Under the Income Tax Act, if a house property is self-occupied, what is the Annual Value of that property? MCQ with Answer and Explanation

Under the Income Tax Act, if a house property is self-occupied, what is the Annual Value of that property?
A. The actual rent received
B. The fair rent of the property
C. The municipal valuation of the property
D. Nil (Zero)
Answer: Option D
Solution (By JKSSB Mock Tests)
Under Section 23(2) of the Income Tax Act, if a house property is used for the owner's own residence (self-occupied), its Annual Value is taken as Nil (Zero).

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Practice More Accountancy and Book Keeping Questions

Question #1
A: Internal audit is a continuous process. R: Internal audit is conducted by the statutory auditor. Choose the correct option.
A. Both A and R are true but R is NOT the correct explanation of A
B. A is true but R is false
C. Both A and R are true and R is the correct explanation of A
D. A is false but R is true

Correct Answer: Option B


Explanation:
Internal audit is a continuous, ongoing appraisal system by the management. It is conducted by internal audit staff, not the statutory (external) auditor, who conducts the annual financial audit. A is true, R is false.

Question #2
The 'Prudence Concept' is also known as:
A. Conservatism
B. Accrual
C. Materiality
D. Consistency

Correct Answer: Option A


Explanation:
Prudence (conservatism) means anticipating no profits but providing for all possible losses.

Question #3
Residential status under the Income Tax Act depends primarily on:
A. Location of assets owned
B. Place of birth
C. Citizenship of the individual
D. Physical presence (number of days) in India during the previous year

Correct Answer: Option D


Explanation:
An individual's residential status for tax purposes is determined by their period of stay in India during the relevant financial year, irrespective of citizenship.