Hindu Undivided Family Taxation Quiz
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Questions and Answers

In which month will the salary for March 2020 be taxable?

  • March 2021
  • March 2020
  • February 2020
  • April 2020 (correct)

    • What is the total taxable salary amount for the year 2019-20?

  • Rs. 2,58,000 (correct)
  • Rs. 2,40,000
  • Rs. 2,50,000
  • Rs. 2,70,000

    • Which of the following is included in the definition of salary as per Section 17(1)?

  • Only wages
  • Employer's contribution to any savings plan
  • Gratuity and fees (correct)
  • Only pension payments

    • As per the given data, in which month was an amount of Rs. 22,000 due?

    <p>October 2019</p> Signup and view all the answers

    What is the due date for the salary of June 2019?

    <p>July 1, 2019</p> Signup and view all the answers

    Which of the following salaries is taxable in the previous year 2019-20?

    <p>March 2019 salary</p> Signup and view all the answers

    Which element is NOT included in the salary as defined in Section 17(1)?

    <p>Investment profits</p> Signup and view all the answers

    What is the amount given for salary in July 2019?

    <p>Rs. 21,000</p> Signup and view all the answers

    What is considered as casual income?

    <p>Winnings from betting or gambling</p> Signup and view all the answers

    What defines an assessee under the Income-tax Act?

    <p>Anyone liable to pay any tax or other sums under the Act</p> Signup and view all the answers

    Which of the following is NOT considered casual income?

    <p>Salary from employment</p> Signup and view all the answers

    How is the previous year defined in relation to the assessment year?

    <p>It is the financial year immediately preceding the assessment year</p> Signup and view all the answers

    Which of the following statements is true regarding casual income?

    <p>Casual income is purely accidental and non-recurring</p> Signup and view all the answers

    Which type of income is explicitly excluded from being classified as casual income?

    <p>Income from tangible assets like stocks</p> Signup and view all the answers

    What happens to the previous year for a newly set-up business?

    <p>It can be less than 12 months</p> Signup and view all the answers

    Who would be deemed an assessee in default?

    <p>An individual who has failed to pay tax assessed</p> Signup and view all the answers

    Which of the following incomes is exempt from tax under section 10 of the Income Tax Act?

    <p>Agricultural income</p> Signup and view all the answers

    What type of income does Hindu Undivided Family (HUF) receive that is exempt from tax?

    <p>Share of income from Hindu Undivided Family</p> Signup and view all the answers

    Which of the following payments qualifies as exempt income under section 10?

    <p>Payment received under Bhopal Gas Leak Disaster Act</p> Signup and view all the answers

    Which of these options is NOT an example of exempt income under section 10?

    <p>Profits from trading in cryptocurrencies</p> Signup and view all the answers

    Which of the following is only partially exempt from tax under section 10?

    <p>60% of the total amount received from opting out of NPS</p> Signup and view all the answers

    Under section 10, which of the following incomes is exempt specifically for individual taxpayers?

    <p>Awards made in public interest</p> Signup and view all the answers

    What is the maximum percentage of NPS withdrawal that can be claimed as exempt under section 10?

    <p>25%</p> Signup and view all the answers

    Which of the following is not included as exempt income under section 10?

    <p>Income from fixed-term deposits</p> Signup and view all the answers

    What is the total tax calculated before any reductions?

    <p>Rs. 2,42,300</p> Signup and view all the answers

    What is the flat tax rate for long term capital gains under the Income Tax Act?

    <p>20%</p> Signup and view all the answers

    Which component is included in determining the rebate amount under section 87A?

    <p>Non-agricultural income</p> Signup and view all the answers

    Which of the following best describes the tax treatment of short term capital gains covered under section 111A?

    <p>Taxable at 15%</p> Signup and view all the answers

    What is the balance amount before applying the rebate under section 87A?

    <p>Rs. 3,000</p> Signup and view all the answers

    How is the net taxable income rounded off according to section 288A?

    <p>To the nearest Rs. 10</p> Signup and view all the answers

    What is the final tax payable after all deductions and rebates?

    <p>Rs. 0</p> Signup and view all the answers

    What happens if the last digit of an amount for rounding off is 5 or more?

    <p>It is increased to the next multiple</p> Signup and view all the answers

    What is the maximum limit for the deduction of life insurance premium for policies issued after April 1, 2013?

    <p>10% of sum assured</p> Signup and view all the answers

    What differentiates an exemption from a deduction in tax terms?

    <p>Deduction can be less than or equal to the amount of income</p> Signup and view all the answers

    Which accounting method involves recognizing income when it is earned rather than when it is received?

    <p>Accrual system</p> Signup and view all the answers

    In which of the following cases is income taxed at a flat rate of 30%?

    <p>Casual incomes like gambling and lottery</p> Signup and view all the answers

    If an individual's total income is Rs. 2,40,000, which of the following is true regarding the taxation of long term capital gains?

    <p>Taxed at 20% regardless of total income</p> Signup and view all the answers

    Study Notes

    Residential Status of Hindu Undivided Family (HUF)

    • Residential status of an HUF is assessed based on the residence of its karta (head) or its members.
    • HUF can be classified as a resident or non-resident taxpayer in India.
    • An HUF is deemed a resident if the karta resides in India for more than 182 days in the previous year.
    • Alternatively, if the karta has been in India for 60 days of the current previous year and 365 days over the preceding four years, it qualifies as a resident.
    • Non-resident status applies when the karta does not meet the above residency criteria.

    Exempt Incomes under Section 10 of the Income Tax Act

    • Certain incomes are exempt from taxation, significantly impacting tax liabilities.
    • Exemptions include:
      • Agricultural income
      • Share of income from a Hindu Undivided Family
      • Partner's share of income from a firm
      • Payments under specific disaster acts (e.g., Bhopal Gas Leak Disaster Act)
      • Educational scholarships
      • Awards from the government in the public interest
      • Income from scientific research associations
      • News agency incomes
      • Khadi and Village Industries income
      • Income of mutual funds and certain government funds (e.g., Swachh Bharat Kosh)

    Summary of Exempted Incomes

    • Income exempted under the head “Salaries” is detailed in a separate chapter.
    • Partial withdrawal from the National Pension System (NPS) is exempt up to 25% of the employee's contribution.
    • Total exempt income can significantly alter the taxable income calculations.

    Taxable Salary Examples

    • Salary is taxable based on the due date or receipt date, whichever comes first.
    • Taxable amounts vary monthly, e.g., ₹21,000 for the first six months of the financial year.

    Definition and Implications of an Assessee

    • An assessee is anyone liable to pay tax or other sums under the Income Tax Act.
    • It includes individuals involved in tax proceedings or those deemed as assessees by law.

    Understanding Casual Income

    • Casual income refers to non-recurring and accidental receipts, e.g., lottery winnings, gambling profits.
    • Casual income does not allow for losses to be set off, and expenses cannot be deducted from it.

    Previous Year and Assessment Year Concepts

    • The previous year refers to the financial year preceding the assessment year, crucial for tax assessments.
    • Businesses may have varying previous years when first established.

    Health and Education Cess

    • Levied at 4% on the income tax amount after rebates and surcharges have been applied.

    Special Rates on Certain Incomes

    • Specific incomes, such as long-term and short-term capital gains or casual incomes, are taxed at flat rates, regardless of the taxpayer's other incomes.

    Rounding Off Income and Tax Liabilities

    • Taxable income and tax payable are rounded off to the nearest multiple of ₹10 to simplify calculations.

    Tax Exemption vs. Deduction

    • Tax exemptions mean an income is not included in the income computation.
    • Deductions are allowable from taxable income and may even exceed total income, potentially resulting in assessable loss.

    Accounting Methods

    • The mercantile and cash methods are the two prevalent systems of accounting that affect income reporting and tax calculations.

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    Description

    Test your knowledge on the residential status of Hindu Undivided Families (HUF) and the exemptions provided under Section 10 of the Income Tax Act in India. This quiz covers essential criteria for residency, non-resident status, and various exempt incomes. Ideal for students and professionals looking to enhance their understanding of tax laws related to HUFs.

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