Preparing for AIBE-19? Don’t Miss These Important Tax Law Questions

As you know, Tax-related questions in the AIBE exam carry 4 marks in the All India Bar Council ( AIBE ) exam. If you’re thinking, “It’s just 4 marks, let’s skip it,” you might be making a huge mistake by missing out on a valuable opportunity. These 4 marks can be some of the easiest to secure with a basic understanding of tax principles, including GST and income tax.

Let’s go through tax-related questions from previous years, look at their answers, and understand them to help you prepare better for this section.

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Previous Year Questions Related to Tax

1. Which provision of the Constitution of India states that no tax can be levied or collected except by authority of law? (AIBE 18)

Options: A) Article 246
B) Article 256
C) Article 260
D) Article 265

Answer: D) Article 265

Explanation: Article 265 establishes that no tax can be imposed or collected without legal authority. It ensures constitutional validity in taxation.

2. As per the Income Tax Act, 1961, a person is said to be a resident of India in any previous year if he had been in India for a period of how many days?  (AIBE 18) (RQ)

Options: A) 180 days
B) 182 days
C) 184 days
D) 186 days

Answer: B) 182 days

Explanation: Under Section 6 of the Income Tax Act, a person is considered a resident if they have been in India for at least 182 days in the previous year.

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3. Income is defined under which of the following provisions of the Income Tax Act, 1961?  (AIBE 18)

Options: A) Section 2(31)
B) Section 2(24)
C) Section 2(9)
D) Section 3

Answer: B) Section 2(24)

Explanation: Section 2(24) of the Income Tax Act comprehensively defines "income" to include profits, gains, and other taxable amounts.

4. Which of the following would be the first previous year in case of a business or profession newly set up on 31st March 2020 as per the Income Tax Act, 1961? (AIBE 18)

Options: A) 1st April 2019 to 31st March 2020
B) 31st March 2020 only
C) 1st April 2020 to 31st March 2021
D) 1st January 2020 to 31st March 2020

Answer: A) 1st April 2019 to 31st March 2020

Explanation: The financial year preceding the date of setup is treated as the previous year for tax purposes.

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5. For an individual to be deemed to be resident in India in any previous year, one condition is: (AIBE 17)

Options: A) If he is in India for a period of 182 days or more during the previous year.
B) If he is in India for a period of 180 days or more during the previous year.
C) If he is in India for a period of 181 days or more during the previous year.
D) If he is in India for a period of 360 days or more during the previous year.

Answer: A) If he is in India for a period of 182 days or more during the previous year.

Explanation: Section 6 of the Income Tax Act specifies that an individual is considered a resident in India if they are in the country for at least 182 days in the relevant financial year.

6. Mr. Kapoor purchased a residential house in January 2021 for ₹80,00,000. He sold the house in April 2022 for ₹94,00,000. The gain of ₹14,00,000 arising on account of the sale of the residential house will be charged to tax under which head? (AIBE 17)

Options: A) Income from capital gains
B) Income from house property
C) Income from profits and gains of business or profession
D) Income from other sources

Answer: A) Income from capital gains

Explanation: Profits from the sale of capital assets such as a house are categorized as "Income from Capital Gains" under the Income Tax Act.

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7. Mr. Manjot is a trader supplying goods from Delhi, Punjab, Uttar Pradesh, and Jammu & Kashmir. Supplies include taxable and exempt items. In which states is he required to take GST registration? (AIBE-17)

Problem Data:

• Delhi: Taxable Supplies: ₹21,00,000
• Punjab: Exempt Supplies: ₹6,00,000
• Uttar Pradesh: Taxable Supplies: ₹3,00,000; Exempt Supplies: ₹3,00,000
• Jammu & Kashmir: Taxable Supplies: ₹8,00,000; Exempt Supplies: ₹3,00,000

Options: A) Delhi, Punjab, Uttar Pradesh, and Jammu & Kashmir
B) Delhi, Uttar Pradesh, and Jammu & Kashmir
C) Delhi and Uttar Pradesh
D) Delhi only

Answer: B) Delhi, Uttar Pradesh, and Jammu & Kashmir

Explanation: Under GST law, registration is required in every state where taxable supplies exceed the prescribed threshold or involve inter-state transactions. Since exempt supplies do not count towards the threshold, no GST registration is required in Punjab.

8. The primary GST slabs for any regular taxpayers are presently pegged at:  (AIBE-17)

A) 0%, 5%, 12%, 18%, 26%
B) 0%, 6%, 12%, 18%, 28%
C) 0%, 5%, 12%, 18%, 28%
D) 0%, 5%, 12%, 16%, 28%

Answer: C) 0%, 5%, 12%, 18%, 28%

Explanation: GST rates are divided into slabs based on the type of goods or services ensuring a progressive tax structure.

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9. Rate of additional depreciation under Section 32 of the Indian Income Tax Act is: (AIBE-16)

• a) 10%
• b) 20%
• c) 15%
• d) 30%

Answer: b) 20%

Explanation: Under Section 32 of the Indian Income Tax Act, companies are allowed additional depreciation at a rate of 20% for new machinery or plants, subject to specified conditions.

10. A company which is not a domestic company will pay income tax at the rate of: (AIBE-16)

• a) 25%
• b) 30%
• c) 40%
• d) 20%

Answer: c) 40%

Explanation: Non-domestic companies are taxed at a higher rate of 40% under the Income Tax Act, as they are not based in India and thus have a different tax structure. Now it is reduced to 35%.

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11. Amount of deduction under Section 24 of the Income Tax Act from annual value is: (AIBE-16)

• a) Half of Annual Value
• b) 1/3 of Annual Value
• c) 3/10 of Annual Value
• d) 1/5 of Annual Value

Answer: c) 3/10 of Annual Value

Explanation: Under Section 24, a deduction of 30% (or 3/10) of the annual value is allowed for repairs and maintenance of property for house property income.

12. Health and education cess is applicable to: (AIBE-16)

• a) All assessees
• b) All assessees except companies
• c) Individuals/HUF
• d) Companies only

Answer: a) All assessees

Explanation: Health and Education Cess, introduced as part of the tax reforms, is levied on the tax liability of all categories of taxpayers.

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13. Provisions relating to GST are inserted in the Constitution by: (AIBE-15)

a) The Constitution (One Hundred and First) Act 2016
b) The Constitution (One Hundred and Second) Act 2016
c) The Constitution (Eighty Fourth) Act 2016
d) The Constitution (Seventy-Seventh) Act 2016

Answer: a) The Constitution (One Hundred and First) Act 2016

Explanation: The 101st Amendment introduced GST in India by adding Articles 246A, 269A, and 279A, streamlining indirect taxation.

14. Under Article 279A, GST Council is constituted by: (AIBE-15)

a) Prime Minister and his Council of Ministers
b) Respective Governors of the State
c) The President
d) A collective body of Union and States

Answer: c) The President

Explanation: As per Article 279A(1) of the Constitution, the GST Council had to be constituted by the President within 60 days of the commencement of the Constitution (One Hundred and First) Amendment Act, 2016.

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15. The definition of ‘money’ under GST law does not include: (AIBE-15)

a) Letter of Credit
b) Currency held for numismatic value
c) Payorder
d) Traveler cheque

Answer: b) Currency held for numismatic value

Explanation: Under GST law, "money" does not include currency held for numismatic value as it is treated as goods.

16. According to the Income Tax Act, "zero coupon bond" means a bond: (AIBE-15)

a) Issued by any infrastructure capital company or public sector company
b) In respect of which no payment is received before maturity
c) Which the Central Government may specify by notification
d) All of the above

Answer: d) All of the above

Explanation: A zero-coupon bond pays no periodic interest but is issued at a discount, maturing at face value, as defined by the Income Tax Act.

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Hope it was useful and if you still want to learn more other than the previous question. Check this out:

CJI Chandrachud Tax-Related Judgments

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Top 15 Important Supreme Court GST Judgements of 2023

Tax Judgments of Supreme Court: Annual Digest 2023 [Part-1]Tax Judgments of Supreme Court: Annual Digest 2023 [Part-2]

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