Indirect Tax Laws MCQs for CA Final | Download Amended MCQs for 2026 CA Final

High-Scoring MCQs for Indirect Tax Laws in CA Final

One of the most difficult yet high-scoring topics on the CA final exam is indirect tax regulations. It is essential to use the appropriate techniques to perform well on the huge syllabus; otherwise, years of hard work and study may be in vain. GST (Goods and Services Tax) and customs legislation are covered in the final exams under indirect tax laws. The IDT subject assesses students understanding of various complex tax regulations and ensures that each student can apply them in practice.

Significance of MCQs

A significant part of the indirect tax laws is multiple-choice questions. They cover 30% of the objective paper. These MCQ papers assess your knowledge of the syllabus and also check your ability to apply it. Cracking the paper means you can score higher on the exams.

Read more: You may also check the MCQs related to CA Final SCMPE provided by tips and tricks to solve them in exams.

Tackling the MCQs

CA Final MCQs are a crucial part of the exams, even though they account for only 30% of the total score. It is vital to excel in the multiple-choice part, as it significantly affects your rank. In the CA finals, tackling the MCQs is not as simple as the other questions. Committing 100% is essential to 30 to 100 marks in this part. This score can make clearing the finals a lot easier. Succeeding in the exams, as said earlier, is significant, as is preparing for them.

Let us discuss some key steps to tackle the MCQs:

1. Read the question thoroughly—carefully reading the question is the most crucial step. They can be deceptive, and even slight misinterpretations can lead to incorrect answers.
2. Examine all the options - After reading the questions, be sure to check the given options. This can avoid selecting the first option that seems valid.
3. Rule out the apparent false, excluding the obviously wrong answers, is the first step. Through this, you will be left with fewer options that contain one correct answer and potentially the right answer.
4. Eliminate the improbable—If you are unsure about the options, carefully examine each option and dismiss the most unlikely. This will leave you with even fewer options, which increases the chance of selecting the correct answer.
5. Time management is crucial—while answering the MCQs, time management is the most important thing. Efficiently manage your time by answering the easier questions first so that you have more time to think about the difficult ones.
6. Some questions can be tricky—MCQ questions are meant to be tricky. Being aware of the complexity of the phrase can save you from this. Extra attentiveness is not bad in this situation.
7. Review after the exam—Review your answers after the exam. This can be very helpful in ensuring your answers are correct and correcting them if needed.

Students also prefer the latest study materials, such as recommended books, concepts, free practice notes, and MCQs, which help them excel in their exams.

Excelling in Indirect Tax Laws in CA Final

Indirect tax laws consist of GST and other customs laws. To excel in the finals of indirect tax laws, a solid and thorough understanding of the said laws is essential. Revising regularly and practicing mock tests with persistence is essential for developing a solid foundation of knowledge. Focusing highly on high-weightage topics is also important. Complex topics, such as input tax credits, require more focus. Past papers, mock tests, and board-released important question banks are very helpful tools that help you in supporting your goal of becoming a CA. 

Students will check the latest amendments issued by the ICAI, as it is very important for each student to get updated with the new amendments. They can write them down in their study material and learn them regularly. Utilize learning hacks, such as mnemonics and summaries, to aid in memory retention.  Students may study in groups, which helps them recall the topics and opens the doors to different viewpoints. Continuous practice makes the students excel in their papers. Avoiding common mistakes is another way to succeed in writing a paper.

Let us discuss the common and repeated mistakes that, once avoided, will help you ace the exam.

1. Skipping the new amendments—This is the most common and most repeated mistake when it comes to preparing for the exam. Tax laws are constantly changing. Pushing them aside may lead to incorrect answers. Staying up-to-date with the new amendments will give you a stronger foundation to expand your points.
2. Revision is a must—revision and repeated practice are key ingredients in passing the exam. Studying or going through it once is not enough when preparing for life-changing exams like the A finals. The lack of revision can lead to confusion in answers.
3. Theory vs. practical— Theoretically, understanding the concept is significant, as well as learning how to use it practically. The CA finals assess your knowledge of theory and also your practical application.
4. Lack of time management—When answering papers like indirect tax laws and their MCQs, time management is a must-have skill. Time can be a challenging component, whether it is expanding your theory or answering multiple-choice questions.
5. Lack of practice—All of the above points are nothing when compared to the lack of practice. With practice, confused and incorrect answers can be avoided. These are the most common mistakes made during finals. Avoiding them can give you a great chance to gain higher scores.

Conclusion

To excel in the CA finals, a strategic approach is crucial. Giving more focus to the MCQs is also a suggested way for scoring higher, even though they only account for 30% of the total mark. The only thing to remember is that tackling the exam means giving your 100% and practicing theory applications, mock tests, past question paper answering, reviewing ICAI and other published question banks, learning from important study notes prepared by top faculties, and practicing more. These are essential for you to crack the exam. Practice only makes you better. A well-prepared candidate will only showcase improved performance. Time management is the most significant and inevitable component in tackling the exam. Effective time management and decision-making skills will improve your performance in exams and help you to crack the CA Final exams on the first attempt. Stay calm and focused. A stressed mind will only increase the chance of poor performance. Consistent practice and a well-prepared strategy can help you overcome your challenges.

MCQs

1. Mr. Arjun, an Indian consumer, receives utility services from XYZ Utilities. Occasionally, he misses the last date of payment. XYZ Utilities offers a facility of accepting late payments with interest or a late payment fee, fine, or penalty. According to the concept mentioned, what is the correct statement regarding the nature of the late payment surcharge or fee imposed by XYZ Utilities?

(a) The late payment surcharge or fee is considered a separate and distinct supply, attracting additional GST.

(b) The facility of accepting late payments is not naturally bundled with the main supply, and hence, the late payment surcharge or fee is taxable.

(c) The late payment surcharge or fee is a facility naturally bundled with the main supply, and it is not considered a separate taxable supply.

(d) The late payment surcharge or fee is taxable only if it exceeds a certain percentage of the total bill.

Answer: (c) The late payment surcharge or fee is a facility naturally bundled with the main supply, and it is not considered a separate taxable supply.

2. Mr. Ravi, an Indian traveler, books a tour package with ABC Tours that includes hotel accommodation, transportation, and other services. The tour package allows for cancellation within a certain time period on payment of a cancellation fee. According to the concept mentioned, what is the correct statement regarding the nature of the cancellation fee imposed by ABC Tours?

(a) The cancellation fee is a separate and distinct supply, subject to additional GST.

(b) The cancellation fee is solely considered a penalty for the cancellation of intended supplies and is not taxable.

(c)The cancellation fee is a charge for the costs involved in making and cancelling arrangements for the intended supply, bundled with the main supply.

(d) The cancellation fee is taxable only if it exceeds a certain percentage of the total tour package cost.

Ans: (c) The cancellation fee is a charge for the costs involved in making and cancelling arrangements for the intended supply, bundled with the main supply.

3. Mr. Sharma, an Indian trader, engages in Merchant Trading. He supplies goods from a place in the non-taxable territory to another place in the non-taxable territory without the goods entering India. According to the concept mentioned. What is the correct statement regarding the GST implications of this Merchant Trading scenario?

(a) GST is applicable on the supply of goods, as it involves the movement of goods from one place to another.

(b) Since the goods do not enter India, the transaction is exempt from GST.

(c) GST is applicable only if the value of the goods exceeds a certain threshold amount.

(d) GST is not applicable as the supply occurs entirely within the non-taxable territory.

Ans: (d) GST is not applicable as the supply occurs entirely within the non-taxable territory.

4. Mr. Verma, an Indian businessman, is involved in the interstate movement of rigs, tools, spares, and goods on wheels, such as cranes. The circular specifies that in cases where the movement is not for further supply, it shall be treated neither as a supply of goods nor supply of service, and consequently, no IGST would be applicable. Considering this concept: What is the correct statement regarding the IGST applicability on the inter-state movement of rigs, tools, spares, and goods on wheels?

(a) IGST is always applicable on inter-state movements of rigs, tools, spares, and goods on wheels, regardless of the purpose of the movement.

 (b) IGST is not applicable if the inter-state movement is for further supply of the same goods

(c) IGST is applicable only if the value of the goods being moved exceeds a certain threshold amount.

(d) IGST is not applicable to any inter-state movement of rigs, tools, spares, and goods on wheels, as specified in the circular.

Ans: (d) IGST is not applicable to any inter-state movement of rigs, tools, spares, and goods on wheels, as specified in the circular.

5. Mr. Raj and Mr. Sharma jointly operate a business in India. During the financial year, they provided consulting services and leased out office space to a client, Mr. Verma. The consideration for the consulting services was ₹5,00,000, and the lease amount for the office space was ₹8,00,000. How should the mixed supply of services be treated for accounting purposes under AS 19?

(a) Recognize the consulting services and lease revenue separately.

(b) Combine the consulting services and lease revenue as a single line item.

(c) Recognize only the consulting services revenue.

(d) Recognize only the lease revenue.

Ans: (a) Recognize the consulting services and lease revenue separately.

6. Rahul Electronics Pvt. Ltd. sold a mobile phone along with a charger to Mr. Arjun for a total consideration of INR 15,000. As per the provisions of the GST Act in India, this transaction qualifies as a composite supply. In this context, identify the correct statement:

(a) The tax liability for this transaction will be calculated based on the rate applicable to mobile phones.

(b) The tax liability for this transaction will be calculated based on the rate applicable to chargers.

(c) The tax liability for this transaction will be calculated based on the average rate applicable to both mobile phones and chargers.

(d) The tax liability for this transaction will be calculated separately for mobile phones and chargers.

Ans: (a) The tax liability for this transaction will be calculated on the basis of the rate applicable to mobile phones.

7. Mr. Raj, a charitable trust, received a donation of medical equipment worth INR 10 lakhs from ABC Pharmaceuticals Pvt. Ltd. without any consideration. As per the provisions of the CGST Act, this transaction falls under the category of deemed supply. Identify the correct reason for treating this supply as per Schedule I:

(a) It involves the transfer of business assets between related parties.

(b) It is a gift exceeding the specified threshold received from a person other than a relative.

(c) It is a transaction involving a supply of goods between distinct persons in different states.

(d) It is a charitable activity carried out by a trust for the benefit of the public.

Ans: B) It is a gift exceeding the specified threshold received from a person other than a relative.

8. Rajesh, a resident of India, holds an unsecured loan of INR 5,00,000 from his friend Arjun. According to the definitions provided in the relevant sections, which of the following statements is correct regarding the treatment of Rajesh unsecured loan for the purpose of GST (Goods and Services Tax)?

(a) Rajesh unsecured loan is considered a supply and is subject to GST.

(b) Rajesh unsecured loan is not considered a supply, as it falls under the category of actionable claims, excluding lottery, betting, and gambling.

(c) Rajesh unsecured loan is treated as a supply, but only if it exceeds INR 2,50,000.

(d) Rajesh unsecured loan is exempt from GST, irrespective of the amount.

Ans: (b) Rajesh unsecured loan is not considered a supply, as it falls under the category of actionable claims, excluding lottery, betting, and gambling.

9. Rahul, a consumer in India, has a power connection with the State Electricity Board (SEB). The electricity bill comprises a minimum fixed charge and a variable per-unit charge. Considering the components of the bill, which of the following statements is correct under AS 19 (Leases)?

(a) The minimum fixed charge is not considered a charge for tolerating the act of not scheduling or consuming the minimum contracted capacity.

(b) The minimum fixed charge is a charge for tolerating the act of not scheduling or consuming the minimum contracted capacity.

 (c) The minimum fixed charge is exempt from accounting standards and is not considered in the lease classification.

(d) The minimum fixed charge is accounted for separately as a penalty for not consuming the contracted capacity.

Ans: (a) The minimum fixed charge is not considered a charge for tolerating the act of not scheduling or consuming the minimum contracted capacity.

10. Amit, an employee in India, decides to leave his employment before the minimum agreed period, and as per the employment contract, his employer forfeits a portion of his salary as a penalty. Considering the provisions for forfeiture and recovery in employment contracts, which of the following statements is correct under AS 19 (Leases)?

(a) The forfeited salary is considered taxable as consideration for the service of agreeing to tolerate the act of premature quitting of employment.

(b) The forfeited salary is not taxable as consideration for the service, as it is a penalty for discouraging non-serious candidates from leaving employment early.

(c) The forfeited salary is accounted for separately as a form of compensation for the act of tolerating the employee premature departure.

 (d) The forfeited salary is taxable, but only if the employee receives something in return from the employer against the payment.

Ans: (b) The forfeited salary is not taxable as consideration for the service, as it is a penalty for discouraging non-serious candidates from leaving employment early.

FAQs 

1. Are the MCQs mentioned above based on the latest amendments?

Yes, all the MCQs mentioned in this blog are updated as per the ICAI amendments applicable for the CA Final January 2026 exams.

1. Can practicing through MCQs help me score better in the IDT exams?

Yes, absolutely, MCQs demand conceptual clarity and memory, and practicing regularly improves speed, accuracy, and builds exam confidence.

1. How can I get the updated multiple-choice questions for the January 2026 CA Final IDT?

You can download MCQs from our website catestseries.org in the notes section, where you will get the latest and amended notes and MCQs, helping students to score better marks in the CA Final IDT exam.

1. For my self-practice, are MCQs suitable only for mock tests?

MCQs are designed for both regular self-practice and preparing mock tests. Students can attempt them as topic-wise or as a full test.

1. Do these MCQs cover customs laws and GST?

Yes, amended MCQs include GST, customs laws, and important amendments that give students complete coverage for CA Final Indirect Tax laws. 

Source: The information mentioned above is collected from the official ICAI website at https://www.icai.org/post/19010