Maximum Marks: 100
Time: 3 Hours
Instructions:
- Attempt all questions.
- Show detailed calculations and cite relevant sections of the Income Tax Act, GST Act, Customs Act, and related rules.
- Use proper tax planning and compliance reasoning where required.
Section A: Theory & Conceptual Questions (20 Marks)
Answer any 4 questions. Each carries 5 marks.
- Discuss the residential status and scope of total income of an individual under the Income Tax Act, 1961.
- Explain the tax implications of capital gains under Sections 45 and 54 of the Income Tax Act, 1961.
- Explain the GST input tax credit mechanism and conditions under which ITC is blocked.
- Describe the tax audit provisions under Section 44AB, including applicability and reporting requirements.
- Discuss the concepts of levy, collection, and customs duty under the Customs Act, 1962.
Section B: Practical / Numerical Problems (50 Marks)
Answer any 5 questions. Each carries 10 marks.
- Income Tax Computation: Mr. A, aged 45, has the following income for FY 2025-26:
- Salary: ₹ 12,00,000
- Short-term capital gain on equity shares: ₹ 2,00,000
- Long-term capital gain on property: ₹ 5,00,000
- Interest on fixed deposits: ₹ 1,50,000
- GST Problem: ABC Ltd. sold goods worth ₹ 10,00,000 (CGST 9%, SGST 9%). Freight ₹ 50,000 (inter-state supply, IGST 18%) paid by supplier and charged to ABC Ltd. Required: Compute GST liability and ITC available.
- Income Tax – Set-off & Carry Forward: Mr. B has the following:
- Business loss: ₹ 4,00,000
- Short-term capital gain (STCG): ₹ 2,50,000
- Long-term capital loss (LTCL) brought forward: ₹ 1,00,000
- Customs Duty Computation: Import of machinery: CIF value = ₹ 50,00,000
- Basic Customs Duty (BCD) = 10%
- IGST = 18%
- TDS / Tax Deduction at Source: XYZ Ltd. paid:
- Rent to a resident: ₹ 2,50,000 (Sec 194I, TDS 10%)
- Professional fees to CA: ₹ 1,20,000 (Sec 194J, TDS 10%)
Section C: Case Study / Analytical Questions (30 Marks)
Answer any 2 questions. Each carries 15 marks.
- Direct Tax Planning Case: Mr. C sells a residential property for ₹ 75,00,000. Cost of acquisition = ₹ 45,00,000; cost of improvement = ₹ 5,00,000; invested ₹ 20,00,000 in a new house within prescribed period. Required:
a) Compute long-term capital gain (LTCG).
b) Discuss exemption under Section 54.
c) Suggest tax planning strategies. - GST Case Study: A manufacturer of electronics exports goods worth ₹ 30,00,000 under LUT (Letter of Undertaking). Input GST paid on purchases = ₹ 4,50,000. Required:
a) Compute GST liability
b) Explain ITC refund mechanism for export under LUT
c) Compliance requirements under IGST Act - Income Tax & TDS Compliance Case: A company paid:
- Salary ₹ 25,00,000
- Bonus ₹ 5,00,000
- Commission to director ₹ 3,00,000
a) Compute TDS liability under applicable sections
b) Suggest due dates for filing TDS returns
c) Penalties for late deduction or non-deposit of TDS
Solutions – CA Final: Direct & Indirect Tax Laws (100 Marks)
Section A: Theory & Conceptual Questions (20 Marks)
- Residential Status & Scope of Total Income (Income Tax Act, 1961)
- Resident: Stays ≥ 182 days or satisfies other conditions (Sec 6)
- Resident & Ordinarily Resident (ROR): Worldwide income taxable in India
- Resident but Not Ordinarily Resident (RNOR): Only India-sourced income taxable
- Non-Resident: Only India-sourced income taxable
- Total Income: Sum of income under 5 heads – Salary, House Property, Business/Profession, Capital Gains, Other Sources
- Capital Gains (Sec 45 & 54)
- Short-term capital gain (STCG): Asset held ≤ 36 months (listed securities 12 months) → taxed at 15% (STCG on equity shares)
- Long-term capital gain (LTCG): Asset held > 36 months → taxed 20% with indexation
- Exemption Sec 54: LTCG from sale of residential property reinvested in new residential property → exempt proportionately
- GST Input Tax Credit (Sec 16, 17 CGST Act)
- Eligible ITC: On goods/services used for business, valid tax invoice
- Blocked ITC (Sec 17(5)) Examples: Personal use, motor vehicles (except specified), exempt supplies
- Conditions: Must have received goods/services, tax paid, return filed
- Tax Audit (Sec 44AB)
- Applicability:
- Turnover > ₹ 1 crore (business) or ₹ 50 lakh (profession)
- Reporting: Form 3CD, due 30th September following FY
- Penalty: ₹ 1,50,000 or ₹ 5,000/day for late filing
- Applicability:
- Customs Duty (Customs Act, 1962)
- Levy: Basic customs duty, IGST, CVD, anti-dumping duty
- Collection: At import time
- Exemptions: Govt notified goods/services
- Penalties: Confiscation, fines, prosecution for violation
Section B: Practical / Numerical Problems (50 Marks)
Q1: Income Tax Computation (New Regime FY 2025-26)
| Particulars | Amount (₹) | Notes |
|---|---|---|
| Salary | 12,00,000 | Fully taxable |
| Interest on FDs | 1,50,000 | Fully taxable |
| STCG on equity shares | 2,00,000 | 15% (Sec 111A) |
| LTCG on property | 5,00,000 | Exemption under Sec 54 → ₹ 20,00,000 invested; exceeds gain → full exempt |
Computation:
- Total Income: 12,00,000 + 1,50,000 + 2,00,000 = ₹ 15,50,000
- Tax on STCG: 2,00,000 × 15% = ₹ 30,000
- Total Tax: Calculate using slab rates for ₹ 13,50,000 (excluding LTCG exempt)
Income Tax (New Regime slabs FY 2025-26):
- ₹ 0–3,00,000 → Nil
- ₹ 3,00,001–6,00,000 → 5% → 3,00,000 × 5% = 15,000
- ₹ 6,00,001–9,00,000 → 10% → 3,00,000 × 10% = 30,000
- ₹ 9,00,001–12,00,000 → 15% → 3,00,000 × 15% = 45,000
- ₹ 12,00,001–15,00,000 → 20% → 3,50,000 × 20% = 70,000
Total Tax: 15,000 + 30,000 + 45,000 + 70,000 + 30,000(STCG) = ₹ 1,90,000
Q2: GST Computation
| Particulars | Amount (₹) | GST | ITC |
|---|---|---|---|
| Sale of goods | 10,00,000 | CGST 9%, SGST 9% = 1,80,000 | ITC on inputs (assume 50,000) |
| Freight (inter-state) | 50,000 | IGST 18% = 9,000 | Eligible ITC |
- Output GST: 1,80,000 + 9,000 = ₹ 1,89,000
- ITC Available: 50,000 + 9,000 = 59,000
- Net GST Payable: 1,89,000 – 59,000 = ₹ 1,30,000
Q3: Set-off & Carry Forward
- Business Loss = ₹ 4,00,000
- STCG = ₹ 2,50,000 → cannot set off against STCG exempt for equities → if normal business loss → can set off
- LTC Loss B/F = ₹ 1,00,000 → can be set off against LTCG
Computation:
- Adjust LTC Loss: 0 STCG (equity, taxed separately)
- Business loss set off = ₹ 4,00,000 – 0 = 4,00,000 B/F
Taxable Income: ₹ 2,50,000 (STCG taxed at 15%)
Q4: Customs Duty Computation
- CIF Value = ₹ 50,00,000
- BCD 10% = 5,00,000
- Subtotal = 55,00,000
- IGST 18% on (CIF + BCD) = 55,00,000 × 18% = 9,90,000
- Total Customs Duty: 5,00,000 + 9,90,000 = ₹ 14,90,000
Q5: TDS Computation
- Rent (Sec 194I) = ₹ 2,50,000 × 10% = ₹ 25,000
- Professional Fees (Sec 194J) = ₹ 1,20,000 × 10% = ₹ 12,000
Total TDS: ₹ 37,000
- Due Date for Deposit: 7th of next month
Section C: Case Study / Analytical Questions (30 Marks)
Q1: LTCG – Section 54
- Sale Price = ₹ 75,00,000
- Cost of Acquisition = ₹ 45,00,000
- Improvement = ₹ 5,00,000
- LTCG = 75 – (45 + 5) = ₹ 25,00,000
- Invested in new house = ₹ 20,00,000 → Exemption under Sec 54 = ₹ 20,00,000
- Taxable LTCG: 25,00,000 – 20,00,000 = ₹ 5,00,000
- Planning Strategy: Invest full gain in new property or bonds under Sec 54EC → exempt LTCG
Q2: GST – Export under LUT
- Export Sale = ₹ 30,00,000
- Export under LUT → No IGST payable
- Input GST paid = ₹ 4,50,000 → ITC refundable
- Compliance: File LUT with GSTN, maintain records of export invoices, claim refund in Form GSTR-3B/GSTR-1
Q3: TDS – Salary & Commission
| Payment | Section | TDS Rate | TDS Amount |
|---|---|---|---|
| Salary | 192 | As per slab | Calculate per slab on total salary ₹ 30,00,000 |
| Commission to Director | 194J | 10% | 3,00,000 × 10% = 30,000 |
- Due Dates: 7th of next month for deduction, 30th/31st July for quarterly deposit
- Penalty for Late Deduction: ₹ 1,000/day or interest 1.5%/month under Sec 201