Introduction of Income from other sources :-
Income from other sources refers to any income that is not categorized as income from salary, business or profession, capital gains, or income from house property. Examples of income from other sources include interest income, rental income from assets other than house property, winnings from lotteries or game shows, and gifts received above a certain value. This type of income is taxed according to the individual’s income tax slab rate.
Income from other sources is a category of income that includes any income that is not covered under the other heads of income such as salaries, business or profession, capital gains, and house property. This article aims to test your knowledge on Income from other sources 36 MCQs
MCQ.1. Which of the following is not considered as Income from other sources?
a) Rental income from a house
b) Interest earned on bank deposits
c) Profits from business or profession
d) Income from lottery
Answer: c) Profits from business or profession
Explanation: Profits from business or profession are covered under the head “Profits and gains from business or profession” and not under Income from other sources.
MCQ.2. What is the tax rate for income earned from other sources?
a) Flat rate of 20%
b) Flat rate of 10%
c) As per the applicable slab rate
d) No tax is levied on such income
Answer: c) As per the applicable slab rate
Explanation: Income from other sources is taxed as per the applicable slab rate of the taxpayer. There is no flat tax rate for this category of income.
MCQ.3. Which of the following is not included under Income from other sources?
a) Dividend income
b) Interest income on post office savings
c) Rental income from commercial property
d) Wages earned from employment
Answer: d) Wages earned from employment
Explanation: Wages earned from employment are covered under the head “Salaries” and not under Income from other sources.
MCQ.4. What is the tax treatment of gifts received from friends or relatives?
a) Fully taxable
b) Exempt up to a limit of Rs. 50,000 in a financial year
c) Exempt up to a limit of Rs. 1,00,000 in a financial year
d) Not taxable
Answer: d) Not taxable
Explanation: Gifts received from friends or relatives are not taxable in the hands of the recipient.
MCQ.5. Which of the following is not considered as income from other sources for a partnership firm?
a) Interest income from a bank deposit
b) Dividend income
c) Income from sale of goods
d) Rent received from letting out a part of the premises
Answer: c) Income from sale of goods
Explanation: Income from sale of goods is covered under the head “Profits and gains from business or profession” and not under Income from other sources for a partnership firm.
MCQ.6. What is the maximum amount of exempt income allowed for interest earned on a savings account in a financial year?
a) Rs. 10,000
b) Rs. 20,000
c) Rs. 30,000
d) Rs. 40,000
Answer: a) Rs. 10,000
Explanation: Interest earned on a savings account up to Rs. 10,000 in a financial year is exempt from tax under Income from other sources.
MCQ.7. Which of the following is not considered as Income from other sources for an individual?
a) Winning from a game show
b) Income from letting out machinery
c) Interest on income tax refund
d) Income from sale of a long-term capital asset
Answer: d) Income from sale of a long-term capital asset
Explanation: Income from sale of a long-term capital asset is covered under the head “Capital gains” and not under Income from other sources for an individual.
MCQ.8. Which of the following is not included under Income from other sources for an HUF?
a) Rental income from a house property
b) Interest income from a savings account
c) Income from letting out machinery
d) Income from a business carried on by the HUF
Answer: d) Income from a business carried on by the HUF
Explanation: Income from a business carried on by an HUF is covered under the head “Profits and gains from business or profession” and not under Income from other sources.
MCQ.9. Which of the following is not considered as Income from other sources for a company?
a) Dividend income
b) Interest income on fixed deposits
c) Rental income from a house property
d) Profit from sale of goods
Answer: d) Profit from sale of goods
Explanation: Profit from sale of goods is covered under the head “Profits and gains from business or profession” and not under Income from other sources for a company.
MCQ.10. Which of the following is not eligible for deduction while computing income from other sources?
a) Expenses incurred to earn interest income
b) Gifts received from relatives
c) TDS deducted on interest income
d) Interest paid on a loan taken to earn income from other sources
Answer: b) Gifts received from relatives
Explanation: Gifts received from relatives are not included under the head “Income from other sources” and hence not eligible for any deductions.
MCQ.11. What is the tax treatment of interest received on a delayed payment of refund by the income tax department?
a) Fully taxable
b) Exempt from tax
c) Taxed at a flat rate of 10%
d) Taxed at a flat rate of 20%
Answer: b) Exempt from tax
Explanation: Interest received on a delayed payment of refund by the income tax department is exempt from tax under Income from other sources.
MCQ.12. Which of the following is not eligible for deduction while computing income from other sources?
a) Brokerage paid on the sale of shares
b) Professional fees paid to a consultant
c) TDS deducted on interest income
d) Salary paid to an employee
Answer: d) Salary paid to an employee
Explanation: Salary paid to an employee is covered under the head “Salaries” and not under Income from other sources.
MCQ.13. What is the tax treatment of gifts received by a taxpayer from a relative outside India?
a) Fully taxable
b) Exempt up to a limit of Rs. 50,000 in a financial year
c) Exempt up to a limit of Rs. 1,00,000 in a financial year
d) Not taxable
Answer: d) Not taxable
Explanation: Gifts received by a taxpayer from a relative outside India are not taxable in the hands of the recipient.
MCQ.14. Which of the following is not included under Income from other sources for a co-operative society?
a) Interest income from a bank deposit
b) Dividend income
c) Rental income from letting out a part of the premises
d) Profit from sale of goods
Answer: d) Profit from sale of goods
Explanation: Profit from sale of goods is covered under the head “Profits and gains from business or profession” and not under Income from other sources for a co-operative society.
MCQ.15. What is the tax treatment of interest received on compensation awarded by a court of law?
a) Fully taxable
b) Exempt from tax
c) Taxed at a flat rate of 10%
d) Taxed at a flat rate of 20%
Answer: b) Exempt from tax
MCQ.16. Which of the following is not eligible for deduction while computing income from other sources?
a) Fees paid for renewal of a license
b) Interest paid on a loan taken to earn income from other sources
c) Commission paid to an agent
d) Rent paid for use of a property
Answer: d) Rent paid for use of a property
Explanation: Rent paid for use of a property is covered under the head “Income from house property” and not under Income from other sources.
MCQ.17. What is the tax treatment of income received from letting out a machinery for hire?
a) Fully taxable
b) Exempt from tax
c) Taxed at a flat rate of 10%
d) Taxed at a flat rate of 20%
Answer: a) Fully taxable
Explanation: Income received from letting out a machinery for hire is covered under the head “Income from other sources” and is fully taxable.
MCQ.18. Which of the following is not included under Income from other sources for a partnership firm?
a) Interest income from a bank deposit
b) Dividend income
c) Rent received from letting out a part of the premises
d) Profit from sale of goods
Answer: d) Profit from sale of goods
Explanation: Profit from sale of goods is covered under the head “Profits and gains from business or profession” and not under Income from other sources for a partnership firm.
MCQ.19. What is the tax treatment of income received from letting out a plant or machinery?
a) Fully taxable
b) Exempt from tax
c) Taxed at a flat rate of 10%
d) Taxed at a flat rate of 20%
Answer: a) Fully taxable
Explanation: Income received from letting out a plant or machinery is covered under the head “Income from other sources” and is fully taxable.
MCQ.20. Which of the following is not eligible for deduction while computing income from other sources?
a) Fees paid for renewal of a permit
b) Professional fees paid to a lawyer
c) TDS deducted on interest income
d) Salary paid to an employee
Answer: d) Salary paid to an employee
Explanation: Salary paid to an employee is covered under the head “Salaries” and not under Income from other sources.
MCQ.21. What is the tax treatment of income received from letting out a vacant plot of land?
a) Fully taxable
b) Exempt from tax
c) Taxed at a flat rate of 10%
d) Taxed at a flat rate of 20%
Answer: a) Fully taxable
Explanation: Income received from letting out a vacant plot of land is covered under the head “Income from other sources” and is fully taxable.
MCQ.22. Which of the following is not eligible for deduction while computing income from other sources?
a) Contribution to a recognized provident fund
b) Donations made to specified entities
c) Interest paid on a loan taken to earn income from other sources
d) Payment of premium for a life insurance policy
Answer: d) Payment of premium for a life insurance policy
Explanation: Payment of premium for a life insurance policy is covered under the head “Income from salary” or “Income from business or profession” and not under Income from other sources.
MCQ.23. What is the tax treatment of income received from letting out a parking space?
a) Fully taxable
b) Exempt from tax
c) Taxed at a flat rate of 10%
d) Taxed at a flat rate of 20%
Answer: a) Fully taxable
Explanation: Income received from letting out a parking space is covered under the head “Income from other sources” and is fully taxable.
MCQ.24. Which of the following is included under Income from other sources for an individual?
a) Winnings from lotteries, crossword puzzles, and races
b) Income received from sale of capital assets
c) Interest income from a bank deposit
d) Profit from sale of goods
Answer: a) Winnings from lotteries, crossword puzzles, and races
Explanation: Winnings from lotteries, crossword puzzles, and races are covered under the head “Income from other sources” for an individual.
MCQ.25. What is the tax treatment of income received from letting out a trademark?
a) Fully taxable
b) Exempt from tax
c) Taxed at a flat rate of 10%
d) Taxed at a flat rate of 20%
Answer: a) Fully taxable
Explanation: Income received from letting out a trademark is covered under the head “Income from other sources” and is fully taxable.
MCQ.26. Which of the following is not included under Income from other sources for a company?
a) Interest income from a bank deposit
b) Dividend income
c) Rent received from letting out a part of the premises
d) Profit from sale of goods
Answer: d) Profit from sale of goods
Explanation: Profit from sale of goods is covered under the head “Profits and gains from business or profession” and not under Income from other sources for a company.
MCQ.27. What is the tax treatment of income received from letting out a furniture or fixture?
a) Fully taxable
b) Exempt from tax
c) Taxed at a flat rate of 10%
d) Taxed at a flat rate of 20%
Answer: a) Fully taxable
Explanation: Income received from letting out a furniture or fixture is covered under the head “Income from other sources” and is fully taxable.
MCQ.28. Which of the following is not eligible for deduction while computing income from other sources?
a) Professional fees paid to a doctor
b) TDS deducted on interest income
c) Rent paid for use of a property
d) Commission paid to an agent
Answer: c) Rent paid for use of a property
Explanation: Rent paid for use of a property is covered under the head “Income from house property” and not under Income from other sources.
MCQ.29. What is the tax treatment of income received from letting out a patent?
a) Fully taxable
b) Exempt from tax
c) Taxed at a flat rate of 10%
d) Taxed at a flat rate of 20%
Answer: a) Fully taxable
Explanation: Income received from letting out a patent is covered under the head “Income from other sources” and is fully taxable.
MCQ.30. Which of the following is not considered as income from other sources?
a) Rental income from a commercial property
b) Interest on savings bank account
c) Winning a horse race
d) Sale of a residential property
Answer: d) Sale of a residential property
Explanation: Sale of a residential property is covered under the head “Capital gains” and not under Income from other sources.
MCQ.31. What is the tax treatment of income received from letting out a copyright?
a) Fully taxable
b) Exempt from tax
c) Taxed at a flat rate of 10%
d) Taxed at a flat rate of 20%
Answer: a) Fully taxable
Explanation: Income received from letting out a copyright is covered under the head “Income from other sources” and is fully taxable.
MCQ.32. What is the tax treatment of income received from letting out a musical instrument?
a) Fully taxable
b) Exempt from tax
c) Taxed at a flat rate of 10%
d) Taxed at a flat rate of 20%
Answer: a) Fully taxable
Explanation: Income received from letting out a musical instrument is covered under the head “Income from other sources” and is fully taxable.
MCQ.33. What is the tax treatment of interest income received on a National Savings Certificate (NSC)?
a) Fully taxable
b) Exempt from tax
c) Taxed at a flat rate of 10%
d) Taxed at a flat rate of 20%
Answer: a) Fully taxable
Explanation: Interest income received on a National Savings Certificate (NSC) is covered under the head “Income from other sources” and is fully taxable.
MCQ.34. Which of the following is included under Income from other sources for a company?
a) Income received from sale of a capital asset
b) Dividend income
c) Income received from letting out a building
d) Income received from the sale of goods
Answer: b) Dividend income
Explanation: Dividend income is covered under the head “Income from other sources” for a company.
MCQ.35. What is the tax treatment of income received from letting out a plant or machinery?
a) Fully taxable
b) Exempt from tax
c) Taxed at a flat rate of 10%
d) Taxed at a flat rate of 20%
Answer: a) Fully taxable
Explanation: Income received from letting out a plant or machinery is covered under the head “Income from other sources” and is fully taxable.
MCQ.36. Which of the following is not eligible for deduction while computing income from other sources?
a) Interest paid on a loan taken to earn income from other sources
b) Donations made to specified entities
c) TDS deducted on interest income
d) Rent paid for use of a property
Answer: d) Rent paid for use of a property
Explanation: Rent paid for use of a property is covered under the head “Income from house property” and not under Income from other sources.
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