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JAIIB · Accounting & Financial Management · Module D — Cost Management Accounting and Taxation

JAIIB AFM Unit 29 — Taxation - Income Tax, TDS, Deferred Tax: Free MCQs with Explanations

By Swarnakshi Jha (ex-banker) · Updated 20 September 2026 · Paper 3 of the November 2026 cycle (28 November 2026)

This page is a free slice of our JAIIB AFM question bank for Unit 29 — Taxation - Income Tax, TDS, Deferred Tax (Module D — Cost Management Accounting and Taxation). The Mock Centre holds 34 questions on this unit alone, every one with a why-right / why-wrong explanation; below are the facts examiners keep returning to, five of those questions to try, and the traps that cost marks.

AFM · Module D34 MCQs in the Mock Centre5 free belowPaper on 28 November 2026

Key facts examiners test from this unit

  1. Income tax = ability-to-pay principle; governed by the Income Tax Act 1961 (+ annual Finance Acts); PREVIOUS year's income is assessed in the ASSESSMENT year. [Law update, Sep 2026] Income-tax Act 2025 in force from 1 April 2026: 536 sections, 23 chapters, 16 schedules; single 'TAX YEAR' replaces previous year + assessment year; 80C → Sec. 123, 80CCD → 124, 80D → 126, 80E → 129; rates and limits unchanged.
  2. TDS: for the deductee it is tax ALREADY PAID (adjustable against final liability); the deductor bears the onus to deduct and deposit on time; TDS = pay-as-you-earn machinery; TCS = Section 206C.
  3. Five heads of income: Salaries · House Property · Business/Profession · Capital Gains · Other Sources (no 'agricultural income' head).
Law update, September 2026. The Income-tax Act 2025 replaced the 1961 Act with effect from 1 April 2026 (tax year 2026-27 onwards); the textbook, and papers set on it, still cite the 1961 Act and its 1962 Rules. Current law: the Income-tax Act, 2025 (in force from 1 April 2026) replaces the previous-year/assessment-year pair with a single 'TAX YEAR' (1 April–31 March) — income is taxed for the tax year in which it is earned. The 1961 Act's terminology is what the textbook (and most papers) still use. Under the Income-tax Act 2025 (from 1 April 2026) the same income is simply reported for 'tax year 2024-25' — the assessment-year label disappears. Answer in the textbook's AY terms unless the stem cites the 2025 Act.

5 free practice questions — tap an option

Five basic questions from this unit. Answers lock on the first tap, exactly as in the exam, and a short explanation opens underneath. The Mock Centre adds the moderate and tough questions, why every other option is wrong, the concept capsule and the exam tip — with your score and revision dates tracked.

Question 1 of 5
Income tax is based on which principle?
Why (b): Income tax follows ABILITY TO PAY — higher income, higher tax (progressive slabs).
Question 2 of 5
Income tax in India is governed by:
Why (b): The charging statute is the INCOME TAX ACT 1961, operationalised by the INCOME TAX RULES 1962.
Law update, Sep 2026: The Income-tax Act 2025 replaced the 1961 Act with effect from 1 April 2026 (tax year 2026-27 onwards); the textbook, and papers set on it, still cite the 1961 Act and its 1962 Rules.
Question 3 of 5
For the DEDUCTEE, tax deducted at source (TDS) is:
Why (b): TDS is tax paid on the deductee's behalf — he CLAIMS it against his assessed liability (refundable if excess).
Question 4 of 5
Interest earned by a customer during FY 2024-25 will be assessed to tax in:
Why (b): Previous year FY 2024-25 → assessment year 2025-26; the AY always follows the PY.
Law update, Sep 2026: Under the Income-tax Act 2025 (from 1 April 2026) the same income is simply reported for 'tax year 2024-25' — the assessment-year label disappears. Answer in the textbook's AY terms unless the stem cites the 2025 Act.
Question 5 of 5
TDS deducted from a customer's fixed-deposit interest appears for the customer as:
Why (b): TDS is prepaid tax on the deductee's behalf; it adjusts against the final assessed liability, with excess refundable.
0 of 5 answered.

Traps in this unit

Confusable AConfusable BThe difference
Previous yearAssessment yearIncome earned vs year it is assessed
TDSTCSDeducted by payer (192-series) vs collected by seller (206C)
Practise all 34 questions on Unit 29. The free demo opens a slice of every subject with the same explanations; the AFM Online-only pass unlocks all 1,681 AFM questions, the full and module mocks, Smart Revision and the Readiness Score for one year (₹1,299). Not sure where you stand? Take the free 10-question test first.
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Independent study aid — not affiliated with, endorsed by, or sponsored by the Indian Institute of Banking & Finance (IIBF). Exam pattern, dates, fees and passing criteria are set by IIBF — always confirm the current rules at iibf.org.in. Regulatory figures verified as of September 2026; verify from official sources before relying on them in practice.