1-Mark Questions (20) — with Answers
Q1. What is meant by savings?
Ans. Money set aside from income after meeting necessities to use in the future.
Q2. Define investment.
Ans. Using savings to buy assets/schemes (e.g., FD, PPF, mutual funds) so that money is safe and grows.
Q3. State any one benefit of keeping money in a bank.
Ans. Safety and ease of cash‑less transactions.
Q4. Write the general purpose of financial planning.
Ans. Protection and growth of wealth; preparing for predictable and unpredictable expenses.
Q5. Name two predictable expenses.
Ans. Children’s education; buying/building a house. (Many others possible.)
Q6. Name two unpredictable expenses.
Ans. Medical emergency; natural disaster loss. (Others: accident, sudden death, old-age needs.)
Q7. What is risk in investment?
Ans. Possibility of loss in value/returns (e.g., in shares, mutual funds).
Q8. Which two aspects must an investor weigh?
Ans. Risk and return/gain.
Q9. Expand PAN.
Ans. Permanent Account Number (10‑character alphanumeric).
Q10. Financial year in India runs from?
Ans. \(1\) April to \(31\) March.
Q11. The year following the financial year is called?
Ans. Assessment year.
Q12. Give any two heads of income for income‑tax.
Ans. Income from salary; Income from house/property. (Also business/profession, capital gains, other sources.)
Q13. Up to what taxable income is there no tax for individuals below 60 (as per given table)?
Ans. Up to \(\text{₹}\,2{,}50{,}000\).
Q14. State one item deductible under Section 80C.
Ans. Life Insurance premium / PF / PPF / NSC / Tuition fees (any one).
Q15. Under Section 80G, donations to CM/PM Relief Fund are…
Ans. Deductible from income (as per chapter’s description).
Q16. Farmer’s income from agriculture is…
Ans. Exempt from income‑tax.
Q17. Education cess and Secondary & Higher Education cess rates (as per tables) are?
Ans. \(2\%\) and \(1\%\) of income‑tax respectively.
Q18. If Alka saves \(\text{₹}\,120\) which is \(10\%\) of income, find monthly income.
Ans. \(120=0.10I\Rightarrow I=\text{₹}\,1200\).
Q19. CI formula for amount \(A\) on principal \(P\) at rate \(r\%\) for \(n\) years (yearly comp.).
Ans. \(A=P\left(1+\dfrac{r}{100}\right)^n\).
Q20. Maximum permissible deduction under 80C (as per chapter)?
Ans. \(\text{₹}\,1{,}50{,}000\).
2-Mark Questions (20) — with Solutions
Q1. Alka spends 90% of her income and saves \(\text{₹}\,120\). Find monthly income.
Ans. Saving \(=10\%\) of income: \(0.10I=120\Rightarrow I=\text{₹}\,1200\).
Q2. Sumit starts with \(\text{₹}\,50{,}000\), loses \(20\%\), then gains \(5\%\) on the remainder. Net % on original?
Ans. After loss: \(50{,}000\to 40{,}000\). Gain \(5\%\Rightarrow 42{,}000\). Net loss \(=8{,}000=16\%\).
Q3. Nikhil uses \(5\%\) (education), \(14\%\) (shares), \(3\%\) (bank), \(40\%\) (expenses). Balance \(=\text{₹}\,19{,}000\). Income?
Ans. Balance \(=38\%\). \(0.38I=19{,}000\Rightarrow I=\text{₹}\,50{,}000\).
Q4. CI: \(\text{₹}\,40{,}000\) at \(8\%\) p.a. for 2 years vs Mutual Fund \(\text{₹}\,1{,}20{,}000\to \text{₹}\,1{,}92{,}000\). Which is better?
Ans. Bank amount \(=40{,}000(1.08)^2=\text{₹}\,46{,}656\) (gain \(16.64\%\)). MF gain \(=60\%\). \(\Rightarrow\) MF better.
Q5. Sameera spends \(90\%\), donates \(3\%\), left with \(\text{₹}\,1750\). Find income.
Ans. Left \(=7\%\Rightarrow 0.07I=1750\Rightarrow I=\text{₹}\,25{,}000\).
Q6. Write two direct taxes and two indirect taxes (as per chapter).
Ans. Direct: Income‑tax, Wealth tax. Indirect: VAT/Central Sales Tax, Service tax/Excise duty.
Q7. Define assessee.
Ans. Any person liable to pay income‑tax under the Act.
Q8. State the five heads of income.
Ans. Salary; House/Property; Business/Profession; Capital Gains; Other Sources.
Q9. Find education cess and SHEC on income‑tax \(\text{₹}\,12{,}000\).
Ans. Education cess \(=2\%\Rightarrow \text{₹}\,240\). SHEC \(=1\%\Rightarrow \text{₹}\,120\).
Q10. CI: \(\text{₹}\,3{,}20{,}000\) at \(10\%\) p.a. for \(2\) years. Interest?
Ans. \(A=3{,}20{,}000(1.1)^2=\text{₹}\,3{,}20{,}000\times1.21=\text{₹}\,3{,}87{,}200\). Interest \(=\text{₹}\,67{,}200\).
Q11. Mr. Shaikh profits \(\text{₹}\,1{,}20{,}000\) and splits FD:Shares \(=3:2\). Find amounts.
Ans. FD \(=\tfrac{3}{5}\times1{,}20{,}000=\text{₹}\,72{,}000\); Shares \(=\tfrac{2}{5}\times1{,}20{,}000=\text{₹}\,48{,}000\).
Q12. If education cess is \(2\%\) and SHEC \(1\%\), total cess on tax \(T\)?
Ans. \(0.03T\) (i.e., \(3\%\) of income‑tax).
Q13. Write any two modes of investment shown in the chapter figure.
Ans. Fixed Deposit (FD); Public Provident Fund (PPF). (Others: RD, shares, mutual funds, bonds, PLI.)
Q14. Why does money kept as cash lose value over time?
Ans. Inflation reduces purchasing power (same money buys fewer goods later).
Q15. Find taxable income if Gross Total Income \(=\text{₹}\,6{,}00{,}000\), deductions (80C) \(=\text{₹}\,1{,}50{,}000\), 80G \(=\text{₹}\,10{,}000\).
Ans. \(6{,}00{,}000-1{,}50{,}000-10{,}000=\text{₹}\,4{,}40{,}000\).
Q16. For individuals below 60, which slab has 20% rate (as per table)?
Ans. \(\text{₹}\,5{,}00{,}001\) to \(\text{₹}\,10{,}00{,}000\).
Q17. Write the formula for percentage gain.
Ans. \(\%\,\text{gain}=\dfrac{\text{Gain}}{\text{Investment}}\times100\%\).
Q18. What does Section 80D allow?
Ans. Deduction for health insurance premium (as per chapter).
Q19. Who is a super‑senior citizen (as per table)?
Ans. Age above \(80\) years.
Q20. If taxable income \(=\text{₹}\,4{,}60{,}000\) for a senior citizen, compute income‑tax (table II only, no cess).
Ans. \(5\%\) of \(4{,}60{,}000-3{,}00{,}000=\text{₹}\,8{,}000\).
3-Mark Questions (20) — with Solutions
Q1. Mr. Shah: Bank FD \(\text{₹}\,3{,}20{,}000\) at \(10\%\) CI for \(2\) yrs and Mutual Fund \(\text{₹}\,2{,}40{,}000\to \text{₹}\,3{,}05{,}000\). Compare % gains.
Ans. Bank interest \(=\text{₹}\,67{,}200\Rightarrow21\%\). MF gain \(=\text{₹}\,65{,}000\Rightarrow27.08\%\). MF more profitable.
Q2. Mr. Shaikh invests \(\text{₹}\,4{,}00{,}000\) in industry; after 2 yrs receives \(\text{₹}\,5{,}20{,}000\). He reinvests the profit in FD and shares in \(3:2\). Find amounts.
Ans. Profit \(=1{,}20{,}000\). FD \(=\tfrac{3}{5}\cdot1{,}20{,}000=\text{₹}\,72{,}000\); Shares \(=\text{₹}\,48{,}000\).
Q3. Anil’s income:expenditure \(=5:4\). Aman’s \(=3:2\). Also \(4\%\) of Aman's income equals \(7\%\) of Anil’s income. If Anil’s monthly expenditure is \(\text{₹}\,96{,}000\), find (i) Aman's annual income, (ii) Their monthly savings.
Ans. Let Anil’s income \(=5x\Rightarrow\) exp. \(=4x\). Given \(4x=96{,}000\Rightarrow x=24{,}000\Rightarrow\) Anil income \(=\text{₹}\,1{,}20{,}000\), saving \(=x=\text{₹}\,24{,}000\). Let Aman’s income \(=3y\). Given \(0.04\cdot 3y=0.07\cdot 1{,}20{,}000\Rightarrow 0.12y=8{,}400\Rightarrow y=70{,}000\Rightarrow\) Aman income \(=\text{₹}\,2{,}10{,}000\), exp. \(=2y=\text{₹}\,1{,}40{,}000\), saving \(=\text{₹}\,70{,}000\). Aman's annual income \(=\text{₹}\,25{,}20{,}000\).
Q4. Compute taxable income and tax (with cess) for Mr. Mhatre, age 50: GTI \(=\text{₹}\,12{,}00{,}000\); 80C items: \(90{,}000,25{,}000,15{,}000,20{,}000\).
Ans. 80C total \(=\text{₹}\,1{,}50{,}000\) (cap). Taxable \(=10{,}50{,}000\). Tax: \(1{,}12{,}500+30\%\times50{,}000=\text{₹}\,1{,}27{,}500\). Cess: \(2\%\Rightarrow 2{,}550\); \(1\%\Rightarrow 1{,}275\). Total \(=\text{₹}\,1{,}31{,}325\).
Q5. Mr. Ahmed (age 62): GTI \(=\text{₹}\,6{,}20{,}000\); 80C: PPF \(1{,}00{,}000\), Insurance \(80{,}000\) (cap \(1{,}50{,}000\)); 80G: \(10{,}000\). Find tax (table II).
Ans. Deductions \(=1{,}50{,}000+10{,}000\Rightarrow\) Taxable \(=4{,}60{,}000\). Tax \(=5\%\times(4{,}60{,}000-3{,}00{,}000)=\text{₹}\,8{,}000\). Cess: \(160\) and \(80\). Total \(=\text{₹}\,8{,}240\).
Q6. Mrs. Hinduja (age 50) taxable income \(=\text{₹}\,16{,}30{,}000\). Compute total tax incl. cesses (table I).
Ans. Tax \(=1{,}12{,}500+30\%\times(16{,}30{,}000-10{,}00{,}000)=1{,}12{,}500+1{,}89{,}000=\text{₹}\,3{,}01{,}500\). Cess: \(2\%\Rightarrow 6{,}030\), \(1\%\Rightarrow 3{,}015\). Total \(=\text{₹}\,3{,}10{,}545\).
Q7. If \(\text{₹}\,80{,}000\) is invested at \(7.5\%\) CI for 3 years, find the maturity amount.
Ans. \(A=80{,}000(1.075)^3=80{,}000\times1.242796875=\text{₹}\,99{,}423.75\) \((\approx\text{₹}\,99{,}424)\).
Q8. Shekhar spends \(60\%\) of income, donates \(\text{₹}\,300\) from the balance, left with \(\text{₹}\,3{,}200\). Find income.
Ans. Balance after expenses \(=40\%\Rightarrow 0.4I-300=3{,}200\Rightarrow I=\text{₹}\,8{,}750\).
Q9. Compare % gains: Hiralal (MF \(2{,}15{,}000\to3{,}05{,}000\)) vs Ramniklal (\(1{,}40{,}000\) at \(8\%\) CI for 2 yrs).
Ans. Hiralal gain \(=\text{₹}\,90{,}000\Rightarrow 41.86\%\). Ramniklal: amount \(=1{,}40{,}000(1.08)^2=\text{₹}\,1{,}63{,}296\Rightarrow16.64\%\). Hiralal better.
Q10. Manohar gives \(20\%\) to elder son, \(30\%\) to younger, then donates \(10\%\) of balance and finally keeps \(\text{₹}\,1{,}80{,}000\). Find income.
Ans. After sons: \(50\%\) left. Donate \(10\%\) of this \(=5\%\) of income. Left \(=45\%\Rightarrow 0.45I=1{,}80{,}000\Rightarrow I=\text{₹}\,4{,}00{,}000\).
Q11. Kailash earlier spent \(85\%\) of income. Income rises by \(36\%\), expenses rise by \(40\%\) of earlier expenses. What % of new income is saved?
Ans. New income \(=1.36I\); new expenses \(=1.4\times0.85I=1.19I\). Saving \(=0.17I\Rightarrow \) % of new income \(=\frac{0.17}{1.36}=12.5\%\).
Q12. Total income of Ramesh, Suresh, Preeti is \(\text{₹}\,8{,}07{,}000\). Expenses are \(75\%\), \(80\%\), \(90\%\) respectively. If savings ratio is \(16:17:12\), find each one’s annual saving.
Ans. Let savings \(=16k,17k,12k\Rightarrow\) incomes \(=64k,85k,120k\). Sum \(=269k=8{,}07{,}000\Rightarrow k=\text{₹}\,3{,}000\). Savings: R \(=\text{₹}\,48{,}000\), S \(=\text{₹}\,51{,}000\), P \(=\text{₹}\,36{,}000\).
Q13. Decide who pays tax (use tables): Nikita (27, \(\text{₹}\,2{,}34{,}000\)), Kulkarni (36, \(\text{₹}\,3{,}27{,}000\)), Mehta (44, \(\text{₹}\,5{,}82{,}000\)), Bajaj (64, \(\text{₹}\,8{,}40{,}000\)), Desilva (81, \(\text{₹}\,4{,}50{,}000\)).
Ans. Nikita: No; Kulkarni: Yes; Mehta: Yes; Bajaj (senior): Yes; Desilva (super‑senior): No.
Q14. Kartarsingh (48): Monthly income \(=\text{₹}\,42{,}000\); GPF \(\text{₹}\,3{,}000\)/month; NSC \(\text{₹}\,15{,}000\); PM Relief \(\text{₹}\,12{,}000\). Compute income‑tax (table I). Round to nearest rupee.
Ans. Annual income \(=\text{₹}\,5{,}04{,}000\). 80C: \(36{,}000+15{,}000=\text{₹}\,51{,}000\). 80G: \(\text{₹}\,12{,}000\). Taxable \(=5{,}04{,}000-63{,}000=\text{₹}\,4{,}41{,}000\). Tax \(=5\%\times(4{,}41{,}000-2{,}50{,}000)=\text{₹}\,9{,}550\). Cess: \(2\%\Rightarrow 191\), \(1\%\Rightarrow 95.5\). Total \(\approx \text{₹}\,9{,}837\).
Q15. For a super‑senior (80+), taxable income \(=\text{₹}\,4{,}80{,}000\). Income‑tax?
Ans. Nil (up to \(\text{₹}\,5{,}00{,}000\) is tax‑free as per Table III).
Q16. Show why cash‑less transactions increase safety compared to carrying cash.
Ans. Reduced risk of theft/loss; traceability; banking protections; easy large‑value payments.
Q17. If total deductions under 80C exceed \(\text{₹}\,1{,}50{,}000\), how much can be claimed?
Ans. Only up to \(\text{₹}\,1{,}50{,}000\) (cap).
Q18. Write two reasons why investments help national production.
Ans. Provide capital to expand businesses/industry; create jobs and output.
Q19. If \(A=P\left(1+\dfrac{r}{100}\right)^n\) and \(P=\text{₹}\,1{,}00{,}000\), \(r=5\%\), \(n=2\), find \(A\).
Ans. \(A=1{,}00{,}000(1.05)^2=\text{₹}\,1{,}10{,}250\).
Q20. If savings increase, what effect on taxable income?
Ans. Eligible deductions (e.g., 80C) reduce taxable income, so tax payable may reduce.
All Textbook Exercises — Perfect Solutions
Below are clean, MathJax‑formatted solutions for Practice Set 6.1, Practice Set 6.2, and Problem Set 6 from Chapter 6. Each question is in red and each solution in green so you can paste directly into your site.
Practice Set 6.1
Q1. Alka spends 90% of her monthly money and saves \(\text{₹}\,120\). How much does she get monthly?
Ans. Saving \(=10\%\) of income \(I\). \(0.10I=120\Rightarrow I=\text{₹}\,1200\).
Q2. Sumit borrows \(\text{₹}\,50{,}000\). Year‑1 loss \(20\%\); reinvests remainder and gains \(5\%\). Profit or loss on original?
Ans. \(50{,}000\to40{,}000\to42{,}000\). Net loss \(=\text{₹}\,8{,}000=16\%\) loss on original.
Q3. Nikhil spends \(5\%\) (education), \(14\%\) (shares), \(3\%\) (deposit), \(40\%\) (daily). Balance \(=\text{₹}\,19{,}000\). Find monthly income.
Ans. Balance \(=38\%\Rightarrow 0.38I=19{,}000\Rightarrow I=\text{₹}\,50{,}000\).
Q4. Sayyad puts \(\text{₹}\,40{,}000\) at \(8\%\) CI for \(2\) yrs; Fernandes puts \(\text{₹}\,1{,}20{,}000\) in MF and gets \(\text{₹}\,1{,}92{,}000\) after 2 yrs. Whose investment is more profitable?
Ans. Bank amount \(=\text{₹}\,46{,}656\) \((+16.64\%)\). MF gain \(=\text{₹}\,72{,}000\) \((+60\%)\). MF is more profitable.
Q5. Sameera spends \(90\%\) and donates \(3\%\). If she is left with \(\text{₹}\,1750\), what was her income?
Ans. Left \(=7\%\Rightarrow 0.07I=1750\Rightarrow I=\text{₹}\,25{,}000\).
Practice Set 6.2
Q1. From the table, decide who pays income‑tax: (i) Nikita (27, \(\text{₹}\,2{,}34{,}000\)) (ii) Kulkarni (36, \(\text{₹}\,3{,}27{,}000\)) (iii) Mehta (44, \(\text{₹}\,5{,}82{,}000\)) (iv) Bajaj (64, \(\text{₹}\,8{,}40{,}000\)) (v) Desilva (81, \(\text{₹}\,4{,}50{,}000\)).
Ans. (i) No (below \(2.5\) lakh). (ii) Yes. (iii) Yes. (iv) Yes (senior slab). (v) No (super‑senior up to \(5\) lakh NIL).
Q2. Kartarsingh (48): Monthly income \(\text{₹}\,42{,}000\); GPF \(\text{₹}\,3{,}000\)/month; NSC \(\text{₹}\,15{,}000\); PM Relief \(\text{₹}\,12{,}000\). Compute his income‑tax.
Ans. Annual income \(=\text{₹}\,5{,}04{,}000\). Deductions: 80C \(=36{,}000+15{,}000=\text{₹}\,51{,}000\); 80G \(=\text{₹}\,12{,}000\). Taxable \(=4{,}41{,}000\). Tax \(=5\%\times(4{,}41{,}000-2{,}50{,}000)=\text{₹}\,9{,}550\). Cess: \(2\%\Rightarrow 191\), \(1\%\Rightarrow 95.5\). Total \(\approx \text{₹}\,9{,}837\) (rounded).
Problem Set 6
Q1. Choose the correct alternative.
(i) Max permissible u/s 80C: \(\color{#0a8a2a}{\text{₹}\,1{,}50{,}000}\).
(ii) Income earned in 2017–18 ⇒ Assessment Year: \(\color{#0a8a2a}{2018\text{–}19}\).
(ii) Income earned in 2017–18 ⇒ Assessment Year: \(\color{#0a8a2a}{2018\text{–}19}\).
Q2. Mr. Shekhar spends \(60\%\) of income. From the balance he donates \(\text{₹}\,300\) and is left with \(\text{₹}\,3{,}200\). Find his income.
Ans. \(0.4I-300=3{,}200\Rightarrow I=\text{₹}\,8{,}750\).
Q3. Hiralal invests \(\text{₹}\,2{,}15{,}000\)→\(\text{₹}\,3{,}05{,}000\) (2 yrs). Ramniklal invests \(\text{₹}\,1{,}40{,}000\) at \(8\%\) CI for 2 yrs. Find % gains and who did better.
Ans. Hiralal: gain \(=\text{₹}\,90{,}000\Rightarrow41.86\%\). Ramniklal: amount \(=\text{₹}\,1{,}63{,}296\Rightarrow16.64\%\). Hiralal better.
Q4. Start balance \(\text{₹}\,24{,}000\). Add \(\text{₹}\,56{,}000\) and invest all at \(7.5\%\) CI for \(3\) yrs. Find total amount.
Ans. Principal \(=\text{₹}\,80{,}000\). \(A=80{,}000(1.075)^3\approx\text{₹}\,99{,}423.75\).
Q5. Manohar gives \(20\%\) to elder son, \(30\%\) to younger, donates \(10\%\) of the balance and retains \(\text{₹}\,1{,}80{,}000\). Find income.
Ans. Left \(=45\%\Rightarrow 0.45I=1{,}80{,}000\Rightarrow I=\text{₹}\,4{,}00{,}000\).
Q6*. Kailash spent \(85\%\) earlier. Income ↑ \(36\%\); expenses ↑ by \(40\%\) of earlier expenses. % of earning saved now?
Ans. New income \(=1.36I\), new expenses \(=1.19I\). Saving \(=0.17I\Rightarrow \) % of income \(=12.5\%\).
Q7*. Total income of Ramesh, Suresh, Preeti \(=\text{₹}\,8{,}07{,}000\). Expenses \(=75\%,80\%,90\%\). Savings ratio \(16:17:12\). Find each one’s annual saving.
Ans. Let savings \(=16k,17k,12k\Rightarrow\) incomes \(=64k,85k,120k\). \(269k=8{,}07{,}000\Rightarrow k=3{,}000\). Savings: \(\text{₹}\,48{,}000,\;\text{₹}\,51{,}000,\;\text{₹}\,36{,}000\).
Q8(i). Tax for Mr. Kadam (35), taxable income \(\text{₹}\,13{,}35{,}000\) (table I + cesses).
Ans. Tax \(=1{,}12{,}500+30\%\times3{,}35{,}000=\text{₹}\,2{,}13{,}000\). Cess: \(2\%\Rightarrow 4{,}260\); \(1\%\Rightarrow 2{,}130\). Total \(=\text{₹}\,2{,}19{,}390\).
Q8(ii). Tax for Mr. Khan (65), taxable income \(\text{₹}\,4{,}50{,}000\) (table II + cesses).
Ans. Tax \(=5\%\times(4{,}50{,}000-3{,}00{,}000)=\text{₹}\,7{,}500\). Cess: \(\text{₹}\,150\) and \(\text{₹}\,75\). Total \(=\text{₹}\,7{,}725\).
Q8(iii). Tax for Miss Varsha (26), taxable income \(\text{₹}\,2{,}30{,}000\) (table I).
Ans. Nil (\(<\text{₹}\,2.5\) lakh).
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