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Test: Taxation - Commerce MCQ


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15 Questions MCQ Test - Test: Taxation

Test: Taxation for Commerce 2024 is part of Commerce preparation. The Test: Taxation questions and answers have been prepared according to the Commerce exam syllabus.The Test: Taxation MCQs are made for Commerce 2024 Exam. Find important definitions, questions, notes, meanings, examples, exercises, MCQs and online tests for Test: Taxation below.
Solutions of Test: Taxation questions in English are available as part of our course for Commerce & Test: Taxation solutions in Hindi for Commerce course. Download more important topics, notes, lectures and mock test series for Commerce Exam by signing up for free. Attempt Test: Taxation | 15 questions in 15 minutes | Mock test for Commerce preparation | Free important questions MCQ to study for Commerce Exam | Download free PDF with solutions
Test: Taxation - Question 1
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If a company has a net income of Rs. 500,000 and the corporate tax rate is 25%, how much tax does the company owe?

Detailed Solution for Test: Taxation - Question 1

The tax owed is calculated by multiplying the net income by the tax rate: Rs. 500,000 * 0.25 = Rs. 125,000.

Test: Taxation - Question 2
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If the sales tax rate is 8% and you buy a laptop for Rs. 1000, how much tax do you pay?

Detailed Solution for Test: Taxation - Question 2

The tax paid is calculated by multiplying the price of the laptop by the sales tax rate: Rs. 1000 * 0.08 = Rs. 80. So, the total amount paid including tax is Rs. 1000 + Rs. 80 = Rs. 108.

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Test: Taxation - Question 3
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If a person's taxable income is Rs 50,000 and the tax rate is 20%, how much tax do they owe?

Detailed Solution for Test: Taxation - Question 3

The tax owed is calculated by multiplying the taxable income by the tax rate: Rs. 50,000 * 0.20 = Rs. 10,000.

Test: Taxation - Question 4
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If a property is valued at Rs. 300,000 and the property tax rate is 2%, how much tax does the owner owe annually?
Detailed Solution for Test: Taxation - Question 4

The annual tax owed is calculated by multiplying the property value by the property tax rate: Rs. 300,000 * 0.02 = Rs. 6,000.

Test: Taxation - Question 5
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Calculate the total income tax for an individual with taxable income of Rs. 75,000 if the tax rates are 10% on the first Rs. 10,000, 15% on the next Rs. 20,000, and 25% on the remaining amount.
Detailed Solution for Test: Taxation - Question 5

Tax is calculated in tiers: 

  • On the first Rs. 10,000: Rs. 10,000 * 0.10 = Rs. 1,000
  • On the next Rs. 20,000 (total Rs. 10,001 to Rs. 30,000): Rs. 20,000 * 0.15 = Rs. 3,000
  • On the remaining Rs. 45,000 (total Rs. 30,001 to Rs. 75,000): Rs. 45,000 * 0.25 = Rs. 11,250

Total tax = Rs. 1,000 + Rs. 3,000 + Rs. 11,250 = Rs. 15,250.

Test: Taxation - Question 6
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If a person's annual salary is Rs. 60,000 and they contribute Rs. 5,000 to a retirement account that is tax-deductible, what is their taxable income?
Detailed Solution for Test: Taxation - Question 6

Taxable income is calculated by subtracting the deductible retirement account contribution from the annual salary: Rs. 60,000 - Rs. 5,000 = Rs. 55,000.

Test: Taxation - Question 7
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A company makes a profit of Rs. 1,000,000 before taxes. If the corporate tax rate is 30%, how much tax does the company owe?
Detailed Solution for Test: Taxation - Question 7

The tax owed is calculated by multiplying the profit before taxes by the tax rate: Rs. 1,000,000 * 0.30 = Rs. 300,000.

Test: Taxation - Question 8
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If the value added at each stage of production for a product is Rs. 500 and the VAT rate is 10%, what is the total VAT paid for the product?
Detailed Solution for Test: Taxation - Question 8

The total VAT paid is calculated by multiplying the value added by the VAT rate: Rs. 500 * 0.10 = Rs. 50.

Test: Taxation - Question 9
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If the estate tax rate is 40% and an estate is valued at Rs. 5,000,000, how much tax is owed?
Detailed Solution for Test: Taxation - Question 9

The tax owed is calculated by multiplying the estate value by the estate tax rate: Rs. 5,000,000 * 0.40 = Rs. 2,000,000.

Test: Taxation - Question 10
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Calculate the capital gains tax for an individual who sells a stock for Rs. 10,000 that was purchased for Rs. 7,000.
Detailed Solution for Test: Taxation - Question 10

Capital gains tax is calculated on the profit made from selling the stock. Profit = Selling price - Purchase price = Rs. 10,000 - Rs. 7,000 = Rs. 3,000. Tax = Profit * Capital gains tax rate = Rs. 3,000 * 0.1667 (for the average tax rate) = Rs. 500.

Test: Taxation - Question 11
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If the gift tax rate is 35% and a person gives a gift worth Rs. 50,000, how much tax is owed?
Detailed Solution for Test: Taxation - Question 11

The tax owed is calculated by multiplying the value of the gift by the gift tax rate: Rs. 50,000 * 0.35 = Rs. 17,500.

Test: Taxation - Question 12
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A company has a revenue of Rs. 2,000,000 and deductible expenses of Rs. 1,500,000. If the corporate tax rate is 25%, how much tax does the company owe?
Detailed Solution for Test: Taxation - Question 12

The taxable income is calculated by subtracting deductible expenses from revenue: Rs. 2,000,000 - Rs. 1,500,000 = Rs. 500,000. The tax owed is then calculated by multiplying the taxable income by the tax rate: Rs. 500,000 * 0.25 = Rs. 125,000.

Test: Taxation - Question 13
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A tax system in which the average tax rate increases as the taxpayer's income increases is known as:
Detailed Solution for Test: Taxation - Question 13

In a progressive tax system, as income increases, the average tax rate also increases. This means that higher-income individuals pay a higher percentage of their income in taxes compared to lower-income individuals.

Test: Taxation - Question 14
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What does TDS stand for in the context of taxation?
Detailed Solution for Test: Taxation - Question 14

TDS stands for Tax Deducted at Source. It is a mechanism through which taxes are deducted at the time of payment itself. This system ensures that taxes are collected in advance from various sources of income such as salaries, interest, dividends, etc.

Test: Taxation - Question 15
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Which of the following is NOT a deductible expense for income tax purposes?
Detailed Solution for Test: Taxation - Question 15

While mortgage interest, charitable contributions, and property taxes are typically deductible expenses for income tax purposes, entertainment expenses are generally not fully deductible. The tax law may allow for a partial deduction of entertainment expenses under certain conditions, but it is not fully deductible in most cases.

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