What is the primary purpose of withholding tax?
a) To increase the tax base of an economy
b) To collect tax at the point of income generation
c) To encourage savings in the economy
d) To redistribute wealth
Which of the following is an example of income subject to withholding tax?
a) Salary
b) Capital gains
c) Dividend income
d) All of the above
What is the key difference between withholding tax and advance tax?
a) Withholding tax is paid by the taxpayer directly, while advance tax is deducted at the source
b) Withholding tax is deducted at the source, while advance tax is paid periodically in advance
c) There is no difference; they are the same
d) Advance tax is applicable only to corporate taxpayers
Which of the following is NOT a type of withholding tax?
a) Tax on salary payments
b) Tax on interest payments
c) Tax on capital gains
d) Tax on sales of goods
Who is typically responsible for deducting and remitting withholding tax to the tax authorities?
a) The employee receiving the income
b) The tax authority
c) The employer or payor of the income
d) The income recipient’s accountant
When is advance tax typically paid?
a) At the time of filing the annual tax return
b) On a quarterly or monthly basis, based on projected income
c) Only at the end of the fiscal year
d) On a weekly basis
Which of the following incomes is commonly subject to withholding tax?
a) Salary income
b) Dividend payments
c) Interest income
d) All of the above
What happens if a taxpayer fails to pay advance tax on time?
a) They may face penalties and interest charges
b) They will automatically receive a tax refund
c) They will not be required to pay taxes for the year
d) They will be exempt from tax audits
Which of the following is a correct example of advance tax?
a) Tax deducted from an employee’s salary
b) Tax paid by a company on its estimated income
c) Tax collected on interest payments to a bank
d) Tax deducted on the sale of real estate
What is the typical purpose of advance tax?
a) To pay taxes on income that has already been earned
b) To estimate and prepay taxes on future income
c) To avoid tax audits
d) To collect taxes for the government
Which of the following is true about withholding tax on dividend income?
a) The withholding tax is paid by the shareholder receiving the dividend
b) The withholding tax is deducted by the company paying the dividend
c) No tax is levied on dividend income
d) The withholding tax is paid by the government directly
Advance tax is calculated based on which of the following?
a) Actual income received in the previous year
b) The estimated income for the current year
c) Taxable income from the previous year
d) The income tax rate only
Which of the following is NOT typically subject to withholding tax?
a) Salary payments
b) Rental income
c) Sale of personal property
d) Dividend payments
Who can claim credit for withholding tax paid on their behalf?
a) The payer of the income
b) The tax authority
c) The individual or entity receiving the income
d) Only large corporations
What is the consequence of not reporting advance tax payments on the annual tax return?
a) The taxpayer may be subject to penalties and interest charges
b) The taxpayer will receive a refund for overpayment
c) The tax authority will deduct the owed amount from their salary
d) There are no consequences
Advance tax is generally applicable to which of the following taxpayers?
a) Only individuals with salaried income
b) Only companies
c) Taxpayers with significant non-salaried income or business profits
d) Only non-residents
Which of the following statements is true about withholding tax on interest income?
a) The tax is deducted by the bank or financial institution paying the interest
b) The taxpayer must report the full interest income without deducting withholding tax
c) The taxpayer is required to pay withholding tax directly to the government
d) Interest income is exempt from withholding tax
What is the role of withholding tax for the government?
a) To prevent taxpayers from avoiding taxes
b) To make tax collection more efficient by collecting at the source
c) To provide taxpayers with a higher tax refund
d) To exempt companies from tax payments
Which of the following is considered an example of withholding tax on foreign income?
a) Tax on salary paid to employees working abroad
b) Tax on income from foreign investments deducted by the payer in the foreign country
c) Tax paid by a company on profits from foreign sales
d) None of the above
What document is typically provided to a taxpayer after withholding tax is deducted?
a) A detailed tax report
b) A W-2 or similar tax statement
c) An invoice for tax payment
d) A tax refund
Which type of income is most likely to have advance tax applied?
a) Capital gains from the sale of personal property
b) Business income of self-employed individuals
c) Dividend income from government bonds
d) Salary income from an employer
What is the penalty for failing to remit withheld tax to the tax authority?
a) Legal fines and possible criminal charges
b) The tax authority will deduct the amount from the payer’s future income
c) A warning letter from the tax authority
d) No penalty for individuals, only for businesses
What is the typical frequency for advance tax payments?
a) Monthly
b) Quarterly
c) Annually
d) Weekly
What is the main objective of advance tax payment?
a) To prepay taxes on estimated income for the year
b) To avoid filing a tax return
c) To pay taxes only after the end of the fiscal year
d) To reduce the tax burden of the employer
Which of the following would NOT typically be subject to withholding tax?
a) Rent income
b) Dividends from stocks
c) Sale of a personal asset
d) Interest on a savings account
Who is responsible for ensuring that advance tax is paid on time?
a) The tax authority
b) The taxpayer
c) The employer
d) The auditor
Which of the following is true about withholding tax on salary payments?
a) It is paid by the employer and not deducted from the employee’s salary
b) It is deducted from the employee’s salary before payment
c) It is only applicable to salaried employees who work overseas
d) The employee is responsible for paying the withholding tax directly to the tax authority
What is the consequence of paying advance tax incorrectly?
a) The taxpayer will face no consequences as long as the payment is made
b) The tax authority may adjust the payment or require further payment
c) The taxpayer will automatically receive a tax refund
d) There is no penalty for incorrect payments
What happens if a taxpayer overpays advance tax?
a) The taxpayer can apply for a refund or carry the overpayment forward to future years
b) The taxpayer forfeits the overpayment
c) The overpayment is added to the employer’s tax obligations
d) The taxpayer must pay interest on the overpayment
