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100+ Free CA Inter Paper 3: Taxation Practice Questions
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2026 Statistics
Key Facts: CA Inter Paper 3: Taxation Exam
100
Total Marks
ICAI CA Intermediate Paper 3
3 hrs
Exam Duration
ICAI Examination Pattern
70:30
Descriptive to MCQ Split
ICAI Examination Pattern
2 sections
Income-tax and GST
ICAI Syllabus
40%
Minimum Paper Marks
ICAI Passing Rules
No
Negative Marking
ICAI Examination Pattern
CA Intermediate Paper 3 Taxation is a 100-mark, three-hour paper in CA Intermediate Group I under the ICAI new scheme of 2023. It has two sections: Section A, Income-tax Law (about 50 marks), and Section B, Goods and Services Tax (about 50 marks). The pattern is roughly 70% descriptive plus 30% compulsory MCQs, with no negative marking. To pass, a candidate must secure at least 40% in the paper and 50% aggregate in the group. ICAI does not publish a per-paper pass rate, and the applicable assessment year and GST provisions are notified for each attempt.
Sample CA Inter Paper 3: Taxation Practice Questions
Try these sample questions to test your CA Inter Paper 3: Taxation exam readiness. Each question includes a detailed explanation. Start the interactive quiz above for the full 100+ question experience with AI tutoring.
1Under the Income-tax Act, 1961, the 'previous year' for an assessee is generally the financial year:
A.In which income is earned, ending on 31st March
B.In which income is assessed to tax
C.Beginning on 1st January and ending on 31st December
D.Chosen by the assessee from any 12-month period
Explanation: Section 3 defines the previous year as the financial year (1 April to 31 March) in which income is earned. The income of the previous year is taxed in the immediately following assessment year. India uniformly uses 1 April-31 March, not the calendar year.
2An individual is treated as a 'resident' in India for a previous year if he is in India for 182 days or more in that year, OR for 60 days or more in that year and:
A.365 days or more in the 4 preceding previous years
B.182 days or more in the immediately preceding year
C.90 days or more in the 7 preceding years
D.any period in the preceding 10 years
Explanation: Under section 6(1), the second basic condition requires 60 days or more in the relevant previous year plus 365 days or more during the 4 immediately preceding previous years. Meeting either basic condition makes an individual a resident.
3Agricultural income earned in India is:
A.Exempt under section 10(1) but may be aggregated for rate purposes
B.Fully taxable under the head Income from Other Sources
C.Taxable only if it exceeds Rs. 5,000
D.Always exempt with no impact on tax computation
Explanation: Agricultural income is exempt under section 10(1). However, for a non-corporate assessee, net agricultural income above Rs. 5,000 (with non-agricultural income above the basic exemption) is aggregated under the partial integration scheme to determine the applicable tax rate on non-agricultural income.
4Income deemed to accrue or arise in India is taxable in the hands of:
A.Only a resident and ordinarily resident
B.A non-resident as well, but not a resident
C.All assessees, irrespective of residential status
D.Only a resident but not ordinarily resident
Explanation: Under section 5, income that accrues or arises in India, or is deemed to accrue or arise in India, is taxable for every assessee regardless of residential status. Residential status only affects the taxability of foreign-source income, not Indian-source income.
5For AY 2025-26, under the default tax regime u/s 115BAC, the standard deduction available to a salaried employee from salary income is:
A.Rs. 75,000
B.Rs. 50,000
C.Rs. 1,00,000
D.Not available
Explanation: From AY 2025-26, the standard deduction under the default new regime (section 115BAC) was increased to Rs. 75,000 under section 16(ia). Under the old regime, the standard deduction remains Rs. 50,000.
6Mr. A receives a gratuity of Rs. 12,00,000 on retirement. He is covered by the Payment of Gratuity Act, 1972. The maximum exemption limit under section 10(10) for such employees is:
A.Rs. 20,00,000
B.Rs. 10,00,000
C.Rs. 15,00,000
D.Rs. 12,00,000
Explanation: For employees covered by the Payment of Gratuity Act, 1972, the maximum exemption ceiling under section 10(10)(ii) is Rs. 20,00,000. The exemption is the least of the actual gratuity, the statutory formula amount, or Rs. 20,00,000.
7Which of the following allowances is fully exempt from tax in the hands of a salaried employee?
A.City compensatory allowance
B.Dearness allowance
C.Allowance granted to a High Court Judge
D.Entertainment allowance to a private-sector employee
Explanation: Allowances paid to High Court and Supreme Court Judges (sumptuary allowance) are fully exempt. City compensatory allowance and dearness allowance are fully taxable, and entertainment allowance deduction under section 16(ii) is available only to government employees.
8The annual value of a self-occupied house property used for own residence, where no other benefit is derived, is taken as:
A.Municipal value of the property
B.Fair rent of the property
C.Nil
D.Standard rent under Rent Control Act
Explanation: Under section 23(2), the annual value of one (or two, at the assessee's option) self-occupied house property is taken as Nil. Consequently no income arises, though interest on borrowed capital may still be claimed within prescribed limits under the old regime.
9The standard deduction allowed under section 24(a) while computing income from a let-out house property is:
A.30% of the Net Annual Value
B.30% of the Gross Annual Value
C.Actual repair expenses incurred
D.Rs. 30,000 fixed
Explanation: Section 24(a) allows a flat standard deduction of 30% of the Net Annual Value (NAV = GAV less municipal taxes paid by owner), irrespective of actual expenditure on repairs or maintenance. Interest on borrowed capital is separately deductible under section 24(b).
10Under the old tax regime, the maximum deduction for interest on borrowed capital for a self-occupied house property (acquired with capital borrowed on or after 1.4.1999 and construction completed in time) is:
A.Rs. 30,000
B.Rs. 1,50,000
C.Rs. 2,00,000
D.No limit
Explanation: Under section 24(b), for a self-occupied property the interest deduction is capped at Rs. 2,00,000 where the loan is taken for acquisition/construction on or after 1.4.1999 and construction is completed within 5 years. Otherwise the limit is Rs. 30,000.
About the CA Inter Paper 3: Taxation Practice Questions
Verified exam format metadata for CA Intermediate Paper 3: Taxation is pending. The practice questions above remain available while official exam length, timing, passing score, fee, and administrator details are reviewed.