Arinjay Academy » CA Final Elective Paper 6C - International Tax MCQs » CA Final International Taxation – Taxation of Non Resident MCQs

CA Final International Taxation – Taxation of Non Resident MCQs

CA Final International Taxation – Taxation of Non Resident MCQs answers with detailed explanations are given at the end of questions. The pattern of CA Final International Taxation question paper is 30% objective and 70% descriptive under the Old and New Schemes.

1. A owned certain notified bonds , which were exempt from tax u/s 10(15)(iid) . He gifted such bonds to B. Interest on such bonds would be ?

a.    Exempt from tax u/s 10(15)(iid)
b.    Taxable in hands of B
c.    Partly taxable in hands of B
d.    None of the above

2. In which of the following cases, interest on notified bonds shall be exempt from tax u/s 10(15)(iid) ?

a)    NRI becomes resident subsequently after purchase of such bonds
b)    Interest earned by Non-resident Indian (‘NRI’) on such bonds is taken outside India
c)    Bonds are purchased by NRI in INR
d)    None of the above

3. Diti Bank performs central banking functions in a foreign country. It made certain deposit with a scheduled bank in India with the approval of the RBI , on which it earns interest. Such interest would be : –

a.    Exempt from tax u/s 10(15)(iiia)
b.    Taxable in hands of DitiBank
c.    Partly taxable in hands of DitiBank
d.    None of the above

4. Interest payable to the Nordic Investment Bank shall be exempt from tax u/s 10(15)(iiib) where — ?

a)    Loan is taken for project , which is approved by the Central Government in terms of the MOU between the Central Government with Nordic Bank
b)    When loan is taken for buyer’s credit
c)    When interest is payable for deposits made by Nordic Investment Bank
d)    None of the above

5. Interest payable to European Investment Bank , shall be exempt from tax u/s 10(15)(iiic) where …. ?

a)    Loan is taken for project approved by the Central Government, in terms of the MOU entered into by the Central Government with European Investment Bank
b)    When loan is taken for buyer’s credit
c)    When interest is payable for deposits made by European Investment Bank
d)    If loan is granted   in pursuance of the framework-agreement for financial co-operation entered into by the Central Government with EIB

6. Interest payable by a scheduled bank (other than cooperative bank) on deposits in foreign currency shall be exempt from tax u/s 10(15)(iv)(fa) if deposits are held by a………………………………….. and acceptance of such deposits by the bank is approved by RBI

a)    Non-resident or person who is not ordinarily resident in India
b)    Foreign citizen, who is a resident of India
c)    Resident in India
d)    None of the above

7. Interest income shall be exempt from tax u/s 10(15)(viii), if it is received by ………………………..on deposit made with Offshore banking unit , on or after 1.4.2005 .

a)    Resident and ordinarily resident in India
b)    Non-resident
c)    Person who is not ordinarily resident in India
d)    Both B and C

8. Income of European Economic Community derived by way of ………………………………shall be exempt from tax u/s 10(23BBB), if investment is made out of its funds under a scheme notified by the Government

a)    Interest
b)    Dividends
c)    Capital Gains
d)    All of the above

9. Income received by a foreign company from sale of Crude oil shall be exempt from tax u/s 10(48) if ……………………………..

a)    Income is received outside India
b)    Income is received in foreign currency
c)    Income is received in India in Indian currency
d)    Both A and B

10. Any income accruing or arising to a foreign company on account of storage of crude oil shall be exempt from tax if ……………………………..

a)    Crude oil is stored in a facility Outside India and sale of crude oil is made to any person resident outside India
b)    Crude oil is stored in a facility in India and sale of crude oil is made to any person resident in India.
c)    Both A and B
d)    None of the above

CA Final International Taxation – Taxation of Non Resident MCQs

11. Any income accruing or arising to a foreign company, from sale of leftover stock of crude oil, if any from a facility in India ……………………shall also be exempt u/s 10(48B)

a)    After the expiry of an agreement   referred to in section 10(48A)
b)    Within 30 days of the expiry of an agreement   referred to in section 10(48A)
c)    Both A and B
d)    None of the above

12. Who can opt for presumptive taxation u/s 44B ?

a)    Any non-resident engaged in shipping business
b)    Any resident engaged in shipping business
c)    Any non-resident engaged in business of operating Airlines
d)    None of the above

13. What are the presumptive profits and gains u/s 44B for non-resident engaged in the business of operation of ships

a)    10% of the aggregate of the specified receipts
b)    5% of the aggregate of the specified receipts
c)    7.5% of the aggregate of the specified receipts.
d)    None of the above

14. Which of the following would be considered as specified receipt for computation of presumptive rate of 7.5% of profits of non-resident engaged in shipping business u/s 44B?

a)    Amount received outside India for goods shipped at any port in India
b)    Amount received in India for goods shipped at any port outside India
c)    Amount received outside India for goods shipped at any port outside India
d)    Both A and B

15. Receipts from shipping business on which presumptive rate of 7.5% is applicable u/s 44B would include …………?

a)    Demurrage
b)    Handling Charges
c)    Both A and B
d)    None of the above

16. While computing presumptive income u/s 44B for profits of non-resident engaged in shipping business , deduction for which expenditure shall be available to the assesse ?

a)    Section 37 – Business expenditure
b)    Section 32 – Depreciation
c)    Both A and B
d)    None of the above

17. Provision for set-off and carry forward of losses u/s ………… would be available while computing presumptive income u/s 44B?

a)    Section 70
b)    Section 71
c)    Section 72
d)    All of the above

18. Deduction under …………, would be available while computing presumptive income u/s 44B in respect of profits of non-resident engaged in shipping business ?

a)    Chapter VI-A
b)    Section 36
c)    Section 32
d)    None of the above

19. Which of the following conditions should be satisfied , to apply Section 172 for the purpose of levy and recovery of tax in case of shipping business of non-residents ?

a)    Such ship should carry passenger, livestock etc, shipped at any port in India
b)    Such ship should carry passenger, livestock etc, be shipped at any port outside India
c)    Both A and B
d)    None of the above

20. Section 172 , dealing with levy and recovery of tax in case of shipping business of non-residents

a)    Is solely for purpose of computing taxable income of shipping business of non-residents ;
b)    Is a complete code for taxation of shipping business of non-residents , including assessment and recovery of tax
c)    Either of the above is true
d)    None of the above

CA Final International Taxation – Taxation of Non Resident MCQs

21. What are the presumptive profits and gains under section 172 in case of shipping business of non-residents ?

a)    5% of specified receipts
b)    10% of specified receipts
c)    7% of specified receipts
d)    7.5% of specified receipts

22. Which of the following receipts of shipping business are covered under section 172 as specified receipts ?

a)    Amount received outside India by owner of ship, on account of carriage of passengers shipped at any port in India
b)    Amount received in India by owner of ship on account of carriage of passengers shipped at any port outside India
c)    Both A and B
d)    None of the above

23. The return of full amount paid or payable to owner of ship is required, to be furnished by the master of the ship …………………………..from the port in India

a)    Before the departure of the ship from any port in India
b)    After departure of the ship
c)    30 days before departure of the ship
d)    None of the above

24. The return of full amount paid or payable to owner of ship, may be filed by the person authorized by the master of the ship within ………….of the departure of the ship from the port.

a)    60 days
b)    15 days
c)    30 days
d)    None of the above

25. The return of full amount paid or payable to owner of ship, may be filed by the person authorized by the master of the ship provided ?

a)    AO is satisfied that it is not possible for the master of the ship to furnish the return before ship’s departure
b)    The master of the ship has made satisfactory arrangement for the filing of the return and payment of tax by any other person on this behalf
c)    Both A and B
d)    None of the above

26. The AO shall pass the assessment order within ……………………………………..under section 172(3).

a)    9 months from the end of the month in which the return of income furnished
b)    9 months from the end of the financial year in which the return of income was furnished
c)    6 months from the end of the financial year in which the return of income furnished
d)    None of the above

27. In which of the following cases, port clearance shall not be granted to the ship under section 172 ?

a)    Tax assessable under section 172 has not been duly paid
b)    Satisfactory arrangements have not been made for the payment of tax assessable under section 172
c)    Both A and B
d)    None of the above

28. The option , by the owner of the ship, that the assessment of his total income should be made in accordance with the other provisions of the Income-Tax Act (i.e., other than Section 172) should be exercised …………………………

a)    Before the expiry of the assessment year relevant to the previous year in which the date of departure of the ship from the Indian port falls
b)    Within 60 days from the date of departure of the ship from the Indian port
c)    Within 30 days from the date of departure of the ship from the Indian port
d)    None of the above

29. Any payment of tax already made under Section 172 shall …………………………….., when non-resident opts to be governed for assessment of income under other provisions of the IT Act (i.e., other than Section 172)

a)    Be refunded
b)    Be treated as payment of advance tax
c)    Not be adjusted against tax to be paid under normal provisions
d)    None of the above

30. Which of the following points are similar/different between provisions of Section 44B and Section 172 ?

a)    Losses can be set-off and carry forward under Section 44B, but not   under Section 172
b)    Losses can be set-off and carry forward under both Section 44B and Section172
c)    Losses cannot be set-off and carry forward under either Section 44B or Section 172
d)    None of the above

CA Final International Taxation – Taxation of Non Resident MCQs

31. Who is eligible to opt for presumptive tax provisions of Section 44BB ?

a)    Non-residents engaged in providing services and facilities, in connection with prospecting for mineral oil
b)    Non-residents engaged in supplying plant and machinery on hire, which is used or to be used in prospecting for mineral oil or
c)    Non-resident engaged in shipping business
d)    Both A and B

32. What is the presumptive rate of profits and gains under Section 44BB – Business of exploration etc of Mineral oil ?

a)    7.5% of specified receipts
b)    10% of specified receipts
c)    5% of specified receipts
d)    7% of specified receipts.

33. Which of the following receipt will be considered to determine presumptive rate of income under Section 44BB ?

a)    Amount paid / payable outside India for providing services in connection with prospecting of mineral oil outside India
b)    Amount paid / payable outside India for providing services in connection with prospecting of mineral oil in India
c)    Both A and B
d)    None of the above

34. Which of the following income would not be covered to determine taxable profits and gains under Section 44BB ?

a)    Amount paid / payable outside India for providing services in connection with prospecting of mineral oil outside India
b)    Income by way of royalty or FTS taxable under section 44AD
c)    Both A and B
d)    Neither A nor B

35. Select the correct statement from the following :-

a)    Assessee may claim income lower than 10% of presumptive rate u/s 44BB, without maintaining books of accounts
b)    Assessee may claim income lower than 10% of presumptive rate u/s 44BB, with unaudited books of accounts
c)    Assessee may claim income lower than 10% of presumptive rate u/s 44BB only when he keeps and maintain books of accounts and get them audited
d)    Both B and C

36. Who is eligible to opt for presumptive tax provisions of Section 44BBA ?

37. What is the presumptive rate of profits and gains under Section 44BBA ?

a)    7.5% of specified receipts
b)    10% of specified receipts
c)    5% of specified receipts
d)    7% of specified receipts

38. Which of the following receipt will be considered to apply presumptive rate of income under Section 44BBA ?

a)    Amount paid / payable outside India on account of carriage of passenger, livestock, mail or goods from any place in India
b)    Amount paid / payable outside India on account of carriage of passenger, livestock, mail or goods from any place outside India
c)    Amount paid / payable in India on account of carriage of passenger, livestock, mail or goods from any place outside India
d)    Both A and C

39. Provisions relating to…………….would not apply while computing presumptive income under Section 44BBA

a)    Deduction under section 37 / Section 32
b)    Set-off and carry forward of losses
c)    Deduction under Chapter VI-A
d)    All of the above

40. Who is eligible to opt for presumptive tax provisions of Section 44BBB ?

a)    Non-residents engaged in providing services and facilities in connection with prospecting for mineral oil
b)    Non-resident engaged in the business of operating aircraft.
c)    Non-resident engaged in shipping business
d)    A foreign company which is engaged in the business of civil construction or erection of plant or machinery in connection with a turnkey power project approved by the Central Government

CA Final International Taxation – Taxation of Non Resident MCQs

41. What is the presumptive rate of profits and gains under Section 44BBB?

a)    7.5% of the specified receipts
b)    10% of the specified receipts
c)    5% of the specified receipts
d)    7% of the specified receipts.

42. Which of the following receipt will be considered to apply presumptive rate of income under Section 44BBB – Foreign companies engaged in civil construction ?

a)    Amount paid or payable in India on account of   eligible business under Section 44BBB
b)    Amount paid or payable outside India on account of eligible business under Section 44BBB
c)    Both A and B
d)    None of the above

43. Select the correct statement from the following :-

a)    Assessee may claim income lower than 10% of presumptive rate u/s 44BBB under all circumstances
b)    Assessee may claim higher income than 10% of presumptive rate u/s 44BBB
c)    Assessee may claim income lower than 10% of presumptive rate u/s 44BBB, only when he keeps and maintain books of accounts and get them audited
d)    Both B and C

44. What is the threshold limit to claim deduction of head-office expenditure under Section 44C when non-resident earns profit in that year ?

a)    5% of “adjusted total income” in case of positive income
b)    5% of the average adjusted total income in case of positive income
c)    Head office expenditure incurred by the assesse which is attributable to the business or profession of the assessee in India
d)    A or C, whichever is less

45. What is the threshold limit to claim deduction of head-office expenditure under Section 44C when non-resident incurs loss in any previous year ?

a)    5% of “adjusted total income”
b)    5% of the average adjusted total income
c)    Head office expenditure incurred by the assesse which is attributable to the business or profession of the assessee in India
d)    B or C, whichever is less

46. Which of the following provisions should not be considered for computing Adjusted Total Income ?

a)    Allowance under Section 44C
b)    Unabsorbed depreciation u/s 32(2)
c)    Deductions under Chapter VI-A.
d)    All of the above

47. What is average adjusted total income ?

a)    When total income of the assessee was assessable for each of the three preceding assessment years, 1/3^rd of the “aggregate amount of the adjusted total income” in respect of previous years relevant to those three assessment years.
b)    When the total income of the assessee was assessable for only one out of three preceding assessment years , “adjusted total income” in respect of the previous years relevant to that assessment year
c)    Average of aggregate amount of ‘adjusted total income’ of last two years
d)    Both A and B

48. What would be considered as head office expenditure for deduction under Section 44C?

a)    Executive and general administrative expenditure incurred in India
b)    Executive and general administrative expenditure incurred outside India
c)    Specific expenditure incurred outside India for Indian operations
d)    None of the above

49. What type of expenditure would be considered as head office expenditure for deduction under Section 44C ?

a)    Rent   of any premises outside India , used for the purpose of the business or profession
b)    Salary, wages to any employee managing the affairs of any office outside India
c)    Manufacturing expenditure incurred for any office outside India
d)    Both A and B

50. Which of the following incomes would be covered under section 44DA ?

a)    Royalty or Fees for technical services arising from agreement made by non-resident with an Indian entity , where the NR does not have a PE in India.
b)    Royalty or Fees for technical services , arising from agreement made by non-resident with Indian entity , when such income is effectively connected with PE of non-resident in India
c)    Interest income arising to non-resident from agreement made with an Indian entity , when such income is effectively connected with PE of non-resident in India
d)    All of the above

CA Final International Taxation – Taxation of Non Resident MCQs

51. Which of the following expenditure shall be allowed as deduction while computing income under section 44DA in respect of income by way of royalties and fees for technical services ?

a)    Expenditure wholly and exclusively incurred for the purpose of PE in India
b)    Any amount paid (otherwise than Reimbursement of actual expenses) by the Indian PE to head office or to any of its other offices
c)    Expenditure which is not wholly and exclusively incurred for PE in India
d)    Both B and C

52. Non-resident earns income from royalty from Indian entity which is effectively connected with Indian PE of non-resident. Which of the following provision would apply to tax such income ?

a)    Section 44BB
b)    Section 44DA
c)    Any of the above
d)    None of the above

53. Non-resident earns income from royalty from Indian entity for providing services in connection with extraction or production of oil, etc. Such royalty income is effectively connected with Indian PE of non-resident. Which of the following conditions need to be satisfied under Section 44DA ?

a)    The non-resident is required to keep and maintain the books of account and get them audited, if it declares presumptive income lower than the prescribed limit
b)    It is mandatory for the non-resident to keep and maintain the books of account and get them audited
c)    There is no requirement to maintain books of accounts under Section 44DA
d)    None of the above

54. Section 45 provides that any profits or gains arising from transfer of a capital asset effected in the previous year shall be chargeable to income tax under the head “Capital gain” and shall be deemed to be the income of the previous year in which …………………………………………

a)    The sales consideration received
b)    The transfer of the capital asset took place
c)    Property is registered in the name of the Seller
d)    None of the above

55. Select the correct statement : –

a)    A foreign company is   liable to capital gains tax on gains arising from transfer of a capital asset situated outside India
b)    A foreign company is   liable to capital gains tax on gains arising from transfer of a capital asset (situated in India) to a resident
c)    A foreign company is also liable to capital gains tax in India, on gains arising from transfer of a capital asset (situated in India) to a non-resident
d)    Both B and C

56. Choose capital assets from the list of following assets :-

a)    Stock-in-trade of goods
b)    Personal effects
c)    Rural Agricultural land
d)    Urban Agricultural land

57. Which of the following shall not be considered as capital assets :-

a)    Jewellery
b)    Shares held by Foreign Portfolio Investors
c)    Equity shares held as investment
d)    None of the above

58. Sinking Equity Fund, was registered as Foreign Portfolio Investor (FPI) and made profit on sale of certain shares in Indian company during PY 2017-18. Such profit would be taxable as……………………..

a)    Business income
b)    Capital Gains
c)    Income from other sources
d)    None of the above

59. What would be considered as urban agricultural land ?

a)    Agricultural land situated within the jurisdiction of municipality
b)    Agricultural land situated within specified distance from municipality
c)    Agricultural land situated outside the jurisdiction of municipality
d)    Both A and B

60. Agricultural land situated within the jurisdiction of municipality having population of …………………… would be considered as urban agricultural land?

a)    20,000 or more
b)    10,000 or more
c)    10,000 or less
d)    None of the above

CA Final International Taxation – Taxation of Non Resident MCQs

61. In order to classify agricultural land as capital asset, distance of agricultural land shall be measured………………from local limits of municipality .

a)    By road
b)    Aerially
c)    A or B, whichever is more beneficial
d)    None of the above

62. Agricultural land situated in any area within 2 Kms aerial distance from local limits of municipality or cantonment board shall be considered as capital asset where the population of municipality or cantonment board is …………………..

a)    10,001 – 1,00,000
b)    1,00,001 – 10,00,000
c)    More than 10,00,000
d)    None of the above

63. Agricultural land situated in any area within 6 Kms aerial distance from local limits of municipality or cantonment board shall be considered as capital asset where the population of municipality or cantonment board is …………………..

a)    10,001 – 1,00,000
b)    1,00,001 – 10,00,000
c)    More than 10,00,000
d)    None of the above

64. Agricultural land situated in any area within 8 Kms aerial distance from local limits of municipality or cantonment board shall be considered as capital asset where the population of municipality or cantonment board is …………………..

a)    10,001 – 1,00,000
b)    1,00,001 – 10,00,000
c)    More than 10,00,000
d)    None of the above

65. Which of the following assets would be considered as short-term Capital Asset on basis of period of holding of 12 months or less ?

a)    Listed shares
b)    Units of debt oriented mutual funds
c)    Unlisted shares
d)    All of the above

66. Which of the following assets would be considered as short-term Capital Asset on basis of period of holding of 12 months or less ?

a)    Listed shares
b)    Units of UTI
c)    Units of Equity Oriented Mutual funds
d)    All of the above

67. Which of the following assets would be considered as short-term assets on basis of period of holding of 24 months or less ?

a)    Unlisted Equity or Preference shares
b)    Units of debt oriented mutual funds
c)    Land or Building
d)    Both A and C

68. Which of the following assets would be considered as short-term assets on basis of period of holding of 36 months or less?

a)    Units of equity oriented mutual funds
b)    Units of debt oriented mutual funds
c)    Unlisted preference shares
d)    All of the above

69. What is Zero Coupon Bonds ?

a)    It is a bond which is redeemable at face value on maturity
b)    It is a bond in respect of which no payment and benefit is received or receivable before maturity or redemption
c)    Both A and B
d)    None of the above

70. UV Inc. acquire Global Depository Receipt (GDR) of D India on April 1, 2015. UV Inc. requested for redemption of GDR on April 12, 2018, in lieu of which it received shares on April 20, 2017. It sold such shares on July 1, 2018. What would be the period of holding of shares ?

a)    April 1, 2015 to July 1, 2018
b)    April 20, 2015 to July 1, 2018
c)    April 12, 2018 to July 1, 2018
d)    None of the above

CA Final International Taxation – Taxation of Non Resident MCQs

71. Any transfer of shares of Indian company by amalgamating foreign company, to amalgamated foreign company, in scheme of amalgamation, shall not be regarded as transfer. However, in order to claim exemption u/s 47(via) which of the following conditions need to be satisfied : –

a)    At least 25 percent of the shareholders of the amalgamating foreign company must continue to remain shareholders of the amalgamated foreign company
b)    At least 30 percent of the shareholders of the amalgamating foreign company must continue to remain shareholders of the amalgamated foreign company
c)    Such transfer should not attract capital gains in the country, in which the amalgamating company is incorporated
d)    Both A and C

72. Any transfer, in a scheme of amalgamation, of a capital asset, being share of a foreign company (referred to in Explanation 5 to section 9(1)(i)), which derives, directly or indirectly …………………………… held by the amalgamating foreign company to the amalgamated foreign company shall not be regarded as transfer u/s 47(viab)

a)    its substantial value from the share or shares of an Indian company
b)    its part value from the share or shares of an Indian company,
c)    its value substantially from the share or shares of another foreign company, not having Indian operations
d)    None of the above

73. Any transfer of shares of Indian company, in a demerger, by the demerged foreign company to the resulting foreign company shall not be regarded as transfer u/s 47(vic) provided : –

a)    At least 25 percent of the shareholders of the demerged foreign company,   continue to remain shareholders of the resulting foreign company
b)    Shareholders holding at least 3/4 of the shares (in value) of the demerged foreign company, continue to remain shareholders of the resulting foreign company;
c)    Such transfer does not attract tax on capital gains in the country, in which the demerged foreign company is incorporated
d)    Both B and C

74. Any transfer of shares of a foreign company (referred to in Explanation 5 to section 9(1)(i)) , in a scheme of demerger, which shares derive, directly or indirectly …………………………………………………………………. held by the demerged foreign company to the resulting foreign company shall not be regarded as transfer u/s 47(vicc)

a)    its value substantially from the share or shares of an Indian company
b)    its part value from the share or shares of an Indian company,
c)    its value substantially from the share or shares of another foreign company
d)    None of the above

75. Any transfer of shares of foreign company, in a scheme of demerger, by the demerged foreign company to the resulting foreign company (referred to in Explanation 5 to section 9(1)(i)) shall not be regarded as transfer. However, in order to claim exemption u/s 47(vic) which of the following conditions need to be satisfied : –

a)    Shareholders holding at least 3/4 of the shares (in value) of the demerged foreign company continue to remain shareholders of the resulting foreign company;
b)    At least 25 percent of shareholders of the demerged foreign company continue to remain shareholders of the resulting foreign company;
c)    Such transfer does not attract tax on capital gains in the country, in which the demerged foreign company is incorporated
d)    Both B and C

76. Which of the following conditions need to be satisfied in order to claim exemption under section 47(viia) on transfer of bond (of Indian company) or GDR by one non-resident to another non-resident ?

a)    Bonds or GDR should be purchased in foreign currency
b)    Bonds or GDR should be purchased in Indian currency
c)    Transfer must be made in India
d)    None of the above

77. Which of the following conditions need to be satisfied in order to claim exemption under section 47(viiaa) on transfer of a rupee denominated bond of an Indian company by one non-resident to another non-resident ?

a)    Bonds or GDR should be denominated in foreign currency
b)    Transfer must be made in India
c)    Transfer must be made outside India
d)    None of the above

78. Which of the following expenditure will not be deductible from sales consideration while computing capital gain?

a)    Brokerage paid for securing a flat
b)    Securities Transaction Tax on purchase of shares
c)    Cost of stamp duty paid on registration of flat
d)    None of the above

79. On which of the following assets, non-resident may neutralize exchange rate fluctuation as per first proviso to Section 48 while computing capital gains?

a)    Bonds
b)    Units of mutual funds
c)    Shares / Debentures of Indian company
d)    Shares / Debentures of foreign company

80. When can a non-resident neutralize exchange rate fluctuation , under first proviso to Section 48 on transfer of shares / debentures of Indian company ?

a)    Shares or debentures were acquired by utilizing foreign currency
b)    Non-resident has not claimed benefit of indexation while computing capital gains
c)    Both A and B
d)    None of the above

CA Final International Taxation – Taxation of Non Resident MCQs

81. Under first proviso to Section 48, sales consideration is converted into foreign currency by using …………………………………….

a)    TT buying rate on date of transfer
b)    TT selling rate
c)    Average of TT buying rate and TT selling rate , of currency used to acquire shares/debentures, on the date of transfer
d)    None of the above

82. Under first proviso to Section 48, cost of acquisition is converted into foreign currency by using …………………………………….

a)    Average of TT buying rate and TT selling rate on date of acquisition
b)    TT selling rate
c)    Average of TT buying rate and TT selling rate on date of transfer
d)    Average of TT buying rate and TT selling rate , of currency used to acquire shares/debentures, on the date of transfer

83. Under first proviso to Section 48, capital gains computed in foreign currency , shall be reconverted into Indian currency by using…………………………..

a)    TT buying rate on date of transfer
b)    TT selling rate on date of transfer
c)    TT buying rate on date of acquisition
d)    None of the above

84. Alright India issued rupee denominated bonds to Alpha Inc. for Rs. 20,000 which were subscribed in USD. Exchange rate at that time was 1$=50 . Alpha paid Rs 20,000 (Equivalent to $400) to purchase rupee denominated bonds. The company redeemed bonds at par (excluding interest) at Rs. 20,000 (The rate of exchange at that time was 1$= 40).

What will be the full value of consideration under Section 48 ?

a)    USD 500
b)    USD 400
c)    USD 50
d)    None of the above

85. In which of the following cases, cost of acquisition of the asset shall be deemed to be cost for which the previous owner of the property acquired it?

a)    Transfer of shares from Indian company to its foreign associated enterprises
b)    Acquisition of shares of Indian company under scheme of amalgamation referred to in section 47(via)
c)    Acquisition of shares of foreign company under scheme of amalgamation referred to in section 47 (viab)
d)    Both B and C

86. Short-term capital gains (for transactions on or after 1.10.2004) u/s 111A are taxable at concessional rate of ………..

a)    10%
b)    15%
c)    20%
d)    Both B and C

87. Which of the following conditions should be satisfied in order to be covered u/s 111A for short-term capital gains?

a)    Capital gains should arise on transfer of units of business trust
b)    Capital gains should arise on transfer of equity shares
c)    Transaction should be chargeable to securities transaction tax
d)    All of the above

88. Mr. A earns short term capital gains of Rs 2,00,000 and he also earns other income of Rs 2,00,000 during the PY 2017-18. He has no other income during such PY. What will be the amount of short-term capital gains taxable at 15% u/s 111A ?

a)    Rs 1,50,000
b)    Rs 2,00,000
c)    Rs 1,00,000
d)    None of the above

89. Mr. B earns short term capital gains of Rs 2,00,000 and he also earns other income of Rs 2,00,000 during the PY 2017-18. He has no other income during such PY, but he has paid insurance premium of Rs 50,000 p.a. during the PY 2017-18. What will be the amount of short-term capital gains taxable at 15% u/s 111A?

a)    Rs 1,50,000
b)    Rs 1,00,000
c)    Rs 2,00,000
d)    None of the above

90. What will be the tax rate on sale of long-term capital assets, being unlisted shares sold by a non-resident ?

a)    10% without indexation and without benefit of foreign exchange fluctuation
b)    20% with indexation
c)    A or B, whichever is more beneficial
d)    None of the above

CA Final International Taxation – Taxation of Non Resident MCQs

91. Which of the following conditions need to be satisfied in order to apply concessional tax rate of 10% on sale of unlisted shares by non-resident under Section 112 ?

a)    Benefit of indexation (under second proviso to Section 48) should not be taken
b)    Benefit of forex currency fluctuation (under first proviso to Section 48) should not be taken
c)    Both A and B
d)    None of the above

92. What will be the tax rate on sale of long-term capital assets being listed shares by a non-resident (which do not satisfy the conditions of Section 10(38)) ?

a)    10% without indexation
b)    20%
c)    10% without indexation and foreign exchange fluctuation benefit
d)    None of the above

93. Select the correct statement

a)    Deduction under chapter VI-A cannot be availed in respect of long-term capital gains taxable under Section 112
b)    Deduction under chapter VI-A can be availed in respect of long-term capital gains taxable under Section 112
c)    Capital gains on sale of listed shares are exempt under Section 10(38) for AY 2019-20 and onwards
d)    None of the above

94. Which of the following persons are eligible to opt for Chapter XII-A ?

a)    Non-resident Indian
b)    Non-resident
c)    Resident
d)    None of the above

95. Which of the following persons are eligible to opt for Chapter XII-A?

a)    Foreign firm
b)    Foreign company
c)    An Individual who is a citizen of India but is not a resident of India
d)    An Individual who is a citizen of India who is a resident of India

96. Which of the following income would be covered under Chapter XII-A, dealing with taxation of income of NRI’s ?

a)    Income from capital gains in relation to long term foreign exchange assets
b)    Income from capital gains in relation to any long-term capital assets
c)    Income from capital gains in relation to short-term foreign exchange assets
d)    None of the above

97. Select the correct Statement

a)    Income derived by non-resident Indian from foreign exchange asset would be covered under Chapter XII-A
b)    Dividend derived by non-resident Indian from foreign exchange asset, being shares would be covered under Chapter XII-A
c)    Any income derived by non-resident Indian would be covered under Chapter XII-A
d)    None of the above

98. Who will be considered as non-resident Indian for the purpose of Chapter XII-A ?

a)    Any Individual being a non-resident
b)    Any Individual being a citizen of India who is not a resident
c)    Any Individual being a person of Indian origin who is not a resident
d)    Both B and C

99. For the purpose of Chapter XII-A, “Foreign exchange asset” means ……………………………….. , which the assessee has acquired or subscribed to in convertible foreign exchange.

a)    Shares of an Indian company
b)    Bonds of an Indian company
c)    Debentures issued by an Indian company , which is not a private company
d)    Both B and C

100. What would be the tax rate on investment income (other than long term capital gains) from foreign exchange asset covered under Chapter XII-A, in respect of income of an NRI ?

a)    20%
b)    10%
c)    15%
d)    None of the above

CA Final International Taxation – Taxation of Non Resident MCQs

101. What would be the tax rate on long-term capital gains from foreign exchange asset covered under Chapter XII-A?

a)    20%
b)    10%
c)    15%
d)    None of the above

102. While computing long-term capital gains from foreign exchange assets under Chapter XII-A, which of the following benefits would be available ?

a)    Deduction under Chapter VI-A
b)    Benefit of Indexation
c)    Both A and B
d)    None of the above

103. Non-resident Indian would be eligible to claim exemption from long-term capital gains from foreign exchange under Section 115F, when such NRI has, within a period of ………………………..after the date of such transfer, invested the net consideration in any specified assets

a)    1 year
b)    6 months
c)    9 months
d)    None of the above

104. Which of the following asset can be purchased to claim exemption from long-term capital gains from foreign exchange under Section 115F ?

a)    Shares of Indian company
b)    Shares of foreign company
c)    Bonds of Indian company
d)    None of the above

105. . Which of the following asset cannot be purchased to claim exemption from long-term capital gains from foreign exchange under Section 115F ?

a)    Shares of foreign company
b)    Debenture issued by an Indian Public company
c)    Central Government security
d)    Shares of an Indian company

106. Exemption claimed by non-resident Indian under Section 115F could be withdrawn where the new asset is transferred or converted into money, within a period of …………

a)    6 months from the date of transfer of original asset
b)    1 year from the date of its acquisition
c)    3 years from the date of its acquisition
d)    None of the above

107. Where the new asset (acquired for claiming exemption under Section 115F) is transferred or converted (otherwise than by transfer) into money, within a period of 3 years from the date of its acquisition, the amount of capital gain exempted on original asset shall be deemed to be income chargeable under the head “Capital gains” in the year when ………………………….

a)    The new asset was acquired for claiming exemption
b)    The new asset is transferred or converted into money
c)    The old asset was transferred
d)    None of the above

108. When it is not necessary for a non-resident Indian to furnish a return of his income u/s 139(1) ?

a)    When his total his total income consists only of investment income or long-term capital gains covered under Chapter XII-A
b)    When his total his total income consists only of investment income or long-term capital gains covered under Chapter XII-A , and the tax is deductible at source on such income but has not been deducted
c)    When his total his total income consisted only of investment income or long-term capital gains covered under Chapter XII-A and the tax is deducted at source on such income
d)    None of the above

109. Where a person, who is a non-resident Indian in any previous year, becomes assessable as resident in India, then benefit of Chapter XII-A

a)    Shall not be available
b)    Would be automatically available until the transfer of foreign exchange assets
c)    Would be available until the transfer of foreign exchange assets, only if assessee files declaration to that effect with AO
d)    None of the above

CA Final International Taxation – Taxation of Non Resident MCQs

110. Select the correct statement ?

a)    In case of every non-resident Indian deriving investment income or long-term capital gains from foreign exchange assets, provisions of Chapter XII-would be applicable automatically
b)    A non-resident Indian may elect not to be governed by the provisions of Chapter XII-A for any assessment year by furnishing a manual declaration before the AO.
c)    A non-resident Indian may elect not to be governed by the provisions of Chapter XII-A for any assessment year by furnishing his return of income for that assessment year under section 139, declaring therein that the provisions of this Chapter shall not apply to him for that assessment year
d)    All of the above

111. An Indian company makes payment of Rs. 50 lakhs for consultancy services taken from International firm located in Country X. Payment is made in accordance with industrial policy of the Government. What will be tax liability of the International firm on such payment ?

a)    10% under the IT Act
b)    15% as per DTAA of India with Country X
c)    20% under the IT Act
d)    None of the above

112. Indian company makes payment of Rs. 20 lakhs for technical services taken from foreign company located in Country Y. Payment is made in accordance with industrial policy of the Government. What will be tax liability on such payment?

a)    10% under the IT Act
b)    20% under the IT Act
c)    0% rate provided   DTAA of India and Country Y
d)    None of the above

113. Indian company makes payment of Rs. 10 lakhs for technical services taken from foreign company located in Country Z. Such payment is connected with PE of foreign company in India. Payment is made in accordance with industrial policy of the Government. What will be tax liability on such payment?

a)    10% under the IT Act
b)    10% under DTAA, even if NR has a PE in India
c)    40% under the IT Act
d)    None of the above

114. Which of the following deductions would be available while computing tax on royalty under Section 115A ?

a)    Expenditure incurred to earn royalty income
b)    Deduction under Chapter VI-A
c)    Both A and B
d)    None of the above

115. Select the correct Statement

a)    Unabsorbed depreciation cannot be set-off against the income of royalty covered under Section 115A
b)    Unabsorbed business loss can be set-off against the income of royalty covered under Section 115A
c)    Both A and B
d)    None of the above

116. What would be the tax rate on income received by overseas financial institution in respect of units of mutual funds which were purchased in foreign currency ?

a)    10%
b)    15%
c)    20%
d)    None of the above

117. The tax rate on long-term capital gains of overseas financial institution, on units of debt oriented mutual funds purchased in foreign currency would be —– ?

a)    10%
b)    15%
c)    20%
d)    None of the above

118. Which of the following benefit would be available while computing long-term capital gains by overseas financial institution in respect of units of debt oriented mutual funds which were purchased in foreign currency ?

a)    Benefit of first proviso to Section 48 and the second proviso to section 48, for currency fluctuation and indexation of cost of acquisition
b)    Provision for set-off and carry forward of losses
c)    Provision for set-off and carry forward of unabsorbed depreciation
d)    None of the above

119. What would be the tax rate on short-term capital gains earned by overseas financial institution in respect of units of equity oriented mutual funds purchased in foreign currency ?

a)    10%
b)    15%
c)    20%
d)    None of the above

120. What would be the tax rate u/s 115AC on interest income of non-resident in respect of bonds of Indian company purchased in foreign currency ?

a)    10%
b)    15%
c)    20%
d)    None of the above

CA Final International Taxation – Taxation of Non Resident MCQs

121. When would the dividend income of non-resident would be taxable at 10% u/s 115AC in respect of GDR ?

a)    GDR are issued in accordance with Government notified scheme
b)    GDR are issued against initial issue of shares of Indian company
c)    GDR are purchased in foreign currency through an approved intermediary
d)    All of the above

122. What would be the tax rate on long-term capital gains income of non-resident in respect of GDR issued by Indian company as per notified scheme and which was purchased by non-resident in foreign currency ?

a)    10%
b)    15%
c)    5%
d)    None of the above

123. Which of the following benefit would be available for computing long-term capital gains, in respect of GDR purchased by non-resident in foreign currency, issued by Indian company under a notified scheme ?

a)    Benefit of Indexation
b)    Benefit of foreign exchange fluctuation as per first proviso to Section 48
c)    Both A and B
d)    None of the above

124. A non-resident is earning interest income on bonds of Indian company which were purchased in foreign currency. Such bonds were issued as per government notified scheme. In which of the following cases such non-resident is not required to file return of income ?

a)    Total income of non-resident includes only such interest income and TDS has not been deducted on such income
b)    Total income of non-resident includes only such interest income and TDS has been deducted on such income
c)    Both A and B
d)    None of the above

125. Where the GDR or bonds referred to in Section 115AC, are acquired by the NR in the amalgamated company by reason of amalgamation, or in a resulting company by reason of demerger, tax rate on interest income or other income from such bonds or GDR would be : –

a)    10%
b)    15%
c)    5%
d)    None of the above

126. Interest payable to Foreign Institutional Investor in respect of rupee denominated bond of an Indian company would be liable to tax @ ….. ?

a)    20% under Section 115AD
b)    5% under Section 194LD
c)    20% under Section 115A
d)    None of the above

127. What would be the tax rate on dividend paid by Indian company to Foreign Institutional Investor ?

a)    20% under Section 115AD
b)    20% under Section 115A
c)    15% dividend distribution tax under Section 115-O
d)    None of the above

128. What would be the tax rate on income earned by Foreign Institutional Investor on mutual fund units ?

a)    10% under Section 115AB
b)    20% under Section 115A
c)    20% under Section 115AD
d)    None of the above

129. What would be the tax rate on short-term capital gains earned by Foreign Institutional Investors on unlisted shares ?

a)    20%
b)    15%
c)    30%
d)    None of the above

130. What would be the tax rate on short-term capital gains earned by Foreign Institutional Investors on listed shares ?

a)    20%
b)    15%
c)    30%
d)    None of the above

CA Final International Taxation – Taxation of Non Resident MCQs

131. What would be the tax rate on long-term capital gains earned by Foreign Institutional Investors on preference shares ?

a)    20%
b)    15%
c)    10% under Section 115AD
d)    None of the above

132. Select the correct statement

a)    Where the gross total income of the Foreign Institutional Investor consists only of dividend (other than dividend liable to dividend distribution tax), no deduction shall be allowed to him under section 28 to 44C or section 57 or under Chapter VIA.
b)    Where the gross total income of the Foreign Institutional Investor consists of interest income (other than interest on rupee denominated bonds), no deduction shall be allowed to him under section 28 to 44C or section 57 or under Chapter VIA.
c)    The benefit of indexation would not be available to foreign institutional investor while computing long-term capital gains.
d)    All of the above

133. During the financial year 2017-18, Aron Finch, an Australia Cricketer participated in a cricket tournament in India, and won prize money of Rs 10 lacs. What would be the tax rate on such income earned by Australian citizen ?

a)    20%
b)    30%
c)    10%
d)    None of the above

134. Select the correct statement?

a)    Income of sportsperson (who is a non resident , but a citizen of India) from participating in any game or endorsing any advertisement in India would be taxable at 20% under Section 115BBA.
b)    Income of sportsperson (who is not a resident and citizen of India) from participating in any game or endorsing any advertisement in India would be taxable at 20% under Section 115BBA.
c)    Both A and B
d)    None of the above

135. What would be the tax rate on income of non-resident sports association from any game or sports (other than winnings from puzzles etc) played in India ?

a)    20%
b)    30%
c)    10%
d)    None of the above

136. Rustin Hieber (who is not a citizen of India) earned income from his Singing performance at Mumbai. What would be the tax rate on such income?

a)    20% under Section 115BBA
b)    30%
c)    Income-Tax slab rate
d)    None of the above

137. Select the correct statement

a)    It is mandatory for non-resident sportsmen or athlete or entertainer to furnish return of income in respect of their income from India.
b)    Non-resident sportsmen or athlete or entertainer is not required to furnish return of income if they have only earned income from India in respect of game played in India or performance in India and the requisite TDS has been deducted from such income.
c)    It is mandatory for non-resident sportsmen or athlete or entertainer to furnish return of income in respect of their income from India if the aggregate amount of income exceed Rs 2,50,000
d)    None of the above

138. Section 115JB covers……………………………. under obligation to pay MAT, if the income-tax payable on the total income of such companies, as computed under the Income-tax Act, 1961 is less than 18.5% of their book profit

a)    Indian companies
b)    Specified Foreign companies
c)    All Foreign companies
d)    Both A and B

139. Select the correct statement :-

a)    MAT taxa liability is applicable on all foreign company
b)    Foreign company is not liable to MAT, if it is resident of Country with which India has a DTAA, and such foreign company does not have any PE in India
c)    Foreign company is not liable to MAT if it is a resident of a country with which India does not have DTAA, and it is not required to seek registration under any law for the time being in force relating to companies in India
d)    Both B and C

140. Which of the following incomes would be included in book profit for computing MAT liability of a foreign company ?

a)    Capital gains which is exempt from tax under DTAA
b)    Interest income which is taxable at 20% under Income-Tax Act
c)    Royalty income which is taxable at 10% under the Income-Tax Act
d)    None of the above

CA Final International Taxation – Taxation of Non Resident MCQs

141. Which of the following expenditure would be added back while computing book profits u/s 115JB of a foreign company ?

a)    Expenditure on royalty income which is taxable at 10% under Income-Tax Act
b)    Expenditure on Interest income which is taxable at 20% under Income-Tax Act
c)    Expenditure on capital gains which is taxable at 20% under the Income-Tax Act.
d)    None of the above

142. As per Section 115JG, capital gains arising to a foreign company from conversion of its Indian branch into subsidiary will not be chargeable to tax for a —- under Section 115JG ?

a)    Foreign company engaged in insurance business
b)    Foreign company engaged in banking business
c)    Any foreign company
d)    None of the above

143. As per section 9(1)(ii), salary is deemed to accrue or arise in India, if salary is earned for ……………………………………

a)    Services rendered outside India
b)    Services rendered in India
c)    Both A and B
d)    None of the above

144. Where salary is payable in foreign currency, TDS deductible on such salary is to be calculated, after converting the salary payable into Indian currency, at the ………………….and applying average rate of income tax to such income

a)    TT selling rate on the date of deduction of tax
b)    TT buying rate on the date of deduction of tax
c)    Average of TT buying rate and TT selling rate on the date of deduction of tax
d)    None of the above

145. Micheal, a non-resident, won the prize money of Rs. 1 lakh in reality game show in India during PY 2017-18. What will be the rate of TDS on such payments?

a)    30%
b)    10%
c)    20%
d)    None of the above

146. Molly, a non-resident, won the prize money of Rs 50 lakhs in Dance reality Show. What will be the rate of TDS to be deducted from such payments?

a)    30%
b)    10%
c)    20%
d)    None of the above

147. Jack, a non-resident, won the prize money of Rs. 9,000 in a game show. What will be the amount of TDS to be deducted from such payments ?

a)    Rs 2,700
b)    Rs 9,00
c)    Nil
d)    Rs 2,808

148. In April 2018, Janny Lion, a non-resident, won cash prize of Rs 1 lakh and a car worth Rs 6 lakhs in the reality game show. The total TDS to be deducted on such winnings is Rs 2,10,000. In this respect, select the correct statement from the following :-

a)    Payer is required to deduct TDS only upto Rs 100,000 and remaining TDS would not be deducted
b)    Payer is not required to deduct TDS as the amount of cash available with it is not sufficient to discharge total TDS liability
c)    Payer will pay Rs 100,000 of TDS from the cash prize and he will ask Janny to pay the balance TDS , before handing over the Car
d)    None of the above

149. What would be the tax rate on income from winning from horse races ?

a)    30%
b)    10%
c)    As per Income-Tax Slab
d)    None of the above

150. There would be no TDS liability on payment for winning from horse race by bookmaker …

a)    When the amount to be paid is Rs 5,000
b)    When the amount to be paid is Rs 15,000
c)    When the amount to be paid is Rs 20,000
d)    All of the above

CA Final International Taxation – Taxation of Non Resident MCQs

151. Alen, a non-resident, won prize money of Rs 30,000 from betting in horse race. However, prize money would be paid in three installments of Rs 10,000 each. Calculate the TDS on such amount under Section 194BB ?

a)    Rs 9000 (plus cess)
b)    Rs 3000 (plus cess)
c)    Rs 6000 (plus cess)
d)    Nil

152. Marvick, a non-resident, won Rs 50,000 on betting from horse race. He also incurred a loss of Rs 10,000 from such betting. Calculate the amount of TDS ?

a)    Rs 15000 (plus cess)
b)    Rs 12000 (plus cess)
c)    Rs 4000 (plus cess)
d)    Nil

153. Mr. B, a non-resident, won the prize money of Rs. 10,00,000 from reality show during PY 2018-19. TDS has been duly deducted on such income. He has also incurred travelling expenditure of Rs 50,000 to earn such income . Calculate the taxable income ?

a)    Rs 10,00,000
b)    Rs 9,50,000
c)    Rs 7,85,000
d)    None of the above

154. What would be the TDS rate on interest income of foreign company from infrastructure debt funds ?

a)    5%
b)    10%
c)    20%
d)    None of the above

155. What would be the tax rate on interest received by business trust from SPVs ?

a)    5%
b)    10%
c)    Nil
d)    20%

156. What would be the tax rate on rental income received by business trust from leasing out any asset owned by business trust ?

a)    5%
b)    10%
c)    Nil
d)    20%

157. What would be the TDS rate , on Interest income distributed by business trust to its non-resident unit holders ?

a)    5%
b)    10%
c)    Nil
d)    20%

158. What would be the TDS rate on rental income distributed by business trust to its unit holders who are non-corporate non-resident ?

a)    5%
b)    10%
c)    30%
d)    Nil

159. What would be the TDS rate on rental income distributed by business trust to its unit holders , being foreign company?

a)    5%
b)    40%
c)    30%
d)    Nil

160. Alternate Investment Fund is required to deduct tax at source on ……………………………………….. payable by the investment fund to a unit holder (being non-resident non-corporate or foreign company) at rates in force

a)    Business income
b)    Any income, other than Business income
c)    Both
d)    None of the above

CA Final International Taxation – Taxation of Non Resident MCQs

161. Where income is payable to investor , who is a non-corporate non-resident, in respect of investment in securitisation trust (as referred to in Section 115TCA), the rate of TDS would be …..

a)    10%
b)    30%
c)    40%
d)    Nil

162. Where income is payable to investor being foreign company, in respect of investment in securitisation trust (as referred to in Section 115TCA), the rate of TDS would be …..

a)    10%
b)    30%
c)    40%
d)    Nil

163. Interest paid by an Indian company to a foreign company, in respect of borrowing made in foreign currency from a source outside India , under a loan agreement shall attract concessional withholding tax @……. under Section 194LC

a)    10%
b)    5%
c)    20%
d)    Nil

164. Interest paid by an Indian company to a foreign company in respect of borrowing made in foreign currency by way of issue of long-term bonds, shall attract concessional withholding tax @……. under Section 194LC

a)    10%
b)    5%
c)    20%
d)    Nil

165. Interest paid by an Indian company to a foreign company in respect of borrowing made in foreign currency , by way of rupee denominated bond shall attract concessional withholding tax @……. under Section 194LC

a)    10%
b)    5%
c)    20%
d)    Nil

166. Which of the following conditions would be applicable in order to apply concessional rate of TDS under section 194LC on interest paid on foreign currency borrowings by way of loan ?

a)    Loan agreement is made on or after 01.07.2012 but before 30.6.2020
b)    Loan is obtained from country outside India
c)    Loan agreement is made at any time after 01.07.2012
d)    Both A and B

167. Which of the following conditions would be applicable in order to apply concessional rate of TDS under section 194LC on interest paid on foreign currency borrowings by way of long-term bonds ?

a)    Borrowing is obtained from country outside India
b)    Long-term bonds issued at any time on or 01.10.2014 but before 01.07.2020
c)    Long-term bonds issued at any time after 01.10.2014
d)    Both A and B

168. An Indian company is required to make payment of interest on External Commercial Borrowing. What would be the withholding tax rate on such interest payment ?

a)    5%
b)    20%
c)    10%
d)    None of the above

169. An Indian entity has issued long-term bonds to foreign company. However, foreign company does not have PAN in India. What would be the TDS rate on the interest payment to foreign company on such long-term bonds ?

a)    5% u/s 194LC
b)    20%
c)    10%
d)    None of the above

170. An Indian company has issued rupee denominated bonds to Foreign Institutional Investor. What would be the TDS rate on interest payable by an Indian company to Foreign Institutional Investor?

a)    5%
b)    20%
c)    10%
d)    None of the above

CA Final International Taxation – Taxation of Non Resident MCQs

171. Indian Bank is crediting interest on NRE account to non-resident Individual. What would be the TDS rate at which Indian Bank is liable to withhold tax under Section 195 ?

a)    10%
b)    30%
c)    Nil
d)    None of the above

172. Indian company pays royalty of Rs 1 lakhs to B Inc. (USA), which is taxable under Section 9(1)(vi), but excluded from the definition of royalty under India-USA DTAA. What would be the TDS rate on such royalty payment ?

a)    10%
b)    20%
c)    Nil
d)    None of the above

173. Indian company pays royalty of Rs 1 lakhs to another Indian company. Which of the following TDS provision would be applicable for such payments ?

a)    Section 115A
b)    Section 195
c)    Section 194J
d)    None of the above

174. Indian company has to pay salary payments to non-resident employee. Which of the following TDS provision would be applicable for such payments?

a)    Section 195
b)    Section 192
c)    Either A or B
d)    None of the above

175. When does the obligation to comply with TDS provision under Section 195, apply to non-resident ?

a)    When the non-resident has a residence in India or place of business in India
b)    When non-resident has business connection in India or any other presence in India
c)    When non-resident is making payment to another non-resident which is chargeable to Income-tax Act
d)    Both A and B

176. When does TDS liability would arise in case interest is payable by the Government or a public sector bank or a public financial institution to non-resident ?

a)    At the time of credit
b)    At the time of payment
c)    A or B, whichever is earlier
d)    None of the above

177. Under Section 195(2), where…………………. considers that the whole of payment would not be income chargeable to tax, he may make an application to the Assessing Officer to determine, by general or special order, the appropriate proportion of such sum so chargeable

a)    Payor
b)    Payee
c)    Both
d)    None of the above

178. ……………………………………may make an application to the Assessing Officer for grant of certificate authorizing him to receive interest or other sum on which TDS has to be deducted u/s 195(1) without deduction of tax thereunder

a)    Non-resident payee
b)    Payor
c)    Both A and B
d)    None of the above

179. Indian Company must make royalty payment of Rs 5,00,000 to Foreign Company on August 7, 2018. Foreign company provides certificate from AO, wherein a Nil withholding tax rate is granted by AO for PY 2017-18. The rate of withholding tax under IT Act is 10.4% and 10% under DTAA. At what rate should the TDS be deducted from such payment ?

a)    10%
b)    10.4%
c)    Nil
d)    None of the above

180. Vino India Ltd. has to make payment of interest of Rs 5,00,000 to its Foreign Associated enterprise on Feb 1, 2019. Foreign company has taken a certificate for Nil withholding tax wherein limit of Rs 50,00,000 has been specified. The Foreign Associated Enterprise has already received interest payment of Rs 55,00,000 till Feb 1, 2019. Rate of withholding tax under IT Act is 10.4% and 10% under DTAA. At what rate TDS should be deducted?

a)    10%
b)    10.4%
c)    Nil
d)    None of the above

CA Final International Taxation – Taxation of Non Resident MCQs

181. BC India Ltd. has to make payment for reimbursement of actual expenses, based on invoices of vendor of Rs 10,00,000 incurred by its Foreign Associated Enterprise. Which of the following forms needs to be filed before making such payment ?

a)    Form 15CA
b)    Form 15CB
c)    Both
d)    None of the above

182. BD India Ltd. has to make payment of royalty of Rs 10,00,000 to Foreign company. Which form needs to be filed before making such payment ?

a)    Form 15CA
b)    Form 15CB
c)    Both
d)    None of the above

183. BD India Ltd. has to make payment of royalty of Rs 4,00,000 to Foreign company during the PY 2017-18. There is no other payment /expected payment to foreign company during such PY. Which form needs to be filed before making such payment ?

a)    Form 15CA
b)    Form 15CB
c)    Both
d)    None of the above

184. DD India Ltd. has to import equipment of Rs 20 crores from JC Incl. (USA) for its manufacturing plant in India. It needs to pay import advance to JC Incl. . Which form needs to be filed before making such payment ?

a)    Form 15CA
b)    Form 15CB
c)    Both
d)    None of the above

185. Indian company has to make royalty payment of Rs 10,00,000 to Foreign company. Which part of Form 15CA needs to be filed by Indian company before making such payment ?

a)    Part A of Form 15CA
b)    Part B of Form 15CA
c)    Part C of Form 15CA
d)    None of the above

186. Indian company has to make royalty payment of Rs 4,00,000 to Foreign company. Which part of Form 15CA needs to be filed by Indian company before making such payment?

a)    Part A of Form 15CA
b)    Part B of Form 15CA
c)    Part C of Form 15CA
d)    None of the above

187. IHL India Ltd. has to make payment of interest of Rs 4,00,000 to HBL Incl. (USA). Such Foreign company has obtained certificate for nil withholding tax. Which part of Form 15CA needs to be filed by IHL India Ltd.?

a)    Part A of Form 15CA
b)    Part B of Form 15CA
c)    Part C of Form 15CA
d)    None of the above

188. IL India Ltd. has to make payment of interest of Rs 8,00,000 to HL Incl. (USA). Such Foreign company has obtained certificate for nil withholding tax. Which part of Form 15CA needs to be filed by IL India Ltd.?

a)    Part A of Form 15CA
b)    Part B of Form 15CA
c)    Part C of Form 15CA
d)    None of the above

189. DD India Ltd. has to import equipment of Rs 20 crores from JC Incl. (USA) for its manufacturing plant in India. It needs to pay import advance to JC Incl. Which form needs to be filed before making such payment?

a)    Form 15CA
b)    Form 15CB
c)    Both
d)    None of the above

190. In which of the following circumstances TDS refund can be claimed by payer in respect of payment to non-resident ?

a)    Indian Company has received invoice from Foreign company for Fees for technical services amounting to Rs 1,00,000. It has deducted TDS of Rs 10,000 on the basis of invoice. However, contract with foreign company is cancelled after deduction and deposit of taxes.
b)    Indian Company has received invoice from Foreign company for Fees for technical services amounting to Rs 1,00,000. It has deducted TDS of Rs 10,000 and made remaining payment of Rs 90,000 to foreign company. However, contract with foreign company is cancelled after deduction and deposit of taxes and the amount is refunded by the foreign company.
c)    Both A and B
d)    None of the above

CA Final International Taxation – Taxation of Non Resident MCQs

191. An Indian company has deducted TDS twice by mistake on payment to be made to the foreign company. Which of the following person can claim refund of TDS ?

a)    Indian company
b)    Foreign company
c)    Either A or B
d)    None of the above

192. In which of the following circumstances TDS refund can be claimed by payer in respect of payment to non-resident ?

a)    Indian Company has deducted TDS by mistake @ 20% on the basis of invoice of foreign company. However, the actual rate of TDS is 10%
b)    Indian company has made contract with foreign company for fees for technical services. It has deducted TDS on the basis of grossed-up amount by mistake even if when was not required to bear the TDS payment.
c)    Indian company has deducted TDS @ 15% by mistake even when the lower rate of TDS of 10% is prescribed under DTAA
d)    All of the above

193. JBL India Ltd. has to pay royalty of Rs 90,000 to UB Incl. (USA). As per the agreement TDS would be borne by JBL India. Applicable rate of TDS as per IT Act is 10%. Calculate the amount of TDS ?

a)    Rs 10,000
b)    Rs 9,000
c)    Rs 8,182
d)    None of the above

194. Application for lower deduction or Nil deduction of TDS can be made by ………….. under Section 197 where, income-tax is required to be deducted at the rates in force as per the provisions of Sections 192, 194G, 194LBB, 194LBC and 195.

a)    Payee
b)    Payor
c)    Both A and B
d)    None of the above

195. UV India Ltd. has paid technical fees to FU Inc . (USA) amounting Rs. 90,000 after deducting TDS of Rs 10,000 on such payment. FU Inc . files declaration with UV India that such income is taxable in the hands of FV Inc . ( USA). Who will get credit of TDS ?

a)    FU Incl.
b)    FV Inc .
c)    UV India
d)    None of the above

196. Indian company has to make payment of royalty to Foreign company, which does not furnish its PAN. As per Income-Tax Act the rate of withholding tax is 10.4% on such royalty payment. TDS rate as per DTAA is 10%. At what rate TDS would be deducted when Foreign company fails to satisfy conditions of Rule 37BC ?

a)    20%
b)    10.4%
c)    10%
d)    None of the above

197. In which of the following cases furnishing of PAN is mandatory ?

a)    Form 15G/15H
b)    Certificate for lower or nil deduction u/s 197
c)    Both A and B
d)    None of the above

198. Which of the following payments would not be liable to TDS at higher rate under section 206AA, when non-resident furnishes TRC and other details required under Rule 37BA ?

a)    Royalty
b)    Interest
c)    Fees for Technical Services
d)    All of the above

199. Indian company has to make payment of Rs 2,00,000 to FC Inc. (USA) for Fees for Technical services. Such Foreign company does not have PAN in India. It provides Tax identification Number of USA, Tax Residency Certificate of USA and its basic income tax details. At what rate TDS would be deducted when the rate of TDS is 10.40% under IT Act and 10% under DTAA?

a)    10.40%
b)    10%
c)    20%
d)    None of the above

200. Who may be regarded as agent of non-resident under section 163 ?

a)    Person who is employed by non-resident
b)    Person who is paying any income to non-resident
c)    Person who is employed by any other person on behalf of non-resident
d)    All of the above