The Income Tax Act, 1961 classifies income under how many heads? MCQ with Answer and Explanation

Question
The Income Tax Act, 1961 classifies income under how many heads?
A. Four
B. Seven
C. Six
D. Five
Answer: Option D
Solution (By JKSSB Mock Tests)
Heads of income: Salary, House property, Business/profession, Capital gains, Other sources. Total five heads.
This question belongs to: Accountancy and Statistics Accountancy and Book Keeping
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Practice More Accountancy and Book Keeping Questions

Question #1
The 'Independence' of auditor means:
A. Auditor is free from any influence that could compromise professional judgment
B. Auditor is a relative of management
C. Auditor can hold shares in the client company
D. Auditor can take loan from client
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Correct Answer: Option A

Explanation:
Independence in mind and appearance is fundamental to audit.
This question belongs to: Accountancy and Statistics Accountancy and Book Keeping
Question #2
S1: Under GST, the 'Input Tax Credit' (ITC) on goods lost, stolen, destroyed, or written off is not available. S2: ITC on goods used for personal consumption is fully available. Which statement(s) is/are correct?
A. S2 only
B. Neither S1 nor S2
C. Both S1 and S2
D. S1 only
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Correct Answer: Option D

Explanation:
S1 is correct as per Section 17(5) of the CGST Act; ITC is blocked for lost, stolen, destroyed, or written-off goods. S2 is incorrect because ITC is explicitly blocked for goods used for personal consumption.
This question belongs to: Accountancy and Statistics Accountancy and Book Keeping
Question #3
The Central Board of Direct Taxes (CBDT) functions under which department of the Ministry of Finance?
A. Department of Financial Services
B. Department of Expenditure
C. Department of Economic Affairs
D. Department of Revenue
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Correct Answer: Option D

Explanation:
CBDT handles direct tax administration and forms part of the Department of Revenue.
This question belongs to: Accountancy and Statistics Accountancy and Book Keeping
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