CA Inter Taxation Important Question
Gear up for the January 2025 CA Inter Taxation exam with our exclusive list of important questions! This carefully curated collection covers key topics in both Direct Tax and Indirect Tax, ensuring you focus on high-priority areas for maximum scoring potential. Boost your preparation with these exam-focused questions and excel in your CA Inter Taxation paper!
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Question 1.
Find out the tax liability (ignore section 115BAC) in the following cases pertaining to the assessment year 2024-25-
| Assessee | Taxable income (Rs.) | Long-term capital gain included in taxable income (Rs.) | Winnings from lotteries included in taxable income(Rs.) |
| X, a resident Hindu undivided family | 2,30,000 | 18,000 | |
| Y, a Hindu undivided family | 2,86,000 | 2,000 | 16,000 |
| Z, an individual (age: 42 years) | 11,70,000 | 40,000 | 70,000 |
| Mrs. A, a resident individual (age: 58 years) | 42,50,000 | ||
| B Ltd., an Indian company (tax rate : 30 per cent) | 1,12,00,000 | 50,000 | 73,000 |
| C Ltd., an Indian company (tax rate : 22 per cent) | 35,000 | 500 | |
| D Society, a co-operative society | 5,000 | 700 | 150 |
| E& Co., partnership firm | 10,30,000 | 60,000 | |
| F, a non-resident individual (age: 74 years) | 2,65,000 | 12,000 |
Answer:
Tax liability will be calculated as follows5 -
In the case of X, a resident Hindu undivided family -
| Rate of tax | Amount of tax (Rs.) | |
| On winnings from lotteries | 30% | 5,400 |
| On the remaining income of Rs. 2,12,000 (it is below the exemption limit of Rs. 2,50,000) | Nil | |
| Tax | 5,400 | |
| Add: Health and education cess | 216 | |
| Tax liability (rounded off) | 5620 |
In the case of Y, a Hindu undivided family-
| Rate of tax | Amount of tax (Rs.) | |
| On winnings from lotteries | 30% | 4,800 |
| On long-term capital gains | 20% | 400 |
| On the remaining income of Rs. 2,68,000 | 900 | |
| Tax | 6,100 | |
| Add: Health and education cess | 244 | |
| Tax liability (rounded off) | 6340 |
In the case of Z, an individual -
| Rate of tax | Amount of tax (Rs.) | |
| On winnings from lotteries | 30% | 21,000 |
| On long-term capital gains | 20% | 8,000 |
| On the remaining income of Rs. 10,60,000 | 1,30,500 | |
| Tax | 1,59,500 | |
| Add: Health and education cess | 6,380 | |
| Tax liability (rounded off) | 1,65,880 |
In the case of Mrs. A -
| Rate of tax | Amount of tax (Rs.) | |
| On first Rs. 2,50,000 | Nil | Nil |
| On next Rs. 2,50,000 | 5% | 12,500 |
| On next Rs. 5,00,000 | 20% | 1,00,000 |
| On the balance of Rs. 32,50,000 | 30% | 9,75,000 |
| Tax | 10,87,500 | |
| Add: Health and education cess @ 4% of Rs. 10,87,500 | 43,500 | |
| Tax liability (rounded off) | 11,31,000 |
In the case of B Ltd. -
| Rate of tax | Amount of tax (Rs.) | |
| On winnings from lotteries | 30% | 21,900 |
| On long-term capital gain | 20% | 10,000 |
| On the remaining income of Rs. 1,10,77,000 | 30% | 33,23,100 |
| Total | 33,55,000 | |
| Add: Surcharge @7%6 | 2,34,850 | |
| Add: Health and education cess @ 4% of Rs. 35,89,850 | 1,43,594 | |
| Tax liability (rounded off) | 37,33,440 |
In the case of C Ltd. -
| Rate of tax | Amount of tax (Rs.) | |
| On long-term capital gain | 20% | 100 |
| On the remaining income of Rs. 34,500 | 22% | 7590 |
| Total | 7,690 | |
| Add: Surcharge (applicable @ 10%) | 769 | |
| Total | 8,459 | |
| Add: Health and education cess @ 4% | 338 | |
| Tax liability (rounded off) | 8,800 |
In the case of D Society, a co-operative society -
| Rate of tax | Amount of tax (Rs.) | |
| On winnings from lotteries | 30% | 45 |
| On long-term capital gain | 20% | 140 |
| On the remaining income of Rs. 4,150 | 10% | 415 |
| Total | 600 | |
| Add: Health and education cess @ 4% of Rs. 600 | 24 | |
| Tax liability (rounded off) | 620 |
In the case of E & Co., a partnership firm -
| Rate of tax | Amount of tax (Rs.) | |
| On long-term capital gain | 20% | 12,000 |
| On the remaining income of Rs. 9,70,000 | 30% | 2,91,000 |
| Total | 3,03,000 | |
| Add: Health and education cess @ 4% of Rs. 3,03,000 | 12,120 | |
| Tax liability (rounded off) | 3,15,120 |
In the case of F, a non-resident individual -
| Rate of tax | Amount of tax (Rs.) | |
| On long-term capital gain | 20% | 2400 |
| On the remaining income of Rs. 2,53,000 (exemption limit is Rs. 2,50,000 in the case of a non-resident, even if, he is a senior citizen) | 5% | 150 |
| Total | 2550 | |
| Add: Health and education cess @ 4% of Rs. 2,550 | 102 | |
| Tax liability (rounded off) | 2650 |
Question 2.
Find out the tax liability (ignore section 115BAC) in of ₹ 7,15,000, comprising his salary income and interest on bank fixed deposit. Compute his tax liability for A.Y.2024-25 under default tax regime under section 115BAC.
Answer:
Question 3.
How would you calculate tax liability for the assessment year 2024-25 in the case of X (42 years), a resident individual, whose income is Rs. 5,61,00,000. He wants to pay tax under the alternative tax regime (or he does not want to opt for the regular tax regime).Income of Rs. 5,61,00,000 includes the following component -
Long-term capital gain (20 per cent tax rate under section 112) : Rs. 6,00,000. Winings from lottery: Rs. 15,00,000. Salary income after standard deduction: Rs. 5,40,00,000. For calculating these incomes, blocked incentives under sections 80C, 80D, 80DD, etc., are not considered
What is the maximum marginal rate of tax and exemption limit under the alternative tax regime?
Answer:
Question 1.
Determine the taxability of the Icome of a US-Based Company Heli Ltd in Indian on entering followiong transactions during a certain finanical year. Explain the rate of tax applicable on taxable Income for US based company Heli Ltd in India.
(a) ₹ 5 Lakhs received from an Indian Domestic Company for providing Technical Know-how in India.
(b) ₹ 6 Lakhs from an Indian Firm for conducting the feasibility study for the new project in Finland.
(c) ₹ 4 Lakhs from a Non-Resident for the use of Patent for a Business in India.
(d) ₹ 8 Lakhs from a Non-Resident Indian for use of know-how for a Business in Singapore.
(e) ₹ 10 Lakhs for supply of manuals and designs for the Business to be established in Singapore.
Answer:
In this case, Heli Ltd has its Place of Effective management outside India. So it is a Non- Resident.
Computation of Taxable Income
| Particulars | Taxability | Amount | Reason |
| 1. Income received from an Indian Domestic Company for providing technical know-how in India | Taxable | 5,00,000 | Payer is an Indian Company, being a Resident in India. Also, the technical know-how is used for business in India. Hence, deemed to accrue or arise in India. |
| 2. Income received from an Indian Firm for conducting the feasibility study for the new project in Finland | Not Taxable | NIL | Payer is an Indian Firm, and a Resident in India. Fees for Feasibility Study conducted for business outside India not deemed to accrue or arise outside India. |
| 3. Income received from a Non-Resident for the use of patent for a business in India | Taxable | 4,00,000 | Payer, being a Non-Resident, Income received for Patent used for business in India, is deemed to accrue or arise in India. |
| 4. Income received from a Non-Resident Indian for use of know-how for a business in Singapore | Not Taxable | NIL | Payer, being Non Resident, income received for use of know-how for a business outside India, is not deemed to accrue or arise in India. |
| 5. Income received for supply of manuals & designs for the business to be established in Singapore | Not Taxable | NIL | Payer is assumed as a Resident. Income received for supply of manuals and designs for business outside India, is not deemed to accrue or arise in India. |
| Taxable Income | 9,00,000 | Assumed Net Income after deducting expenses. | |
| Rate of Tax applicable | 40.00% | 3,60,000 | |
| Health and Education Cess | 4.00% | 14,400 | |
| Total Tax Payable | 3,74,400 |
Question 2.
X is a businessman. His parents and grandparents were born in Canada. He was born in USA but later on he migrated to Karachi and took Indian citizenship on June 1, 1946. After division of India, he stayed in Pakistan and took Pakistani citizenship in December 1948. From the information given below, find out the residential status of X for the assessment year 2024-25.
| Previous year | Presence in India |
| 2024-25 | 20 Days |
| 2023-24 | 70 Days |
| 2022-23 | 60 Days |
| 2021-22 | 40 Days |
| 2020-21 | 5 Days |
| 2019-20 | 260 Days |
| 2018-19 | 46 Days |
| 2017-18 | 182 Days |
| 2016-17 | 55 Days |
| 2015-6 | 59 Days |
| 2014-15 | 25 Days |
| 2013-14 | 24 Days |
Answer:
Question 3.
Mr. Akash, an Indian citizen aged 45 years, worked in XYZ Ltd. in Delhi. He got a job offer from ABC Inc., California on 01.06.2022. He left India for the first time on 31.07.2022 and joined ABC Inc. on 08.08.2022. During the P.Y. 2023-24, Mr. Akash visited India from 25.05.2023 to 22.09.2023. He has received the following income for the previous year 2023-24:
| Particulars | ₹ |
| Salary from ABC Inc., California received in California (Computed) | 7,00,000 |
| Dividend from Indian companies | 5,00,000 |
| Agricultural income from land situated in Nepal, received in Nepal | 4,00,000 |
| Rent received/receivable from house property in Delhi | 5,50,000 |
| Profits from a profession in California, which was set up in India, received there | 6,00,000 |
Determine the residential status of Mr. Akash and compute his total income for the A.Y. 2024-25.
Answer:
Question 1.
Mr. B grows sugarcane and uses the same for the purpose of manufacturing sugar in his factory. 30% of sugarcane produce is sold for ₹ 10 lakhs, and the cost of cultivation of such sugarcane is ₹ 5 lakhs. The cost of cultivation of the balance sugarcane (70%) is ₹ 14 lakhs and the market value of the same is ₹ 22 lakhs. After incurring ₹ 1.5 lakhs in the manufacturing process on the balance sugarcane, the sugar was sold for ₹ 25 lakhs. Compute B’s business income and agricultural income.
Answer:
Computation of Business Income and Agriculture Income of Mr. B
| Particulars | Business Income | Agricultural Income | |
| ₹ | ₹ | ₹ | |
| Sale of Sugar | |||
| Business income | |||
| Sale Proceeds of sugar | 25,00,000 | ||
| Less: Market value of sugarcane (70%) | 22,00,000 | ||
| Less: Manufacturing exp. | 1,50,000 | ||
| 1,50,000 | |||
| Agricultural Income | |||
| Market value of sugarcane (70%) | 22,00,000 | ||
| Less: Cost of cultivation | 14,00,000 | 8,00,000 | |
| Sale of sugarcane | |||
| Agricultural Income | |||
| Sale proceeds of sugarcane (30%) | 10,00,000 | ||
| Less: Cost of cultivation | 5,00,000 | 5,00,000 | |
| 13,00,000 | |||
Question 2.
The Total Income of Arvind, aged 76 years, computed for Assessment Year 2024-2025 is ₹ 9,00,000 which includes Long-Term Capital Gains on land of ₹ 90,000 and Winning from Lotteries ₹ 60,000. He contributed ₹ 1,40,000 towards PPF and invested ₹40,000 in NSC during the previous year. Compute the Tax Payable assuming his Agricultural Income for the Previous Year was ₹ 1,50,000.
Answer:
Question 3.
X Limited, grows sugarcane to manufacture sugar. The data for the Previous Year 2023-2024 is as follows -
| ₹ | |
| 1. Cost of Cultivation of Sugarcane | 6,00,000 |
| 2. Market Value of Sugarcane when transferred to Factory | 10,00,000 |
| 3. Other Manufacturing Cost | 6,00,000 |
| 4. Sales of Sugar | 25,00,000 |
| 5. Salary of Managing Director who looks after all operations of the Company | 3,00,000 |
Determine the Income of the Company.
Answer:
Question 1.
Mr. B is working in XYZ Ltd. and has given the details of his income for the P.Y. 2023-24. You are required to compute his gross salary from the details given below:
| Basic Salary | ₹ 10,000 p.m. |
| D.A. (50% is for retirement benefits) | ₹ 8,000 p.m. |
| Commission as a percentage of turnover | 0.1% |
| Turnover during the year | ₹ 50,00,000 |
| Bonus | ₹ 40,000 |
| Gratuity | ₹ 25,000 |
| His own contribution in the RPF | ₹ 20,000 |
| Employer’s contribution to RPF | 20% of his basic salary |
| Interest accrued in the RPF @ 13% p.a. | ₹ 13,000 |
Answer:
Computation of Gross Salary of Mr. B for the A.Y. 2024-25
| Particulars | (₹) | (₹) |
| Basic Salary [₹ 10,000 × 12] | 1,20,000 | |
| Dearness Allowance [₹ 8,000 × 12] | 96,000 | |
| Commission on turnover [0.1% × ₹ 50,00,000] | 5,000 | |
| Bonus | 40,000 | |
| Gratuity [Note 1] | 25,000 | |
| Employer's contribution to RPF [20% of ₹ 1,20,000] | 24,000 | |
| Less: Exempt [Note 2] | 20,760 | 3,240 |
| Interest accrued in the RPF @ 13% p.a. | 13,000 | |
| Less: Exempt @ 9.5% p.a. | 9,500 | 3,500 |
| Gross Salary | 2,92,740 |
Notes:
Question 2.
X (47 years) is employed by ABC Textiles Ltd., Surat. From the information given below find out net income and tax liability of X for the assessment year 2023-24 -
| Basic salary | ₹ 46,000 per month |
| Commission at the rate of 10 percent of sales made by X | ₹ 90,000 for the period ending on December 31, 2023 & ₹ 45,000 for the period ending March 31, 2023 |
| Dearness allowance | ₹ 8,000 per month (1/4 is part of salary for computing pension but only 20 per cent is part of salary for computing other retirement benefits, like provident fund, gratuity, etc.) |
| House rent allowance | ₹ 25,000 per month |
| Tiffin allowance | ₹ 10,000 per month (but only with effect from February 1, 2023). |
Besides, he has been provided with the amenities of gas, electricity and water, the expenses of which amounting to ₹ 18,000 are paid by the employer. He has purchased from the company's showroom garments of MRP of ₹ 30,000 at a discount of 95 percent of MRP (as per service rules). Production cost of these garments is 30 percent of MRP (dealers generally get a discount of 60 per cent of MRP). He resides in a rented accommodation at 32, Navsari Bazaar, Surat (rent being ₹ 21,000 payable every month to the landlord : D Ltd., population of Surat is above 25 lakh). However, the employer-company has purchased this property from D Ltd. on December 31, 2023 and the same house is allotted as a rent-free unfurnished house to X without charging any rent. House rent allowance has been discontinued on the same day.
X contributes ₹ 6,000 per month towards recognized provident fund. Contribution by the employer company is not more than 12 percent of salary. Provident fund interest is credited at the rate of 8 percent which comes to ₹ 2,94,000 for the previous year 2023-24. X pays life insurance premium on the life of his married daughter (annual insurance premium since 2006 being ₹ 10,000, sum assured ₹ 95,000, premiums which became due on May 15, 2020 and May 15, 2023 are paid during the previous year 2023-24). Income of X from other sources is ₹ 1,44,000. Besides, he gets a pension of ₹ 3,600 per month from the previous employer with whom X was employed till 1996 and contributes ₹ 20,000 towards public provident fund. Ignore section 115BAC pertaining to alternative tax regime.
Answer:
Question 3.
Determine the amount of taxable pension for the assessment year 2024-25 in the following cases on the assumption that pension becomes due on the last day of month :
1. X retires from the Indian Economic Service on July 31, 2023 and receives ₹ 32,000 per month as pension.
2. X retires from the Indian Administrative Service on May 31, 2022. He gets pension of ₹ 29,000 per month up to June 30, 2023. With effect from July 1, 2023, he gets 42 per cent of his pension commuted for ₹ 4,00,000.
3. X retires from PQR (P.) Ltd. in December 2020 and receives ₹ 11,000 per month up to February 28, 2024 when he dies.
4. retires from PQR (P.) Ltd. on March 31, 2023, PQR (P.) Ltd. pays ₹ 24,000 per month as pension but does not pay any gratuity. On the request ofX, PQR (P.) Ltd. pays ₹ 6,00,000 in lieu of commutation of 30 per cent of pension with effect from February 1, 2024.
5. What will be the amount of taxable pension ifX, under the circumstances mentioned at (4), receives ₹ 90,000 as gratuity at the time of retirement ?
Answer:
Question 1.
Calculate interest on loan allowed for assessment year 2018-19 to 2023-24 from the following information :
Loan was taken on 1/1/2014 ₹ 5,00,000 @ 12% p.a.
Construction commenced on 1/8/2014. Construction completed on 31/3/2019. Repayment made as under :
| On 1/4/2015 | On 1/4/2018 | On 1/4/2021 | On 1/7/2022 |
| ₹ 1,00,000 | ₹ 1,00,000 | ₹ 1,00,000 | ₹ 1,00,000 |
Answer:
Since construction started on 1/8/2014, hence pre-construction period starts from 1/8/2014 and since construction completed on 31/3/2019, hence pre construction period ends on 31/3/2018 and post construction period starts from the year 2018-19. Finally, pre construction period is from previous year 2014-15 to previous year 2017-18 and post construction period is from previous year 2018-19 onwards. Thus, pre-construction period interest are as under :
| Previous Year | Amount | Month | Interest @ 12% |
| 2014-15 | 5,00,000 | 8 | 40,000 |
| 2015-16 | 4,00,000 | 12 | 48,000 |
| 2016-17 | 4,00,000 | 12 | 48,000 |
| 2017-18 | 4,00,000 | 12 | 48,000 |
| Total interest for pre-construction period | 1,84,000 | ||
Total interest for pre-construction period is ₹ 1,84,000 which shall be allowed in 5 equal installments i.e., ₹ 36,800 p.a. from P.Y. 2018-19 to 2022-23.
Computation of interest :
| Assessment Year | Previous Year | Pre construction period Interest | Post construction period Interest | Total Interest |
| 2018-19 | 2017-18 | -- | -- | -- |
| 2019-20 | 2018-19 | 36,800 | 36,0001 | 72,800 |
| 2020-21 | 2019-20 | 36,800 | 36,0001 | 72,800 |
| 2021-22 | 2020-21 | 36,800 | 36,0001 | 72,800 |
| 2022-23 | 2021-22 | 36,800 | 24,0002 | 60,800 |
| 2023-24 | 2022-23 | 36,800 | 15,0003 | 51,800 |
| 1. ₹ 3,00,000 * 12% | |
| 2. ₹ 2,00,000 * 12% | |
| 3. On ₹ 2,00,000 @ 12% for 3 months | ₹ 6,000 |
| On ₹ 1,00,000 @ 12% for 9 months | ₹ 9,000 |
| Total | ₹ 15,000 |
Question 2:
X owns House A (75, Nikolson Road, Chennai). Y owns House B (76, Nikolson Road, Chennai). These two Houses- A and B, are identical in size and were constructed in 2020. X and Y are employees of A Ltd. (salary being ₹ 1,85,000 per month in each case). Besides, X and Y get ₹ 80,000 per month as house rent allowance and ₹ 30,000 per month as commission. On April 1, 2023, X and. Y reside in a rented accommodation at Chennai for which each pays ₹ 60,000 per month as rent.
House A and House B are given on rent. The following information is available about these houses -
| House A ₹ | House B ₹ | |
| Municipal valuation (MV) | 8,00,000 | 8,00,000 |
| Fair rent (FR) | 10,50,000 | 10,50,000 |
| Rent (₹ 70,000 per month) | - | - |
| Standard rent (SR) | 9,00,000 | 9,00,000 |
| Municipal tax paid in May 2023 by landlords for 2023-24 | 80,000 | 80,000 |
| Arrears of municipal tax paid in May 2023 by landlords for 2023-24 | 12,000 | 12,000 |
| Interest on capital borrowed for acquisition of these properties | 3,30,000 | 3,30,000 |
On June 20, 2023, the above properties have been vacated by the tenants. On July 1, 2023, House A is given on rent to A Ltd. for which the company will pay Rs. 80,000 per month. The same house is given as a rent-free perquisite to X for his residence. House rent allowance has been discontinued. On the same day, Y has shifted in his house but he continues to get house rent allowance from the employer. On March 31, 2024, A Ltd. has given advance rent of 6 months toX (I.e., Rs. 4,80,000). On the same day, .4 Ltd. has given Rs. 4,80,000 as advance salary to Y.
Employer and employees contribute 15 per cent of salary towards recognized provident fund. Income from other sources of X is Rs. 2,50,000 (FD interest) and Y is Rs. 2.50,000 (from coaching). Find out net income and tax liability of X and Y for the assessment year 2024-25 (X and Y are resident in India and born in 1989). Ignore section 115BAC pertaining to alternative tax regimd1.
Answer:
Question 3.
Ganesh has three houses, all of which are self-occupied. The particulars of the houses for the P.Y.2023-24 are as under:
| Particulars | House I (₹) | House II (₹) | House III (₹) |
| Municipal valuation p.a. | 3,00,000 | 3,60,000 | 3,30,000 |
| Fair rent p.a. | 3,75,000 | 2,75,000 | 3,80,000 |
| Standard rent p.a. | 3,50,000 | 3,70,000 | 3,75,000 |
| Date of completion/purchase | 31.3.1999 | 31.3.2002 | 01.4.2015 |
| Municipal tax paid during the year | 12% | 8% | 6% |
| Interest on money borrowed for repair of property during the current year | - | 55,000 | |
| Interest for current year on money borrowed in April, 2016 for purchase of property | 1,75,000 |
Compute Ganesh’s income from house property for A.Y.2024-25 and suggest which houses should be opted by Ganesh to be assessed as self-occupied so that his tax liability is minimum.
Answer:
Question 1.
Mr. A, furnishes the following particulars for the P.Y.2023-24. Compute the deduction allowable under section 35 for A.Y.2024-25, while computing his income under the head “Profits and gains of business or profession”, if.
(i) he is paying tax under default tax regime under section 115BAC
(ii) he has exercised the option of shifting out of the default tax regime provided under section 115BAC(1A)
| Particulars | ₹ | |
| 1. | Amount paid to notified approved Indian Institute of Science, Bangalore, for scientific research | 1,00,000 |
| 2. | Amount paid to IIT, Delhi for an approved scientific research programme | 2,50,000 |
| 3. | Amount paid to X Ltd., a company registered in India which has as its main object scientific research and development, as is approved by the prescribed authority | 4,00,000 |
| 4. | Expenditure incurred on in-house scientific research and development facility as approved by the prescribed authorityrelated to his business | |
| (a) Revenue expenditure on scientific research | 3,00,000 | |
| (b) Capital expenditure (including cost of acquisition of land ` 5,00,000) on scientific research | 7,50,000 |
Answer:
(i) If Mr. A is paying tax under default tax regime under section 115BAC
Computation of deduction under section 35 for the A.Y.2024-25
| Particulars | ₹ | Section | Allowability | Amount of deduction (₹) |
| Payment for scientific research | ||||
| Indian Institute of Science, Bangalore | 1,00,000 | 35(1)(ii) | Not allowable under defaulttax regime | Nil |
| IIT, Delhi | 2,50,000 | 35(2AA) | Nil | |
| X Ltd. | 4,00,000 | 35(1)(iia) | Nil | |
| Expenditure incurred on in-house research and development facility | ||||
| Revenue expenditure | 3,00,000 | 35(1)(i) | Allowable under default tax regime | 3,00,000 |
| Capital expenditure (excluding cost of acquisition of land ₹ 5,00,000) | 2,50,000 | 35(1)(iv) read with 35(2)(ia) | 2,50,000 | |
| Deduction allowable under section 35 | 5,50,000 | |||
(ii) If Mr. A has exercised the option of shifting out of the default tax regime provided under section 115BAC(1A)
Computation of deduction under section 35 for the A.Y.2024-25
| Particulars | ₹ | Section | % of deduction | Amount of deduction (₹) |
| Payment for scientific research | ||||
| Indian Institute of Science | 1,00,000 | 35(1)(ii) | 100% | 1,00,000 |
| IIT, Delhi | 2,50,000 | 35(2AA) | 100% | 2,50,000 |
| X Ltd. | 4,00,000 | 35(1)(iia) | 100% | 4,00,000 |
| Expenditure incurred on in-house research and development facility | ||||
| development facility | ||||
| Revenue expenditure | 3,00,000 | 35(1)(i) | 100% | 3,00,000 |
| Capital expenditure (excluding cost of acquisition of land ₹ 5,00,000) | 2,50,000 | 35(1)(iv) read with 35(2)(ia) | 100% | 2,50,000 |
| Deduction allowable under section 35 | 13,00,000 | |||
Question 2.
Mr. Arnav is a proprietor having two units – Unit A carries on specified business of setting up and operating a warehousing facility for storage of sugar; Unit B carries on non-specified business of operating a warehousing facility for storage of edible oil.
Unit A commenced operations on 1.4.2022 and it claimed deduction of ₹ 100 lacs incurred on purchase of two buildings for ₹ 50 lacs each (for operating a warehousing facility for storage of sugar) under section 35AD for A.Y.2023-24. However, in February, 2024, Unit A transferred one of its buildings to Unit B.
Examine the tax implications of such transfer in the hands of Mr. Arnav.
Answer:
Question 3.
Mr. Abhimanyu is engaged in the business of generation and distribution of electric power. He opts to claim depreciation on written down value for income-tax purposes. From the following details, compute the depreciation allowable as per the provisions of the Income-tax Act, 1961 for the A.Y. 2024-25, assuming he has exercised the option of shifting out of the default tax regime provided under section 115BAC(1A):
| Particulars | (₹ in lacs) | |
| 1 | WDV of block as on 31.3.2023 (15% rate) | 50.00 |
| 2 | Depreciation for P.Y. 2022-23 | 7.50 |
| 3 | New machinery purchased on 12-10-2023 | 10.00 |
| 4 | Machinery imported from Colombo on 12-4-2023. This machine had been used only in Colombo earlier and the assessee is the first user in India | 9.00 |
| 5 | New computer installed in generation wing unit on 15-7-2023 | 2.00 |
All assets were purchased by A/c payee cheque.
Answer:
Question 1.
Mukherjee furnishes the following information regarding purchases of shares No. of Shares
| No. of Shares | Month & Year of Purchase | Shares Dematted Month & Year |
| 1,000 | March 2009 | July 2016 |
| 500 | March 2012 | __________ |
| 1,000 | December 2013 | october 2015 |
He sold 1500 Shares in January 2024 out of the dematted Shares. He seeks your advice as to the taxability towards Capital Gains for the Assessment Year 2024-2025.
Answer:
Transfer of Shares held in Demat Form [Sec 45(2A)]
Concept of Demat Form
1. Person Liable: Sale of Shares held in a Dematerialized Form with a Depository, is chargeable to tax as the income of the Beneficial Owner.
2. Cost of Acquisition and Period of Holding:
1. In the above case, the Assessee sold 1,500 Shares in January 2024.
2. 1000 Shares credited in Depository Account in October 2015 (purchased in December 2013) and 500 Shares credited in July 2016 (out of 1,000 Shares purchased in March 2009) shall be deemed to be "sold" by applying FIFO Method. But, indexation shall apply on the basis of year of acquisition of those Shares.
Question 2.
Mr. Rakesh purchased a House Property on 14th April 1999 for ₹ 2,30,000. He entered in to an agreement with Mr. B for sale of house on 15th September 2002 and received an Advance of ₹ 25,000. However, since Mr. B did not remit the balance amount, Mr. Rakesh forfeited the advance. Later on, he gifted the House Property to his friend Mr. A on 15th June 2004.
Following renovations were carried out by Mr. Rakesh and Mr. A to the House Property -
| Particulars | Amount |
| By Mr. Rakesh during FY 1999-2000 | 1,00,000 |
| By Mr. A during FY 2009-2010 | 1,00,000 |
| By Mr. A during FY 2011-2012 | 2,50,000 |
The Fair Market Value of the Property as on 01.04.2001 is ₹ 2,50,000.
Mr. A entered into an agreement with Mr. C for sale of the House on 1st June 2019 and received an Advance of ₹ 1,00,000. The said amount was forfeited by Mr. A, since Mr. C could not fulfill the terms of the agreement. Finally, the House was sold by Mr. A to Mr. Sanjay on 2nd January 2024 for a consideration of ₹ 17,00,000. Compute the Capital Gains chargeable to tax in the hands of Mr. A for the AY 2024-2025.
Answer:
Question 3.
X (43 years) purchased a house property on July 17, 1999 for Rs. 45,000 (in addition he paid stamp duty at the rate of 12 per cent on stamp duty value of Rs. 50,000). Fair market value of the properly on April I, 2001 is Rs. 48,000. X incurred the following
expenses -
| Rs. | |
| a. Construction of a room on the ground floor during 1 999-00 | 30,000 |
| b. Renewals/reconstruction in 2018-19 | 40,000 |
The property is transferred on April 6, 2023 for Rs. 87,00,000 (stamp duty value is Rs. 99,00,000 on which the purchaser has paid stamp duty at the rale of 9 per cent). X made the following investments -
1 . On April 1, 2023, X purchased Rs. 10,00,000 NHA1 bonds for availing of exemption under section 54EC.
2. On March 31, 2023, X purchased a residential house property hi Pune for Rs. 13,00,000. In addition he paid stamp duty at the rate of 6 per cent on stamp duty value of Rs. 15,00,000
3. On June 30, 2023, X constructed first floor in Pune property by spending Rs. 2,70,000.
4. On December 8, 2023, X purchased Rs. 8,00,000 REC bonds for availing of exemption under section 54EC.
Find out the net income and tax liability for the assessment year 2024-25 (income of X from salary is Rs. 6,50,000 and contribution towards recognized provident fund is Rs. 60,000). Is if possible to reduce tax liability under the alternative tax regime under section 115BAC?
Answer:
Question 1.
Sunder died on 31st July 2022 while being in Central Government service. In terms of rules governing his service, his widow Mrs. Sunder is paid a family pension of ₹ 10,000 p.m. and dearness allowance of 40% thereof. State whether the amount of family pension is assessable in her hands, and if so, under what head of income. Can she claim any relief/deduction on such receipt? Compute taxable income for the assessment year 2023-24 and tax thereon.
Answer:
Computation of gross total income of Mrs. Sunder for the A.Y.2023-24
| Particulars | Details | Amount |
| Income from other sources | ||
| Family pension [(₹ 10,000 + ₹ 4,000) x 8] [From 01-08-2022 to 31-03-2023] | 1,12,000 | |
| Less: Standard deduction being minimum of the following: | ||
| a) 1/3rd of the pension | 37,333 | |
| b) Statutory limit | 15,000 | 15,000 |
| Total Income | 97,000 | |
| Tax on above | Nil |
It is assumed that other income of Mrs. Sunder is nil.
Question 2.
Examine whether the following are chargeable to tax and the amount liable to tax:
(i) A sum of ₹ 1,20,000 was received as gift from non-relatives by Raj on the occasion of the marriage of his son Pravin.
(ii) Interest on enhanced compensation of ₹ 96,000 received on 12-3-2024 for the acquisition of urban land, of which 40% relates to P.Y.2022-23.
Answer:
Question 3.
X holds the following securities on April 1, 2023 :
| Rs. 8,00,000 | 8% non-listed debentures of ABC Ltd. ; and |
| Rs. 6,00,000 | 15% securities of the Punjab Government |
Interest on both the cases is payable on October 31 every year. On September 1, 2023, X borrows Rs. 7,00,000 at 9 per cent per annum and invests in purchasing Rs. 7,00,000, 9.25 per cent securities of the UP Government (due dates of interest : January 15 and July 15 every year). Interest which becomes due on January 15, 2024 is actually received by March 31, 2023. However, interest on borrowing for the period ending March 31, 2024 is still unpaid. His business income is Rs. 29,64,000. Determine the taxable income of X for the assessment year 2024-25 on the assumption that (a) he maintains books of account on mercantile basis, or (b) books of account are maintained on cash basis.
Answer:
Question 1.
Mr. Dhaval has an income from Salary of ₹ 3,20,000 and his Minor Children’s income are under:
| Particular | Amount (₹) |
| (a) Minor Daughter had earned the following income: | |
| From TV show | 50,000 |
| From Interest of FD with a Bank (deposited by Mr. Dhaval from his Income) | 5,000 |
| (b) Minor Son has earned the following income: | |
| From the sale of a own painting | 10,000 |
| From Interest of FD with a Bank (deposited by Mr. Dhaval from his Income) | 1,000 |
Compute the Taxable Income and tax liability in the hands of Mr. Dhaval.
Answer:
Assessee : Dhaval
Previous Year : 2023-2024
Assessee Year : 2024-2025
Computation of Total Income
| Particulars | Amount (₹) | Amount (₹) |
| (A) Income from Salary (given) | 3,20,000 | |
| (B) Income from Other Sources | ||
| Income of Minor Children [clubbed u/s 64(1A)] | ||
| (a) Income of Mr. Dhaval's Minor Daughter | ||
| Interest of FD with Bank | 5,000 | |
| Less : Exemption u/s 10(32) | (1,500) | 3,500 |
| (b) Income of Mr. Dhaval’s Minor [clubbed u/s 64(1A)] | ||
| Interest of FD with Bank | 1,000 | |
| Less : Exemption u/s 10(32) [restricted to Income clubbed] | (1,000) | Nil |
| Total Income (A + B) | 3,23,500 | |
| Tax on Total Income | 3,675 | |
| Less: Rebate u/s 87A (See Note) | (3,675) | Nil |
| Add: HEC @ 4% | Nil | |
| Total Tax Payable (Rounded Off) | Nil |
Note :
1.Income on account of any activity involving application of skill or specialized knowledge and experience or the income of a minor child suffering from disability u/s 80U shall not be clubbed.
2.Hence, Income of Minor Daughter from TV show (assumed to arise due to her talent and skill) and Income of Minor Son by way of sale of own painting is not clubbed in the hands of Mr. Dhaval. They shall be taxed in their hands separately.
3.When Total Income of Resident Individual does not exceed ₹ 5.00 Lakhs, Rebate u/s 87A = 100% of Tax Payable or ₹ 12,500 whichever is less.
Question 2.
X, an individual, is engaged in the business of money-lending. On April 1, 2023, he advances ₹ 10,00,000 to his HUF at the market rate of interest of 12 per cent per annum. During the previous year 2023-24, HUF earns ₹ 4,00,000 as profit on the money advanced by X (before paying interest). Determine:
1. Is the amount of net income of HUF (i.e,, ₹ 4,00,000 minus 12 per cent of ₹ 10,00,000) includible in the income of X under section 64(2) ?
2. Does it make any difference if X is not engaged in the business of money-lending ?
3. Does it make any change in the applicability of section 64(2), if money is advanced at the rate of 4 per cent whereas the market rate of interest is 12 per cent ?
4. Will the transaction come within the scope of sections 60 to 64, if X foregoes his right to receive interest on the sum so advanced before the date of accrual ?
Answer:
Question 3.
Mr. B is the Karta of a HUF, whose members derive income as given below:
| Particulars | Amount (₹) | |
| (i) | Income from B' s profession | 45,000 |
| (ii) | Mrs. B's salary as fashion designer | 76,000 |
| (iii) | Minor son D (interest on fixed deposits with a bank which were gifted to him by his uncle) | 10,000 |
| (iv) | Minor daughter P's earnings from sports | 95,000 |
| (v) | D's winnings from lottery (gross) | 1,95,000 |
Examine the tax implications in the hands of Mr. and Mrs. B.
Answer:
Question 1.
During the P.Y. 2023-24, Mr. C has the following income and the brought forward losses:
| Particulars | ₹ |
| Short term capital gains on sale of shares | 1,50,000 |
| Long term capital loss of A.Y.2022-23 | (96,000) |
| Short term capital loss of A.Y.2023-24 | (37,000) |
| Long term capital gain u/s 112 | 75,000 |
What is the capital gain taxable in the hands of Mr. C for the A.Y.2024-25?
Answer:
Taxable capital gains of Mr. C for the A.Y. 2024-25
| Particulars | ₹ | ₹ |
| Short term capital gains on sale of shares | 1,50,000 | |
| Less: Brought forward short-term capital loss of the A.Y.2023-24 | (37,000) | 1,13,000 |
| Long term capital gain | 75,000 | |
| Less: Brought forward long-term capital loss of A.Y.2022-23 ₹ 96,000 set off to the extent of ₹ 75,000 | (75,000) | Nil |
| [See Note below] | ||
| Taxable short-term capital gains | 1,13,000 |
Note:
Long-term capital loss cannot be set off against short-term capital gain. Hence, the unadjusted long-term capital loss of A.Y.2022-23 of ₹ 21,000 (i.e. ₹ 96,000 – ₹ 75,000) can be carried forward to the next year to be set-off against long-term capital gains of that year.
Question 2.
Mr. Batra furnishes the following details for year ended 31.03.2024:
| Particulars | ₹ |
| Short term capital gain | 1,40,000 |
| Loss from speculative business | 60,000 |
| Long term capital gain on sale of land | 30,000 |
| Long term capital loss on sale of unlisted shares | 1,00,000 |
| Income from business of textile (after allowing current year depreciation) | 50,000 |
| Income from activity of owning and maintaining race horses | 15,000 |
| Income from salary (computed) | 1,00,000 |
| Loss from house property | 40,000 |
Following are the brought forward losses:
(i) Losses from activity of owning and maintaining race horses-pertaining to A.Y.2021-22 - ₹ 25,000.
(ii) Brought forward loss from business of textile ₹ 60,000 - Loss pertains to A.Y. 2016-17.
Compute gross total income of Mr. Batra for the Assessment Year 2024-25, assuming that he has exercised the option of shifting out of the default tax regime provided under section 115BAC(1A). Also determine the losses eligible for carry forward to the A.Y. 2025-26.
Answer:
Question 3.
The summarized P&L Account of Sri Raj Kumar Santoshi (from his Grocery Stores)for the Previous Year ended 31.03.2024 is as under:
| Particulars | Amount (₹) | Particulars | Amount (₹) |
| To Expenses | 4,20,000 | By Gross Profits | 6,00,000 |
| To Net Profit | 2,80,000 | By Dividends (from Indian Listed Companies) | 1,00,000 |
| Total | 7,00,000 | Total | 7,00,000 |
The following further information was provided for the same previous year:
Raj had other business (Proprietary)
| (a) | Cloth Trade (Loss) | ₹ 42,000 |
| (b) | Speculation (Profit) | ₹ 30,000 |
| (c) | Loss in Proprietary business carried on in the name of Minor Son | ₹ 45,000 |
He had carried forward loss of ₹ 39,000 in Electrical Spares for Assessment Year 2023-2024. The business was closed down. However, the Income Tax return for Assessment Year 2023-2024 was filed in time.
Income of Smt. Raj was ₹ 55,000
Compute the income of Sri Raj Kumar Santoshi for AY 2023-2024 chargeable under the head Profits and Gains of business.
Answer:
Question 1.
From the following data, find out the tax payable on self-assessment by Mr. Bharath, 66 Year old Resident Individual -
| Particulars | ₹ | Particulars | ₹ |
| House Property | 75,000 | Interest on Company Deposit | 60,000 |
| Pension | 98,000 | Capital Gains - Long Term | 1,25,000 |
Investment in National Savings Certificate is ₹ 40,000.
Answer:
Name: Mr. Bharath
Previous Year: 2023-2024
Assessment Year: 2024-2025
Computation of Tax Payable
| Particulars | ₹ | |
| Income from Salaries | Pension Received | 98,000 |
| Income from House Property | 75,000 | |
| Long Term Capital Gains | 1,25,000 | |
| Income from Other Sources | Interest on Company Deposits | 60,000 |
| Gross Total Income | 3,58,000 | |
| Less : Deduction under Chapter VI-A - Sec.80C(NSC) | (40,000) | |
| Total Income | 3,18,000 | |
| Tax on Total Income (Note 1) | 3,600 | |
| Less : Rebate u/s 87A (Note 2) | (3,600) | |
| Tax Payable | Nil | |
| Add : HEC at 4% | Nil | |
| Net Tax Payable (Rounded Off) |
Nil |
Note 1 : Since Total Income exceeds the Basic Exemption Limit of ₹ 3,00,000 because of LTCG, Tax on Total Income shall be computed as under (i.e. after reducing the Unavailed Basic Exemption from the Taxable LTCG)
Tax on Total Income = (Total Income Including LTCG - Basic Exemption) × Tax Rate for LTCG =（₹ 3,18,000 - ₹ 3,00,000) x 20% = ₹ 3,600
Note 2 : When Total Income of Resident Individual does not exceed ₹ 5 Lakhs, Rebate u/s 87A = 100% of Tax Payable or ₹12,500 whichever is less.
Question 2.
Determine the eligibility and quantum of deduction under Chapter VI-A in the following cases -
Answer:
Question 3.
Mr. B has taken three education loans on April 1, 2023, the details of which are given below:
| Loan 1 | Loan 2 | Loan 3 | |
| For whose education loan was taken | B | Son of B | Daughter of B |
| Purpose of loan | MBA | B. Sc | B.A |
| Amount of loan (₹) | 5,00,000 | 2,00,000 | 4,00,000 |
| Annual repayment of loan (₹) | 1,00,000 | 40,000 | 80,000 |
| Annual repayment of interest (₹) | 20,000 | 10,000 | 18,000 |
Compute the amount deductible under section 80E for the A.Y.2024-25 if Mr. B has exercised the option of shifting out of the default tax regime provided under section 115BAC(1A).
Answer:
Question 1.
Examine the TDS implications under section 194A in the cases mentioned hereunder–
(i) On 1.10.2023, Mr. Harish made a six-month fixed deposit of ₹ 10 lakh@9% p.a. with ABC Co-operative Bank. The fixed deposit matures on 31.3.2024.
(ii) On 1.6.2023, Mr. Ganesh made three nine months fixed deposits of ₹ 3 lakh each, carrying interest@9% p.a. with Dwarka Branch, Janakpuri Branch and Rohini Branch of XYZ Bank, a bank which has adopted CBS. The fixed deposits mature on 28.2.2024.
(iii) On 1.10.2023, Mr. Rajesh started a six months recurring deposit of ₹ 2,00,000 per month@8% p.a. with PQR Bank. The recurring deposit matures on 31.3.2024.
Answer:
(i) ABC Co-operative Bank has to deduct tax at source@10% on the interest of ₹ 45,000 (9% × ₹ 10 lakh × ½) under section 194A. The tax deductible at source under section 194A from such interest is, therefore, ₹ 4,500.
(ii) XYZ Bank has to deduct tax at source@10% u/s 194A, since the aggregate interest on fixed deposit with the three branches of the bank is ₹ 60,750 [3,00,000 × 3 × 9% × 9/12], which exceeds the threshold limit of ₹ 40,000. Since XYZ Bank has adopted CBS, the aggregate interest credited/paid by all branches has to be considered. Since the aggregate interest of ₹ 60,750 exceeds the threshold limit of ₹ 40,000, tax has to be deducted@10% u/s 194A.
(iii) No tax has to be deducted under section 194A by PQR Bank on the interest of ₹ 28,000 falling due on recurring deposit on 31.3.2024 to Mr. Rajesh, since such interest does not exceed the threshold limit of ₹ 40,000.
Question 2.
Mr. Sachal, a Resident Individual aged 54, furnishes income details as under:
1. Wholesale Cloth Business, whose turnover is ₹ 150 Lakhs, for which accounts are audited u/s 44AB. Income from such Business ₹ 8,10,000.
2. Income from Other Sources ₹ 2,70,000.
3. Tax Deducted at Source ₹ 25,000.
4. Advance Tax paid ₹ 1,03,000 on 14.03.2024.
Return of Income will be filed on 11.12.2024. The Assessee is willing to pay the requisite Self-Assessment Tax. Calculate the Interest Payable under Section 234B of the Income-Tax Act, 1961. Assume that the Return of Income would be processed on the same day of filing of return.
Answer:
Question 3.
Examine and compute the liability for deduction of tax at source, if any,in the cases stated hereunder, for the financial year ended 31st March, 2024
(i) State Bank of India pays ₹ 70,000 per month and ₹ 60,000 permonth as rent to the Central Government and Mr. Kunal, respectively for building in which its branches are situated.
(ii) Payment of ₹ 2,50,000 to Mr. Deepak a transporter who owns 8 goods carriages throughout the previous year. He does not furnish his PAN.
Answer:
Question 1:
State with reasons whether you agree or disagree with the following statements:
(a) Return of income of Limited Liability Partnership (LLP) could be verified by any partner.
(b) Time limit for filing return under section 139(1) in the case of Mr. A having total turnover of ₹ 160 lakhs (₹ 100 lakhs received in cash) for theyear ended 31.03.2024 whether or not declaring presumptive income under section 44AD, is 31st October, 2024.
Answer:
(a) Disagree
The return of income of LLP should be verified by a designated partner.Any other partner can verify the Return of Income of LLP only in the following cases:-
(i) where for any unavoidable reason such designated partner is not able to verify the return, or,
(ii) where there is no designated partner.
(b) Disagree
In case Mr. A offers his business income as per the presumptive taxation provisions of section 44AD (₹ 11.60 lakhs or more), then, the due date under section 139(1) for filing of return of income for the year ended 31.03.2024, shall be 31st July, 2024.
In case, Mr. A wants to declare business income lower than ₹ 11.60 lakhs, he has to get his accounts audited under section 44AB, since his turnover exceeds ₹ 1 crore, in which case, the due date for filing return would be 31st October, 2024.
Question 2.
X has the following incomes for the previous year ending March 31, 2024 -
1. Salary : ₹ 15,00,000.
2. Income let out commercial property : ₹ 24,00,000.
3. Bank interest : ₹ 6,00,000.
4. Dividend from Indian companies : ₹ 1,00,000.
What is the Form No. in which return should be submitted? Does it make any difference, if he wants to claim double taxation relevant under section 90 or 91. What is the due date of submission of return of income? In which mode return should be submitted — paper mode or electronic mode?
Answer:
Question 3.
X has the following incomes for the previous year ending March 31, 2024-
1. Income from sole-proprietary business : ₹ 3,00,000 (turnover : ₹ 2,65,00,000)
2. Bank interest : ₹ 2,00,000.
3. Interest on NSC : ₹ 2,180.
4. Short-term capital loss : ₹ 60,000
What is the Form No. in which return should be submitted? What is the due date of submission of return of income? In which mode return should be submitted — paper mode or electronic mode?
Answer:
Question 1.
Ms. Vaishali, employed in a Private Sector Company, furnishes following information for the year ended 31.03.2024.
| ₹ | |
| Income from Salary (computed) | 5,00,000 |
| Bank Interest on Fixed Deposits | 15,000 |
| Tax on Non-Monetary Perquisite paid by Employer | 20,000 |
| Amount contributed by her during the year are given below: | |
| Contribution to Recognised Provident Fund | 60,000 |
| Health Insurance Premium - on self (paid by crossed cheque) | 7,000 |
| Medical Expenditure for dependent sister with disability | 20,000 |
Compute the Taxable Income and tax liability of Ms. Vaishali for the Assessment Year 2024-2025.
Answer:
Assessee: Ms. Vaishali
Previous Year: 2023-2024
Assessment Year: 2024-2025
Computation of Taxable Income and Tax Liability
| Particulars | ₹ | ₹ |
| Salaries (given) | 5,00,000 | |
| Income from Other Sources = Bank FD Interest | 15,000 | |
| Gross Total Income | 5,15,000 | |
| Less: Deduction under Chapter VIA | ||
| U/s 80C Contribution to RPF | 60,000 | |
| U/s 80D Medical Insurance Premium paid by Cheque | 7,000 | |
| U/s 80DD Medical treatment of handicapped dependent (WN 2) | 75,000 | (1,42,000) |
| Total Income | 3,73,000 | |
| Tax there on (3,73,000 - 2,50,000) × 5% | 6,150 | |
| Less: Rebate u/s 87A (Max ₹ 12,500) For Resident Individual if Income ≤ ₹ 5 Lakhs. | (6,150) | |
|
Net Tax Liability (Rounded off) |
Nil |
Notes:
Question 2.
For AY 2024-2025, an Author of Books furnishes the following particulars and requests you to work out his Tax Liability.
| Particulars | ₹ | ₹ |
| 1.Royalty from Printers Ltd on publication of Books | 3,60,000 | |
| 2.Long Term Capital Gain | 6,00,000 | |
| 3.Other Sources: (a) Interest on Bank Deposits | 36,000 | |
| (b) Dividend Income | 9,000 | |
| (c) Income from Units of EMOF | 15,000 | 60,000 |
| 10,20,000 | ||
| Deductions: | ||
| 1. Contributions towards: (a) LIC Pension Scheme | 45,000 | |
| (b) LIC Premium | 30,000 | |
| 2.Contribution to Public Provident Fund | 30,000 | |
| 3.Investment in National Savings Certificate | 1,50,000 | |
| 4. Expenditure on medical treatment of handicapped dependent | 60,000 |
Answer:
Question 3.
Mr. Sanjay, a Retail Trader from Delhi, submits the following Trading and Profit & Loss Account for year ended 31" March, 2024.
| Particulars | ₹ | Particulars | ₹ |
| Opening Stock | 10,000 | sales | 15,00,000 |
| Purchases | 12,50,000 | closing stock | 20,000 |
| Gross Profit | 2,60,000 | ||
| total | 15,20,000 | total | 15,20,000 |
| salaries | 80,000 | gross profit | 2,60,000 |
| rent and rates | 50,000 | interest received-savings bank | 5,200 |
| intrest in loans | 25,000 | profit on sale of shares | 45,000 |
| printing and stationery | 30,000 | winnings from lottery (net of TDS)(TDS 4,500) | 10,500 |
| postage | 15,000 | miscellaneous income | 20,000 |
| professional fees | 40,000 | ||
| motorcycle | 40,000 | ||
| (purchase on 31.10.2023) | |||
| loss on sale of shares | 20,000 | ||
| miscellaneus expenses | 10,000 | ||
| net profit | 30,700 | ||
| total | 3,40,700 | total | 3,40,700 |
Salary including ₹ 24,000 paid to his brother-in-law which was unreasonable to the extent of ₹ 6,000
2. the whole amount of printing and stationery was paid in cash in a single transaction
3.the details of fixed assets for the year are as follows
| particulars | ₹ | rate of depreciation |
| plant and macinery (WDV AS ON 01.04.2023) | 3,40,000 | 15% |
| furitnure and dixtures (WDV as on 01.04.2023) | 1,00,000 | 10% |
| purchase of motorcycle (31.10.2023) | 40,000 | 15% |
| sale of plant and machinery | 40,000 | 15% |
| sale of furniture and fixtures | 20,000 | 10% |
Sales-Tax for March 2024, ₹ 6,000 was paid on 30.04.2024 Due date for payment was 25.04.2024.
4. Refund of GST₹ 5,000 relating to the year 2021-2022 is included under Miscellaneous Income.
5.Miscellaneous Expenses include ₹ 10,000 contributed to Prime Minister's National Relief Fund.
6.Loss on Sale of Shares represents shares sold within a period of 6 months from the date of purchase.
7.Profit on Sale of Shares represents shares held for 2 years & Securities Transaction Tax was paid on it.
You are required to compute the Total Income of Mr. Sanjay AY 2024-2025. You are also required to advise Mr. Sanjay, whether he can offer his Business Income u/s 44AD, i.e. on Presumptive Taxation.
Answer:
Question 1.
Explain with the help of examples how a particular transaction of goods and services is taxed simultaneously under Central GST (CGST) and State GST (SGST)?
Answer:
The Central GST and the State GST is levied simultaneously on every intra-State supply of goods or services or both made by registered persons except the exempted goods and services as well as goods and services which are outside the purview of GST. Further, both are levied on the same price or transaction value. The same can be better understood with the help of following examples:
Example I: Suppose that the rate of CGST is 10% and that of SGST is 10%. When a wholesale dealer of steel in Uttar Pradesh supplies steel bars and rods to a construction company which is also located within the same State for, say ₹ 100, the dealer would charge CGST of ₹ 10 and SGST of ₹ 10 in addition to the basic price of the goods. The CGST component will go into a Central Government account while the SGST portion into the account of concerned State Government (viz. U.P.).
It is important to note that he might not actually pay ₹ 20 (₹ 10 + ₹ 10) in cash as he would be entitled to set-off this liability against the CGST or SGST paid on his eligible purchases (inputs, input services and capital goods) assuming that all his purchases are intra-State. However, for paying CGST, he would be allowed to use only the credit of CGST paid on his purchases while for SGST he can utilize the credit of SGST alone. CGST credit cannot be used for payment of SGST and vice versa.
Example II: Suppose, again the rate of CGST is 10% and that of SGST is 10%. When an advertising company located in Mumbai supplies advertising services to a company manufacturing soap also located within the State of Maharashtra for, let us say ₹ 100, the ad company would charge CGST of ₹ 10 as well as SGST of ₹ 10 at the basic value of the service. The CGST
component will go into a Central Government account while the SGST portion into the account of the Maharashtra Government.
He might not actually pay ₹ 20 (₹ 10+₹ 10) in cash as it would be entitled to set-off this liability against the CGST or SGST paid on his eligible purchases(say, of inputs such as stationery, office equipment, services of an artist etc.)assuming that all his purchases are intra-State. However, for paying CGST,he would be allowed to use only the credit of CGST paid on its purchase while for SGST, he can utilise the credit of SGST alone. CGST credit cannot be used for payment of SGST and vice versa.
Question 2.
With reference to GST Laws, how does the new payment system benefit the taxpayer & the Commercial Tax Department?
Answer:
Question 3.
Discuss the deficiencies in the existing indirect taxes which led to the need for ushering into GST regime.
Answer:
Question 1.
X, located in Mumbai, is a technical consultant to many companies. He is a registered person under GST. He has been providing technical services to A Ltd., Nagpur since 2011. Consideration is settled for each assignment. On December 10, 2022, A Ltd. has paid ₹ 10 lakh to X on his promise of X of not providing similar technical services to any other business entity in India or abroad for a period of 10 years ending on December 31, 2032. X is of the view that ₹ 10 lakh is not chargeable to GST. Do you agree ? If not, calculate GST liability of X (it cannot be recovered from A Ltd.). Technical services provided by X is otherwise chargeable to GST at the rate of 18 percent.
Answer:
Scope of supply is specified by section 7(1). It includes deemed supply given under Schedule II. Under Item 5(e) of Schedule II, any consideration received for agreeing to the obligation to refrain from an act, is subject to GST. Consideration received for non-compete agreement is also consideration for supply of services. Consideration of ₹ 10 lakh received on the promise of X of not providing similar services to any other person, is consideration for supply which is chargeable to GST. Since GST is not separately collected, it will be assumed that it is included in ₹ 10 lakh. Consequently, value of taxable supply will be ₹ 8,47,458 (i.e., ₹ 10,00,000 x 100 ÷ 118). GST liability on ₹ 8,47,458 will be calculated as follows (it will be paid by X out of his pocket) -
| ₹ | |
| Taxable value of supply | 8,47,458 |
| Add: GST - | |
| - CGST (@ 9% of ₹ 8,47,458) | 76,271 |
| - SGST (Maharashtra) (@ 9% of ₹ 8,47,458) | 76,271 |
| Total amount charged by X | 10,00,000 |
Question 2.
Examine whether the activity of import of service in the following independent cases would amount to supply under section 7:
(a) Miss Shriniti Kaushik received interior decoration services for her residence located at Bandra, Mumbai from Mr. Racheal of Sydney (Australia). The amount paid for the said service is 5,000 Australian dollar.
(b) Miss Shriniti Kaushik received interior decoration services for her residence located at Bandra, Mumbai from her brother, Mr. Varun residing in Sydney (Australia) [wholly dependent on Miss Shriniti]. Further, Miss Shriniti did not pay any consideration for the said service.
(c) Will your answer change if in the above case, if Miss Shriniti has taken interior decoration services with regard to her business premises and not her residence?
Answer:
Question 3.
Discuss whether GST is applicable in the following transactions -
Answer:
Question 1.
In this case, the normal value of taxable supply will be Rs. 15,000 (i.e., the difference between sale price and RBI reference rate : Re. 0.50 per US$, taxable value shall be Re. 0.50 * USS 30,000). If X I .Id. has opted for compounding scheme, value of taxable supply will be calculated as follows—
| Rs | |
| Gross amount of currency exchanged in excess of Rs, 10,00,000 | 9,50,000 |
| Amount calculated at the rate of 0,1% | 950 |
| Plus : Rs. 5,500 | 5,500 |
| Value of taxable supply | 6,450 |
It may be noted that compounding scheme cannot be opted on daily basis. It has to be opted for the entire financial year.
Question 2.
XYZ Pvt. Ltd. manufactures beauty soap with the brand name 'Forever beauty'. XYZ Pvt. Ltd. has organized a concert to promote its brand. Ms. Mahima, its brand ambassador, who is a leading film actress, has given a classical dance performance in the said concert.
The proceeds of the concert is ₹ 1,25,000.
(i) Explain with relevant provisions of GST, whether Ms. Mahima will be required to pay any GST.
(ii) What will be the answer if the proceeds of the concert is donated to a charitable organization?
Answer:
Question 3.
X Ltd., Nasik, is a wholesale dealer in piston rings. GST rate for supply is 28 percent. The following data is noted from the records of the company for December 2023 -
| Date of Supply | Receipt of Supply | Place of Supply | Quantity | Rate (in ₹ per Unit) | Discount |
| December 2, 2023 | A Ltd, | Jaipur | 3 | 67,000 | 10% |
| December 6, 2023 | B Ltd. | Patna | 8 | 69,000 | 9% |
| December 18, 2023 | C Ltd. | Mumbai | 10 | 64,000 | 5% |
| December 20, 2023 | D Ltd. | Pune | 12 | 70,000 | 1% |
| December 28, 2023 | E Ltd. | Andaman | 4 | 59,000 | 6% |
| December 30, 2023 | F Ltd. | Delhi | 6 | 58,500 | 3% |
No other supply is made by X Ltd. during December 2023. Calculate GST liability for December 2023. Assume that input tax credit for December 2023 is nil.
Answer:
Question 1.
With reference to GST law, Determine the place of supply with reasons in the following independent circumstances:-
(i) Miss Kanika of Kolkata (West Bengal) visited to Jodhpur Law University (Rajasthan) and paid her college fees by purchasing a demand draft from a bank located in the University campus.Miss Kanika did not have any account with the bank.
(ii) Mizu Machine Ltd., registered in the State of Andhra Pradesh,supplied a machinery to Keyan Wind Farms Ltd., registered in the State of Karnataka. However, this machinery was assembled and installed at the wind mill of Keyan Wind Farms Ltd., which was located in the State of Tamilnadu.
Answer:
(i) Section 12(12) of the IGST Act, 2017 provides that the place of supply of banking and other financial services, including stock broking services to any person is the location of the recipient of services in the records of the supplier of services. However, if the location of recipient of services is not available in the records of the supplier, the place of supply is the location of the supplier of services.
Therefore, since the location of recipient is not available in the records of the supplier, the place of supply is the location of the supplier of services, i.e. Rajasthan (or Jodhpur).
(ii) Section 10(1)(d) of the IGST Act, 2017 provides that if the supply involves goods which are to be installed or assembled at site, the place of supply is the place of such installation or assembly.
Thus, the place of supply is the site of assembly of machine, i.e.Tamilnadu.
Question 2.
Determine the place of supply in the following independent cases:-
(i) Harpreet (New Delhi) boards the New Delhi-Kota train at New Delhi. He sells the goods taken on board by him (at New Delhi), in the train, at Jaipur during the journey.
(ii) LP Refineries (Mumbai, Maharashtra) gives a contract to BhansaliLtd. (Ranchi, Jharkhand) to supply a machine which is required to be assembled in a power plant in its refinery located in Kutch, Gujarat.
Answer:
Question 3.
What is the place of supply for mobile connection? Can it be the location of supplier?
Answer:
Question 1.
Determine the GST payable @ 18% with respect to each of the following independent services provided by the registered persons:
| Particulars | Gross amount charged (Rs) |
| Fees charged for yoga camp conducted by a charitable trust registered under section 12AA of the Income-tax Act, 1961 | 50,000 |
| Amount charged by business correspondent from banking company for the services provided to the rural branch of a bank with respect to Savings Bank Accounts | 1,00,000 |
| Amount charged by cord blood bank for preservation of stem cells | 5,00,000 |
| Amount charged for service provided by selectors to a recognized sports body | 5,20,000 |
Answer:
Computation of value of taxable supply
| Particulars | (Rs) | GST PAYABLE @ 18% (Rs) |
| Fees charged for yoga camp conducted by a charitable trust registered under section 12AA of the Income-tax Act, 1961 [Note-1] | Nil | Nil |
| Amount charged by business correspondent for the services provided to the rural branch of a bank with respect to Savings Bank Accounts [Note-2] | Nil | Nil |
| Amount charged by cord blood bank for preservation of stem cells [Note-3] | Nil | Nil |
| Service provided by selectors to a recognized sports body [Note-4] | 5,20,000 | 5,20,000 |
Notes:
1. Services by an entity registered under section 12AA of the Income-tax Act, 1961 by way of charitable activities are exempt from GST. The activities relating to advancement of yoga are included in the definition of charitable activities. So, such activities are exempt from GST.
2. Services by business facilitator or a business correspondent to a banking company with respect to accounts in its rural area branch have been exempted from GST.
3. Services provided by cord blood banks by way of preservation of stem cells/any other service in relation to such preservation are exempt from GST.
4. Services provided to a recognized sports body only by an individual as a player, referee, umpire, coach or team manager for participation in a sporting event organized by a recognized sports body are exempt from GST. Thus, services provided by selectors are liable to GST.
Question 2.
Discuss whether the following services are chargeable to GST -
Answer:
Question 3.
Asha Medical Centre, a clinical establishment, offers the following services:
| Sr. No | Particulars | Amount |
| 1 | Reiki healing treatments. Such therapy is not a recognized system of medicine in terms of section 2(h) of Clinical Establishments Act, 2010. Plastic surgeries | 10,00,000 |
| 2 | Plastic surgeries One such surgery was conducted to repair cleft lip of a new born baby. Consideration of 1,00,000 was charged for the same. | 20,00,000 |
| 3 | Air ambulance services to transport critically ill patients from distant locations to Asha Medical Centre. | 1,00,000 |
| 4 | Alternative medical treatments by way of Ayurveda. Such therapy is not a recognized system of medicine in terms of section 2(h) of Clinical Establishments Act, 2010 | 2,50,000 |
Asha Medical Centre also operates a cord blood bank which provides services in relation to preservation of stem cells. You are required to compute the value of supply and GST liability of Asha Medical Centre, if any, in the light of relevant GST provisions. All the services provided by Asha Medical Centre are intra-State supplies. Assume the rates of CGST, SGST and [GST to be 9%, 9% and 18% respectively.]
Answer:
Question 1.
XYZ & Co., a firm of Chartered Accountants, issued invoice for services rendered to Mr. A on 7th September. Determine the time of supply in the following independent cases:
(1) The provision of service was completed on 1st August and payment was received on 28th September.
(2) The provision of service was completed on 14th August and payment was received on 28th September.
(3) Mr. A made the payment on 3rd August. However, provision of service was remaining to be completed at that time.
(4) Mr. A made the payment on 15th September. However, provision of service was remaining to be completed at that time.
Answer:
The time of supply of services is the date of issue of invoice if the same is issued within 30 days from the date of supply of service OR the date of receipt of payment, whichever is earlier [Section 13(2)(a)].
In case the invoice is not issued within 30 days from the date of supply of service, time of supply is the date of provision of service OR the date of receipt of payment, whichever is earlier [Section 13(2)(b)].
In accordance with the aforesaid provisions, the time of supply in the four independent cases will be:
(1) 1st August since the invoice is not issued within 30 days of supply of service.
(2) 7th September since the invoice is issued within 30 days of supply of service and the payment is received after the issuance of invoice.
(3) 3rd August viz., earlier of date of issuance of invoice (7th September) or date of receipt of payment (3rd August)
(4) 7th September viz., earlier of date of issuance of invoice (7th September) or date of receipt of payment (15th September)
Question 2.
Determine the time of supply in the following cases assuming that GST is payable under reverse charge:
| S.No | Date of receipt of goods | Date of payment by the recipient of goods | Date of issue of invoice by the supplier of goods |
| i | July 1 | August 10 | June 29 |
| ii | July 1 | June 25 | June 29 |
| iii | July 1 | Part payment made on June 30 and balance amount paid on July 20 | June 29 |
| iv | July 5 | Payment is entered in the books of account on June 28 and debited in recipient’s bank account on June 30 | June 1 |
| v | July 1 | Payment is entered in the books of account on June 30 and debited in recipient’s bank account on June 26 | June 29 |
| vi | August 1 | August 10 | June 29 |
Answer:
Question 3.
Determine the time of supply from the following particulars:
| 6th May | Booking of convention hall, sum agreed Rs 15000, advance of Rs 3000 received |
| 15th September | Function held in convention hall |
| 27th October | Invoice issued for Rs 15000, indicating balance of Rs 12000 payable |
| 3rd November | Balance payment of Rs 12000 received |
Answer:
Question 1.
Ms. Achintya a registered supplier in Kochi (Kerala State) has provided the following details in respect of her supplies made within Intra-State for the month of March 2021:
| Particulars | Amount(₹) | |
| i | List price of goods supplied intra-state (The items given below from (ii) to (v) have not been adjusted in the list price.) | 3,30,000 |
| ii | Taxes (other than GST)levied on sale of the goods | 12,500 |
| iii | Packing expenses charged separately in the invoice | 10,800 |
| iv | Discount of 1 % on list price of goods was provided (recorded in the invoice of goods) | |
| v | Subsidy received from State Govt, for encouraging women entrepreneurs | 5,000 |
Compute the value of taxable supply and the gross GST liability of Ms. Achintya for the month of March 2021 assuming rate of CGST to be 9% and SGST to be 9%. All the amounts given above are exclusive of GST.
Answer:
Computation of value of taxable supply and gross GST liability of Ms. Achintya (for the month of March, 2021)
| Particulars | Note | Amount(₹) |
| List price of goods | 3,30,000 | |
| Non-GST Taxes levied on sale of the goods | 1 | 12,500 |
| Packing expenses | 2 | 10,800 |
| Subsidy received from State Govt. | 3 | (5,000) |
| Discount of 1% on list price ₹ 3,30,000 | 4 | (3,300) |
| Value of taxable supply | 3,45,000 | |
| CGST@ 9% of ₹ 3,45,000 | 31,050 | |
| SGST@ 9% of ₹ 3,45,000 | 31,050 |
As per section 15 of CGST Act, 2017
Question 2.
Red Pepper Ltd., Delhi, a registered supplier, is manufacturing taxable goods. It provides the following details of taxable inter-State supply made by it during the month of March.
| S.No | Particulars | Amount (Rs) |
| i | List price of taxable goods supplied inter-state (exclusive of taxes) | 15,00,000 |
| ii | Subsidy received from the Central Government for supply of taxable goods to Government School (exclusively related to supply of goods included at S. No. 1) | 2,10,000 |
| iii | Subsidy received from an NGO for supply of taxable goods to an old age home (exclusively related to supply of goods included at S. No. 1) | 50,000 |
| iv | Tax levied by Municipal Authority | 20,000 |
| v | Packing charges | 15,000 |
| vi | Late fee paid by the recipient of supply for delayed payment of consideration (Recipient has agreed to pay Rs 6,000 in lump sum and no additional amount is payable by him) | 6,000 |
The list price of the goods is net of the two subsidies received. However, the other charges/taxes/fee are charged to the customers over and above the list price.
Calculate the total value of taxable supplies made by Red Pepper Ltd. during the month of March. Rate of IGST is 18%.
Answer:
Question 3.
Black and White Pvt. Ltd. has provided the following particulars relating to goods sold by it to Colourful Pvt. Ltd.
| Particulars | Rs |
| List price of the goods (exclusive of taxes and discounts | 50,000 |
| Tax levied by Municipal Authority on the sale of such goods | 5,000 |
| Packing charges (not included in price above) | 1000 |
Black and White Pvt. Ltd. received ₹ 2,000 as a subsidy from a NGO on sale of such goods. The price of ₹ 50,000 of the goods is after considering such subsidy. Black and White Ltd. offers 2% discount on the list price of the goods which is recorded in the invoice for the goods.
Determine the value of taxable supply made by Black and White Pvt. Ltd.
Answer:
Question 1.
X Ltd. is in the business of manufacture of kitchen appliances for domestic market. It is located in Hyderabad. During January 2024, it has acquired the following -
| Taxable value of inward supply ₹ | GST charged by supplier ₹ | |
| Steel from a Mumbai supplier (to be used as raw material in factory) | 3,00,000 | 54,000 |
| Steel rods from a Hyderabad supplier (to be used in factory) | 70,000 | 12,600 |
| 50 LED lamps from a Hyderabad supplier (to be used in office) | 50,000 | 6,000 |
| Machinery for gym from a Vijayawada supplier (gym is used by employees of X Ltd.) | 6,50,000 | 78,000 |
| Group mediclaim insurance policy (taken for employees and their family members) | 3,00,000 | 54,000 |
Calculate the amount of GST payable for January 2024 taking into consideration the following additional information -
|
CGST ₹ |
SGST ₹ |
IGST ₹ |
|
| Invoice issued pertaining to outward supply effected during January 2024 | 80,000 | 80,000 | 600 |
| Advance received : ₹ 1,00,000 (supply of goods to be made during March 2024) (no GST charged) | - | - | - |
Answer:
Computation of GST payable on outward supply for January 2024 -
| CGST ₹ | SGST ₹ | IGST ₹ | |
| Supply of goods effected during January 2024 | 80,000 | 80,000 | 600 |
| Advance received for supply of goods (in case of supply of goods, time of supply does not depend upon date of advance) | - | - | - |
| Advance received for supply of services (in case of supply of services, time of supply is either date of invoice or date of payment, whichever is earlier) (out of advance of ₹ 50,000, CGST is ₹ 50,000 x 9 ÷ 118, similar amount is SGST) | 3,814 | 3,814 | - |
| 83,814 | 83,814 | 600 |
Computation of input tax credit -
| CGST ₹ | SGST ₹ | IGST ₹ | |
| Opening balance on January 1, 2024 | 2,000 | 7,000 | 3,000 |
| Add: Inward supply during January 2024 - | |||
| - Supply of steel from a Mumbai supplier (inter-State supply) | - | - | 54,000 |
| - Supply of steel rods from Hyderabad supplier (intra-State supply) | 6,300 | 6,300 | - |
| - Supply of 40 LED lamps (intra-State supply) (no input credit available for stolen goods) | 2,400 | 2400 | - |
| - Supply of gym machinery (not eligible for input tax credit) | - | - | - |
| - Mediclaim insurance policy (not eligible for input tax credit) | - | - | - |
| Input tax credit available on January 31, 2024 | 10,700 | 15,700 | 57,000 |
Computation of GST payable for January 2024 -
| CGST ₹ | SGST ₹ | IGST ₹ | |
| GST on outward supply (as computed earlier) | 600 | 83,814 | 83,814 |
| Less: IGST on inward supply (balance IGST : ₹ 57,000 - ₹ 600 = ₹ 56,400) | 600 | - | - |
| Balance | Nil | 83,814 | 83,814 |
| Less: IGST on inward supply | - | 56,400 | - |
| Balance | Nil | 27,414 | 83,814 |
| Less: CGST on inward supply | - | 10,700 | - |
| Balance | Nil | 16,714 | 83,814 |
| Less: SGST on inward supply | - | - | 15,700 |
| Balance payable by electronic cash ledger | Nil | 16,714 | 68,114 |
Question 2.
M/s. Diwan & Sons of New Delhi, has placed an order for 250 kg of plastic granules @ ₹ 50 per kg (exclusive of GST) on M/s. Karim & Bros. of Noida, U.P. M/s. Karim & Bros. has agreed to deliver the goods at the warehouse of M/s. Diwan & Sons at New Delhi.
While the order was getting packed at the factory of M/s. Karim & Bros., M/s. Diwan & Sons got an order from Shubhkamna Sales of Hapur, U.P. for 250 kg of plastic granules @ ₹ 60 per kg (exclusive of GST). In order to save on transportation cost, M/s. Diwan & Sons asks M/s. Karim & Bros. to directly deliver the plastic granules to Shubhkamna Sales at its godown located in Hapur. Accordingly, M/s. Karim & Bros. has delivered the plastic granules at the godown of Shubhkamna Sales at Hapur.
Examine the availability of ITC with M/s. Diwan & Sons & M/s. Karim & Bros.
Note: All the parties are registered under GST and rate of GST is 18%.
Answer:
Question 3.
XT Pvt. Ltd., a supplier of goods, pays GST under regular scheme. It has made the following outward taxable supplies in a tax period:
| Particulars | Amount(Rs) |
| Intra-State supply of goods | 8,00,000 |
| Inter-State supply of goods | 3,00,000 |
It has also furnished the following information in respect of purchases made by it in that tax period:
| Particulars | Amount(Rs) |
| Intra-State purchases of goods | 2,00,000 |
| Inter-State purchases of goods | 50,000 |
The company has following ITCs with it at the beginning of the tax period:
| Particulars | Amount(Rs) |
| CGST | 57,000 |
| SGST | Nil |
| IGST | 70,000 |
Note:
Compute the minimum GST, payable in cash, by XT Pvt. Ltd. for the tax period. Make suitable assumptions as required.
Answer:
Question 1.
Pure Oils, Delhi has supplied machine oil and high-speed diesel in the month of April as per the details given in table below. Pure Oils is not yet registered.
| SI. No | Particulars | Amount (Rs)* |
| i | Supply of machine oil in Delhi | 15,00,000 |
| ii | Supply of high speed diesel in Delhi | 10,00,000 |
| iii | Supply of machine oil made in Punjab by Pure Oils from its branch located in Punjab | 10,00,000 |
*excluding GST
(A) Determine whether Pure Oils is liable for registration.
(B) What will be your answer if Pure Oils supplies the high speed diesel in Delhi in the capacity of an agent of Mixed Oils Ltd.?
Answer:
(A) As per section 22 read with Notification No. 10/2019 CT dated 07.03.2019, a supplier is liable to be registered in the State/Union territory from where he makes a taxable supply of goods and/or services, if his aggregate turnover in a financial year exceeds the threshold limit. The threshold limit for a person making exclusive intra-State taxable supplies of goods is as under:-
The threshold limit for a person making exclusive taxable supply of services or supply of both goods and services is as under:-
As per sect ion 2(6), aggregate turnover includes the aggregate value of:
The above is computed on all India basis. Further, the aggregate turnover excludes central tax, State tax, Union territory tax, integrated tax and cess. Moreover, the value of inward supplies on which tax is payable under reverse charge is not taken into account for calculation of ‘aggregate turnover’.
Section 9(2) provides that CGST is not leviable on five petroleum products i.e. petroleum crude, motor spirit (petrol), high speed diesel, natural gas and aviation turbine fuel. As per section 2(47), exempt supply includes non-taxable supply. Thus, supply of high speed diesel in Delhi, being a non-taxable supply, is an exempt supply and is, therefore, includible while computing the aggregate turnover.
In the backdrop of the above-mentioned discussion, the aggregate turnover of Pure Oils for the month of April is computed as under:
| SI.No | Particulars | Amount (Rs) |
| i | Supply of machine oils in Delhi | 15,00,000 |
| ii | Add: Supply of high speed diesel in Delhi | 10,00,000 |
| iii | Add: Supply of machine oil made by Pure Oils from its branch located in Punjab | 10,00,000 |
| Aggregate Turnover | 35,00,000 |
Pure Oils is making exclusive supply of goods and hence the threshold limit for registration would be Rs 40,00,000. Since the aggregate turnover does not exceed Rs 40,00,000, Pure Oils is not liable to be registered.
(B) In case Pure Oils makes the supply in capacity of an agent of Mixed Oils Ltd.:
Section 24 provides that an agent who is engaged in making taxable supplying of goods on behalf of other taxable persons, shall be liable to obtain registration irrespective of the threshold turnover limit. However, in the present case, if Pure Oils supply high speed diesel on behalf of Mixed Oil Ltd. in Delhi as its agent, it shall still not be liable to obtain registration in Delhi since section 24 comes into play only when agent is making taxable supply of goods on behalf of principal whereas in the given case, Pure Oils is supplying non-taxable goods on behalf of Mixed Oils Ltd.
Question 2.
Examine whether the supplier of goods is liable to get registered in the following independent cases:-Examine whether the supplier of goods is liable to get registered in the following independent cases:-
Answer:
Question 3.
Determine the effective date of registration in the following instances:
i. The aggregate turnover of Madhu Ltd., engaged in taxable supply of services in the state of Punjab, exceeded ₹ 20 Lakhs on 25th August, 2018. It applies for registration on 19th September, 2018 and is granted registration certificate on 29th September, 2018.
ii. What will be your answer, if in the above scenario; Madhu Ltd. submits the application for registration on 27th September, 2018 and is granted registration on 5th October, 2018?
Answer:
Question 1.
ABC Cinemas, a registered person engaged in making supply of services by way of admission to exhibition of cinematograph films in multiplex screens was issuing consolidated tax invoice for supplies at the close of each day in terms of section 31(3)(b) of CGST Act, 2017 read with fourth proviso to rule 46 of CGST Rules, 2017.
During the month of October, 2019, the Department raised objection for this practice and asked to issue separate tax invoices for each ticket.
Advise ABC Cinemas for the procedure to be followed in the light of recent notification.
Answer:
The option to issue consolidated tax invoice is not available to a supplier engaged in making supply of services by way of admission to exhibition of cinematograph films in multiplex screens. Thus, ABC Cinemas cannot issue consolidated tax invoice for supplies made by it at the close of each day.
The procedure to be followed by ABC Cinemas is as under:
(a) ABC Cinemas is required to issue an electronic ticket.
(b) The said electronic ticket shall be deemed to be a tax invoice, even if such ticket does not contain the details of the recipient of service but contains the other information as prescribed to be mentioned.
Question 2.
X of Bengaluru supplies goods/services to Y of Mysore. Taxable value of supply is Rs. 5,00,000. X does not have any input tax credit. How GST will be shown in invoice ?
Answer:
Question 3.
Luv & Kush Pvt. Ltd. of Meghalaya engaged in the supply of gifts items and repair services, provides you the following details:-
| S. No | Particulars | Date |
| 1 | Commencement of the business of supplying goods and services | 01st August |
| 2 | Turnover exceeds Rs 10,00,000 on | 15th August |
| 3 | Turnover exceeds Rs 20,00,000 on | 05th September |
| 4 | Application for registration made on | 28th September |
| 5 | Registration certificate granted on | 06th October |
The company seeks your advice as to how it should raise revised tax invoices for supplies made. Is there any specific provision for issuance of revised tax invoices to unregistered customers? Explain.
Answer:
Question 1.
Mr. X, a registered person has caused movement of goods of consignment value exceeding ` 50,000 in relation to a supply and thus, generated e-way bill. However, after generation of e-way bill, he found a mistake in the e-way bill and wants to edit it. You are required to advise Mr. X whether he can do so with the help of relevant provisions?
Answer:
If there is a mistake, incorrect or wrong entry in the e-way bill, then it cannot be edited or corrected. Only option is cancellation of e-way bill within 24 hours of generation and generate a new one with correct details.
Thus, in view of the above-mentioned provisions, Mr. X cannot edit the eway bill. However, he can cancel the e-way bill within 24 hours of generation and generate a new one with correct details.
Question 2.
Explain the meaning of consignment value of goods
Answer:
Question 3.
Mr. Shambhu, a trader registered under GST in Delhi is engaged in wholesale business of toys for kids. Mr. Nandi registered under GST in Patiala, a regular return filer supplies toys in bulk to Mr. Shambhu for selling to end consumers.
Mr. Shambhu paying tax in regular scheme in Delhi, has not filed GSTR-3B for last 2 months. Mr. Nandi wants to generate e-way bill for toys amounting to ₹ 5,00,000 to be supplied to Mr. Shambhu. Also Mr. Narayan from Jammu approached Mr. Shambhu for purchasing toys amounting to ₹ 75,000 for the purpose of return gift on his son’s first birthday party. Shambhu wants to generate an e-way bill in respect of an outward supply of goods to Mr. Narayan.
Examine with reference to the provisions under GST law, whether Mr. Nandi and Mr. Shambhu can generate e-way bill?
Answer:
Question 1.
M/s ABC & Co., have defaulted in filing the return under Section 39 of CGST Act, 2017 i.e. GSTR-3B for the month of March, 2021 within the specified due date . Reason for such delay is attributable to delay in closure of Books for March 2020, which have been finalised during May 2020. The GST Common portal prompted for payment of late fees payable under Section 47 of CGST Act, 2017 for a sum of ₹ 2,000 under CGST and SGST each. Accountant, of M/s ABC & Co., sought your confirmation for payment of such late fees through the balance available in Electronic Credit Ledger for the late fees. Give your guidance in this regard.
Answer:
Section 49(3) of the CGST Act, 2017 provides that the amount available in the electronic cash ledger may be used for making any payment towards tax, interest, penalty, fees or any other amount payable under the provisions of this Act or the rules made there under in prescribed manner.
Further, section 49(4) provides that the amount available in the electronic credit ledger may be used for making any payment towards output tax under this Act or under the Integrated Goods and Services Tax Act in prescribed manner.
Accordingly, as per the combined reading of the above provisions, late fees shall be paid only through electronic cash ledger and not possible through electronic credit ledger. Thus, contention of the accountant of M/s ABC & Co., is not correct and the above amount shown on the common portal has to be deposited in Electronic Cash Ledger under appropriate minor head, through any of the specified modes.
Question 2.
ABC Ltd., have filed their GSTR3B for the month of July, 2021 within the due date prescribed under Section 39 i.e. 20.08.2021. Post filing of the return, the registered person has noticed during September 2021 that tax dues for the month of July, 2021 have been short paid for ₹ 40,000. ABC Ltd., has paid the above shortfall of ₹ 40,000, through GSTR3B of September 2021, filed on 20.10.2021 [payment through Cash ledger - ₹ 30,000 and Credit ledger ₹ 10,000]. Examine the Interest payable under the CGST Act, 2017.
What would be your answer if, GSTR3B for the month of July 2021 has been filed belatedly on 20.10.2021 and the self-assessed tax of ₹ 40,000/- has been paid on 20.10.2021 [payment through electronic cash ledger - ₹ 30,000 and electronic credit ledger ₹ 10,000]
Notes:
Answer:
Question 3.
“Little Smiles”, a photography firm, has commenced providing photoshoot services in Delhi from the beginning of current financial year 2023-2024. It has provided the following details of turnover for the various quarters till December, 2023 :-
| S. No | Quarter | Amount(₹ in lakh) |
| 1 | April,2023-June,2023 | 20 |
| 2 | July,2023-September,2023 | 30 |
| 3 | October,2023-December,2023 | 40 |
You may assume the applicable tax rate as 18%. Little Smiles wishes to pay tax at a lower rate and opts for the composition scheme. You are required to advise whether it can do so and calculate the amount of tax payable for each quarter?
Answer:
Question 1.
Mr. X, is suffering from low-vision (certified as severe disability). He has following incomes details -
| Net Salary | ₹ 45,000 |
| Short term capital gain | ₹ 45,000 |
| Long term capital gain | ₹ 1,50,000 |
Mrs. X, suffering from leprosy (certified as 50% disable), is fully dependant on Mr. X. Compute his total income.
Answer:
Since Mr. X is suffering from severe disability, he can claim deduction u/s 80U of ₹ 1,25,000. Further, Mrs. X is also a person with disability & dependant on Mr. X, therefore, Mr. X can also claim deduction u/s 80DD of ₹ 75,000.
Computation of total income of Mr. X for the A.Y. 2023-24
| Particulars | Details | Amount |
| Salaries | 45,000 | |
| Capital gains | ||
| Short term capital gains | 45,000 | |
| Long term capital gains | 1,50,000 | 1,95,000 |
| Gross Total Income | 2,40,000 | |
| Less: Deduction u/s | ||
| 80DD (Relative with disability) | 75,000 | |
| 80U (Assessee is a person with severe disability) | 1,25,000 | 90,000! |
| Total Income | 1,50,000 | |
| ! Total deduction u/s 80C to 80U cannot exceed GTI excluding LTCG, STCG covered u/s 111A, and casual income like winning from lotteries, etc. | ||
Question 2.
Mr. Ram (38 years) has incurred following expenses:
| Particulars | ₹ |
| Mediclaim Insurance premium paid for himself | 9,000 |
| Mediclaim Insurance premium paid for spouse | 8,000 |
| Mediclaim Insurance premium paid for dependent children | 6,000 |
| Mediclaim Insurance premium paid for father (62 years) | 18,000 |
| Preventive health-check up expenditure for father | 6,000 |
| Preventive health-check up expenditure for himself (paid in cash) | 4,000 |
Compute deduction available to Mr. Ram u/s 80D.
Answer:
Question 3.
Mr. Rahim (55 years) has incurred following expenses:
| Particulars | ₹ |
| Mediclaim Insurance premium paid for himself | 10,000 |
| Mediclaim Insurance premium paid for spouse | 10,000 |
| Mediclaim Insurance premium paid for dependent children | 5,000 |
| Mediclaim Insurance premium paid for mother (76 years) | 9,000 |
| Mediclaim Insurance premium paid for father (82 years) | 39,000 |
| Preventive health-check up expenditure for father | 6,000 |
| Medical expenditure incurred for father | 14,000 |
Compute deduction u/s 80D.
Answer:
Question 1.
Smarajit whose Income consists of salary Income only , files his Return of income for assessment year- 2023-2024 on 02.04.2024. Is the Return o valid return ?
Answer:
Question 2.
A is a chartered accountant in practice and is registered under GST. On a query regarding return filing process by a potential client, A has represented him as a GST practitioner. A is of the view that since he is a qualified chartered accountant with a GST registration in the name of his pr oprietorship firm, he also qualifies as GST practitioner.
Is the understanding of A correct? Discuss.
Answer:
Question 3.
“All taxpayers are required to file GSTR-1 only after the end of the tax period.” Examine the validity of the statement.
Answer:
Ruchika Saboo
An All India Ranker (AIR 7 - CA Finals, AIR 43 - CA Inter), she is one of those teachers who just loved studying as a student. Aims to bring the same drive in her students.
Ruchika Ma'am has been a meritorious student throughout her student life. She is one of those who did not study from exam point of view or out of fear but because of the fact that she JUST LOVED STUDYING. When she says - love what you study, it has a deeper meaning.
She believes - "When you study, you get wise, you obtain knowledge. A knowledge that helps you in real life, in solving problems, finding opportunities. Implement what you study". She has a huge affinity for the Law Subject in particular and always encourages student to - "STUDY FROM THE BARE ACT, MAKE YOUR OWN INTERPRETATIONS". A rare practice that you will find in her video lectures as well.
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He cleared his CA Finals in May 2011 and has been into teaching since. He started teaching CA, CS, 11th, 12th, B.Com, M.Com students in an offline mode until 2016 when Konceptca was launched. One of the pioneers in Online Education, he believes in providing a learning experience which is NEAT, SMOOTH and AFFORDABLE.
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