Taxation (Individual and Corporate) MCQs 50 Score: 0 Attempted: 0/50 Subscribe 1. What is the primary objective of taxation? (A) Encourage savings (B) Redistribute income (C) Control inflation (D) Discourage imports 2. Which of the following is a direct tax? (A) Sales Tax (B) Excise Duty (C) Income Tax (D) Custom Duty 3. Which tax is imposed on the profit of a company? (A) Wealth Tax (B) Corporate Income Tax (C) Capital Gains Tax (D) Property Tax 4. Which form is used by individuals to file income tax returns? (A) Form 10B (B) Form A1 (C) Form 1040 (D) Form VAT-01 5. Which of the following is an example of an indirect tax? (A) Personal Income Tax (B) Corporate Tax (C) Sales Tax (D) Gift Tax 6. Capital Gains Tax is levied on: (A) Property Sales (B) Dividend Income (C) Inheritance (D) Salary 7. A progressive tax system means: (A) Tax rate decreases as income increases (B) Tax rate is fixed (C) Tax rate increases as income increases (D) Tax is imposed only on luxury goods 8. Which organization administers Federal taxes in the USA? (A) IMF (B) IRS (C) SEC (D) FBR 9. Corporate tax is based on: (A) Gross Sales (B) Net Profit (C) Total Assets (D) Paid-up Capital 10. The tax paid by a person on inherited wealth is called: (A) Income Tax (B) Estate Duty (C) Capital Gains Tax (D) Corporate Tax 11. VAT stands for: (A) Value Addition Tax (B) Voluntary Added Tax (C) Value Added Tax (D) Variable Added Tax 12. Which one of the following is exempt from tax? (A) Lottery Winnings (B) Gifts from relatives (C) Salary Income (D) Rent Income 13. Withholding tax is collected: (A) Before payment is made (B) After payment is made (C) Quarterly (D) Annually 14. Dividend income is usually subject to: (A) Sales Tax (B) Capital Gains Tax (C) Dividend Tax (D) VAT 15. Which tax applies to both individuals and companies on their annual earnings? (A) Income Tax (B) Wealth Tax (C) Import Duty (D) Excise Duty 16. Corporation tax rates are generally: (A) Flat (B) Progressive (C) Regressive (D) Variable 17. Which expense is not deductible from taxable income? (A) Business Expenses (B) Donation to Charity (C) Personal Vacation Expenses (D) Medical Expenses 18. The deadline for filing individual income tax returns in the USA is usually: (A) January 1 (B) March 31 (C) April 15 (D) December 31 19. The tax imposed on goods produced within a country is: (A) Excise Duty (B) Custom Duty (C) Income Tax (D) Capital Gains Tax 20. Who bears the burden of indirect taxes? (A) Producer (B) Consumer (C) Retailer (D) Government 21. Corporate tax liability is calculated on: (A) Gross Turnover (B) Taxable Profit (C) Sales Revenue (D) Share Capital 22. Which one of these is a regressive tax? (A) Sales Tax (B) Corporate Tax (C) Income Tax (D) Property Tax 23. Tax Evasion is: (A) Illegal (B) Legal (C) Encouraged by governments (D) Only applicable to corporations 24. Tax Avoidance is: (A) Illegal (B) A criminal offense (C) Legal (D) Punishable by jail 25. Advance tax payments are also called: (A) TDS (B) Estimated Taxes (C) Excise Taxes (D) Dividend Taxes 26. Taxable income for an individual includes: (A) Salary (B) Lottery Winnings (C) Capital Gains (D) All of the above 27. Double taxation occurs when: (A) Two people pay the same tax (B) The same income is taxed in two jurisdictions (C) One country imposes tax on imports and exports (D) None of the above 28. The primary source of revenue for governments is: (A) Imports (B) Taxation (C) Borrowing (D) Donations 29. Which of the following is not a type of Corporate Tax? (A) Excise Duty (B) Income Tax (C) Capital Gains Tax (D) Dividend Distribution Tax 30. Which body regulates corporate taxes in Pakistan? (A) SECP (B) FBR (C) SBP (D) IRD 31. Tax holiday refers to: (A) Period without working (B) Period of exemption from tax (C) Refund of tax (D) Delay in tax payment 32. In a corporate setting, tax planning is aimed at: (A) Increasing tax liability (B) Reducing tax liability legally (C) Avoiding tax obligations (D) Increasing dividends 33. Which of the following is a capital receipt? (A) Salary (B) Sale of assets (C) Dividend (D) Interest on deposits 34. Corporate Social Responsibility (CSR) expenses are: (A) Fully Taxable (B) Tax Exempt (C) Partially Tax Deductible (D) Non-allowable expenses 35. Which one of the following is fully exempt from taxation? (A) Agricultural Income (in certain countries) (B) Salary (C) Rent (D) Business Profits 36. A company’s dividend payout is subject to: (A) Dividend Tax (B) Sales Tax (C) Excise Tax (D) VAT 37. Property tax is levied by: (A) Central Government (B) Local Authorities (C) International Organizations (D) Federal Reserve 38. Penalty for late filing of tax returns results in: (A) Additional Interest (B) Refund (C) Exemption (D) No consequences 39. Which tax is paid at the time of purchase of goods? (A) Capital Gains Tax (B) Excise Duty (C) Sales Tax (D) Corporate Tax 40. What is the term for reducing tax liability through illegal means? (A) Tax Avoidance (B) Tax Planning (C) Tax Evasion (D) Tax Rebate 41. A resident individual is taxed on: (A) Global Income (B) Only Local Income (C) Only Capital Gains (D) Only Business Income 42. Which of the following is a tax incentive? (A) Higher Tax Rates (B) Tax Credits (C) Penalties (D) Late Fees 43. Tax levied on imported goods is known as: (A) Excise Duty (B) Customs Duty (C) Wealth Tax (D) Service Tax 44. Companies pay Minimum Alternate Tax (MAT) to: (A) Reduce double taxation (B) Ensure minimum payment of tax despite exemptions (C) Avoid tax audit (D) Increase share capital 45. Transfer Pricing regulations are applicable to: (A) Domestic Transactions (B) International Transactions between related entities (C) Public Sector Enterprises (D) Employees 46. Dividend received by shareholders is: (A) Tax-free (B) Fully Taxable in the hands of the shareholder (C) Exempt from Corporate Tax (D) None of the above 47. Tax Rebate means: (A) Penalty (B) Refund (C) Exemption (D) Relief or reduction in tax 48. Which of the following is an ad valorem tax? (A) Income Tax (B) Property Tax (C) Customs Duty (percentage of value) (D) Road Tax 49. Zero-rated tax refers to: (A) No tax charged, input tax refunded (B) Exempt goods with no refund (C) Fully taxable (D) Penalty reduced to zero 50. The primary law governing corporate taxation in Pakistan is: (A) Companies Act (B) Income Tax Ordinance, 2001 (C) Banking Companies Ordinance (D) SECP Act