i) Basic customs duty levied under Customs Act, 1962
(ii) Taxes on lotteries
(iii) Environment tax
(a) (ii)
(b) (ii) and (iii)
(c) (iii)
(d) (i), (ii) and (iii)

1.1 GST IN INDIA-AN INTRODUCTION

 Answer Key
1. 2. 3. 4. 5. 6.
d a c c a a

GST IN INDIA-AN INTRODUCTION 1.2

 2. SUPPLY UNDER GST

1. Which of the following amounts to supply under GST law?

(a) Services by an employee to the employer in the course of or in relation to his employment.
(b) Services by any court or Tribunal established under any law for the time being in force.
(c) Lottery, betting and gambling
(d) Sale of land

2. Which of the following services received, in the course or furtherance of business, without consideration
amount to supply?
(i) Import of services by a person in India from his son well settled in USA
(ii) Import of services by a person in India from his brother well-settled in Germany
(iii) Import of services by a person in India from his brother (wholly dependent on such person in India)
in France
(iv) Import of services by a person in India from his daughter (wholly dependent on such person in
India) in Russia
(a) i, iii and iv
(b) ii, iii and iv
(c) ii and iii
(d) i and ii

3. Which of the following is not considered as ‘goods under the CGST Act, 2017?
(i) Ten-paisa coin having sale value of Rs.100.
(ii) Shares of unlisted company
(iii) Lottery tickets
(a) (i)
(b) (ii)
(c) (ii) and (iii)
(d) (i), (ii) and (iii)

4. Which of the following statements is true under GST law?

(a) Grand-parents are never considered as related persons to their grand-son/grand-daughter
(b) Grand-parents are always considered as related persons to their grand-son/grand-daughter
(c) Grand-parents are considered as related persons to their grand-son/grand-daughter only if
they are wholly dependent on their grand-son/grand-daughter
(d) Grand-parents are considered as related persons to their grand-son/grand-daughter only if
they are not dependent on their grand-son/grand-daughter

Answer Key
1. 2. 3. 4.
c a b c

2.1 SUPPLY UNDER GST

 3. CHARGE OF GST

1. Which of the following is not eligible for opting composition scheme under sub-sections (1) and (2)
of section 10 of the CGST Act, 2017?
(a) M/s ABC, a firm selling garments solely in Ahmedabad, having aggregate turnover of Rs.78
lakh in the preceding F.Y.
(b) A start up company exclusively operating a restaurant in Delhi, having aggregate turnover of
Rs.98 lakh in the preceding F.Y.
(c) A courier service company operating solely in Mumbai having aggregate turnover of Rs.90 lakh
in the preceding F.Y.
(d) A trader selling grocery items solely in Orissa having an aggregate turnover of Rs.95 lakh in
the preceding F.Y.

2. C & Co., a registered supplier in Delhi, opted for composition levy under sub-sections (1) and (2)
of section 10 of the CGST Act, 2017. It sold goods in the fourth quarter of a financial year for
Rs.15,00,000 (exclusive of GST).
The applicable GST rate on these goods is 12%. C & Co.purchased goods from Ramesh & Co.,
registered in Delhi, for Rs.9,55,000 on which Ramesh & Co. had charged CGST of Rs.57,300 and SGST
of Rs.57,300.
C & Co. had also purchased goods from E & Co., registered in Haryana, for Rs.2,46,000 on which E &
Co. had charged IGST of Rs.29,520.
GST liability of C & Co. for the fourth quarter of the financial year is-
(a) CGST Rs.7,500 & SGST Rs.7,500
(b) CGST Rs.3,180 & SGST Rs.32,700
(c) CGST Rs.32,700 & SGST Rs.3,180
(d) CGST Nil and SGST Nil

3. Which of the following services does not fall under reverse charge provisions as contained under
section 9(3) of the CGST Act?
(a) Services supplied by arbitral tribunal to business entity located in Ladakh
(b) Sponsorship services provided to a partnership firm located in Jammu & Kashmir
(c) Sponsorship services provided to a body corporate located in Kerala
(d) Service of renting of motor vehicle for passengers provided to a recipient other than body
corporate.

4. GST is not payable by recipient of services in the following cases:

(a) (i) Services provided by way of sponsorship to ABC Ltd. located in India.
(b) (ii) Services supplied by a director (registered under GST) of Galaxy Ltd. to Mr. Krishna
(c) (iii) Services by Department of Posts by way of speed post to MNO Ltd. located in India.
(d) (iv) Services supplied by a recovering agent to SNSP Bank located in India.
(e) (i) & (iii)
(f) (i) & (iv)
(g) (ii) & (iii)
(h) (ii) & (iv)

3.1 CHARGE OF GST

5. X & Co., a supplier registered under GST in Meghalaya, wants to opt for composition levy. The
aggregate turnover limit for composition levy is
(a) Rs.50 lakh
(b) Rs.75 lakh
(c) Rs.1.5 crore
(d) none of the above

6. Which of the following persons engaged in making intra-state supplies from Uttar Pradesh, as
prescribed below, is not eligible for composition levy under sub-sections (1) and (2) of the CGST Act,
2017 even though their aggregate turnover does not exceed Rs.1.5 crore in preceding FY?
(a) A person supplying restaurant services
(b) A person supplying restaurant services and earning bank interest
(c) A person trading in ice cream
(d) A person supplying service of repairing of electronic items

7. Can a registered person under composition scheme collect GST on his outward supplies from
recipients?
(a) Yes, in all cases
(b) Yes, only on such goods as may be notified by the Central Government
(c) Yes, only on such services as may be notified by the Central Government
(d) No

8. Rama Ltd. has provided following information for the month of September:
Intra-State taxable outward supply Rs.8,00,000
Inter-State exempt outward supply Rs.5,00,000
Turnover of exported goods Rs.10,00,000
Payment made for availing legal services Rs.80,000
Calculate the aggregate turnover of Rama Ltd.
(a) Rs.8,00,000
(b) Rs.23,80,000
(c) Rs.23,00,000
(d) Rs.18,00,000

Answer Key
1. 2. 3. 4. 5. 6. 7. 8.
c a d c b d d c

CHARGE OF GST 3.2

 4. PLACE OF SUPPLY

1. Mr. Ankit, a permanent resident of Gurgaon travels by Indigo flight from Delhi to Mumbai. During 3
hours halt at Mumbai he buys travel insurance at Mumbai Airport and takes his onward journey flight
from Mumbai to Bangalore. What shall be place of supply for the insurance bought?
(a) Gurgaon
(b) Delhi
(c) Mumbai
(d) Bangalore

Answer Key
1.
a

4.1 PLACE OF SUPPLY

 6. TIME OF SUPPLY

1. Sham Ltd., located in Mumbai, is receiving legal services from a lawyer Mr. Gyan, registered under GST.
The aggregate turnover of Sham Ltd. in the preceding financial year is Rs.42 lakh. The information
regarding date of payment, invoice etc. is as follows-
Invoice issued by Mr. Gyan on 15th April
Payment debited in the bank account of Sham Ltd. on 5th May
Date of payment entered in books of accounts of Sham Ltd. is 1st May
What is time of supply of services?
(a) 1st May
(b) 5th May
(c) 15th June
(d) 15th April

Answer Key
1.
a

6.1 TIME OF SUPPLY

 7. VALUE OF SUPPLY

1. Piramal Ltd. has 24% shareholding of Anukul Ltd. Piramal Ltd. supplied goods to Anukul Ltd. during
the current FY. Which of the following value shall be the value of goods under GST law?
(a) Maximum Retail Price (MRP)
(b) Exchange Value
(c) Transaction value
(d) Other than transaction value since supplier and recipient are ‘related person

2. Discount given after the supply has been effected is deducted from the value of taxable supply, if
(i) such discount is given as per the agreement entered into at/or before the time of such supply
(ii) such discount is linked to the relevant invoices
(iii) proportionate input tax credit is reversed by the recipient of supply
(a) (i)
(b) (i) and (ii)
(c) (ii) and (iii)
(d) (i), (ii) and (iii)

3. Which of the following are not includible in the value of supply in terms of section 15 of the CGST
Act, 2017?
(a) CGST, SGST, UTGST, GST Compensation Cess
(b) Commission and packing charges
(c) Interest for delayed payment of consideration
(d) Payments made to third parties by the recipient on behalf of the supplier in relation to the
supply

4. M/s. Gemini Exports has sold scrap amounting to Rs.3,84,000 excluding Tax collected at Source @
1% under Income Tax Act, 1961. The scrap was transported to the place of business of the recipient
for which M/s. Gemini Exports charged additional Rs. 5,100 as transportation charges.
All the given amounts are exclusive of GST.
Determine the value of supply.
(a) Rs. 3,84,000
(b) Rs. 3,89,940
(c) Rs. 3,89,100
(d) Rs. 3,82,260

5. The director of M/s. Carrier Ltd. provided premises to it at a monthly rental of Rs. 2,50,000 which is
registered as principal place of business (from where its carries out business opera ons).
M/s. Carrier Ltd. wants to understand whether the monthly rental of Rs. 2,50,000 should be termed
as ‘transac on value’ for determina on of value of supply.
Will answer differ if premises is provided by independent supplier ie. M/s. Kalp Ltd.
(a) No, Yes.
(b) Yes, Yes
(c) Yes, No
(d) No, No
Answer Key
1. 2. 3. 4. 5.
c d a c a

7.1 VALUE OF SUPPLY

 8. INPUT TAX CREDIT

1. PZY Ltd. is engaged in manufacturing of motor car. The company paid following amount of GST to
its suppliers against the invoices raised to it. Compute the amount of ineligible input tax credit under
GST law:
Particulars GST Paid
General insurance taken on cars manufactured by PZY Ltd. 1,00,000
Buses purchased for transportation of employees (Seating capacity 23) 25,00,000
Life and health insurance for employees under statutory obligation 6,00,000
Outdoor catering in Diwali Mela organized for employees 3,50,000
(a) Rs.9,50,000
(b) Rs.3,50,000
(c) Rs.1,31,00,000
(d) Rs.28,50,000

2. A supplier takes deduction of depreciation on the GST component of the cost of capital goods as per
Income- tax Act, 1961. The supplier can
(a) avail only 50% of the said tax component as ITC
(b) not avail ITC on the said tax component
(c) avail 100% ITC of the said tax component
(d) avail only 25% of the said tax component as ITC

3. TT Pvt. Ltd., registered in Rajasthan, furnished following information for the month of June:
(i) Inter-State sale of goods for Rs.1,25,000 to JJ Enterprises registered in Haryana
(ii) Inter-State purchases of goods from XYZ company, registered in Punjab, for Rs.40,000
(iii) Intra-State purchases of goods from RR Traders, registered in Rajasthan, for Rs.65,000
The applicable rate of GST is 18%. There is no opening balance of ITC. All the above amounts are
exclusive of taxes. GST liability payable in cash is
(a) CGST Rs.1,800 & SGST Rs.1,800
(b) SGST Rs.3,600
(c) IGST Rs.3,600
(d) CGST Rs.3,600

4. Input tax credit shall not be available in respect of:

(i) Goods used for personal consumption
(ii) Membership of a club provided by the employer to its employees as per companys internal
policy.
(iii) Travel benefits extended to employees on vacation such as leave or home travel concession as
per companys internal policy.
(a) (i)
(b) (i) and (ii)
(c) (ii) and (iii)
(d) (i), (ii) and (iii)

5. ITC of motor vehicles used for making ______ is allowed.

(i)Transportation of goods
(ii)Taxable supplies of transportation of passengers
(iii)Taxable supplies of imparting training on driving

8.1 INPUT TAX CREDIT

 (a) (i)
(b) (i) and (ii)
(c) (ii) and (iii)
(d) (i), (ii) and (iii)

6. Mr. Raghu avails services of Mr. Raja, a Chartered Accountant, as under

(i) Audit of financial accounts of Mr. Raghu Rs.55,000
(ii) Tax audit and annual accounts filing of Mr. Raghu Rs.10,000
(iii) Income-tax return filing of Mr. Raghu s wife (salaried return) Rs.5,000
All the above amounts are exclusive of taxes and the applicable rate of GST on these services is 18%.
The accountant of Mr. Raghu has booked the entire expenses of Rs.70,000 plus GST in the books of
account. Mr. Raghu is eligible to take input tax credit of
(a) Rs.13,500
(b) Rs.11,700
(c) Rs.9,900
(d) Rs.1,800

7. Input tax credit is not available in respect of _____ .

(i) services on which tax has been paid under composition levy
(ii) goods given as free samples
(iii) goods used for personal consumption
(a) (i)
(b) (i) and (ii)
(c) (ii) and (iii)
(d) (i), (ii) and (iii)

8. If the goods are received in lots/instalment, --

(a) 50% ITC can be taken on receipt of 1st lot and balance 50% on receipt of last lot.
(b) ITC can be availed upon receipt of last lot.
(c) 100% ITC can be taken on receipt of 1st lot.
(d) Proportionate ITC can be availed on receipt of each lot/instalment.

9. Mr. A has a tax invoice dated 20-1-2023 of services received by him. It’s input tax credit is lost, if ITC
is not availed on or before
(a) 20-01-2024
(b) 31-12-2023
(c) due date of filing return under Section 39 for September, 2023 or date of filing of annual
return for 2022-23, whichever is earlier
(d) 30th November, 2023 or furnishing of the relevant annual return, whichever is earlier.

Answer Key
1. 2. 3. 4. 5. 6. 7. 8. 9.
b b c d d b d b d

INPUT TAX CREDIT 8.2

 9. REGISTRATION

1. The registration certificate granted to non resident taxable person is valid for ---days from the
effective date of registration or period specified in registration application, whichever is earlier.
(a) 30
(b) 60
(c) 90
(d) 120

2. Mr. X, a casual taxable person, is not involved in making taxable supplies of notified handicraft
goods or predominantly hand-made notified products.
Which of the following statements is true for Mr. X - a casual taxable person?
(a) Mr. X is not required to take registration under GST under any circumstances.
(b) Mr. X is required to get registration under GST if the aggregate turnover in a financial year
exceeds Rs.20 lakh.
(c) Mr. X is required to get registration under GST if the aggregate turnover in a financial year
exceeds Rs.40 lakh.
(d) Mr. X has to compulsorily get registered under GST irrespective of the threshold limit.

3. Dhruvtara Ltd., an electronic commerce operator, is liable to collect tax at source under section 52
of the CGST Act, 2017 and is registered under GST. However, it is going to close its operations from
the next month.
(i) No option is available for Dhruvtara Ltd. to suo-motu apply for cancellation of registration
under GST. Only proper officer can initiate cancellation of registration
(ii) Dhruvtara Ltd. can apply in writing for cancellation of registration under GST if it is no longer
required to collect tax at source under section 52.
(iii) Registration of Dhruvtara Ltd. can be cancelled if proper officer is satisfied that Dhruvtara Ltd.
is no longer liable to collect tax at source under section 52, pursuant to the enquiry under GST
law.
Choose the most appropriate option.
(a) (i)
(b) (ii)
(c) (iii)
(d) Either (ii) or (iii)

4. Mr Ram, a jeweller registered under GST in Mumbai, wants to sell his jewellery in a Trade Expo held
in Delhi.Which of the following statements is false in his case?
(a) He needs to get registration in Delhi as casual taxable person.
(b) He needs to pay advance tax on estimated tax liability.
(c) He needs to mandatorily have a place of business in Delhi.
(d) He needs to file GSTR-1/ IFF and GSTR-3B for Delhi GSTIN for the month or quarter, as the case
may be, when he gets registered in Delhi.

5. The person making inter-State supply of goods from Madhya Pradesh is compulsorily required
to get registered under GST, ______ provided such goods are not notified handicraft goods nor
predominantly hand-made notified products .
(a) if his aggregate turnover exceeds Rs.20 lakh in a financial year

9.1 REGISTRATION
 (b) if his aggregate turnover exceeds Rs.10 lakh in a financial year
(c) if his aggregate turnover exceeds Rs.40 lakh in a financial year
(d) irrespective of the amount of aggregate turnover in a financial year since he is making inter-
State supply of taxable goods.

6. Which of the following persons is mandatorily required to undergo Aadhaar authentication?

(a) Department of Posts, a Central Government Department
(b) Municipal Corporation of Delhi
(c) ICAI
(d) Supplier of pan masala in Delhi

7. Within how many days an application for revocation of cancellation of registration can be made
provided no extension to said time-limit has been granted?
(a) Within 7 days from the date of service of the cancellation order.
(b) Within 15 days from the date of the cancellation order.
(c) Within 45 days from the date of the cancellation order.
(d) Within 30 days from the date of service of the cancellation order.

8. Xylo & Co. has three branches, in Jalandhar, Amritsar and Ludhiana, in the State of Punjab. Amritsar
and Ludhiana branches are engaged in supply of garments and Jalandhar branch engaged in supply
of shoes. Which of the following options is/are legally available for registration to Xylo & Co.?
(i) Xylo & Co. can obtain single registration for Punjab State declaring any one of the branches as
principal place of business and other two branches as additional place of business.
(ii) Xylo & Co. can obtain separate GST registration for each of the three branches - Amristar,
Jalandhar and Ludhiana.
(iii) Xylo & Co. can obtain one GST registration for shoe business (Jalandhar branch) and another
GST registration which is common for garments business (Amritsar and Ludhiana).
(a) Answer - 1 : (ii)
(b) Answer - 2 : Either (i), (ii) or (iii)
(c) Answer - 3 : Either (i) or (ii)
(d) Answer - 4 : Either (ii) or (iii)

9. Which of the following statements are correct?

(i) Revocation of cancellation of registration under SGST/UTGST Act shall be deemed to be a
revocation of cancellation of registration under CGST Act.
(ii) Cancellation of registration under SGST/UTGST Act shall be deemed to be a cancellation of
registration under CGST Act.
(iii) Revocation of cancellation of registration under SGST/UTGST Act shall not be deemed to be a
revocation of cancellation of registration under CGST Act.
(iv) Cancellation of registration under SGST/UTGST Act shall not be deemed to be a cancellation of
registration under CGST Act.
(a) (i) and (ii)
(b) (i) and (iv)
(c) (ii) and (iii)
(d) (iii) and (iv)

REGISTRATION 9.2
10. How is the aggregate turnover calculated for determining threshold limit for registration?
(a) Aggregate value of all taxable supplies (excluding the value of inward supplies on which tax
is payable by a person on reverse charge basis and inter-State supplies), exempt supplies and
export of goods/services
(b) Aggregate value of all taxable supplies (excluding the value of inward supplies on which tax is
payable by a person on reverse charge basis), exempt supplies, export of goods/services and
inter-State supplies of a person computed for each State separately.
(c) Aggregate value of all taxable intra-State supplies, export of goods/services and exempt
supplies of a person having same PAN computed for each State separately.
(d) Aggregate value of all taxable supplies (excluding the value of inward supplies on which tax is
payable by a person on reverse charge basis), exempt supplies, export of goods/services and
inter-State supplies of a person having same PAN computed on all India basis and excluding
taxes if any charged under CGST Act, SGST Act and IGST Act.

11. Registration certificate granted to casual taxable person or non-resident taxable person will be
valid for:
(a) Period specified in the registration application
(b) 90 days from the effective date of registration
(c) Earlier of (a) or (b)
(d) Later of (a) or (b)

12. P Ltd. has its registered office, under the Companies Act, 2013, in the State of Maharashtra from
where it ordinarily carries on its business of taxable goods. It also has a warehouse in the State of
Telangana for storing said goods. What will be the place of business of ‘P Ltd. under the GST law?
(a) Telangana
(b) Maharashtra
(c) Both (a) and (b)
(d) Neither (a) nor (b)

13. What is the validity of the registration certificate granted under GST for a normal tax payer?
(a) One year
(b) Two years
(c) Valid till it is cancelled
(d) Five years.

14. Within how many days a person should apply for registration under GST, apart from provisions of
voluntary registration?
(a) Within 60 days from the date he becomes liable for registration.
(b) Within 30 days from the date he becomes liable for registration.
(c) No time limit
(d) Within 90 days from the date he becomes liable for registration.

15. Ram, an individual, based in Gujarat, is in employment and earning Rs.10 lakh as salary. He is also
providing intra-State consultancy services to different organizations on growth and expansion of
business.

9.3 REGISTRATION
 His turnover from the supply of such services is Rs.12 lakh.
Determine whether Ram is liable for taking registration as per provisions of the Act?
(a) Yes, as his aggregate turnover is more than Rs.20 lakh.
(b) No, as his aggregate turnover is less than Rs.40 lakh.
(c) No, as services in the course of employment does not constitute supply and therefore, aggregate
turnover is less than Rs.20 lakh.
(d) Yes, since he is engaged in taxable supply of services.

16. A non-resident taxable person is required to apply for registration:

(a) within 30 days from the date on which he becomes liable to registration
(b) within 60 days from the date on which he becomes liable to registration
(c) at least 5 days prior to the commencement of business
(d) within 180 days from the date on which he becomes liable to registration

17. Mr. Z of Himachal Pradesh starts a new business and makes following supplies in the first month
(i) Intra-State supply of taxable goods amounting to Rs.17 lakh
(ii) Supply of exempted services amounting to Rs.1 lakh
(iii) Inter-State supply of taxable goods amounting to Rs.1 lakh
Whether he is required to obtain registration, if the aforesaid goods are not handicraft goods or
predominantly hand-made products, as notified?
(a) Mr. Z is liable to obtain registration as the threshold limit of Rs. 10 lakh is crossed.
(b) Mr. Z is not liable to obtain registration as he makes exempted supplies.
(c) Mr. Z is liable to obtain registration as he makes the inter-State supply of goods.
(d) Mr. Z is not liable to obtain registration as the threshold limit of Rs.20 lakh is not crossed.

Answer Key
1. 2. 3. 4. 5. 6. 7. 8. 9. 10. 11. 12. 13. 14. 15.
c d d c d d d b a d c c c b c
16. 17.
c c

REGISTRATION 9.4
 10. TAX INVOICE, CREDIT AND DEBIT NOTES

1. Subhas & Co., a registered person, supplies taxable goods to unregistered persons. It need not issue
tax invoice, if the value of supply of goods to such persons is _____ and the recipient does not require
such invoice.
(a) Rs.1,200
(b) Rs.600
(c) Rs.150
(d) Rs.200

2. Which of the following statements is/are incorrect under GST law:

(i) If the supplier has erroneously declared a value which is more than the actual value of goods
or services provided, then he can issue credit note for the same.
(ii) If the supplier declared some special discount which is offered after the supply is over, then he
cannot issue credit note under GST law for the discount offer.
(iii) If quantity received by the recipient is more than what has been declared in the tax invoice, then
supplier can issue debit note for the same.
(iv) There is no time limit to declare the details of debit note in the return
(a) (i), (ii) and (iv)
(b) (i) and (iv)
(c) (iv)
(d) (i) and (iii)

3. In case of taxable supply of services by a non banking financial company (NBFC) to, other than a
distinct person, invoice shall be issued within a period of _______ from the date of supply of service.
(a) 30 days
(b) 45 days
(c) 60 days
(d) 90 days

4. Invoice shall be prepared in ________ in case of taxable supply of goods and in ________ in case
of taxable supply of services.
(a) Triplicate, Duplicate
(b) Duplicate, Triplicate
(c) Duplicate, Duplicate
(d) Triplicate, Triplicate

5. Where the goods being sent or taken on approval for sale or return are removed before the supply
takes place, the invoice shall be issued:
(a) before/at the time of supply
(b) 6 months from the date of removal
(c) Earlier of (a) or (b)
(d) Later of (a) or (b)

6. During the month of May, Z Ltd. sold goods to Y Ltd. for Rs.2,55,000 and charged GST @ 18%.
However, owing to some defect in the goods, Y Ltd. returned some of the goods by issuing debit note
of Rs.40,000 in the same month.

10.1 TAX INVOICE, CREDIT AND DEBIT NOTES

Z Ltd. records the return of goods by issuing a credit note of Rs.40,000 plus GST in the same
month.
In this situation, GST liability of Z Ltd. for the month of May will be-
(a) Rs.45,900
(b) Rs.38,700
(c) Rs.53,100
(d) Rs.40,000

Answer Key
1. 2. 3. 4. 5. 6.
c c b a c b

TAX INVOICE, CREDIT AND DEBIT NOTES 10.2

 11. ACCOUNTS & RECORDS

1. How the electronic records be authenticated by a registered person?

(a) physical signature
(b) digital signature
(c) scan copy of physical signature
(d) affixing stamp

2. A registered person who is engaged in manufacturing of Plastic Bottles is required to maintain books
of accounts relating to _________.
(i) Raw material
(ii) Input services
(iii) Goods manufactured including waste & by products
(iv) waste and by products
(a) (i) & (ii)
(b) (i) & (iii)
(c) (iii) & (iv)
(d) (i),(ii),(iii) & (iv)

3. Principal place of business means the place of business _____.

(a) as Informed to GST officer separately
(b) As mentioned in Income tax records
(c) As mentioned in the certificate of GST registration
(d) As mentioned on sign board of the premises

4. A registered person is required to maintain books of accounts relating to___________.

(i) Supply of goods or services
(ii) Receipt of goods or services
(iii) Stock of goods
(iv) input tax credit availed
(a) Answer - 1 : (i) & (ii)
(b) Answer - 2 : (i) & (iii)
(c) Answer - 3 : (iii) & (iv)
(d) Answer - 4 : (i),(ii),(iii) & (iv)

5. What course of action can be adopted if there is any incorrect entry made in books of accounts other
than those of clerical nature?
(a) It can be deleted directly
(b) It must be deleted after obtaining approval from GST officer
(c) It can be scored out under attestation
(d) No entries can be corrected.

6. In which manner it is mandatory to maintain books of accounts?

(a) Manual form
(b) Electronic Form
(c) Any form -manual or electronic
(d) Both manual and electronic

11.1 ACCOUNTS & RECORDS

7. Where the _______ considers that any class of taxable persons is not in a position to keep and
maintain accounts in accordance with the provisions of this section, he may, for reasons to be
recorded in writing, permit such class of taxable persons to maintain accounts in such manner as
may be prescribed.
(a) GST Council
(b) Commissioner
(c) Central Government
(d) Proper officer

8. All the accounts and records are required to be retained until the expiry of____from the due date of
furnishing of annual return.
(a) 60 months
(b) 72 months
(c) 84 months
(d) 96 months

9. Who is not required to maintain records relating to stock of goods and details of taxes in terms of
Rule 56 of CGST Rules, 2017?
(a) Manufacturer
(b) Service provider
(c) Composition Supplier
(d) Transporter

Answer Key
1. 2. 3. 4. 5. 6. 7. 8. 9.
b d c d c c b b c

ACCOUNTS & RECORDS 11.2

 12. E WAY BILL

1. Style Associates, Delhi deals in denim garments has ordered jeans from Super Garments in Ludhiana
(Punjab) which is 310 km away from its warehouse. E-way bill is generated by Super Garments and the
order is coming by a normal cargo.
For how many days will the e-way bill be valid from the time it is generated?
(a) 24 hours
(b) 2 Days
(c) 5 Days
(d) 7 Days

2. A registered person has to transport goods from its warehouse to its depot located at a distance of 300
km in a normal cargo. E-way bill is generated at 00:04 hrs. on 14th March. It will expire on ______:
(a) 12:00 midnight of 16 -17 March
(b) 12:00 midnight of 15 -16 March
(c) 12:00 midnight of 17 -18 March
(d) 12:00 midnight of 18 -19 March

3. Ajay, proprietor of firm Surya Steels Pvt Ltd. registered in Haryana has ordered TMT steel bars amounting
to Rs.5,75,000 (excluding GST @18%) on 01.05.2023 02:25 pm from Kindle Steels registered in Madhya
Pradesh which is at a distance of 650 km from the factory of Surya Steels Pvt Ltd in Haryana.
E-way bill is generated immediately, and the validity period of e-way is 4 days.
However, due to unforeseen circumstances, Surya Steels Pvt. Ltd. asks Kindle Steels to cancel
the order at 03:45 PM. The goods are still in the warehouse of Kindle Steels who has asked its
accountant to cancel the e-way Bill.
What is the time-period within which e-way bill can be cancelled by Kindle Steels?
(a) 4 days
(b) 24 hrs
(c) 48 hrs
(d) 72 hrs

4. ABC Ltd. generated e-way bill on 12th February at 14.00 hrs. It transported over-dimensional cargo
for a distance of 100 km. The validity period of the e-way bill will expire on _________ if there is no
extension of the same.
(a) Midnight of 13th-14th February
(b) Midnight of 17th-18th February
(c) At 14.00 hrs. of 13th February
(d) At 14.00 hrs. of 14th February

5. Anna Private Limited registered in Delhi (consigner) sells goods to Krishan Chand registered in Punjab
(consignee), a grocery store owner. The consignment contains eggs and fish of the value Rs. 50,000
(exempt under GST) and corrugated boxes for packaging the eggs & fish of the value Rs. 40,000
(excluding GST @18%).
Determine the consignment value for generation of e-way bill by consignor, Anna Private Limited.
(a) 90000
(b) 97200
(c) 47200
(d) 106200

12.1 E WAY BILL

 Answer Key
1. 2. 3. 4. 5.
b a b b c

E WAY BILL 12.2

 13. PAYMENT OF TAX

1. What is the applicable rate of interest if a registered party fails to pay the amount of tax liability within
the due date?
(a) 24% p.a
(b) 18% p.a
(c) 22% p.a
(d) 20% p.a

2. Which type of number is created for every successful challan generated by the taxpayer to identify the
challan?
(a) Bank Reference Number (BRN)
(b) Challan Identification Number (CIN)
(c) Common Portal Identification Number (CPIN)
(d) Acknowledgement Reference Number (ARN)

3. all the taxes, fees, penalty, interest, and other payments to be paid under the GST regime?
(a) 3 Challans
(b) 2 Challans
(c) 4 Challans
(d) Single Challan

4. Self-assessed Input Tax Credit (ITC) by a registered person which reflects in electronic credit ledger can
only be used to make payment of which of the following liabilities?
(a) Tax
(b) Penalty
(c) Interest
(d) Fee

5. Balance in electronic credit ledger can be utilized against payment of _____.

(a) output tax
(b) interest
(c) penalty
(d) late fees

6. How much time does a receipt for the payment made online takes to get appeared at common portal?
(a) Instant
(b) Minimum of 2 Hours
(c) 12 Hours
(d) 1 Working Day

7. How many branches can be nominated by authorized banks as its ‘Electronic Focal Point Branch to
collect payment of GST?
(a) Only 2 Branches
(b) Only 5 Branches
(c) Only 3 Branches
(d) Only 1 Branch

PAYMENT OF TAX
13.1
8. Which of the following shall be discharged first, while discharging liability of a taxable person?
(a) All dues related to previous tax period
(b) All dues related to current tax period
(c) Demand raised under section 73 and 74
(d) No such condition is mandatory.

Answer Key
1. 2. 3. 4. 5. 6. 7. 8.
b c d a a a d a

PAYMENT OF TAX
13.2
 14. TAX DEDUCTED AT SOURCE AND COLLECTION OF TAX AT SOURCE

1. At which point of time TDS is required to be deducted?

(a) Payment to supplier
(b) Earlier of payment or invoice of supplier
(c) Invoice of supplier
(d) Filing GST Return

2. What is the due date of payment of TDS?

(a) 11th of succeeding month
(b) 10th of succeeding month
(c) 15th of succeeding month
(d) 20th of succeeding month

3. The provisions of section 51 relating to TDS are applicable only to such authority or a board or any
other body set up by an Act of parliament or a State legislature or established by any Government in
which ___% or more participation by way of equity or control is with the Government.
(a) 26
(b) 51
(c) 76
(d) 100

4. ‘Net value of taxable supplies for the purpose of TCS u/s 52 of the CGST Act excludes ___________.
(i) Central tax, State tax, Union Territory tax, Integrated tax and cess indicated in the invoice
(ii) aggregate value of taxable supplies of services notified under section 9(5),
(iii) aggregate value of taxable supplies returned to the suppliers
(a) (i)
(b) (ii)
(c) (i) & (iii)
(d) (i),(ii) & (iii)

5. Calculate the TCS required to be collected by e-commerce operator. A supplier sold goods through
operator of Rs.1,18,000 (including GST Rs.18,000) and out of which Rs. 23,600 (including GST Rs.3,600)
goods were returned by customers.
(a) Rs.1,600
(b) Rs.1,888
(c) Rs.800
(d) Rs.944

6. When is tax not required to be deducted?

(a) Contract value does not exceed Rs. 2 Lacs (excluding taxes)
(b) Contract value does not exceed Rs. 2 Lacs (Including taxes)
(c) Contract value does not exceed Rs. 2.5 Lacs (excluding taxes)
(d) Contract value does not exceed Rs. 2.5 Lacs (including taxes)

TAX DEDUCTED AT SOURCE AND COLLECTION OF

14.1 TAX AT SOURCE
7. Under the GST law, who is liable to collect TCS on the net value of taxable supplies made through
it by the suppliers?
(a) Input Service Distributor
(b) E-commerce Operator
(c) Composition Dealer
(d) Person Deducting Tax at Source

8. Floret Jewels Pvt. Ltd., registered in Maharashtra sells floral jewellery via an E-commerce operator
Zeebel.com. Mr. Ajay placed an order of 10 sets of floral jewellery in different colours each costing
Rs. 5000 (GST @18% not included ) on 20th May 2023.
However, he returned 2 sets back after 2 days in accordance with the exchange policy of Zeebel.
com.
Determine the value of supply on which Zeebel.com should collect TCS from Floret Jewels Pvt. Ltd.
(a) Rs. 40,000
(b) Rs. 59,000
(c) Rs. 50,000
(d) Rs. 47,200

9. Star Footwear, a registered seller from Maharashtra has received order of shoes from unregistered
wholesaler from Orissa through an e-commerce site Zamba.com amounting to Rs. 37,500 (exclusive
of GST @12%).
Star Footwear gave 10% discount at the time of supply to the wholesaler and received Rs. 37,800
(inclusive of GST).
Determine the of amount of tax that would be collected by the e-commerce operator Zamba.com?
(a) Rs. 375
(b) Rs. 420
(c) Rs. 337.50
(d) Rs. 378

10. Mr. P located in Gujarat is engaged in providing taxable services to a government undertaking,
Daman Branch. In this case, government undertaking is liable to deduct TDS ________in terms of
Section 51 of the CGST Act, 2017, where the total value of such supply, under a contract,exceeds Rs.
2,50,000.
(a) CGST & SGST @ 1% each
(b) IGST @ 2%
(c) CGST & UTGST @ 1% each
(d) CGST & UTGST @ 0.5% each

11. Health department of Gujarat Government is making payment of Rs. 3,54,000 [Rs. 3,00,000 service
value + Rs.54,000 GST] to a supplier for a contract of printing. Calculate TDS required to be deducted,
if any?
(a) Rs.7,080
(b) Rs.3,540
(c) Rs.6,000
(d) Rs.3,000

TAX DEDUCTED AT SOURCE AND COLLECTION OF

TAX AT SOURCE 14.2
12. Krishi Udyog (a State government establishment), registered under GST in Maharashtra has purchased
fabric worth Rs. 2,80,000 (exclusive of GST @12%) from M/s Talwar Fabrics registered in Haryana
(Inter state supply). Determine the amount of TDS Krishi Udyog is liable to deduct while making
payment to M/s Talwar Fabrics.
(a) Rs. 5,600
(b) Rs. 1,400
(c) Rs. 2,800
(d) Rs. 14,000

Answer Key
1. 2. 3. 4. 5. 6. 7. 8. 9. 10. 11. 12.
a b b d c c b a c b b a

TAX DEDUCTED AT SOURCE AND COLLECTION OF

14.3 TAX AT SOURCE
 15. RETURNS

1. ABC Ltd. supplied certain taxable goods at list price of Rs.1,53,000 to PQR Ltd. Considering that the
goods are of brittle nature, PQR Ltd. had asked for appropriate packing of the same to avoid breakage
during transportation.
ABC Ltd. additionally charged Rs. 5,500 towards packing charges. ABC Ltd. has also received subsidy
of Rs. 2,800 per item from State Government on sale of each such items.
Determine the value of taxable supply assuming that cash discount is allowed at the rate of 2.5% on
list price of goods.
(a) Rs. 1,57,267
(b) Rs. 1,54,675
(c) Rs. 1,57,475
(d) Rs. 1,54,538

2. Mr. Ritesh runs an e-commerce website “Flip-over” and he has registered himself as an E-commerce
operator (ECO) under GST in Delhi. Being an ECO, Flip-over needs to furnish the details of supplies on
which it has collected TCS.
Which form does Mr. Ritesh need to file?
(a) Form GSTR-8
(b) Form GSTR-5
(c) Form GSTR-11
(d) Form GSTR-7

3. While filing GSTR-3B of a taxable person registered in GST, which of the following need not be mentioned
in the form GSTR-3B?
(a) Summary of Outward Supplies
(b) Invoice-wise details of Outward Supplies
(c) Payment of tax under Reverse charge mechanism
(d) Eligible Input Tax Credit as per GSTR-2B

4. Jayanti Candles & Co. registered in Maharashtra, supplies commercial grade candles to its customers
PAN India. On 24th August 2023, its Accountant received a call from a customer in Orissa that its GST-
2B has not reflected a bill dated 22nd April 2023 till now.
On checking, he found that the bill has been inadvertently entered in GSTR-1 of April 2023 in the
name of a party in Karnataka.
In which return can the bill be amended by the Accountant of Jayanti Candles & Co.?
(a) GSTR-1 of April 2023
(b) GSTR-3B of April 2023
(c) GSTR-1 of August 2023
(d) GSTR-3B of August 2023

5. Kalim & Associates made an application for cancellation of GST registration in the month of March due
to closure of its business. Its application for cancellation of GST registration was approved w.e.f. 4th
September by the proper officer by passing an order for the same on 14th September.
In the given case, Kalim & Associates is:
(a) required to file Final Return on or before 4th December
(b) not required to file Final Return

15.1 RETURNS
 (c) required to file Final Return on or before 30th September
(d) required to file Final Return on or before 14th December

6. RR Stationers, dealers of wholesale and retail stationary items, are registered under QRMP scheme
in GST for the Financial year 2023-24.
It has opted for Fixed sum method of tax payment in the previous quarter (April-June) and tax
paid in cash was Rs.10,000 in April under GST PMT-06, Rs. 12,000 in May under GST PMT-06 and
Rs. 7,000 in GSTR-3B of the quarter filed on 24th July 2023.
Now RR Stationers want to deposit tax for the month of July 2023 under QRMP Scheme (Fixed Sum
payment method). Determine the amount of tax to be deposited for the month of October 2023
under this scheme?
(a) Rs. 2,450
(b) Rs. 7,700
(c) Rs. 10,150
(d) Rs. 4,200

7. Shubham Traders Pvt. Ltd. is registered in Meghalaya (a North- Eastern State). Its turnover in the
immediate previous financial year is Rs. 4.95 crore.
While filing its GSTR-1 for the current financial year, the accountant is preparing the HSN Summary
but is unaware about the number of digits of HSN code to be mentioned in GSTR-1.
How many digits of HSN code is mandatory to be mentioned in GSTR-1 of Shubham Traders Pvt.
Ltd.?
(a) 6 digits HSN
(b) 4 digits HSN
(c) Only description of goods
(d) 8 digits HSN

8. The due date of filing Final Return is __________.

(a) 20th of the next month
(b) 18th of the month succeeding the quarter
(c) within 3 months of the date of cancellation or date of order of cancellation, whichever is later
(d) 31st December of next financial year

9. Nirmaan Industries, registered in Faridabad (Haryana) has purchased goods from 3 suppliers
registered in Delhi and 2 suppliers registered in Punjab. One supplier from Delhi failed to file his
GSTR-1 on time (assuming no supplier has opted for QRMP Scheme).
Now Nirmaan Industries wants to evaluate its tax payable in cash for the subject month and check
which
company has failed to file their GSTR-1 to calculate available input tax credit.
Which form should Nirmaan Industries check to calculate available and eligible Input Tax Credit?
(a) GSTR-2A
(b) GSTR-1
(c) GSTR-2B
(d) GSTR-3B

RETURNS 15.2
10. Mr. Rishabh Gaba, registered under GST in Delhi had turnover of 75 lakh in the previous year. He has
registered himself under composition scheme in GST as he projects his sale to be below Rs. 1.5 crores
in the forthcoming years and all sales will take place within Delhi.
He has deposited his tax quarterly. He wants to file the return of his company Rishabh Engineering
Works
on yearly basis.
Which form Mr. Rishabh Gaba should use for furnishing the yearly return of his company?
(a) Form GST CMP-08
(b) Form GSTR-9
(c) Form GSTR-4
(d) Form GSTR-10

Answer Key
1. 2. 3. 4. 5. 6. 7. 8. 9. 10.
b a b c d c a c c c

15.3 RETURNS