Taxation - DT Ch 07: Other Sources - Test 3: answer key

Question 1 · 2 marks · Taxation - DT Ch 07: Other Sources · hard

Scenario. Smt. Anuradha Sen, a resident individual aged 62 years, is a widow. During FY 2026-27, she received family pension of ₹6,00,000 from her late husband's former employer. On 15th July 2026, she won ₹2,00,000 from a State lottery, having spent ₹30,000 on purchasing lottery tickets. On 20th December 2026, she won ₹1,50,000 from online gaming and incurred ₹25,000 as entry fees for participating in the games. On 10th January 2027, she received ₹50,000 as winnings from betting on horse races. She also earned ₹40,000 as interest on a fixed deposit with a scheduled bank. She follows the default tax regime under Section 115BAC. She has no other income during the year.

What is the amount of deduction allowable under Section 57(iia) against the family pension received by Smt. Anuradha Sen, and what is the net taxable family pension under the default tax regime for AY 2027-28?

1. ₹15,000 deduction; net taxable ₹5,85,000
2. ₹30,000 deduction; net taxable ₹5,70,000
3. ₹2,00,000 deduction; net taxable ₹4,00,000
4. ₹25,000 deduction; net taxable ₹5,75,000 (correct answer)

Answer: D — ₹25,000 deduction; net taxable ₹5,75,000

Explanation. Under the default tax regime, the deduction under Section 57(iia) for family pension is ₹25,000. The family pension is ₹6,00,000. Net taxable = ₹6,00,000 - ₹25,000 = ₹5,75,000.

Where it goes wrong. Students may apply the old regime limit of 1/3rd or ₹15,000, or mistakenly allow a deduction of 1/3rd of ₹6,00,000.

Authority. Section 57(iia) of the Income-tax Act, 1961; Section 115BAC

Question 2 · 2 marks · Taxation - DT Ch 07: Other Sources · medium

What is the tax payable under Section 115BB on the lottery winnings of ₹2,00,000 received by Smt. Anuradha Sen, considering the ₹30,000 spent on lottery tickets?

1. ₹51,000, being 30% of ₹1,70,000
2. Nil, since the net winnings are below ₹2,00,000
3. ₹45,000, being 30% of ₹1,50,000
4. ₹60,000, being 30% of ₹2,00,000 (correct answer)

Answer: D — ₹60,000, being 30% of ₹2,00,000

Explanation. Section 115BB taxes winnings from lotteries at a flat 30% on the gross amount. No deduction is allowed for expenses incurred in purchasing lottery tickets. Tax = 30% × ₹2,00,000 = ₹60,000.

Where it goes wrong. Students may deduct the cost of lottery tickets before applying the 30% rate, or apply the slab rates instead of the special rate.

Authority. Section 115BB of the Income-tax Act, 1961

Question 3 · 2 marks · Taxation - DT Ch 07: Other Sources · hard

What is the total tax payable on the online gaming winnings of ₹1,50,000 and horse race winnings of ₹50,000 received by Smt. Anuradha Sen?

1. ₹60,000, being 30% of ₹2,00,000 (correct answer)
2. ₹52,500, being 30% of ₹1,75,000
3. ₹45,000, being 30% of ₹1,50,000
4. ₹15,000, being 30% of ₹50,000

Answer: A — ₹60,000, being 30% of ₹2,00,000

Explanation. Online gaming winnings are taxed at 30% under Section 115BBJ on the gross amount without deduction for entry fees. Horse race winnings are taxed at 30% under Section 115BB. Tax = 30% × ₹1,50,000 + 30% × ₹50,000 = ₹45,000 + ₹15,000 = ₹60,000.

Where it goes wrong. Students may deduct the ₹25,000 entry fee from online gaming winnings or apply the basic exemption limit to reduce the tax.

Authority. Section 115BB of the Income-tax Act, 1961; Section 115BBJ

Question 4 · 2 marks · Taxation - DT Ch 07: Other Sources · hard

What is the total tax payable under Sections 115BB and 115BBJ on all casual income received by Smt. Anuradha Sen during FY 2026-27?

1. ₹1,05,000, being tax on all casual income
2. ₹90,000, being tax after deducting expenses
3. ₹1,20,000, being 30% of gross casual income (correct answer)
4. ₹1,35,000, being tax including interest income

Answer: C — ₹1,20,000, being 30% of gross casual income

Explanation. Gross casual income = lottery ₹2,00,000 + online gaming ₹1,50,000 + horse race ₹50,000 = ₹4,00,000. Tax = 30% × ₹4,00,000 = ₹1,20,000. No expenses are deductible, and the basic exemption limit is not available against casual income.

Where it goes wrong. Students may deduct expenses of ₹55,000 or incorrectly apply the basic exemption limit to reduce the tax.

Authority. Section 115BB of the Income-tax Act, 1961; Section 115BBJ

Question 5 · 2 marks · Taxation - DT Ch 07: Other Sources · medium

Scenario. Mr. Vikramaditya, a resident individual aged 58 years, received the following during FY 2026-27. He won ₹80,000 from a crossword puzzle competition and ₹1,20,000 from card games, incurring ₹15,000 as participation expenses for the card games. He received family pension of ₹9,00,000 from his deceased father's employer. He earned ₹40,000 as interest on bank fixed deposits and ₹25,000 as dividend from an Indian company. He also received ₹2,00,000 as winnings from a horse race, on which the bookmaker deducted tax at source before payment. He follows the default tax regime under Section 115BAC. He has no other income during the year.

What is the tax payable under Section 115BB on the crossword puzzle winnings of ₹80,000 and card game winnings of ₹1,20,000 received by Mr. Vikramaditya, considering the ₹15,000 participation expenses for card games?

1. ₹55,500, being 30% of ₹1,85,000
2. ₹24,000, being 30% of ₹80,000
3. ₹36,000, being 30% of ₹1,20,000
4. ₹60,000, being 30% of ₹2,00,000 (correct answer)

Answer: D — ₹60,000, being 30% of ₹2,00,000

Explanation. Winnings from crossword puzzles and card games are taxed at 30% on the gross amount under Section 115BB. No deduction is allowed for participation expenses. Tax = 30% × (₹80,000 + ₹1,20,000) = 30% × ₹2,00,000 = ₹60,000.

Where it goes wrong. Students may deduct the ₹15,000 expenses or apply separate thresholds to each category of winnings.

Authority. Section 115BB of the Income-tax Act, 1961

Question 6 · 2 marks · Taxation - DT Ch 07: Other Sources · hard

What is the amount of deduction allowable under Section 57(iia) against the family pension of ₹9,00,000 received by Mr. Vikramaditya under the default tax regime, and what is the net taxable family pension?

1. ₹25,000 deduction; net taxable ₹8,75,000 (correct answer)
2. ₹15,000 deduction; net taxable ₹8,85,000
3. ₹3,00,000 deduction; net taxable ₹6,00,000
4. ₹1,50,000 deduction; net taxable ₹7,50,000

Answer: A — ₹25,000 deduction; net taxable ₹8,75,000

Explanation. Under the default tax regime, the deduction under Section 57(iia) for family pension is ₹25,000, irrespective of the amount of family pension. Net taxable = ₹9,00,000 - ₹25,000 = ₹8,75,000.

Where it goes wrong. Students may apply the old regime limit of 1/3rd or ₹15,000, or mistakenly allow a deduction of 1/3rd of ₹9,00,000.

Authority. Section 57(iia) of the Income-tax Act, 1961; Section 115BAC

Question 7 · 2 marks · Taxation - DT Ch 07: Other Sources · hard

What is the amount of tax deducted at source on the horse race winnings of ₹2,00,000 received by Mr. Vikramaditya, and at what rate?

1. ₹20,000 at 10% under Section 194BB
2. ₹30,000 at 15% under Section 194BB
3. ₹60,000 at 30% under Section 194BB (correct answer)
4. Nil, since the winnings are below ₹2,50,000

Answer: C — ₹60,000 at 30% under Section 194BB

Explanation. Section 194BB requires tax deduction at source at 30% on winnings from horse races exceeding ₹10,000 in a single transaction. TDS = 30% × ₹2,00,000 = ₹60,000. This TDS is the tax liability on these winnings.

Where it goes wrong. Students may apply a lower TDS rate or assume that TDS is not applicable because the winnings are not from a lottery.

Authority. Section 194BB of the Income-tax Act, 1961

Question 8 · 2 marks · Taxation - DT Ch 07: Other Sources · hard

What is the total income of Mr. Vikramaditya under the head 'Income from Other Sources' for AY 2027-28, excluding casual income taxed separately under Section 115BB?

1. ₹9,50,000, being family pension and interest
2. ₹8,75,000, being net family pension only
3. ₹9,40,000, being net family pension, interest and dividend (correct answer)
4. ₹9,15,000, being net family pension and interest

Answer: C — ₹9,40,000, being net family pension, interest and dividend

Explanation. Family pension after deduction = ₹9,00,000 - ₹25,000 = ₹8,75,000. Interest on FD = ₹40,000. Dividend = ₹25,000. Total = ₹8,75,000 + ₹40,000 + ₹25,000 = ₹9,40,000. Casual income is taxed separately under Section 115BB.

Where it goes wrong. Students may include casual income or forget to add dividend while computing income from other sources.

Authority. Section 56 of the Income-tax Act, 1961; Section 57(iia)

Question 9 · 2 marks · Taxation - DT Ch 07: Other Sources · medium

Scenario. During Tax Year 2026-27, a registered taxpayer is evaluating statutory compliance, computation of taxable income, and eligible tax deductions in accordance with the provisions of the Income-tax Act, 2025 and applicable rules for the May 2027 examination.

Ms. Nandini won ₹5,00,000 from a State lottery on 1st August 2026. She had purchased lottery tickets worth ₹20,000. What is the tax payable under Section 115BB on these winnings for AY 2027-28?

1. ₹1,50,000, being 30% of ₹5,00,000 (correct answer)
2. ₹1,44,000, being 30% of ₹4,80,000
3. ₹1,25,000, being 25% of ₹5,00,000
4. Nil, since the winnings are below ₹10,00,000

Answer: A — ₹1,50,000, being 30% of ₹5,00,000

Explanation. Section 115BB taxes lottery winnings at 30% on the gross amount without any deduction for the cost of tickets. Tax = 30% × ₹5,00,000 = ₹1,50,000.

Where it goes wrong. Students may deduct the ticket cost of ₹20,000 before applying the tax rate.

Authority. Section 115BB of the Income-tax Act, 1961

Question 10 · 2 marks · Taxation - DT Ch 07: Other Sources · medium

Scenario. During Tax Year 2026-27, a registered taxpayer is evaluating statutory compliance, computation of taxable income, and eligible tax deductions in accordance with the provisions of the Income-tax Act, 2025 and applicable rules for the May 2027 examination.

Mr. Rohan won ₹3,00,000 from an online game on 15th December 2026. He had paid ₹50,000 as entry fees to participate in the games. What is the tax payable under Section 115BBJ on these winnings?

1. ₹75,000, being 25% of ₹3,00,000
2. ₹0, since the winnings are below ₹5,00,000
3. ₹1,05,000, being 30% of ₹3,50,000
4. ₹90,000, being 30% of ₹3,00,000 (correct answer)

Answer: D — ₹90,000, being 30% of ₹3,00,000

Explanation. Section 115BBJ taxes online gaming winnings at 30% on the net winnings. The net winnings are ₹3,00,000 (gross winnings), and no deduction is allowed for entry fees. Tax = 30% × ₹3,00,000 = ₹90,000.

Where it goes wrong. Students may deduct the entry fees or apply a lower rate to online gaming winnings.

Authority. Section 115BBJ of the Income-tax Act, 1961

Question 11 · 2 marks · Taxation - DT Ch 07: Other Sources · hard

Scenario. During Tax Year 2026-27, a registered taxpayer is evaluating statutory compliance, computation of taxable income, and eligible tax deductions in accordance with the provisions of the Income-tax Act, 2025 and applicable rules for the May 2027 examination.

Smt. Meera, aged 65 years, received family pension of ₹4,50,000 during FY 2026-27 and follows the default tax regime under Section 115BAC. What is the amount of deduction allowable under Section 57(iia)?

1. ₹15,000, being the statutory limit
2. ₹25,000, being the limit under the default regime (correct answer)
3. ₹1,50,000, being one-third of family pension
4. Nil, since family pension is fully exempt

Answer: B — ₹25,000, being the limit under the default regime

Explanation. Under the default tax regime, the deduction under Section 57(iia) is ₹25,000. The old regime limit of 1/3rd or ₹15,000 is not applicable here. The full ₹25,000 is allowable as a deduction from the family pension.

Where it goes wrong. Students may apply the old regime limit of 1/3rd or ₹15,000, or assume that family pension is fully exempt.

Authority. Section 57(iia) of the Income-tax Act, 1961; Section 115BAC

Question 12 · 2 marks · Taxation - DT Ch 07: Other Sources · hard

Scenario. During Tax Year 2026-27, a registered taxpayer is evaluating statutory compliance, computation of taxable income, and eligible tax deductions in accordance with the provisions of the Income-tax Act, 2025 and applicable rules for the May 2027 examination.

Mr. Arjun received family pension of ₹30,000 during FY 2026-27 and follows the default tax regime. What is the taxable amount of family pension after claiming the deduction under Section 57(iia)?

1. ₹15,000, being the balance after ₹15,000 deduction
2. ₹5,000, being the balance after ₹25,000 deduction (correct answer)
3. ₹20,000, being the balance after 1/3rd deduction
4. Nil, since the family pension is below the deduction limit

Answer: B — ₹5,000, being the balance after ₹25,000 deduction

Explanation. Under the default regime, the deduction is ₹25,000. Family pension is ₹30,000. Taxable amount = ₹30,000 - ₹25,000 = ₹5,000. The deduction cannot exceed the family pension amount, but here it is within limits.

Where it goes wrong. Students may apply the old regime limit of 1/3rd (₹10,000) or wrongly assume that the deduction cannot exceed the income.

Authority. Section 57(iia) of the Income-tax Act, 1961; Section 115BAC

Question 13 · 2 marks · Taxation - DT Ch 07: Other Sources · hard

Scenario. During Tax Year 2026-27, a registered taxpayer is evaluating statutory compliance, computation of taxable income, and eligible tax deductions in accordance with the provisions of the Income-tax Act, 2025 and applicable rules for the May 2027 examination.

Mr. Karan won ₹2,00,000 from betting on cricket matches during FY 2026-27. He also incurred a loss of ₹50,000 from betting on another match during the same year. What is the tax payable under Section 115BB on the net betting income?

1. ₹60,000, being 30% of ₹2,00,000 (correct answer)
2. ₹45,000, being 30% of ₹1,50,000
3. ₹75,000, being 30% of ₹2,50,000
4. Nil, since the net income is below ₹2,00,000

Answer: A — ₹60,000, being 30% of ₹2,00,000

Explanation. Section 115BB taxes betting winnings at 30% on the gross amount. Section 58(4) expressly bars any deduction for losses from casual income. The loss of ₹50,000 cannot be set off against the winnings. Tax = 30% × ₹2,00,000 = ₹60,000.

Where it goes wrong. Students may set off the loss against the winnings before applying the tax rate, or apply the slab rates to the net amount.

Authority. Section 115BB of the Income-tax Act, 1961; Section 58(4)

Question 14 · 2 marks · Taxation - DT Ch 07: Other Sources · medium

Scenario. During Tax Year 2026-27, a registered taxpayer is evaluating statutory compliance, computation of taxable income, and eligible tax deductions in accordance with the provisions of the Income-tax Act, 2025 and applicable rules for the May 2027 examination.

Ms. Riya won ₹60,000 from card games on 1st September 2026 and spent ₹10,000 on travel to participate in the tournament. What is the tax payable under Section 115BB on these winnings?

1. ₹15,000, being 25% of ₹60,000
2. ₹18,000, being 30% of ₹60,000 (correct answer)
3. ₹21,000, being 30% of ₹70,000
4. Nil, since the winnings are below ₹1,00,000

Answer: B — ₹18,000, being 30% of ₹60,000

Explanation. Card game winnings are taxed at 30% on the gross amount under Section 115BB. No deduction is allowed for travel or participation expenses. Tax = 30% × ₹60,000 = ₹18,000.

Where it goes wrong. Students may deduct the ₹10,000 travel expenses or apply a basic exemption limit to reduce the tax.

Authority. Section 115BB of the Income-tax Act, 1961

Question 15 · 2 marks · Taxation - DT Ch 07: Other Sources · hard

Scenario. During Tax Year 2026-27, a registered taxpayer is evaluating statutory compliance, computation of taxable income, and eligible tax deductions in accordance with the provisions of the Income-tax Act, 2025 and applicable rules for the May 2027 examination.

Mr. Kabir has winnings from a lottery of ₹1,50,000 and no other income during FY 2026-27. He claims that the basic exemption limit of ₹3,00,000 under the default tax regime should be set off against the lottery winnings, resulting in nil tax. Is his claim valid?

1. Yes, since the total income is below the basic exemption limit
2. No, since casual income is taxed at a flat 30% without basic exemption (correct answer)
3. Yes, but only if the winnings are below ₹2,00,000
4. No, since lottery winnings are fully exempt from tax

Answer: B — No, since casual income is taxed at a flat 30% without basic exemption

Explanation. Section 115BB taxes casual income at a flat 30% on the gross amount. The basic exemption limit cannot be set off against casual income. The tax liability is 30% × ₹1,50,000 = ₹45,000. Mr. Kabir's claim is invalid.

Where it goes wrong. Students may accept the claim by applying the basic exemption limit to total income, ignoring the special rate provision.

Authority. Section 115BB of the Income-tax Act, 1961

Question 16 · 2 marks · Taxation - DT Ch 07: Other Sources · medium

Scenario. During Tax Year 2026-27, a registered taxpayer is evaluating statutory compliance, computation of taxable income, and eligible tax deductions in accordance with the provisions of the Income-tax Act, 2025 and applicable rules for the May 2027 examination.

While computing income from other sources for AY 2027-28, which of the following deductions is allowable under Section 57?

1. Standard deduction of ₹50,000 from family pension
2. Deduction for expenses incurred to purchase lottery tickets
3. One-third of family pension or ₹15,000, whichever is less, under the old regime (correct answer)
4. Deduction for personal expenses of the assessee

Answer: C — One-third of family pension or ₹15,000, whichever is less, under the old regime

Explanation. Section 57(iia) allows a deduction of one-third of family pension or ₹15,000, whichever is less, under the old regime. The standard deduction of ₹50,000 is available only against salary income. Lottery ticket expenses and personal expenses are expressly disallowed under Section 58.

Where it goes wrong. Students may confuse the salary standard deduction with family pension deduction or allow personal expenses as deductions.

Authority. Section 57(iia) of the Income-tax Act, 1961; Section 58

Question 17 · 2 marks · Taxation - DT Ch 07: Other Sources · hard

Scenario. During Tax Year 2026-27, a registered taxpayer is evaluating statutory compliance, computation of taxable income, and eligible tax deductions in accordance with the provisions of the Income-tax Act, 2025 and applicable rules for the May 2027 examination.

Which of the following expenses is expressly disallowed as a deduction under Section 58 while computing income from other sources?

1. Personal expenses of the assessee (correct answer)
2. Interest paid on a loan taken to purchase securities
3. Commission paid for realizing dividend income
4. Insurance premium paid on the life insurance policy of the assessee

Answer: A — Personal expenses of the assessee

Explanation. Section 58 expressly disallows personal expenses of the assessee, interest on capital, wealth tax, and any expenditure not related to earning the income. Interest on loans for investments, commission for realizing dividend, and insurance premium may be allowed under Section 57 if they relate to earning the income.

Where it goes wrong. Students may assume that all expenses are disallowed or that personal expenses can be claimed as deductions.

Authority. Section 58 of the Income-tax Act, 1961

Question 18 · 2 marks · Taxation - DT Ch 07: Other Sources · hard

Scenario. During Tax Year 2026-27, a registered taxpayer is evaluating statutory compliance, computation of taxable income, and eligible tax deductions in accordance with the provisions of the Income-tax Act, 2025 and applicable rules for the May 2027 examination.

Smt. Radha received family pension of ₹4,50,000 during FY 2026-27. What is the difference in the deduction allowable under Section 57(iia) between the default tax regime and the old tax regime?

1. ₹15,000, being the deduction under the old regime
2. ₹1,35,000, being the difference between 1/3rd and ₹15,000
3. ₹1,50,000, being one-third of family pension
4. ₹10,000, being the difference between ₹25,000 and ₹15,000 (correct answer)

Answer: D — ₹10,000, being the difference between ₹25,000 and ₹15,000

Explanation. Under the old regime, deduction = lower of 1/3rd (₹1,50,000) or ₹15,000 = ₹15,000. Under the default regime, deduction = ₹25,000. The difference = ₹25,000 - ₹15,000 = ₹10,000.

Where it goes wrong. Students may compare ₹25,000 with 1/3rd of family pension (₹1,50,000) instead of ₹15,000, or calculate the difference incorrectly.

Authority. Section 57(iia) of the Income-tax Act, 1961; Section 115BAC

Question 19 · 2 marks · Taxation - DT Ch 07: Other Sources · medium

Scenario. During Tax Year 2026-27, a registered taxpayer is evaluating statutory compliance, computation of taxable income, and eligible tax deductions in accordance with the provisions of the Income-tax Act, 2025 and applicable rules for the May 2027 examination.

Mr. Suraj won ₹5,00,000 from a State lottery on 1st August 2026. The lottery agent deducted tax at source before paying him. What is the rate and amount of TDS applicable under Section 194B?

1. 10% TDS; amount ₹50,000
2. 30% TDS; amount ₹1,50,000 (correct answer)
3. 20% TDS; amount ₹1,00,000
4. Nil TDS; since winnings are below ₹10,00,000

Answer: B — 30% TDS; amount ₹1,50,000

Explanation. Section 194B requires tax deduction at source at 30% on winnings from lotteries exceeding ₹10,000. TDS = 30% × ₹5,00,000 = ₹1,50,000. This TDS is the final tax liability on these winnings.

Where it goes wrong. Students may apply a lower TDS rate or assume a higher threshold for TDS applicability.

Authority. Section 194B of the Income-tax Act, 1961

Question 20 · 2 marks · Taxation - DT Ch 07: Other Sources · hard

Scenario. During Tax Year 2026-27, a registered taxpayer is evaluating statutory compliance, computation of taxable income, and eligible tax deductions in accordance with the provisions of the Income-tax Act, 2025 and applicable rules for the May 2027 examination.

Ms. Priya won ₹3,00,000 from an online game during FY 2026-27. What is the TDS applicable on these winnings under Section 194BA, assuming no withdrawals were made during the year?

1. ₹15,000, being 5% TDS on net winnings
2. ₹30,000, being 10% TDS on net winnings
3. ₹90,000, being 30% TDS on net winnings (correct answer)
4. Nil, since TDS is applicable only on withdrawal

Answer: C — ₹90,000, being 30% TDS on net winnings

Explanation. Section 194BA requires TDS at 30% on net winnings from online games. TDS is deductible at the end of the financial year on the net winnings in the user account, or at the time of withdrawal. Here, TDS = 30% × ₹3,00,000 = ₹90,000.

Where it goes wrong. Students may assume TDS applies only on withdrawal, or apply a lower rate to online gaming winnings.

Authority. Section 194BA of the Income-tax Act, 1961