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CMA Inter Direct Taxation — practice by topic

Browse 22 questions across 1 Direct Taxation topics. Choose what you want to revise, then open a question to check its answer and worked solution.

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Direct Taxation topics

Salaries (22)

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Which section deals with the basis of charge under the head Salaries?Read the answer and worked solution →Salary is chargeable to tax onRead the answer and worked solution →Salary paid in advance and already assessed in the year of payment isRead the answer and worked solution →Advance salary is taxableRead the answer and worked solution →

Worked practice questions

Which section deals with the basis of charge under the head Salaries?

  1. Section 15
  2. Section 16
  3. Section 17
  4. Section 14
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Correct answer: A. Section 15

1. Each head of income has its own charging provision. 2. For salaries, the basis of charge is dealt with by section 15. 3. Section 16 covers the deductions allowed from salary instead. 4. Section 17 defines salary, perquisite and profits in lieu of salary. _Source: ICAI Income Tax Law, Ch3 'Heads of Income', Unit 1 'Salaries', section 1.2_

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Salary is chargeable to tax on

  1. due basis only, in every case
  2. due or receipt basis, whichever is earlier
  3. receipt basis only, in every case
  4. due or receipt basis, whichever is later
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Correct answer: B. due or receipt basis, whichever is earlier

1. Salary can fall due in one year and be received in another. 2. The rule fixes which of the two events triggers the charge. 3. Salary is chargeable to tax either on due basis or on receipt basis, whichever is earlier. 4. Choosing the later of the two would let tax be deferred simply by delaying payment. _Source: ICAI Income Tax Law, Ch3 'Heads of Income', Unit 1 'Salaries', section 1.2_

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Salary paid in advance and already assessed in the year of payment is

  1. taxed again in the year it falls due
  2. taxed at half rate when it falls due
  3. not taxed again when it falls due
  4. refunded to the employee on assessment
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Correct answer: C. not taxed again when it falls due

1. The earlier of due or receipt decides the year of charge. 2. Where salary paid in advance is assessed in the year of payment, that year has already taxed it. 3. It cannot subsequently be brought to tax in the year in which it becomes due. 4. The mirror rule applies to arrears: salary already assessed on due basis is not taxed again when paid. 5. Together these two rules prevent the same salary being taxed twice. _Source: ICAI Income Tax Law, Ch3 'Heads of Income', Unit 1 'Salaries', section 1.2_

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