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100+ Free CA Final Paper 4 Practice Questions

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2026 Statistics

Key Facts: CA Final Paper 4 Exam

100

Total Marks

ICAI Paper 4 Study Material

3 hours

Exam Duration

ICAI CA Final Exam Pattern

70:30

Descriptive to MCQ Split

ICAI New Scheme 2023

~70 / ~30

Part I DT / Part II Intl Tax Marks

ICAI Syllabus

40%

Paper Pass Mark

ICAI Examination Regulations

No

Negative Marking on MCQs

ICAI Examination Notification

CA Final Paper 4, Direct Tax Laws and International Taxation, is a 100-mark, 3-hour Group II paper under ICAI's New Scheme 2023. It is split into Part I Direct Tax Laws (about 70 marks) covering charge, residence, the five heads, assessment of entities, MAT/AMT, TDS/TCS, assessment procedure, appeals and penalties, and Part II International Taxation (about 30 marks) covering transfer pricing, non-resident taxation, double taxation relief, advance rulings, equalisation levy and BEPS. About 70% of marks are descriptive and 30% are compulsory MCQs with no negative marking. To pass, a candidate needs 40% in the paper and 50% aggregate in the group.

Sample CA Final Paper 4 Practice Questions

Try these sample questions to test your CA Final Paper 4 exam readiness. Each question includes a detailed explanation. Start the interactive quiz above for the full 100+ question experience with AI tutoring.

1Under Section 6(1) of the Income-tax Act, 1961, an individual is treated as resident in India for a previous year if he is present in India for at least how many days during that previous year?
A.60 days
B.120 days
C.182 days
D.365 days
Explanation: Section 6(1)(a) treats an individual as resident if he is in India for 182 days or more in the previous year. Alternatively, under Section 6(1)(c), 60 days in the previous year plus 365 days in the four preceding years also confers residence, subject to specified exceptions.
2An Indian citizen having total income (other than income from foreign sources) exceeding Rs 15 lakh, who is not liable to tax in any other country, is treated under Section 6(1A) as:
A.Deemed resident, and therefore Resident but Not Ordinarily Resident
B.Non-resident regardless of stay
C.Resident and Ordinarily Resident automatically
D.Exempt from Indian tax entirely
Explanation: Section 6(1A) deems such a 'stateless' Indian citizen to be resident in India. Under Section 6(6), a person deemed resident under 6(1A) is always Resident but Not Ordinarily Resident (RNOR), so only Indian-source and India-controlled business income is taxed.
3Income deemed to accrue or arise in India to a non-resident is governed primarily by which section of the Income-tax Act, 1961?
A.Section 9
B.Section 5
C.Section 14
D.Section 56
Explanation: Section 9 enumerates incomes deemed to accrue or arise in India, including business connection, property in India, capital assets situated in India, salaries for services in India, dividends from Indian companies, and interest, royalty and fees for technical services payable by residents.
4For a Resident but Not Ordinarily Resident (RNOR), which income is NOT included in total income under Section 5?
A.Income received in India
B.Income deemed to accrue in India
C.Income accruing outside India from a business controlled from India
D.Income accruing outside India from a business controlled wholly from outside India
Explanation: Under Section 5(1), an RNOR is taxed on Indian income and on foreign income only if derived from a business controlled in or a profession set up in India. Foreign income from a business controlled wholly outside India is therefore excluded.
5A company is treated as resident in India in any previous year if it is an Indian company OR if its place of effective management (POEM) in that year is:
A.In India
B.Outside India
C.Determined solely by shareholding
D.Irrelevant for companies
Explanation: Under Section 6(3), a company is resident if it is an Indian company or if its place of effective management, the place where key management and commercial decisions necessary for conduct of the business as a whole are in substance made, is in India during the year.
6Salary income chargeable under Section 15 includes salary due whether paid or not, and salary paid in advance. Which of the following is the correct treatment to avoid double taxation?
A.Salary not taxed again when due if already taxed on receipt basis as advance
B.Advance salary taxed again when it becomes due
C.Salary always taxed only on receipt
D.Arrears never taxable
Explanation: Section 15 charges salary on due or receipt basis, whichever is earlier. The proviso ensures that salary already taxed on an advance/receipt basis is not taxed again when it becomes due, preventing double taxation of the same amount.
7Under the head 'Income from House Property', the annual value of a self-occupied residential house under Section 23(2) is generally taken as:
A.Municipal value
B.Fair rent
C.Nil
D.Standard rent
Explanation: For a self-occupied property under Section 23(2), the annual value is taken as nil. The owner may still claim interest on borrowed capital under Section 24(b) within the prescribed limit (Rs 2 lakh for eligible loans).
8Section 14A read with Rule 8D disallows expenditure incurred in relation to:
A.Income that does not form part of total income (exempt income)
B.Income chargeable at maximum marginal rate
C.Capital expenditure
D.Foreign income
Explanation: Section 14A disallows expenditure incurred in relation to income that does not form part of total income (exempt income). Rule 8D provides the mechanism to quantify the disallowance where the Assessing Officer is not satisfied with the assessee's computation.
9Under Section 32, additional depreciation on new plant and machinery acquired and installed by an assessee engaged in manufacture is allowed at the rate of:
A.10% of actual cost
B.15% of actual cost
C.20% of actual cost
D.40% of actual cost
Explanation: Additional depreciation under Section 32(1)(iia) is allowed at 20% of the actual cost of new plant and machinery for assessees engaged in manufacture or production of an article. If the asset is used for less than 180 days, only 10% is allowed in the first year, with the balance 10% in the next year.
10Section 40(a)(i) disallows certain payments to non-residents on which tax was deductible but not deducted or not paid. What is the consequence if the TDS is deducted and paid in a subsequent year?
A.Allowed as deduction in the year of payment of TDS
B.Permanent disallowance
C.30% allowed only
D.Penalty instead of disallowance
Explanation: Where tax deductible on a payment to a non-resident is not deducted or paid in time, Section 40(a)(i) disallows the expenditure, but it is allowed as a deduction in the previous year in which the tax is subsequently deducted and paid.

About the CA Final Paper 4 Exam

CA Final Paper 4 is a Group II paper under ICAI's New Scheme 2023 covering Part I Direct Tax Laws (about 70 marks) and Part II International Taxation (about 30 marks), tested over 3 hours through roughly 70% descriptive questions and 30% compulsory MCQs with no negative marking.

Assessment

Question count not published by the exam provider

Time Limit

3 hours (180 minutes)

Passing Score

40% in the paper and 50% aggregate in the group

Exam Fee

Part of the per-group CA Final examination fee (approximately Rs 3,300 per group); there is no separate Paper 4 fee (Institute of Chartered Accountants of India (ICAI))

CA Final Paper 4 Exam Content Outline

Part I (~70 marks)

Basis of Charge, Residential Status & Scope of Total Income

Sections 4 to 9 on charge of tax, residential status under Section 6, deemed resident, POEM, and scope of total income for residents, RNOR and non-residents.

Part I (~70 marks)

Heads of Income & Profits of Business

Salary, house property, depreciation under Section 32, business deductions and disallowances, and capital gains including Sections 50CA, 54EC and 112A.

Part I (~70 marks)

Clubbing, Set-off & Carry Forward, Deductions

Clubbing under Sections 60-65, set-off and carry forward under Sections 70-79, and Chapter VI-A deductions such as 80-IAC, 80JJAA and 80M.

Part I (~70 marks)

Assessment of Various Entities

Taxation of firms, LLPs, AOP/BOI, companies under Sections 115BAA/115BAB, trusts, business trusts (REIT/InvIT) and securitisation trusts.

Part I (~70 marks)

Dividends, MAT, AMT & Tax Planning

Taxation of dividends and units post-DDT, MAT under Section 115JB, AMT under Section 115JC, GAAR, and tax planning versus avoidance and evasion.

Part I (~70 marks)

Collection & Recovery, TDS/TCS, Advance Tax

TDS and TCS including Sections 194-IA, 195 and 206C, advance tax under Section 208, interest under Sections 234B/234C, and recovery under Section 220.

Part I (~70 marks)

Authorities, Assessment, Appeals, Penalties & Offences

Income-tax authorities, faceless assessment under Section 144B, reassessment, appeals and revision, penalties under Sections 270A/271, and prosecution offences.

Part II (~30 marks)

Transfer Pricing

Arm's length price under Sections 92-92F, associated enterprises, methods under Section 92C, APA, secondary adjustment, thin capitalisation, and CbC reporting.

Part II (~30 marks)

Non-Resident Taxation & Double Taxation Relief

Taxation of non-residents under Sections 115A, 44BB, 44DA and Chapter XII-A, business connection, significant economic presence, and relief under Sections 90, 90A and 91.

Part II (~30 marks)

Advance Rulings, Equalisation Levy & Model Conventions/BEPS

Board for Advance Rulings, equalisation levy on online advertisement, OECD and UN Model Conventions, BEPS Action Plans, MLI, and the Principal Purpose Test.

How to Pass the CA Final Paper 4 Exam

What You Need to Know

  • Passing score: 40% in the paper and 50% aggregate in the group
  • Assessment: Question count not published by the exam provider
  • Time limit: 3 hours (180 minutes)
  • Exam fee: Part of the per-group CA Final examination fee (approximately Rs 3,300 per group); there is no separate Paper 4 fee

Keys to Passing

  • Work through all 100 available questions
  • Review every answer and explanation
  • Track weak areas and revisit them
  • Use our AI tutor for tough concepts

CA Final Paper 4 Study Tips from Top Performers

1Track every Finance Act amendment and ICAI amendment notification for the applicable assessment year, since Paper 4 questions frequently test the latest provisions.
2Practise Part II International Taxation thoroughly because its 30 marks are high-scoring and concept-driven compared with the volume-heavy Part I.
3Solve ICAI Revision Test Papers, Mock Test Papers, and past papers to internalise presentation and section-quoting expectations.
4Memorise key sections, rates, and thresholds (MAT 15%, AMT 18.5%, Section 269ST Rs 2 lakh) so you can cite them precisely in descriptive answers.
5Build a one-page rate and due-date chart for TDS/TCS, advance tax, surcharge, and time limits to revise quickly before the attempt.
6Attempt the compulsory MCQ section carefully; with no negative marking, never leave an objective question blank.

Frequently Asked Questions

How is CA Final Paper 4 structured?

Paper 4 is a 100-mark, 3-hour paper divided into Part I Direct Tax Laws (about 70 marks) and Part II International Taxation (about 30 marks). Roughly 70% of marks come from descriptive questions and 30% from compulsory MCQs.

Is there negative marking in CA Final Paper 4 MCQs?

No. ICAI does not apply negative marking to the MCQ portion of CA Final Paper 4. The roughly 30 marks of objective questions are compulsory, and incorrect answers do not reduce the descriptive-section score.

What are the passing requirements for CA Final Paper 4?

Under ICAI Examination Regulations, a candidate must secure at least 40% in Paper 4 and 50% in aggregate across the group. Exemptions are granted for individual papers scoring 60% or more.

Which scheme does CA Final Paper 4 fall under?

Paper 4, Direct Tax Laws and International Taxation, is a Group II paper under ICAI's New Scheme of Education and Training implemented in 2023, replacing the earlier elective and separate international taxation structure.

What topics fall under Part II International Taxation?

Part II covers transfer pricing, taxation of non-residents, double taxation relief under Sections 90, 90A and 91, advance rulings, equalisation levy, and an overview of Model Tax Conventions and BEPS, carrying about 30 of the 100 marks.

How many times a year is CA Final Paper 4 held?

ICAI conducts the CA Final examination three times a year, generally in January, May, and September, so candidates can attempt Paper 4 in any of these windows within their registration validity.

Does this practice bank exactly replicate the ICAI exam?

No. This is a free MCQ knowledge-prep bank built to the official syllabus weightage. The actual ICAI exam is mostly descriptive with a 30-mark compulsory MCQ section, so use these questions to reinforce concepts rather than as a replica.