# Samacheer Kalvi 11th Commerce Solutions Chapter 32 Direct Taxes

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## Samacheer Kalvi 11th Commerce Solutions Chapter 32 Direct Taxes

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### Samacheer Kalvi 11th Commerce Direct Taxes Textbook Exercise Questions and Answers

I. Choose the Correct Answer

Question 1.
Income Tax is ……………
(a) a business tax
(b) a direct tax
(c) an indirect tax
(d) none of these
Answer:
(b) a direct tax

Question 2.
Period of assessment year is ……………
(a) 1st April to 31st March
(b) 1st March to 28st Feb
(c) 1st July to 30st June
(d) 1st Jan to 31st Dec
Answer:
(a) 1st April to 31st March

Question 3.
The year in which income is earned is known as ……………
(a) Assessment Year
(b) Previous Year
(c) Light Year
(d) Calendar Year
Answer:
(b) Previous Year

Question 4.
The aggregate income under five heads is termed as ……………
(a) Gross Total Income
(b) Total Income
(c) Salary Income
(d) Business Income
Answer:
(b) Total Income

Question 5.
Agricultural income earned in India is ……………
(a) Fully Taxable
(b) Fully Exempted
(c) Not Considered for Income
(d) None of the above
Answer:
(b) Fully Exempted

II. Very Short Answer Questions

Question 1.
What is Income tax?
Answer:
Income tax is a direct tax under which tax is calculated on the income, gains or profits earned by a person such as individuals and. other artificial entities (a partnership firm, company, etc.).

Question 2.
What is meant by previous year?
Answer:
The year in which income is earned is called previous year. It is also normally consisting of a period of 12 months commencing on 1st April every year and ending on 31st March of the following year. It is also called as financial year immediately following the assessment year.

Question 3.
Define the term person?
Answer:
The term ‘person’ has been defined under the Income tax Act. It includes individual, Hindu, Undivided Family, Firm, Company, local authority, Association of person or body of Individual or any other artificial juridical persons.

Question 4.
Define the term assessee?
Answer:
Assessee means a person by whom any tax or any other sum of money is payable under this Act. It includes every person in respect of whom any proceeding has been taken for the assessment of his income or assessment of fringe benefits.

Question 5.
What is an assessment year?
Answer:
The term has been defined under section 2(9). The year in which tax is paid is called the assessment year. It normally consists of a period of 12 months commencing on 1st April every year and ending on 31st March of the following year.

III. Short Answer Questions

Question 1.
What is Gross Total Income?
Answer:
Income from the five heads, namely – Salaries, House Property, Profits and Gains of Business or Profession, Capital Gains, and Other Sources – is computed separately according to the provisions given in the Act. Income computed under these heads shall be aggregated after adjusting past and present losses and the total so arrived at is known as ‘Gross Total Income’.

Question 2.
List out the five heads of income.
Answer:
The five heads of income are:

1. Income from‘Salaries’ [Sections 15 – 17];
2. Income from ‘House Property’ [Sections 22 – 27];
3. Income from ‘Profits and Gains of Business or Profession’ [Sections 28 – 44];
4. Income from ‘Capital Gains’ [Sections 45 – 55]; and
5. Income from‘Other Sources’ [Sections 56 – 59].

Question 3.
Write a note on Agricultural Income.
Answer:
Any rent or revenue derived from land which is situated in India and is used for agriculture purposes. Agricultural income is fully exempted from tax u/s 10(1) and as such does not form part of total income.

Question 4.
What do you mean by Total Income.
Answer:
Out of Gross Total Income, Income Tax Act 1961 allows certain deductions under section 80. After allowing these deductions the figure which we arrive at is called ‘Total Income’ and on this figure tax liability is computed at the prescribed rates.

1. Gross Total Income ****
2. Less: Deductions (Sec. 80C to 80U) ****
3. Total Income (T.I.) ****

Question 5.
Write short notes on:

1. Direct Tax
2. Indirect Tax

Answer:
1. Direct Tax:
If a tax levied on the income or wealth of a person and is paid by that person (or his office) directly to the Government, , it is called direct tax, example Income – Tax, Wealth Tax, Capital Gains Tax, Securities Transaction Tax, Fringe Benefits Tax (from 2005), Banking Cash Transaction Tax (for Rs,50,000 and above – from 2005), etc. In India all direct taxes are levied and administered by Central Board of Direct Taxes.

2. Indirect Tax:
If tax is levied on the goods or services of a person (seller). It is collected from, the buyers and is paid by seller to the Government. It is called indirect tax example GST.

IV. Long Answer Questions

Question 1.
Elucidate any five features of Income Tax.
Features of Income Tax in India:
1. Levied as Per the Constitution Income tax is levied in India by virtue of entry No. 82 of list I (Union List) of Seventh Schedule to the Article 246 of the Constitution of India.

2. Levied by Central Government Income tax is charged by the Central Government on all incomes other than agricultural income. However, the power to charge income tax on agricultural income has been vested with the State Government as per entry 46 of list II, i.e., State List.

3. Direct Tax Income tax is direct tax. It is because the liability to deposit and ultimate burden are on same person. The person earning income is liable to pay income tax out of his own pocket and cannot pass on the burden of tax to another person.

4. Annual Tax Income tax is an annual tax because it is the income of a particular year which is chargeable to tax.

5. Tax on Person It is a tax on income earned by a person. The term ‘person’ has been defined under the Income tax Act. It includes individual, Hindu Undivided Family, Firm, Company, local authority, Association of person or body of Individual or any other artificial juridical persons. The persons who are covered under Income tax Act are called ‘assessees’.

Question 2.
Define Tax. Explain the term direct tax and indirect tax with an example.
Answer:
Tax is a compulsory contribution to state revenue by the Government. It is levied on the income or profits from business of individuals and institutions. It may be added to the price of goods, services or transactions. Tax is the basic source of revenue to the Government. This revenue is utilised for the expenses of civil administration, internal and external security, building infrastructure, etc.

There are two types of taxes – direct taxes and indirect, taxes.

1. Direct Tax:
If a tax levied on the income or wealth of a person and is paid by that person (or his office) directly to the Government, it is called direct tax, e.g., Income – Tax, Wealth Tax, Capital Gains Tax, Securities Transaction Tax, Fringe Benefits Tax (from 2005), Banking Cash Transaction Tax (for Rs.50,000 and above – from 2005), etc. In India all direct taxes are levied and administered by Central Board of Direct Taxes.

2. Indirect Tax:
If tax is levied on the goods or services of a person (seller). It is collected from the buyers and is paid by seller to the Government. It is called indirect tax. example GST.

Question 3.
List out any ten kinds of incomes chargeable under the head income tax.
Answer:

1. Profits and gains of business or profession.
2. Dividend
3. Voluntary contribution received by a charitable / religious trust or university/education institution or hospital/electoral trust[ w.e.f. 01.04.2010]
4. Value of perquisite or profit in lieu of salary taxable u/s 17 and social allowance or benefit specifically granted either to meet personal expenses or for performance Of duties of an office or an employment of profit.
5. Export incentives, like duty drawback, cash compensatory support, sale of licenses, etc.
6. Interest, salary, bonus, commission or remuneration earned by a partner of a firm from such firm.
7. Capital gain chargeable u/s 45.
8. Profits and gains from the business of banking carried on by a co – operative society with its members.
9. Winning from lotteries, crossword puzzles, races including horse races, card games and other games of any sort or from gambling or betting of any form or nature whatsoever.
10. Deemed income u/s 41 or 59.

Question 4.
Discuss the various kinds of assesses.
Answer:
Assessee means a person by whom any tax or any other sum of money is payable under this Act. It includes every person in respect of whom any proceeding has been taken for the assessment of his income or assessment of fringe benefits. The term ‘person’ includes the following:

1. an individual
2. a Hindu Undivided Family (HUE)
3. a company
4. a firm
5. an Association Of Persons or a Body Of Individual, whether incorporated or not
6. a local authority, and
7. every artificial juridical person example an idol or deity.

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