CA Inter Taxation Important Question - Jan 26
Gear up for the January 2026 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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Direct Tax
Indirect Tax
Other Important Questions Blog :
Question : 1
Mrs. X (42 years) is resident in India for the assessment year 2024-25. For the previous year 2023-24, her income chargeable to tax in India is Rs. 10,30,000. Find out tax liability. Ignore section 115BAC.
Solution:
Question : 2
"Tax rates are not given under the Income-tax Act, 1961 but by the annual Finance Act", discuss.
Solution:
Question : 3
Mr. Varun, an Indian citizen, engaged in consultancy business in India. He shifted to Dubai in the year 2019 to expand his consultancy business overseas. He visits India every year to supervise his office in Delhi. His stay in India for current as well as past years is as follows:
During the P.Y. 2024-25, he earned the following income:
1. Income from consultancy business in India – ₹ 10,00,000
2. Income from consultancy business in Dubai - ₹ 4,00,000
3. Agricultural income from land situated in Kerala - ₹ 70,000
4. Dividend from an Indian company, received in Dubai - ₹ 50,000
5. Interest expenditure on investment in above shares - ₹ 15,000
You are required to:
(a) Determine Mr. Varun’s residential status for A.Y. 2025-26, assuming he is not liable to tax in Dubai.
(b) Compute the Total income of Mr. Varun for P.Y. 2024-25 if he opts out of the default tax regime
Solution:
Question : 4
The following data is given by Xfor the assessment year 2025-26 -
| ₹ | |
| Agricultural income from Nepal (Net profit on sale of crops) | 38,000 |
| Agricultural income from Sikkim | 1,77,000 |
| Share of profit from a firm (out of agricultural income in india) | 2,00,000 |
| Interest from the aforesaid firm | 67,000 |
| Long-term capital gain from sale of agricultural land in Delhi | 94,000 |
| Salary from MP Agricultural University | 11,70,000 |
| Interest on bank fixed deposit | 64,000 |
| Loss from growing and manufacturing coffee in india | (-)2,70,000 |
| life insurance premium (sum assured in 2010: Rs. 4,00,000) on his own life paid out of profit from firm | 70,000 |
| Contribution towards university provident fund. | 20,000 |
Find out the tax liability ofX for the assessment year 2025-26 under the regular tax regime as well as alternative tax regime.
Solution:
Question : 5
X (64 years) is the director of HRD at A Ltd. since May 1987. He gets Rs. 1,10,000 per month as salary (up to September 30, 2024, it was Rs. 1,00,000 per month) and Rs. 3,000 per month as an incentive. He owns a car which is used by him for official and private purposes. The entire expenditure of the car and driver, Rs. 1,95,000, is borne by the employer-company. As per the logbook of the car, 70% of the expenditure is attributable to official use of the car.
The company reimburses Rs. 20,200 on account of personal telephone bills and Rs. 8,000 on account of personal water bills during the financial year 2024-25. The employer-company contributes 12% of salary towards a recognized provident fund (X also makes a matching contribution) and 15% of salary towards an approved superannuation fund.
X retires from the company on February 28, 2025, and gets a gratuity of Rs. 22,00,000 (the company is covered by the Payment of Gratuity Act). After retirement, he gets a fixed pension of Rs. 10,000 per month. Salary and pension become due on the last day of each month and are generally paid on the same day.
Assuming that income of X from other sources is Rs. 3,60,500, find out the net income and tax liability of X for the assessment year 2025-26. X wants to know whether (or not) tax liability can be reduced under the alternative tax regime.
Solution:
Question : 6
X (age: 48 years) is in the service of A Ltd. since 1980. He dies on January 31, 2025. The following information is available –
Basic salary: Rs. 20,000 per month; dearness allowance: Rs. 6,000 per month (40 per cent of which is included for the purpose of determining retirement benefit); transport allowance: Rs. 4,600 per month (out of which only Rs. 600 is used for the journey between office and residence ; the remaining amount is not spent; and entertainment allowance: Rs. 1,000 per month. He contributes 15 per cent of basic salary towards recognised provident fund and A Ltd. also makes a matching contribution. Interest is credited at the rate of 8 per cent. X contributes Rs. 1,00,000 towards PPF on January 5, 2025.
After the death of X, his legal heirs (i.e., Mrs. X and her children) get the following payments from A Ltd. –
X is a doctor. He runs a small clinic near his residence which is discontinued after the death of X. His income (computed on receipt basis) from the clinic for the period April 1, 2024 to January 31, 2025 is Rs. 9,83,000.
After the discontinuation of the clinic, Mrs. X recovers some of the outstanding bills issued by X (amount recovered during February 1, 2025 to March 31, 2025: Rs. 2,93,000). Mrs. X does not have any other income. On March 30, 2025, Mrs. X withdraws Rs. 9,40,000 being the balance in account of X in National Saving Scheme, 1987.
Assuming that salary, allowances and pension become “due” on the last day of the month, find out –
Solution:
Question : 7
Mr. Ravi, a resident in India, owns two house properties – one in Delhi and another in Kanpur. The property in Kanpur is self-occupied by Mr. Ravi; however, the property in Delhi is let out throughout the year. The particulars of the Delhi house for the P.Y. 2024-25 are as under:
Municipal tax paid by Mr. Ravi on 10.6.2024 for Kanpur house is ₹ 3,500. Mr. Ravi had taken a loan from SBI of ₹ 35 lakhs @12% p.a. in April 2021 for purchase of Delhi house. The stamp duty value of this house was ₹ 40 lakhs. Mr. Ravi purchased a plot in Kanpur in May 2021 and the construction of the Kanpur house began in June 2021 and was completed on December 2022. Mr. Ravi took a loan of ₹ 25,00,000 @10% on 1-7-2021 for the construction of this house. No repayment has been done so far for both the loans.
During the P.Y. 2024-25, Mr. Ravi has earned a salary income of ₹ 18,00,000. Compute total income of Mr. Ravi for the A.Y. 2025-26 under default tax regime.
Solution:
Question : 8
X (age : 24 years, resident) has occupied two houses for his residential purposes, particulars of which are as follows:
| House I | House II | |
| Municipal valuation (MV) | 60,000 | 30,000 |
| Fair rent (FR) | 85,000 | 32,000 |
| Standard rent under Rent Control Act (SR) | 65,000 | 36,000 |
| Municipal taxes paid | 10 per cent | 10, per cent |
| Fire insurance | 600 | 360 |
| Interest on capital borrowed for construction of houses (loan was taken in 2017-18 and construction is completed within one year) | 1,40,000 | 1,70,000 |
Income of X from business is Rs. 9,30,000. Determine the taxable income and tax liability for the assessment year 2025-26 on the assumption that he contributes Rs. 1,40,000 towards the public provident fund. X does not want to opt for the alternative tax regime.
Solution:
Question : 9
X (age : 63 years) owns two houses. Relevant details are given below -
| House I | House II | |
| Let out | April 1, 2024 to June 30, 2024 (rent being Rs. 6,000 per month) | July 1, 2024 to March 31, 2025 (rent being Rs. 13,000 per month) |
| Self-occupied | July 1, 2024 to March 31, 2025 | April 1, 2024 to June 30, 2025 |
| Municipal valuation per annum (MV) | 60,000 | 1,00,000 |
| Fair rent per annum (FR) | 70,000 | 95,000 |
| Standard rent per annum (SR) | 66,000 | 1,10,000 |
| Rent of let out period | 18,000 | 1,17,000 |
| Interest on borrowed capital | 2,000 | 40,000 |
| Municipal tax paid | 10,000 | 17,000 |
Assuming that income of X from business is Rs. 12,80,000 (he does not have any other income) and he deposits Rs. 1,50,000 in public provident fund, find out his net income and tax liability for the assessment year 2025-26. Ignore section 115BAC pertaining to alternative tax regime].
Solution:
Question : 10
XY & Co. is a. limited liability partnership. Profit and loss account of the firm for the year ending March 31, 2025 is given below -
| ₹ | ₹ | ||
| Cost of goods sold | 36,00,000 | Sales turnover | 70,00,000 |
| Salary to staff | 7,90,000 | Commission received from trade | 6,00,000 |
| Rent | 7,20,000 | Refund of sales tax penalty | 30,000 |
| Office electricity and water | 60,000 | Refund of income-tax penalty | 16,000 |
| Taxes | 72,000 | Interest on refund of sales tax penalty | 2,000 |
| Car expenses | 2,60,000 | Interest on refund of sales tax penalty | 800 |
| Depreciation | 6,00,000 | Non-compete fees received from a competitor | 12,80,000 |
| Repairs | 75,000 | Other receipts | 1,75,000 |
| Travelling | 2,92,000 | ||
| Entertainment expenditure | 4,17,000 | ||
| Other expenses | 1,92,000 | ||
| Net profit | 20,25,800 | ||
| 91,03,800 | 91,03,800 |
Additional information -
1. Cost of goods sold of ₹ 36,00,000 is calculated as follows -
| ₹ | |
| Opening stock on April 1, 2024 | 4,00,000 |
| Add: Purchases during 2024-25 | 43,10,000 |
| Less: Closing stock on March 31, 2025 | 11,10,000 |
| Cost of goods sold | 36,00,000 |
2. Opening stock is over valued by 25 percent.
3. Purchases include ₹ 40,000 which is paid to a dealer in cash.
4. Purchases also include a payment of ₹ 38,000 to a company in which XY & Co. holds 32 per cent shares. Market value of the goods supplied by the company is ₹ 9,000.
5. Salary to staff includes salary of ₹ 90,000 paid to X, who is working partner. It also includes salary of ₹ 12,000 paid to Y who is a sleeping partner.
6. Rent of ₹ 7,20,000 includes rent of office building of ₹ 2,00,000. This building is owned by X, one of the partners. Market rent of the property is more than ₹ 2,00,000. The entire amount of ₹ 2,00,000 is paid by an account payee cheque to X. However, tax is not deducted at source under section 194-1, as X has paid advance tax on this income.
7. Electricity expenses include a personal electricity bill of Y of ₹ 9,000.
8. Taxes include ₹ 25,000 municipal tax of residential building of Y.
9. Taxes also include advance income-tax of ₹ 15,000. Further, it includes an amount of ₹ 6,000 paid on account of late payment of sales tax.
10. Depreciation is calculated as per section 32, However, the firm has not debited additional depreciation on purchase of furniture of ₹ 50,000 on March 1, 2025.
11. Repair includes a sum of ₹ 3,000 being replacement cost of stabilizer of office air-conditioner.
12. Travelling expenditure includes a personal expenditure of partners of ₹ 80,000 out of which ₹ 50,000 is paid in cash.
13. Entertainment expenditure includes Diwali pooja expenditure of ₹ 10,000.
14. Other expenses include litigation expenditure of ₹ 24,500 pertaining to a house property owned by Mrs. Y and litigation expenditure of ₹ 2,000 for obtaining refund of income-tax penalty.
15. Other expenses also include ₹ 24,000, being advertisement expenditure. This advertisement is published by a newspaper owned by a political party.
16. Non-compete fees is received from a competitor for not operating for a period of 10 years in Andhra Pradesh. In the hands of the payer this amount is disallowed (being a capital expenditure).
17. Other receipts include ₹ 10,000 being compensation received by X from an advocate for providing poor services to X in a personal litigation matter.
Determine the amount of net income and tax liability of XY & Co. The firm has deposited ₹ 40,000 in public provident fund account of Y.
Solution:
Question : 11
X (age : 24 years), a resident individual, furnishes the fallowing information for the assessment year 2025-26:
Profit and Loss Account for the year ending March 31, 2025
| Rs. | Rs. | ||
| Office Expenses | 11,000 | Gross profit | 28,78,000 |
| Telephone | 8,000 | Sundry receipts | 8,000 |
| Salary to staff | 42,000 | ||
| Depreciation | 28,000 | ||
| Travelling expenses | 43,000 | ||
| Loss of cash by an employee through embezzlement | 5,000 | ||
| Amount transferred to special reserve account | 7,500 | ||
| Expenditure on the occasion of Diwali | 7,100 | ||
| Interest and legal expenses | 44,000 | ||
| Sundry expenses | 8,500 | ||
| Net profit | 26,81,900 | ||
| 28,86,000 | 28,86,000 |
Other information :
During the year, X purchases a new plant for office for Rs. 1,22,670 which is eligible for depreciation at the rate of 15 per cent. The plant is installed and put to use on May 15, 2024.
Determine the taxable income and tax liability of X for the assessment year 2025-26 assuming that sundry receipts include Rs. 5,000, being amount of endowment insurance policy received from the Life Insurance Corporation of India at the time of maturity of the policy (i.e., December 5, 2024) [amount of insurance premium last paid on June 5, 2024 : Rs. 400]. Besides, X has RD bank interest of Rs. 44,000 (not given above) and he deposits Rs. 1,30,000 in PPF account of Mrs. X on March 31, 2025. X is also eligible for deduction under section 80G pertaining to contribution of Rs. 2,50,000 towards PM CARES Fund.
Solution:
Question : 12
Profit and loss account of X for the year ending March 31, 2025 is given below -
| ₹ | ₹ | ||
| Cost of goods sold | 77,00,000 | Sales turnover | 1,08,00,000 |
| Depreciation | 8,00,000 | Other receipts | 50,000 |
| Scientific research expenditure | 6,00,000 | ||
| Other expenses | 3,50,000 | ||
| Net profit | 14,00,000 | ||
| 1,08,50,000 | 1,08,50,000 |
Additional information-
1. On April 1, 2025, X owns the following two blocks of assets -
| Plant and machinery | Building | |
| Rate of depreciation | 15% | 10% |
| Nature of assets | Plants A and B | Building I and II |
| ₹ | ₹ | |
| Depreciated value on April 1, 2024 | 7,10,000 | 65,75,000 |
| Money received on sale of Plant A on April 30, 2024 | 6,27,000 | |
| Money received on sale of Plant B on June 10, 2024 | 2,68,000 | |
| Cost of new Plant C purchased on September 6, 2024 | 5,00,000 | |
| Cost of Building III on July 20, 2024 | 19,00,000 |
On June 1, 2024, Building I is destroyed by fire. Insurance company has paid a sum of ₹ 23,00,000 by way of compensation. Out of the compensation of ₹ 23,00,000, new Building III is purchased on July 20, 2024 as given in the table above. All assets acquired during the year are put to use within 7 days from the date of acquisition. However, Plant C could not be used for manufacturing purposes during September 20, 2024 and March 13, 2025 due to non-availability of imported raw material. During June 10, 2024 and September 6, 2024, the first block is empty. One of the staff members of X is of the opinion that when the block is empty and sale consideration exceeds opening balance of the block, the excess amount is taxable as short-term capital gain.
2. Scientific research expenditure includes cost of a plant purchased on March 20, 2025 for ₹ 70,000. This plant will be used for conducting research related to the business of X. Up to March 31, 2025, it is not put to use. Scientific research expenditure also includes contribution to a notified scientific research association of ₹ 10,000. This amount will be utilized by the association for conducting a scientific research which is not related to the business of X.
Find out net income and tax liability of X for the assessment year 2025-26 taking into consideration the following additional information (ignore section 115BAC pertaining to alternative tax regime)-
1. X has deposited a sum of ₹ 78,000 in fixed deposit with Syndicate Bank for the purpose of claiming deduction under section 80C,
2. X has received on his 64th birthday, a gift outside India of US $ 4,000 on December 10, 2024 from a non-resident friend. Telegraphic transfer buying rate of US $ offered by SBI on December 10, 2024 and March 31, 2025 is ₹ 87 and ₹ 83 respectively. The gifted amount is deposited in a foreign bank outside India with the permission of RBI and it will be remitted during November 2025.
Solution:
Question : 13
Mr. Aryan, a resident individual, is working in Nishchay Ltd. and earns salary of ₹ 90,000 per month during P.Y. 2024-25. He holds 20,000 equity shares of Alpha Ltd., an Indian listed company, purchased on 1st January 2016 at ₹ 200 per share. These were acquired through a recognized stock exchange and STT was paid on both acquisition and sale.
In August, 2024, Mr. Aryan transferred a plot in Chandigarh for ₹ 70 lakhs which was acquired by him in May 2016 for ₹ 22 lakhs. He paid brokerage of 1% on transfer.
In November, 2024, Alpha Ltd. decided to buy back 50% of its shares at ₹ 250 per share. Alpha Ltd. bought back proportionate shares of Mr. Aryan. In May 2025, Mr. Aryan acquired a residential house property in Kanpur for ₹ 40 lakhs. Fair Market value of equity shares of Alpha Ltd. as on 31.1.2018 was ₹ 190 per share.
You are required to compute the total income of Mr. Aryan if he is paying tax under default tax regime.
CII for F.Y. 2015-16: 254; F.Y. 2016-17: 264; F.Y. 2017-18: 272; F.Y. 2024-25: 363
Solution:
Question : 14
X (44 years) is a resident individual. His taxable salary income (before standard deduction) is Rs. 9,90,000. He contributes Rs. 1,50,000 to a recognized provident fund. During the previous year 2024-25, he transfers the following assets –
Find out the net income and tax liability of X for the assessment year 2025-26, on the assumption that he has invested Rs. 1,00,000 in the bonds of National Highways Authority of India on November 30, 2024. Is it possible to reduce tax liability under the alternative tax regime under section 115BAC?
Solution:
Question : 15
X (42 years) submits the following information for the previous year ending March 31, 2025 -
1. On October 11, 2024, he gets a commercial property by way of gift from his friendY. Stamp duty value of the property is Rs. 25,00,000. Stamp duty value is challenged by X before the Assessing Officer. The Department Valuation Officer (DVO) has determined Rs. 21,50,000 as value of the property.
2. On October 15, 2024, X purchases a residential house from 7 for Rs. 8,00,000 (stamp duty value is Rs. 14,00,000).
3. On November 1, 2024, Xgets a plot of 30 meter in a village in Andhra Pradesh by way of gift from A (who is a friend of his grandfather). Stamp duty value is Rs. 45,000.
4. On September 1, 2024, X gets a gift of a residential plot from his friend.B without consideration. Stamp duty value is Rs. 14,00,000.
5. On December 1, 2024, X gets a gift of 1,000 sq.ft, commercial space in a mall from C (C is father of Mrs. X). Stamp duty value is Rs. 12,00,000.
Income of X from other sources is bank FD interest of Rs. 6,90,000 and Post Office Savings Bank interest of Rs. 18,500. X does not have any other income. However, he is entitled to claim Rs. 40,000 as deduction under section 80CCC. You are required to determine the following -
1. The amount of income and tax liability of X for the assessment year 2025-26.
2. Determine "cost of acquisition" of the aforesaid properties in the hands of X for the purpose of calculating capital gain at the time of transfer of these properties in future.
3. How capital gain would be calculated in the hands ofY, Z, A, B and C (capital gain need not be calculated)?
Ignore section 115 BAC pertaining to alternative tax regime.
Solution:
Question : 16
X, maintaining books of account on the basis of financial year, holds the following securities on April 1, 2024:
| ₹ 4,30,000 | 7% MP Government loan (date of payment of interest : July 15 every year). |
| ₹ 3,80,000 | 11% debentures (non-listed) of ABC Ltd. (date of payment of interest : June 30 every year) |
Apart from the aforesaid securities, X invests in UP Government Loan, Central Government securities and (listed) debentures of PQR Ltd. and receives on December 1, 2024, ₹ 36,000, ₹ 90,000 and ₹ 1,08,000 (net of tax deducted — rate of tax 10%), respectively, as interest. His business income is ₹ 24,32,000. He pays ₹ 6,000 as commission to his bank for collecting interest on securities. Determine the taxable income of X for the assessment year 2025-26.
Solution:
Question : 17
Mr. Gagan, a Classical singer of Bengal and his wife Mrs. Rashmi furnish the following information relating to the A.Y. 2025-26.
| Particulars | Amount (₹) |
| 1. Income of Mr. Gagan – Professional classical singer (computed) | 5,65,000 |
| 2. Salary income of Mrs. Rashmi (Computed) | 3,80,000 |
| 3. Loan received by Mrs. Rashmi from XYZ Pvt. Ltd. (Mrs. Rashmi holds 35% shares of the Co. The Co. has incurred losses since its inception 2 years back) |
2,50,000 |
| 4. Income of their minor son Gaurav from winning singing reality show on T.V. | 2,50,000 |
| 5. Cash gift received by Gaurav from friend of Mr. Gagan on winning the show | 21,000 |
| 6. Interest income received by minor married daughter Kavita from deposit with XYZ Pvt. Ltd. | 40,000 |
Compute the total taxable income of Mr. Gagan & Mrs. Rashmi for the A.Y. 2025-26 if they want to pay tax under default regime under section 115BAC.
Solution:
Question : 18
X gifts ₹ 10,00,000 to his wife on April 1, 2023 which she deposits in a bank (interest rate : 6 per cent). On January 1, 2025, Mrs. X withdraws the money and gifts it to her son's wife. She claims that the interest which has accrued to the daughter-in-law from January 1, 2025 to March 31, 2025 on investment made by her is not assessable in her hands but in the hands of X. Is this correct? What would be the position, if Mrs. X had gifted the money to her minor son, instead of the daughter-in-law?
Solution:
Question : 19
X, an individual, is engaged in the business of money-lending. On April 1, 2024, he advances ₹ 10,00,000 to his HUF at the market rate of interest of 12 per cent per annum. During the previous year 2024-25, 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 ?
Solution:
Question : 20
X submits the following information for the year ending March 31, 2025 -
1. Income of Business A (non-speculative) : ₹ (-)5,00,000
2. Income of Business B (speculative) : ₹ 6,00,000.
3. Income from house property : ₹ 6,10,000.
4. Winnings from lottery : ₹ 4,30,000.
5. Deduction available under section 80C : ₹ 1,45,000.
6. Donation to political party : ₹ 10,000.
Determine the net income and tax liability of X for the assessment year 2025-26 taking into consideration the following additional information (ignore section 115BAC pertaining to alternative tax regime) -
1. Brought forward loss of Business B (speculative) is ₹ 5,80,000. This loss pertains to the assessment year 2021-22.
2. Brought forward house property loss of the assessment year 2014-15 is ₹ 75,000.
3. X wants to set off loss of Business A of the current year against winnings from lotteries and the remaining loss against house property income. This strategy X wants to adopt to avail set off of brought forward speculative loss against speculative income of the current year.
Solution:
Question : 21
X is a Tamil Nadu Government employee posted at Chennai. He had joined the Government on February 1, 2021. For the previous year 2024-25, he gives the following information -
1. Basic salary : ₹ 3,27,000
2. Allowances from Government chargeable to tax : ₹ 2,20,000.
3. Government's contribution towards NPS : ₹ 32,700.
4. Contribution of X towards NPS : ₹ 90,000.
5. Gift received by X's minor son on his birthday from friends : ₹ 45,000 (X's minor son has not received any other gift during the previous year 2024-25).
6. Gift received by X's minor daughter on her birthday from friends : ₹ 65,000 (no other gift is received by her during the previous year 2024-25).
7. During 2017-18, X gifted a sum of ₹ 4,00,000 to Mrs. X. She started a business by introducing ₹ 4,00,000 as her capital. On April 1, 2024, her total investment in business is ₹ 9,00,000. During the previous year 2024-25, her income from the sole proprietor business is ₹ (-)82,500
8. X deposits ₹, 90,000 in SBI fixed deposit account for the purpose of availing deduction under section 80C.
9. X contributes ₹ 30,000 in an approved annuity plan of LIC for the purpose of claiming deduction under section 80CCC.
10. X has taken a loan for the education of his nephew who is dependent upon him. The loan has taken for the purpose of pursuing MBBS course. Interest on such loan for the year 2023-24 is ₹ 34,000. However, he has actually paid only ₹ 17,000. Besides, he has paid ₹ 72,000 on account of repayment of loan.
11. He has taken another loan for the education of his major son. The loan is taken from pursuing B.Sc. course from Gujarat University. Amount of interest for the previous year 2024-25 is ₹ 10,000. However, he has paid ₹ 15,000 on account of interest (i.e., ₹ 10,000 for the current year and ₹ 5,000 for earlier year).
Determine the amount of net income and tax liability of X for the assessment year 2025-26. Also find out net income of other family members of X.
Solution:
Question : 22
X is a sole proprietor. His annual turnover for the financial years 2024-25 and 2025-26 is ₹ 30,00,000 and ₹ 10,05,00,000 respectively. Every year he pays (in the month of March) annual consultancy fees of ₹ 1,20,000 to a consultant. This amount is before GST and after GST it comes to ₹ 1,41,600 (i.e., ₹ 1,20,000 + GST at the rate of 18 per cent of ₹ 1,20,000). Find out TDS liability in respect of payment made during the financial years 2025-26 and 2026-27.
Solution:
Question : 23
X Ltd. makes the following payments during the financial year 2025-26 -
1. Payment to A, a resident transport contractor (who owns 8 goods carriages) : ₹ 11,50,000 (PAN is intimated by A to X Ltd.).
2. Payment to B, a. resident transport contractor : ₹ 1,00,000 (PAN is not intimated by B or B does not have PAN).
3. Payment to C, a resident catering contractor : ₹ 21,50,000 (PAN is intimated by C to X Ltd.).
4. Payment to D, a resident catering contractor : ₹ 2,00,000 (PAN is not intimated by D or D does not have PAN).
Determine the amount of tax-deductible under section 194C in these cases.
Solution:
Question : 24
In each of the following independent situations, you are required to examine whether these persons are required to file their return of income or loss for A.Y.2025-26 if their total income for the P.Y. 2024-25 do not exceed the basic exemption limit:
(i) The turnover of Mr. Ankit’s business is ₹ 65 lakhs during the P.Y. 2024-25.
(ii) Mr. Suyash has incurred a total expenditure of ₹ 90,000 towards consumption of electricity during the P.Y. 2024-25.
Solution:
Question : 25
X (32 years) is a salaried employee, employed by A Ltd. as finance advisor. His income and tax incentives for the previous year 2024-25 are as follows –
| Particulars | Rs. |
| Basic salary | 40,00,000 |
| House rent allowance (out of Rs. 90,000, Rs. 60,000 is exempt under section 10(13A)) | 90,000 |
| Perquisite in respect of car and driver (for official and private use) (expenditure incurred by A Ltd.: Rs. 2,10,000) | 2,10,000 |
| Conveyance allowance/traveling for official use (amount of allowance: Rs. 60,000, expenditure incurred by X for official purposes: Rs. 59,000) | 60,000 |
| Prepaid food vouchers (Rs. 50 x 300 working days) | 15,000 |
| Leave travel concession or assistance (LTC or LTA) (out of Rs. 1,95,000, Rs. 1,80,000 is exempt under section 10(5)) | 1,95,000 |
| NPS contribution by A Ltd. (12% of basic salary) | 4,80,000 |
| Payment of professional tax | 2,000 |
| Income from Property A (self-occupied) | (–) 1,05,000 |
| Income from Property B (let out) | 60,000 |
| Income from Property C (let out) | (–) 80,000 |
| Savings bank account interest received by minor son of X | 800 |
| Savings bank account interest received by minor daughter of X | 2,000 |
| Interest on savings bank account of X | 28,000 |
| Interest on public provident fund credited on March 31, 2025 | 3,55,000 |
| Interest credited to Sukanya Samriddhi Account in the name of minor daughter | 29,000 |
| Deductions under sections 80D, 80E, 80EEA, 80EEB and 80G | 3,14,400 |
| NPS contribution by X | 4,00,000 |
| PPF contribution by X | 20,000 |
X wants to know whether he should opt for regular tax regime from the assessment year 2025-26.
Solution:
Question : 26
Mr. Brajesh has set up a unit in SEZ in May, 2017. The total turnover, export turnover and net profit for the year ended 31.3.2025 were ₹ 120 lakhs, ₹ 45 lakhs and ₹ 7.50 lakhs respectively. Out of the export turnover of ₹ 45 lakhs, only ₹ 40 lakhs has been received in convertible foreign exchange by 30.9.2025.
During the P.Y. 2024-25, Mr. Brajesh has commenced a business of warehousing facility for storage of food grain. The net profit of this business as per profit & loss account is ₹ 8,50,000. The following items are debited to Profit & Loss Account:
The following items are credited to Profit & Loss account:
Mr. Brajesh is also a working partner in M/s Neelkamal Associates, a partnership firm. Mr. Brajesh has contributed ₹ 15 lakhs as capital in the firm. Further, Partnership deed authorises payment of interest to partners @ 13% and also payment of remuneration to partners @ ₹ 20,000 per month. Whole of the remuneration is allowable as deduction to M/s Neelkamal Associates.
Mr. Brajesh has also paid the premium of ₹ 60,000 on life insurance policy in the name of her married daughter. The policy was taken on 1.10.2018 and the sum assured being ₹ 5,00,000.
Compute the total income and tax payable by Mr. Brajesh for the A.Y. 2025-26 under default tax regime and normal provisions of the Act.
Solution:
Question : 27
Mr. Amit, aged 45 years, a resident Indian has provided you the following information for the previous year ended 31.03.2024
(i) He received royalty of ₹ 2,88,000 from abroad for a book authored by him in the nature of artistic. The rate of royalty as 18% of value of books and expenditure made for earning this royalty was ₹ 40,000. The amount remitted to India till 30th September, 2024 is ₹ 2,30,000.
(ii) He owns an industrial undertaking established in a SEZ and which had commenced operation during the financial year 2021-22. Total turnover of the undertaking was ₹ 200 lakhs, which includes ₹140 lakhs from export turnover which have been received in India in convertible foreign exchange on or before 30.9.2024. Profit from this industry is ₹ 20 lakhs.
(iii) He was holding 30% equity shares in TSP (P) Ltd., an Indian company. Company allotted shares to shareholders on 1st October, 2020. The paid up share capital of company is ₹ 20 lakh divided into 2 lakh shares of ₹ 10 each which were issued at a premium of ₹ 30 each.
He sold all these shares on 30th April, 2023 for ₹ 60 per share. Equity shares of TSP (P) Ltd. are listed on National Stock Exchange and Mr. Amit has paid STT both at the time of acquisition and transfer of such shares. FMV on 31.1.2018 was ₹ 50 per share.
(iv) Received ₹ 30,000 as savings bank deposits.
(v) He occupies ground floor of his residential building and has let out first floor for residential use at an annual rent of ₹ 2,28,000. He has paid municipal taxes of ₹ 60,000 for the current financial year. Both floor are of equal size.
(vi) He paid insurance premium of ₹ 39,000 on life insurance policy of son, who is not dependent on him and ₹ 48,000 on life insurance policy of his dependent father.
(vii) He paid tuition fees of ₹ 42,000 for his three children to a school. The fees being ₹ 14,000 p.a. per child.
You are required to compute the total income and tax liability of Mr. Amit under normal provisions for the A.Y. 2024-25
Solution:
Question : 28
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)?
Solution:
Question : 29
Which of the following taxes is/are not subsumed in GST?
(i) Service tax
(ii) Customs duty
(iii) Luxury tax
(iv) Tax on lottery, betting and gambling
(v) Entertainment tax levied by local bodies
Solution:
Question : 30
A Inc is an American car manufacturing company. It has a branch in Hyderabad. X is HRD head of Hyderabad branch. For the year ending March 31, 2025, CTC of X (as per employment agreement) is as follows -
| ₹ | |
| Salary (₹ 3,00,000 per month) | 36,00,000 |
| Residential accommodation (cost to company : ₹ 6,00,000) | 6,00,000 |
| Employer's contribution towards provident fund | 5,40,000 |
| Conveyance facility (reimbursement up to ₹ 40,000 per month) | 4,80,000 |
| Cost to company (CTC) | 52,20,000 |
A Inc. maintains a gym near Hyderabad office. Employees (and their family members) of the Hyderabad office can use gym facility. Cost to the company for maintaining this facility in Hyderabad is approximately ₹ 27,00,000 per year. On January 1, 2025, A Inc. gifts a new car to X (price tag : ₹ 12,65,000 before GST). Gym facility and gift of car are not covered by CTC as well as employment agreement.
X owns a commercial flat in Hyderabad. It is given on rent to A Inc. (monthly rent being ₹ 1,00,000).
Discuss whether GST is applicable. Determine the amount of GST liability for the month of January 2025 (assume that GST rate is 28 per cent for car and 18 per cent for others) -
Solution:
Question : 31
Discuss whether GST is applicable in the following transactions -
Solution:
Question : 32
A house is given on rent (to a person who is not registered under GST), one floor of which is to be used as residence and the other for housing a printing press. Discuss whether GST is applicable.
Solution:
Question : 33
Regal Foundation of Commerce organized a business summit in Surat, Gujarat, in which all the startups were invited to pitch their business ideas. Pandit Jewels Pvt Ltd., registered in the State of Maharashtra, sponsored the summit and paid a sponsorship fee of ₹ 1,50,000 to Regal Foundation of Commerce.
You are required to determine, who is the person liable to pay tax if:
(I) Regal Foundation of Commerce is a body corporate.
(II) Regal Foundation of Commerce is not a body corporate.
Solution:
Question : 34
Determine the place of supply in the following independent cases:-
(i) Mr. Motilal, a Chartered Accountant in Gurugram, Haryana, (registered in Haryana) provides consultancy services to his client Mr. Manoharlal who is a resident of New Delhi but is not registered under GST. The address of Mr. Manoharlal is recorded in the records of Mr. Motilal.
(ii) Vinchi Pvt. Ltd. (New Delhi) has leased its machine (cost ₹ 8,00,000) to Mishti Pvt. Ltd. (Noida, Uttar Pradesh) for production of goods on a monthly rent of ₹ 35,000. After 12 months Mishti Pvt. Ltd. requested Vinchi Pvt. Ltd. to sell the machine to it for ₹ 5,00,000, which is agreed to by Vinchi Pvt. Ltd.
Solution:
Question : 35
A Ltd. is engaged in fertilizer manufacturing in Karnataka. It has GST registration from Karnataka (A Ltd. does not have registration in any other State/Union Territory). X is head of finance department of the company. On January 10, 2025, X goes to Mumbai to attend a 3 day conference on international finance organised by Harvard Business School at Nariman Point. For this purpose, he incurs the following expenditure -
These expenses are paid by cheque by A Ltd. Recipient of supply is A Ltd. (GSTIN of A Ltd. is given on tax invoices).
What is the place of supply in these cases ?
Solution:
Question : 36
Examine whether GST is exempted in the following independent cases of supply of services:
(i) Apex Facilities provided civil maintenance services for the upkeep of the Municipal Corporation of Delhi (MCD) head office building. Value of supply of goods constitute 20% while providing such maintenance services.
(ii) M/s Talreja & Talreja, a firm of advocates, provides legal services to the State Government for representation in the High Court.
(iii) BLF Mall, Noida provides services by way of vehicle parking to general public in the basement of mall.
(iv) Service provided by a private transport operator to Scholar Boys Higher Secondary School by way of transportation of students to and from the school.
Solution:
Question : 37
The following data is noted from the records of X Ltd. (a computer consultant company) and Y Ltd. (a garment retailer, recipient of services)-
What is the time of supply ?
Solution:
Question : 38
X of Mysore supplies 1,000 kg. of rubber bushes to Y of Amritsar. Invoice value inclusive of GST is Rs. 1,02,400. Applicable GST rate is 28 per cent.
(i) What is the value of taxable supply and amount of GST ?
(ii) Suppose in the above problem, recipient is Y of Bengaluru.
Solution:
Question : 39
Mascot Motors Private Limited (hereinafter referred as MMPL), a dealer of motor vehicles, registered in Udaipur, Rajasthan, has given an exworks contract to M/s Ganesh Traders, registered in Ahmedabad, Gujarat for manufacturing 10 units of Pick-Up vans.
M/s Ganesh Traders manufactured the vans and handed them over to transporter on behalf of MMPL on 29th April and delivery on its part is complete at it’s factory gate in Ahmedabad.
Further, it raised the invoice for all ten Pick-Up vans on same day. MMPL has recorded the invoice in it’s books on the same day.
Price of the vans (ex-factory) was ₹ 10 lakh each (excluding GST @ 28%).
However, the vans were physically received by MMPL at its showroom in Udaipur, Rajasthan on 2nd May and payment was also made on the same day. After the payment, two Vans got damaged completely in a fire in the showroom in first week of May and therefore, they were written off in the books in the month of receipt by MMPL.
Discuss the availability of ITC on pick-up vans to MMPL with reference to the provisions under GST law. In which month, MMPL is eligible to avail ITC on the purchase of vans and how much ITC is available in respect of the vans?
Solution:
Question : 40
The aggregate turnover of Action Services Ltd., Delhi, exceeded ₹ 20 lakh on 12th August. He applied for registration on 3rd September and was granted the registration certificate on 6th September. You are required to advice Action Services Ltd. as to what is the effective date of registration in its case. It has also sought your advice regarding period for issuance of Revised Tax Invoices.
Solution:
Question : 41
X owns a departmental store in Hapur. Grocery items and cosmetic goods of all brands are available in his store. The following information is noted from his records pertaining to December 8, 2024-
| Items | Purchaser | Amount charged in ₹ (before GST) |
| Bath oil | Y (unregistered dealer) | 180 |
| Hair cream | Z Ltd. (registered dealer) | 10,500 |
| Shampoo | A (unregistered dealer) | 1,400 |
| Eau-de-cologne | B (unregistered dealer) | 250 |
| Shaving cream | C (unregistered dealer) | 110 |
| Nail polish | D (unregistered dealer) | 190 |
| Face powder | E (registered dealer) | 95 |
| Toothpaste | F (registered dealer under Composition Scheme) | 120 |
| Nail polish remover | G (unregistered dealer) | 200 |
C wants tax invoice. No other recipient of goods is interested in taking tax invoice. What is the requirement of issue of tax invoice in this case ?
Solution:
Question : 42
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?
Solution:
Question : 43
Mr. Sagar Chaturvedi, registered under GST, is engaged in supplying multiple services (as discussed in the table below) in Mumbai, Maharashtra. He has furnished the following information with respect to the services supplied and received by him, during the month of April:
| S. No. | Particulars | Amount (₹) |
| (i) | Services of transportation of students provided to Sanskar College offering the degree courses recognized by law. | 90,000 |
| (ii) | Outward supply of services of milling of paddy into rice | 1,80,000 |
| (iii) | Received the services by way of transportation of goods by road from Sindhu Transporters, an unregistered Goods Transport Agency of Nagpur, Maharashtra. | 2,00,000 |
| (iv) | Organized a business exhibition in Gujarat for Ramesh Industries, registered in Delhi. | 20,00,000 |
| (v) | Provided training to employees of Aashiyana Interiors, a proprietorship concern of Rajasthan, which was not registered under GST | 1,00,000 |
| (vi) | Recovery agent’s services provided to a car dealer | 30,000 |
| (vii) | Legal services availed for official purpose from an individual advocate located in Gujarat | 1,60,000 |
| (viii) | Sponsored his business in a Cricket Match, organized by Mumbai Cricket Association, Maharashtra wherein he paid an amount of ₹ 1,50,000 to the association. |
Note:
(i) Rates of CGST, SGST and IGST are 9%, 9% and 18% respectively for both inward and outward supply of services except the service of transportation of goods by GTA, on which the rates of CGST, SGST and IGST are 2.5%, 2.5% and 5% respectively.
(ii) All inward and outward supplies are exclusive of taxes, wherever applicable.
(iii) All the conditions necessary for availing the ITC have been fulfilled.
(iv) The turnover of Sagar was ` 1.8 crore in the previous financial year.
(v) All the above mentioned supplies are intra-state, wherever the information for determining the place of supply is not provided.
Compute the net GST payable in cash, by Sagar for the month of April.
Solution:
Question : 44
X completed his studies on 1-04-2022 and was immediately employed by X Ltd. on the following terms:
| Basic Salary | ₹ 20,000 p.m. |
| DA | ₹ 5,000 p.m. (forming a part of retirement benefit) |
| Bonus | ₹ 50,000 |
During the year, his employer contributed ₹ 33,000 to the pension scheme being notified u/s 80CCD of the Income Tax Act, 1961. X also contributed similar amount. His income from house property is ₹ 50,000. During the year he contributed ₹ 15,000 to pension plan of LIC, to PPF ₹ 1,00,000 and paid LIC premium of ₹ 16,000 (Policy value ₹ 1,20,000). Compute his total income.
Solution:
Question : 45
Mehul Enterprises, registered under GST in Uttar Pradesh and a monthly return filer, is engaged in making taxable supplies of goods and services. It furnished the details of its outward supplies in Form GSTR-1 for the month of January on 11th February.
However, on 14th February, the accountant of Mehul Enterprises noticed that one invoice issued to Vaishali Traders (registered in Gujarat) for supply of goods of value of ₹ 1,00,000 (taxable @ 18%) pertaining to January has been inadvertently missed to be declared in the Form GSTR-1 furnished for January. He has approached you for the advice before furnishing Form GSTR-3B for the said month. You are required to briefly discuss whether Mehul Enterprises can amend the details of outward supply furnished in Form GSTR-1 of January. If such amendment is permitted and details of Form GSTR-1 are amended, whether the details of said invoice will be available in Form GSTR-2B of Vaishali Traders for the month of January.
Solution:
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.
She specializes in theory subjects - Law and Auditing.
Yashvardhan Saboo
A Story teller, passionate for simplifying complexities, techie. Perfectionist by heart, he is the founder of - Konceptca.
Yash Sir (As students call him fondly) is not a teacher per se. He is a story teller who specializes in simplifying things, connecting the dots and building a story behind everything he teaches. A firm believer of Real Teaching, according to him - "Real Teaching is not teaching standard methods but giving the power to students to develop his own methods".
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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