Top 50 Questions

CA Inter (Taxation)
)

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 CA INTER COURSE

Taxation

TOP 50 QUESTIONS

Q-1 Mr. Dheeraj, aged 48 years, a resident Indian has furnished the following particulars for the
year ended 31.03.2023:

(i) He occupies ground floor of his residential building and has let out first floor for
residential use at an annual rent of Rs. 334000. He has paid municipal taxes of Rs. 30000
for the current financial year. Both these floors are of equal size.
(ii) As per interest certificate from ICICI Bank, he paid Rs. 180000 as interest and Rs. 95000
towards principal repayment of housing loan borrowed for the above residential
building in the year 2015.
(iii) He owns an industrial undertaking established in a SEZ and which had commenced
operation during the financial year 2020 – 21. Total turnover of the undertaking was Rs.
400 lakhs, which includes Rs. 120 lakhs from export turnover. This industrial undertaking
fulfills all the conditions of section 10AA of the Income-tax Act, 1961. Profit from this
industry is Rs. 45 lakhs.
(iv) He employed 20 new employees for the said industrial undertaking during the previous
year 2022-23. Out of 20 employees, 12 were employed on 1st May 2022 on monthly
emoluments of Rs. 18,000 and remaining were employed on 1st August 2022 on
monthly emoluments of Rs. 12,000. All these employees participate in recognised
provident fund and they are paid their emoluments directly to their bank accounts.
(v) He earned Rs. 30,000 and Rs. 45,000 as interest on saving bank deposits and fixed
deposits respectively.
(vi) He also sold his vacant land on 01.12.2022 for Rs. 13 lakhs. The stamp duty value of land
at the time of transfer was Rs. 14 lakhs. The FMV of the land as on 1st April, 2001 was
Rs. 4.8 lakhs and Stamp duty value on the said date was Rs. 3.8 lakhs. This land was

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 acquired by him on 15.9.1997 for 2.80 lakhs. He had incurred registration expenses of
12,000 at that time.
The cost of inflation index for the financial year 2022-23 and 2001-02 are 331 and 100
respectively.
(vii) He paid insurance premium of Rs. 49,000 towards life insurance policy of his son, who is
not dependent on him.

You are requested to compute his total income and tax liability of Mr. Dheeraj for the
Assessment Year 2023-24, in the manner so that he can make maximum tax savings.

Q-2

(i) Calculate the amount chargeable to tax under the head Capital Gains and also calculate
tax on such gains for A.Y. 2023-24 from the following details provided by Mr. Naveen
with respect to sale of certain securities during F.Y. 2022-23, assuming that the other
incomes of Mr. Naveen exceed the maximum amount not chargeable to tax. (Ignore
surcharge and cess):
i. Sold 10,000 shares of Y Ltd. on 05-04-2022 @ 650 per share

Y Ltd. is a listed company. These shares were acquired by Mr. Naveen on 05-04-2017 @
Rs. 100 per share. STT was paid both at the time of acquisition as well as at the time of
transfer of such shares which was affected through a recognized stock exchange.

On 31-01-2018, the shares of Y Ltd. were traded on a recognized stock exchange as

under:

Highest price – Rs. 300 per share

Average price – Rs. 290 per share

Lowest price – Rs. 280per share

ii. Sold 1,000 units of AB Mutual Fund on 20-05-2022 @ 50 per unit

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 AB Mutual Fund is an equity oriented fund. These units were acquired by Mr. Naveen on
10-03-2017 @ 10 per unit. STT was paid only at the time of transfer of such units. On 31-
01-2018, the Net Asset Value of the units of AB Mutual Fund was 55 per unit. The units
of AB Mutual Fund were not listed on the stock exchange as on 31.1.2018.

iii. Sold 100 shares of C Ltd. on 27-09-2022 @ 200 per share

C Ltd. is an unlisted company. These shares were issued by the company as bonus
shares on 30-09-1997. The Fair Market Value of these shares as on 01-04-2001 was Rs.
50 per.

Cost Inflation Index for various financial years are as under.

2001 – 02 - 100

2017 – 18 - 272

2018 – 19 - 280

2022 – 23 - 331

(ii) Mr. Ramesh constructed a big house (construction completed in Previous Year 2008- 09)
with 3 independent units. Unit - 1 (50% of floor area) is let out for residential purpose at
monthly rent of Rs. 15,000. A sum of Rs. 3,000 could not be collected from the tenant is
a notice to vacate the unit was given to the tenant. No other property of Mr. Ramesh
any occupied by the tenant. Unit - 1 remains vacant for 2 months when it is not put to
any use. Unit 2 (25% of the floor area) is used by Mr. Ramesh for the purpose of his
business, while Unit - 3 (the remaining 25%) is utilized for the purpose of his residence.
Other particulars of the house are as follows:
Municipal valuation – Rs. 1,88,000
Fair rent – Rs. 2,48,000
Standard rent under the Rent Control Act – Rs. 2,28,000

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 Municipal taxes – Rs. 20,000 Repairs – Rs. 5,000
Interest on capital borrowed for the construction of the property – Rs. 60,000, ground
rent? 6,000 and fire insurance premium paid – Rs. 60,000.
Income of Ramesh from the business is Rs. 1,40,000 (without debiting house rent and
other incidental expenditure).
Determine the taxable income of Mr. Ramesh for the assessment year 2023-24 if he
does not opt to be taxed under section 115BAC.

Q-3 Mr. Lalit, a dealer in shares and securities, has entered into following transactions during
the previous year 2022-23:

(i) Received a motor car of Rs. 5,00,000 as gift from his friend Sunil on the occasion of his
marriage anniversary.
(ii) Cash gift of Rs. 21,000 each from his four friends.
(iii) Land at Jaipur on 1st July, 2022 as a gift from his friend Kabra, the stamp duty value of
the land is 6 lakhs as on the date. The land was acquired by Mr. Kabra in the previous
year 2001-02 for Rs. 2 lakhs.

Mr. Lalit purchased from his friend Mr. Abhishek, who is also a dealer in shares, 1000 shares of
ABC Ltd. @400 each on 19th June, 2022 the fair market value of which was Rs. 600 each on that
date. Mr. Lalit sold these shares in the course of his business on 23rd June, 2022.

Further, on 1st November, 2022, Mr. Lalit took possession of his residential house booked by
him two years back at Rs. 20 lakh. The stamp duty value of the property as on 1st November,
2022 was Rs. 32 lakh and on the date of booking was Rs. 24 lakh. He had paid 1 lakh by account
payee cheque as down payment on the date of booking.

He received a shop (building) of the fair market value Rs. 1,50,000 and cash Rs. 50,000 in
distribution from the ABC (P) Ltd at the time of liquidation process of the company in

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proportion of his share capital. The balance in general reserve of the company attributable to
his share capital is Rs. 1,25,000.

On 1st March, 2023, he sold the plot of land at Jaipur for Rs. 8 lakh.

The value of the cost inflation index is 100 and 331 for the previous year 2001-02 and 2022-23
respectively.

Compute the income of Mr. Lalit chargeable u. Jer the head "Income from other sources" and
"Capital Gains" for A. Y. 2023-24.

Q-4 Mr. A commenced operations of the businesses of setting up a warehousing facility for
storage of food grains, sugar and edible oil on 1.4.2022. He incurred capital expenditure of Rs.
80 lakh, Rs. 60 lakh and Rs. 50 lakh, respectively, on purchase of land and building during the
period January, 2022 to March, 2022 exclusively for the above businesses, and capitalized the
same in its books of account as on 1st April, 2022. The cost of land included in the above figures
is Rs. 50 lakh, Rs. 40 lakh and Rs. 30 lakh, respectively. During the P.Y. 2022-23, he incurred
capital expenditure of Rs. 20 lakh, Rs. 15 lakh & Rs. 10 lakh, respectively, for extension/
reconstruction of the building purchased and used exclusively for the above businesses.

Compute the income under the head "Profits and gains of business or profession" for the AY
2023-24 and the loss to be carried forward, assuming that Mr. A has fulfilled all the conditions
specified under section 35AD and wants to claim deduction under section 35AD and has not
claimed any deduction under Chapter VI-A under the heading "C - Deductions in respect of
certain incomes".

The profits from the business of setting up a warehousing facility for storage of food grains,
sugar and edible oil (before claiming deduction under section 35AD and section 32) for the AY.
2023-24 is Rs. 16 lakhs, Rs. 14 lakhs and Rs. 31 lakhs, respectively. Also, assume in respect of
expenditure incurred, the payments are made by account payee cheque or use of ECS through
bank account.

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Q-5 Mr. Guram, aged 42 years, has salary income (computed) of Rs. 5,50,000 for the previous
year ended 31.03.2023. He has earned interest of 14,500 on the saving bank account with State
Bank of India during the year. Compute the total income of Mr. Gurnam for the assessment
year 2023-24 from the following particulars, assuming that he does not opt for section 115BAC:

(i) Life insurance premium paid to Birla Sunlife Insurance in cash amounting to Rs. 25,000
for insurance of life of his dependent parents. The insurance policy was taken on
15.07.2019 and the sum assured on life of his dependent parents is Rs. 2,00,000.
(ii) Life insurance premium of Rs. 25,500 paid for the insurance of life of his major son who
is not dependent on him. The sum assured on life of his son is Rs. 3,50,000 and the life
insurance policy was taken on 30.3.2012.
(iii) Life insurance premium paid by cheque of Rs. 22,500 for insurance of his life. The
insurance policy was taken on 08.09.2018 and the sum assured is Rs. 2,00,000.
(iv) Premium of Rs. 26,000 paid by cheque for health insurance of self and his wife.
(v) Rs. 1,500 paid in cash for his health check-up and Rs. 4,500 paid in cheque for
preventive health check-up for his parents, who are senior citizens.
(vi) Paid interest of Rs. 6,500 on loan taken from bank for MBA course pursued by his
daughter..
(vii) A sum of Rs. 5,000 donated in cash to an institution approved for purpose of section
80G for promoting family planning.

Q-6

Compute the total income of Mr. Praveen (aged 48), a resident Indian, from the following
information relating to the financial year ended 31.3.2023. Also, show the items eligible for
carry forward.

Particulars Rs.
Income from salaries 220000
Loss from house property 250000

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 Loss from toy business 130000
Income from speculation business 40000
Loss from specified business covered by section 35AD 20000
Long-term capital gains from sale of urban land 250000
Long-term capital loss from sale of listed shares in recognized stock exchange 110000
(STT paid at the time of acquisition and sale of shares)
Loss from card games 32000
Income from betting (Gross) 45000
Life Insurance Premium paid (10% of the capital sum assured) 50000

Q-7 Mr. Kailash, a resident and ordinarily resident in India, could not file his return of Income
for the assessment year 2023-24 before due date prescribed under section 139(1). Advise Mr.
Kailash as a tax consultant.

What are the consequences for non-filing of return of Income within the due date under
section 139(1)?

Q-8 Mr. Sitaram is engaged in the business of trading of cement having turnover of 10 crores
during the financial year 2022-23. As a tax consultant advise him what are the particulars to be
furnished under section 139(6A) along with Return of Income?

Q-9 Examine & explain the TDS implications in the following cases along with reasons thereof,
assuming that the deductees are residents and having a PAN which they have duly Murnished
to the respective deductors.

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(i) Mr. Kunal received a sum of Rs. 10,20,000 on 28.02.2023 as pre-mature withdrawal
from Employees Provident Fund Scheme before continuous service of 5 years on
account of termination of employment due to ill-health.
(ii) Indian Bank sanctioned and disbursed a loan of Rs. 12 crores to B Ltd. on 31-12-2022. B
Ltd. paid a sum of Rs. 1,20,000 as service fee to Indian Bank for processing the loan
application.
(iii) Mr. Agam, working in a private company, is on deputation for 5 months (from October,
2022 to February, 2023) at Mumbai where he pays a monthly house rent of Rs. 32,000
for those five months, totaling to Rs. 1,60,000. Rent is paid by him on the first day of the
relevant month.

Q-10 Mr. X retired from the services of M/s Y Ltd. on 31.01.2023, after completing service of 30
years and one month. He had joined the company on 1.1.1993 at the age of 30 years and
received the following on his retirement:

(i) Gratuity Rs. 6,00,000. He was covered under the Payment of Gratuity Act, 1972.
(ii) Leave encashment of Rs. 3,30,000 for 330 days leave balance in his account. He was
credited 30 days leave for each completed year of service.
(iii) As per the scheme of the company, he was offered a car which was purchased on
30.01.2020 by the company for Rs. 5,00,000. Company has recovered Rs. 2,00,000 from
him for the car. Company depreciates the vehicles at the rate of 15% on Straight Line
Method.
(iv) An amount of Rs. 3,00,000 as commutation of pension for 2/3 of his pension
commutation.
(v) Company presented him a gift voucher worth Rs. 6,000 on his retirement.
(vi) His colleagues also gifted him a Television (LCD) worth Rs. 50,000 contribution.

Following are the other particulars:

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(i) He has drawn a basic salary of 20,000 and 50% dearness allowance per month for the
period from 01.04.2022 to 31.01.2023.
(ii) Received pension of Rs. 5,000 per month for the period 01.02.2023 to 31.03.2023 after
commutation of pension.

Q-11

a) State person liable to pay GST in the following independent cases provided recipient is
located in the taxable territory:
a. Services provided by an Arbitral Tribunal to any business entity having turnover of Rs.
150 Lakh in PFY.
b. Sponsorship services provided by a company to an individual.
c. Renting of immovable property service provided by the Central Government business
entity having GSTN.
d. Services provided by the Director to the Company located in Kashmir.
e. Services by members of overseeing committee to Reserve Bank of India.

Q-12 Gas is supplied by a pipeline. Monthly payments are made by the recipient as per
contract. Every quarter, invoice is issued by the supplier supported by a statement of the goods
dispatched and payments made, and the recipient has to pay the differential amount, if any.
The details of the various events are:

August 5, September 5, October 6 Payments of Rs, 2 Lakh in each month

October 3 Statement of accounts issued by supplier, with
invoice for the quarter July – September
October 17 Differential payment of Rs. 56000 received by
supplier for the quarterly July – September as per
statement of accounts

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 Determine the time of supply for the purpose of payment of tax.

Q-13 with the reference to the provision relating to the electronic way bill (E – way bill) as
prescribed under the GST laws, answer the following questions:

Sindhi Toys Manufactures, registered in Punjab, sold electronic toys to a retail seller in Gujarat,
at a value of Rs. 48000 (excluding GST leviable @ 18%). Now, it wants to send the consignment
of such toys to the retail seller in Gujarat.

You are required to advise Sindhi Toys Manufacturers on the following issues:

a. Whether e – way bill is mandatorily required to be generated in respect of such movement

of goods?
b. If yes, who is required to generate the e – way bill?
c. What will be the consequences for non – issuance of e – way bill?

Q-14 Gita Services Limited, registered under GST, is engaged in providing various services to
Government. The company provides the following information in respect of services provided
during the month of April:

S .No. Description of Services provided

(i) Supply of manpower for cleanliness of roads not involving any supply of goods.
(ii) Service provided by Fair Price Shops owned by Gita Services Limited by way of sale
of sugar under Public Distribution System against consideration in the form of
commission
(iii) Service of maintenance of street lights in a Municipal area involving replacement of
defunct lights and other spares along with maintenance. Generally replacement of
defunct lights and other spares constitutes 35% of the supply of service.
(iv) Service of brochure distribution provided under a training programme for which

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 70% of the total expenditure is borne by the Government.

Q-15 A makes intra-State supply of goods valued at Rs. 50,000 to B within State of Karnatake. B
makes inter-State supply to X Ltd. (located in Telangana) after adding 10% as its margin.
Thereafter, X Ltd. sells it to Y in Telangana (Intra-State sale) after adding 10% as his margin.

Assume that the rate of GST chargeable is 18% (CGST 9% plus SGST 9%) and IGST chargeable is
18%. Calculate tax payable at each stage of the transactions detailed above. Wherever input tax
credit is available and can be utilized, calculate the net tax payable in cash. At each stage of the
transaction, indicate which Government will receive the tax paid and to what extent.

Q-16 Mr. XYZ & Co., a firm of Chartered Accountants, issued invoice for services rendered to
Mr. A on 7th September, 2017. Determine the time of supply in the following independent
cases:

(1) The provision of service was completed on 1st August, 2017.

(2) The provision of service was completed on 14th August, 2017.
(3) Mr. A made the payment on 3rd August, 2017 where provision of service was remaining to
be completed.
(4) Mr. A made the payment on 15th September, 2017 where provision of service was
remaining to be completed

Q-17 Granites Textiles Ltd. purchased a needle detecting machine on 8th July, 2017 from
Makhija Engineering Works Ltd. for 10,00,000 (excluding GST) paying GST 18% on the same. It
availed the ITC of the GST paid on the machine and started using it for manufacture of goods.

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The machine was sold on 22nd October, 2018 for 7,50,000 (excluding GST), as second hand
machine to LT. Pvt. Ltd. The GST rate on supply of machine is 18%.. State the action which
Granites Textiles Ltd. is required to take, if any, in accordance with the statutory GST provisions
on the sale of the second-hand machine.

Q-18 Answer the following questions with respect to casual taxable person under the WEGST
Act, 2017:

(i) Who is a casual taxable person?

(ii) Can a casual taxable person opt for the composition scheme?
(iii) When is the casual taxable person liable to get registered?
(iv) What is the validity period of the registration certificate issued to a casual taxable
person?
(v) Can the validity of registration certificate issued to a casual taxable person be extended?
If yes, what will be the period of extension.

Q-19 Luv & Kush Pvt. Ltd. of UK engaged in the supply of gifts items provides you the Following
detail

S. No. Particulars Date

1. Commencement of the business of supplying goods 01.08.20XX
2. Turnover exceeds Rs. 10,00,000 on 15.08.20XX
3. Turnover exceeds Rs. 20,00,000 on 05.09.20XX
4. Application for registration made on 28.09.20XX
5. Registration certificate granted on 06.10.20XX

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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.

Q-20 Examine with reasons whether the following transactions attract income-tax in India in
the hands of recipients:

(i) Salary paid by Central Government to Mr. John, a citizen of India Rs 7,00,000 for the
services rendered outside India.
(ii) Interest on moneys borrowed from outside India Rs 5,00,000 by a non-resident for the
purpose of business within India say, at Mumbai.
(iii) Post office savings bank interest of Rs 19,000 received by a resident assessee, Mr. Ram,
aged 46 years.
(iv) Royalty paid by a resident to a non-resident in respect of a business carried on outside
India.
(v) Legal charges of Rs 5,00,000 paid in Delhi to a lawyer of United Kingdom who visited
India to represent a case at the Delhi High Court.

Q-21 Examine the correctness or otherwise of the statement – “Income deemed to accrue or
arise in India to a non-resident by way of interest, royalty and fees for technical services is to be
taxed irrespective of territorial nexus”.

Q-22 Discuss the deficiencies in the existing indirect tax regime.

Q-23 The temple of ancestral tutelary deity of Mr. Aman goel and his family is located at Beri,
Haryana. The temple is run by a charitable organization registered under section 12AA of the

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Income Tax Act, 1961. The family has got unshakeable faith in their ancestral tutelary deity. Mr.
Aman is a big entrepreneur having flourishing business of tiles in Gurugram. Upon the birth of
their first child, he donated Rs 10 lakh to the said temple for construction of a sitting hall in the
temple. On the main door of the sitting hall, a name plate was places stating “Donated by Mr.
Aman Goel upon birth of his first child”.

You are required to examine the leviability of GST on the donation received from Mr. Aman
Goel?

Q-24 Miss Vivitha, a resident and ordinarily resident in India, has derived the following income
from various operations (relating to plantations and estates owned by her) during the year
ended 31-3-2023:

S. No. Particulars Rs
(i) Income from sale of centrifuged latex processed from rubber plants 3,00,000
grown in Darjeeling
(ii) Income from sale of coffee grown and cured in Yercaud, Tamil Nadu. 1,00,000
(iii) Income from sale of coffee grown, cured, roasted and grounded, in 2,50,000
Colombo. Sale consideration was received at Chennai.
(iv) Income from sale of tea grown and manufactured in Shimla. 4,00,000
(v) Income from sapling and seedling grown in a nursery at Cochin. 80,000
Basic operations were not carried out by her on land.

You are required to compute the business income and agricultural income of Miss Vivitha for
the A.Y. 2023-24.

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Q-25 Compute the tax liability of Mr. D (aged 37), having total income of Rs 5,01,00,000 for the
Assessment Year 2023-24. Assume that his total income comprises of salary income, Income
from House Property and interest on fixed deposit. Assume that Mr. D has not opted for the
provisions of section 115BAC.

Q-26 You are required to compute the income from salary of Mr. Raja from the following
particulars for the year ended 31-03-2023:

(i) He retired on 31-12-2022 at the age of 60, after putting in 25 years and 9 months of
service, from a private company at Delhi.
(ii) He was paid a salary of Rs 25,000 p.m. and house rent allowance of Rs 6,000 p.m. He
paid rent of Rs 6,500 p.m., during his tenure of service.
(iii) On retirement, he was paid a gratuity of Rs 3,50,000. He was covered by the payment of
Gratuity Act, 1972. He had not received any other gratuity at any point of time earlier,
other than this gratuity.
(iv) He had accumulated leave of 15 days per annum during the period of his service; this
was encashed by him at the time of his retirement. A sum of Rs 3,15,000 was received
by him in this regard. Employer allowed 30 days leave per annum.
(v) He is receiving Rs 5,000 as pension. On 1.2.2023, he computed 60% of his pension and
received Rs 3,00,000 as commuted pension.
(vi) The company presented him with a gift voucher of Rs 5,000 on his retirement. His
colleagues also gifted him a mobile phone worth Rs 50,000 from their own contribution.

Q-27 Mrs. Rohini Ravi, a citizen of the U.S.A., is a resident and ordinarily resident in India during
the financial year 2022-23. She owns a house property at Los Angeles, U.S.A., which is used as
her residence. The annual value of the house is $20,000. The value of one USD ($) may be taken
as Rs 75.

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She took ownership and possession of a flat in Chennai on 1.7.2022, which is used for self-
occupation, while she is in India. The flat was used by her for 7 months only during the year
ended 31.3.2023. The municipal valuation is Rs 3,84,000 p.a. and the fair rent is Rs 4,20,000 p.a.
She paid the following to Corporation of Chennai:

Property Tax Rs 16,200

Sewerage Tax Rs 1,800

She had taken a loan from Standard Chartered Bank in June, 2020 for purchasing this flat.
Interest on loan was as under:

Particulars Rs
Period prior to 1.4.2022 49,200
1.4.2022 to 30.6.2022 50,800
1.7.2022 to 31.3.2023 1,31,300

She had a house property in Bangalore, which was sold in March, 2019. In respect of this house,
she received arrears of rent of Rs 60,000 in March, 2023. This amount has not been charged to
tax earlier.

Compute the income chargeable from house property of Mrs. Rohini Ravi for the assessment
year 2023-24.

Q-28 Examine whether GST is payable in the following independent cases-

(i) Amar Jyoti Charitable trust, registered under section 10(23C)(v) of the Income-tax Act
manages a temple in Shandara, Delhi. It has given on rent a community hall, located
within temple premises, to public for celebration of new year evening, Rent charged is
Rs 9,500.
(ii) Speed post services by Department of Post to Union Territory of Lakshadweep.

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(iii) XY Ltd. has given on hire 7 trucks to Jaggi Transporters of Delhi (a goods transport
agency) for transporting goods in Central and West Delhi. The hiring charges for the
trucks are Rs 6,200 per truck per day.

Q-29 Parikshit Ltd., engaged in providing a bouquet of services, is registered under GST law. It
furnishes the following information for the month of March in relation to various services
provided by it:

Particulars Rs
Fees from prospective employers for campus interview in its college 5,20,000
Five buses each with seating capacity of 40 passengers given on hire to State 6,50,000
Transport Undertaking
Receipts of ‘Shiny’, a commercial coaching institute providing coaching in the 1,82,000
field of commerce (a certificate was awarded to each trainee after completion of
the training)
Interest received on fixed deposits of the company with Dhanvarsha Bank 6,50,000
Receipts from running a Boarding School (including receipts for providing 39,00,000
residential dwelling service of Rs 18,20,000)
Receipts of ‘Sikshit Samudai’- an Industrial Training Institute (ITI) affiliated to the 2,60,000
National Council for Vocational Training (NCVT). Courses run by said ITI are in
designated trades.
Receipts of ‘Pratibha Institute’, an institute registered with Directorate General 1,30,000
of Employment and Training (DGET), Union Ministry of Labour and Employment,
running a Modular Employable Skill Course (MESC) approved by the National
Council for Vocational Training (NCVT)
Professional services provided to foreign diplomatic mission located in India 1,04,000

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Compute the GST payable by Parikshit Ltd. assuming that all the above receipts are exclusive of
GST wherever applicable and the rate of GST applicable on all the supplies is 18%.

Q-30 Kamal Book Depot, a wholesaler of stationery items, registered in Mumbai, has received
order for supply of stationery items worth Rs 2,00,000/- on 12th November, 20XX from another
local registered dealer, Mr. Mehta, Mumbai. Kamal Book Depot charged the following
additional expenses from Mr. Mehta:-

Particulars Amount (Rs)

(i) Packing charges 5,000
(ii) Freight & Cartage 2,000
(iii) Transit insurance 1,500
(iv) Extra designing charges 6,000
(v) Taxes by Municipal Authority 500

The goods were delivered to Mr. Mehta on 14th November, 20XX. Since Mr. Mehta was satisfied
with the quality of the goods, he made the payment of goods the same day and simultaneously
placed another order on Kamal Book Depot of stationery items amounting to Rs 10,00,000 to
be delivered in the month of December, 20XX**. On receipt of second order, Kamal Book Depot
allowed a discount of Rs 20,000 on the first order placed by Mr. Mehta.

Compute the GST liability of Kamal Book Depot for the month of November, 20XX assuming the
rates of GST on the goods supplied as under:

CGST 9%

SGST 9%

Would your answer be different if expenses (i) to (v) given in above table are already included
in the price of Rs 2,00,000?

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Note:-

(i) All the amounts given above are exclusive of GST.

(ii) Kamal Book Depot and Mr. Mehta are not related persons and price is the sole
consideration of the supply.

**Payment and invoice for the second order will also be made in the month of December, 20XX
only.

Q-31 Mrs. Yuvika bought a vacant land for 80 lakhs in May 2004. Registration and other
expenses were 10% of the cost of land. She constructed a residential building on the said land
for Rs. 100 lakhs during the financial year 2006-07.

She entered into an agreement for sale of the above said residential house with Mr. Johar (not
a relative) in April 2015. The sale consideration was fixed at Rs. 700 lakhs and on 23-4- 2015,
Mrs. Yuvika received Rs. 20 lakhs as advance in cash by executing an agreement. However, due
to failure on part of Mr. Johar, the said negotiation could not materialize and hence, the said
amount of advance was forfeited by Mrs. Yuvika.

Mrs. Yuvika, again entered into an agreement on 01.08.2022 for sale of this house at Rs. 810
lakhs. She received Rs. 80 lakhs as advance by RTGS. The stamp duty value on the date of
agreement was Rs. 890 lakhs. The sale deed was executed and registered on 14-1-2023 for the
agreed consideration. However, the State stamp valuation authority had revised the values,
hence, the value of property for stamp duty purposes was Rs. 900 lakhs. Mrs. Yuvika paid 1% as
brokerage on sale consideration received.

Subsequent to sale, Mrs. Yuvika made following investments:

(i) Acquired two residential houses at Delhi for Rs. 130 lakhs and Rs. 50 lakhs on 31.1.2023
and 15.5.2023
(ii) Acquired a residential house at UK for Rs. 180 lakhs on 23.3.2023.

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(iii) Subscribed to NHAI capital gains bond (approved under section 54EC) for Rs. 50 lakhs on
29-3-2023 and for Rs. 40 lakhs on 12-5-2023.

Compute the income chargeable under the head 'Capital Gains of Mrs. Yuvika for AY 2023-24.
The choice of exemption must be in the manner most beneficial to the assessee.

Cost Inflation Index: F.Y. 2004-05-113; F.Y. 2006-07-122: F.Y. 2022-23-331.

Q-32 Mr. A, a dealer in shares, received the following without consideration during the P.Y.
2022- 23 from his friend Mr. B.-

(1) Cash gift of Rs. 75,000 on his anniversary, 15th April, 2022.
(2) Bullion, the fair market value of which was 60,000, on his birthday, 19th June, 2022.
(3) A plot of land at Faridabad on 1st July, 2022, the stamp value of which is Rs. 5 lakh on that
date. Mr. B had purchased the land in April, 2009.

Mr. A purchased from his friend Mr. C, who is also a dealer in shares, 1000 shares of X Ltd. @
Rs. 400 each on 19th June, 2022, the fair market value of which was Rs. 600 each on that date.
Mr. A sold these shares in the course of his business on 23rd June, 2022. Further, on 1st
November, 2022, Mr. A took possession of property (office building) booked by him two years
back at Rs. 20 lakh. The stamp duty value of the property as on 1 st November, 2022 was Rs. 32
lakh and on the date of booking was Rs. 23 lakh. He had paid Rs. 1 lakh by account payee
cheque as down payment on the date of booking.

On 1st March, 2023, he sold the plot of land at Faridabad for Rs. 7 lakh.

income of Mr. A chargeable under the head "Income from other sources" and "Capital Gains"
for A.Y. 2023-24.

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Q-33 Rao& Jain, a partnership firm consisting of two partners, reports a net profit of Rs.
7,00,000 before deduction of the following items:

(1) Salary of Rs. 20,000 each per month payable to two working partners of the firm (as
authorized by the deed of partnership).
(2) Depreciation on plant and machinery under section 32 (computed) Rs. 1,50,000.
(3) Interest on capital at 15% per annum (as per the deed of partnership). The amount of
capital eligible for interest is Rs. 5,00,000.

Compute:

(i) Book-profit of the firm under section 40(b) of the Income-tax Act, 1961.
(ii) Allowable working partner salary for the assessment year 2023-24 as per section 40(b)

Q-34 Shri Krishna Pvt. Ltd., a registered supplier, furnishes the following information relating to
goods sold by it to ShriBalram Pvt. Ltd.-

S.No. Particulars Amount Rs.

(i) Price of the goods [excluding taxes and other charges mentioned at S. 100000
Nos. (iii), (v) and (vi)]
(ii) Municipal tax 2000
(iii) Inspection charges 15000
(iv) Subsidy received from Shri Ram Trust [Subsidy is directly linked to the 50000
goods supplied]
(v) Late fees for delayed payment inclusive of GST [ShriBalram Pvt. Ltd. 1000
paid the late fees. However, these charges were ultimately waived by
Shri Krishna Pvt. Ltd. and the amount was refunded to ShriBalram Pvt.
Ltd. during the same month]
(vi) Weighment charges [Such charges were paid by ShriBalram Pvt. Ltd. to 2000

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 Radhe Pvt. Ltd. on behalf of Shri Krishna Pvt. Ltd.]

Note: Price of the goods is net of the subsidy received.

Determine the value of taxable supply made by Shri Krishna Pvt. Ltd. to Shri Balram Pvt. Ltd.

Q-35 Siddhi Ltd. is a registered manufacturer engaged in taxable supply of goods. Siddhi Ltd.
purchased the following goods during the month of January, 2019. The following particulars are
provided:

S.No. Particulars Inputs tax Rs.

1. Capital goods purchased on which depreciation has been taken on 15000
full value including input tax thereon
2. Goods purchased from Ravi Traders (Invoice of Ravi Traders is 20000
received in month of January, 2019, but goods were received in
month of March, 2019)
3. Car purchased for making further supply of such car. Such car is 30000
destroyed in accident while being used for test drive by potential
customers
4. Goods used for setting up telecommunication towers being 50000
immovable property
5. Goods purchased from Pooja Ltd. (Full payment is made by Siddhi 10000
Ltd. to Pooja Ltd. against such supply, but tax has not been
deposited by Pooja Ltd.
6. Truck purchased for delivery of output goods 80000

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Determine the amount of input tax credit (ITC) available by giving necessary explanations for
treatment of various items as per the provisions of the CGST Act, 2017. You may assume that all
the necessary conditions for availing the ITC have been complied with by Siddhi Ltd.

Q-36 Mrs. Nisha, a resident individual aged 54 years, is carrying on business of manufacturing
of textile fabrics, as a proprietor. The turnover in the previous year 2021-22 was Rs. 250 lakhs
and in the current previous year 2022-23, it is Rs. 600 lakhs. The net profit as per the profit and
loss account as on 31-03-2023 is Rs. 5,61,000. She provides the following additional information
those were not considered while making the profit and loss account for the previous year 2022-
23.
i) Depreciation has not been debited to profit and loss account. The details of the plant &
machinery employed in the business are given as under:
Date Particulars Amount
01-04-2022 Opening written down value of machinery used for 4,75,000
manufacturing purpose
03-07-2022 New machinery purchased during the Year, payment 7,25,000
made by an account pay cheque.
10-03-2023 Sold one of the old machine 75,000

She does not have any other fixed assets employed in the business.
ii) Received subsidy of 20% on new machine purchased on 03-07-2022 during the previous
year under technology up gradation fund scheme from the central Government.
iii) She paid a job charges for the value addition on the fabrics Rs. 90,000 without deduction of
tax to job worker by an account payee cheque.
iv) Commission paid to one agent allowed as deduction in earlier assessment year amounting
Rs. 50,000,has now been received back during previous year 2022-23, from the agent due to
settlement with commission agent.
v) Rs. 25,000 paid to creditor for goods in cash.

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vi) Incurred loss of Rs.1,17,500 from an eligible transaction carried out in respect of trading in
derivatives in a recognized stock exchange.
vii) Interest received amounting Rs. 2,00,000, duly authorized by partnership deed of M/s Ramji
textiles @15% p.a. on the capital employed. She is sleeping partner in the Ramji textiles.
viii) She received Rs. 60,000 by pre – mature withdrawals from deposit including interest Rs.
5,000, in post office time deposit, eligible for deduction under section 80C.
ix) She sold her gold bracelet (jewellery), used by her for personal purposes, on 01-05-2022 for
Rs.5,00,000,which was acquired for Rs. 40,000 on 01- 03-2005. A diamond was embedded
onto bracelet on 01- 05- 2007 of Rs. 50,000. ( cost inflation index 2004-05:113,2007-08:129
and 2022-23:331)
x) She received a gold coin (bullion) worth Rs. 55,000 (FMV) from her cousin (daughter of
uncle) during the previous Year 2022-23.
xi) She incurred long term loss from sale of share of the Indian company. (The STT is paid on
the sale and purchase of the shares) Rs. 75,000.
xii) She deposited a sum of Rs. 50,000 with life insurance Corporation of India every year for the
maintenance of her mother aged 70 years depended upon him and suffering from severe
disability.
xiii) She purchased the new residential house during the previous year and paid stamp duty
and registration fee Rs. 1,55,000 to get transfer the property in her name.
You are required to compute the total income and tax payable by Mrs. Nisha for the
assessment year 2023-24. (Ignore the previous of section 115BAC). Give brief note wherever
necessary.

Q-37
(i) Mr. sarthak entered into an agreement with Mr. jaikumar to sell his residential house
located at Kanpur on 16.08.2022 for Rs. 1,50,00,000.
The sale proceeds were to be paid in the following manner:
(i) 20% through account payee bank draft on the date of agreement.

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 (ii) 60% on the date of the possession of the property.
(iii) Balance after the completion of the registration of the title to the property.
Mr. Jaikumar was handed over the possession of the property on 15.12.2022 and the
registration process was completed on 14.01.2023. He paid the sale proceeds as per the
sale agreement.
The value determined by the Stamp Duty Authority-
(a) On 16.08.2022 was Rs. 1,70,00,000;
(b) On 15.12.2022 was Rs. 1,71,00,000 and
(c) On 14.01.2023 was Rs. 1,71,50,000.
Mr. Sarthak had acquired the residential house at Kanpur on 01.04.2001 for Rs. 30,00,000.
After recovering the sale proceeds from jaikumar, he purchased two residential house
properties, one in Kanpur for Rs. 20,00,000 on 24.3.2023 and another in Delhi for Rs.
35,00,000 on 28.5.2023.
Compute the income chargeable under the head “Capital Gains” of Mr. Sarthak for the
Assessment Year 2023-24.
Cost Inflation Index for Financial Year (S): 2001-02-100; 2022-23-331

(ii) Mr. Naveen and Mr. Vikas constructed their houses on a piece of land purchased by them at
Delhi. The built up area of each house was 1,800 sq. ft. ground floor and an equal area in
the first floor. Naveen started construction on 1-04-2020 and completed on 1-04-2022.
Vikas started the construction on 1-04-2020 and completed the construction on 30-09-
2022. Naveen occupied the entire house on 01-04-2022. Vikas occupied the ground floor on
01-10-2022 and let out the first floor for a rent of Rs. 20,000 per month. However, the
tenant vacated the house on 31-12-2022 and vikas occupied the entire house during the
period 01-01-2023 to 31-03-2023.
Following are the other information
(i) Fair rental value of each unit- Rs. 1,00,000 per annum (ground floor/first floor)
(ii) Municipal value of each unit (ground floor/ first floor) – Rs. 72,000 per annum
(iii) Municipal taxes paid by

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 Naveen – Rs. 8,000
Vikas – Rs. 8,000
(iv) Repair and maintenance charges paid by
Naveen – Rs. 28,000
Vikas – Rs. 30,000
Naveen has availed a housing loan of Rs. 15 lakhs @12% p.a. on 01-04-2020. Vikas has
availed a housing loan of Rs. 10 lakhs @ 10% p.a. on 01-07-2020. No repayment was made
by either of them till 31-03-2023. Compute income from house property for Naveen and
Vikas for the previous year 2022-23.

Q-38 Examine with reasons, the allow ability of the following expenses incurred by Mr. Manav,
a wholesale dealer of commodities, under the Income – tax Act, 1961 while computing profit
and gains from business or profession for the Assessment Year 2023-24.
(i) Construction of school building in compliance with CSR activities amounting to Rs. 5,60,000.
(ii) Purchase of building for the purpose of specified business of setting up and operating a
warehousing facility for storage of food grains amounting to Rs. 4,50,000.
(iii) Interest on loan paid to Mr. X (a resident) Rs. 50,000 on which tax has not been deducted.
The sales for the previous year 2021-22 was Rs. 202 lakhs. Mr. X has not paid the tax, if any, on
such interest.
(iv) Commodities transaction tax paid Rs. 20,000 on sale of bullion.

Q-39 During the previous Year 2022-23, the following transactions occurred in respect of Mr. A.
a) Mr. A had a fixed deposit of Rs. 5,00,000 in Bank of India. He instructed the bank to credit the
interest on the deposit @9% from 1-4-2022 to 31-3-2023 to the savings bank account of Mr. B,
son of his brother, to help him in his education.

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b) Mr. A holds 75% profit share in a partnership firm. Mrs.A received a commission of Rs.
25,000 from the firm for promoting the sales of the firm. Mrs. A possesses no technical or
professional qualification.
c) Mr. A gifted a flat to Mrs. A on April 1, 2022. During the previous Year 2022-23, Mrs. A’s
“Income from house property” (computed) was Rs. 52,000 from such flat.
d) Mr. A gifted Rs. 2,00,000 to his minor son who invested the same in a business and he
derived income of Rs. 20,000 from the investment.
e) Mr. A’s minor son derived an income of Rs. 20,000 through a business activity involving
application of his skill and talent.
During the year, Mr. A got a monthly pension of Rs. 10,000. He had no other income. Mrs. A
received salary of Rs. 20,000 per month from a part time job.
Examine the tax implications of each transaction and compute the total income of Mr. A, Mrs. A
and their minor child assuming they do not wish to opt for section 115BAC.

Q-40 Shri Bala employed in ABC Co. Ltd. as Finance Manager gives you the list of perquisites
provided by the company to him for the entire financial year 2022-23:
(i) Domestic servant was provided at the residence of Bala. Salary of domestic servant is Rs.
1,500 per month. The servant was engaged by him and the salary is reimbursed by the company
(employer).
In case the company has employed the domestic servant, what is the value of perquisite?
(ii) Free education was provided to his two children Arthy and Ashok in a school maintained and
owned by the company. The cost of such education for Arthy is computed at Rs. 900 per month
and for Ashok at Rs. 1,200 per month. No amount was recovered by the company for such
education facility from Bala.
(iii) The employer has provided movable assets such as television, refrigerator and air-
conditioner at the residence of Bala. The actual cost of such assets provided to the employee is
Rs. 1,10,000.

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(iv) A gift voucher worth Rs. 10,000 was given on the occasion of his marriage anniversary. It is
given by the company to all employees above certain grade.
(v) Telephone provided at the residence of shri Bala and the bill aggregating to Rs. 25,000 paid
by the employer.
(vi) Housing loan @6% per annum. Amount outstanding on 1.4.2022 is Rs. 6,00,000. Shri Bala
pays Rs. 12,000 per month towards principal, on 5th of each month.
Compute the chargeable perquisite in the hands of Mr. Bala for the A.Y. 2023-24.
The lending rate of state Bank of India as on 1.4.2022 for housing loan may be taken as 10%

Q-41 Mr. Harsh furnishes the following details for the year ended on 31-03-2023:
Particulars Amount (Rs.)
Salary received from partnership firm (the same was allowed to the firm) 8,50,000
Loss on sale of shares listed in stock exchange held for 18 months and the
STT paid on the sale and acquisition 6,00,000
Long term capital gain on sale of land
Brought forward business loss of assessment year 2015- 16 5,00,000
Loss of the specified business covered in section 35AD 6,00,000
Loss from house property 3,50,000
Income from betting (gross) 2,50,000
Loss from card games 50,000
35,000

Compute the total income and show the item eligible for carry forward of Mr. Harsh for the
assessment year 2023-24.

Q-42 Compute the deduction available to Mr. Dhyanchand under chapter VI-A for A.Y. 2023-24.
Mr. Dhyanchand, aged 65 years, is working with ABC Ltd. His income comprises of salary of Rs.

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18,50,000 and interest on fixed deposits of Rs. 75,000. He submits the following particulars of
investments and payments made by him during the previous year 2022-23:
- Deposit of Rs. 1,50,000 in public provident fund
- Payment of life insurance premium of Rs. 62,000 on the policy taken on 01.4.2017 to insure
his life (sum assured – Rs. 4,00,000).
- Deposit of Rs. 45,000 in a five year term deposit with bank.
- Contributed Rs. 2,10,000, being 15% of his salary (basic salary plus dearness allowance,
which forms part of retirement benefits) to the NPS of the central government. A matching
contribution was made by ABC Ltd.
- On 1.4.2022, mediclaim premium of Rs. 1,08,000 and Rs. 80,000 paid as lumpsum to insure
his and his wife (aged 58 years) health, respectively for four years
- Incurred Rs. 46,000 towards medical expenditure of his father, aged 85 Years, not
dependent on him. No insurance policy taken for his father.
- He spent Rs. 6,000 for the preventive health – check up of his wife.
- He has incurred an expenditure of Rs. 90,000 for the medical treatment of his mother, being
a person with severe disability

Q-43 Mr. Ramesh & Mr. Suresh are brothers and they earned the following incomes during the
financial Year 2022-23. Mr. Ramesh settled in Canada in the Year 1996 and Mr. Suresh settled in
Delhi. Compute the total income for the A.Y. 2023-24.
Sr. No. Particulars Mr. Ramesh Mr.
(Rs.) Suresh(Rs.)
1. Interest on Canada Development Bonds (only 50% 35,000 40,000
of interest received in india)
2. Dividend from British Company received in 28,000 20,000
London
3. Profits from a business in Nagpur, but managed 1,00,000 1,40,000
directly from London

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 4. Short term capital gain on sale of shares of an 60,000 90,000
Indian company received in India
5. Income from a business in Chennai 80,000 70,000
6. Fees for technical services rendered in India, but 1,00,000 ---
received in Canada
7. Interest on savings bank deposit in UCO Bank, 7,000 12,000
Delhi
8. Agricultural income from a land situated in 55,000 45,000
Andhra Pradesh
9. Rent received in respect of house property at 1,00,000 60,000
Bhopal
10. Life insurance premium paid --- 30,000

Q-44 Briefly discuss the provisions relating to payment of advance tax on income arising from
capital gains and casual income

Q-45 Kesar Maharaj, a registered supplier, gave a classical dance performance in an auditorium.
The consideration charged for the said performance is Rs. 1,48,500. Is kesar Maharaj liable to
pay GST on the consideration received for the said performance if such performance is not for
promotion of any product/services? If yes, determine his GST liability (CGST and SGST or IGST as
the case may be). Will your answer be different if:
(i) Keser Maharaj is a brand ambassador of a food product and aforesaid performance is for the
promotion of such food product?
(ii) The dance performance given by Kesar Maharaj is not a classical dance performance, but a
contemporary Bollywood style dance performance?
(iii) Consideration charged by Kesar Maharaj for the classical dance performance is Rs.
1,60,000?

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Notes:
1. services provided by Kesar Maharaj are intra-state supplies.
2. Wherever applicable, GST has been charged separately.
3. Rates of CGST SGST and IGST are 9% and 18% respectively.

Q-46 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

Q-47 Examine whether the supplier is liable to get registered in the following independent
cases:-
(i) Happy Ltd. of Himachal Pradesh is exclusively engaged in intra-state supply of pan masala.
Its aggregate turnover in the current financial year is Rs. 24 lakhs.
(ii) Akki Ltd. of Assam is exclusively engaged in intra-state supply of taxable services. Its
aggregate turnover in the current financial year is Rs. 25 lakhs.
(iii) Aaru Ltd. of Assam is engaged in intra-state supply of both taxable goods and services. Its
aggregate turnover in the current financial year is Rs. 30 lakhs.

Q-48 Mr. Anurag, a famous Author is engaged in supply by the way of transfer or permitting
the use or enjoyment of a copyright covered under clause (a) of sub – section (1) of section 13
of the copyright Act, 1957 relating to original literary works to a publisher.
Explain in brief the conditions under an Author can choose to pay tax under forward charge.

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Q-49 Following are the particulars, relating to one of the machine sold by SQM Ltd. to ACD Ltd.
in the month of February 2020 at list price of Rs. 9,50, 000. (Exclusive of tax and discount)
further, following additional amounts have been charged from ACD Ltd:
S. No. Particulars Amount (Rs.)
(i) Municipal taxes chargeable on the machine 45,000
(ii) Outward freight charges (Contract was to deliver machine at ACD 65,000
Ltd.’s factory i.e. F.O.R. contract)

Additional information:
(i) SQM Ltd. normally gives an interest – free credit period of 30 days for payment, after that it
charges interest @1 p.m. or part thereof on list price.
ACD Ltd. paid for the supply after 45 days, but SQM Ltd. waived the interest payable.
(ii) SQM Ltd. received Rs. 50,000 as subsidy, from one non- government organization (NGO) on
sale of each machine. This subsidy was not linked to the price of machine and also not
considered in list price of Rs. 9, 50,000.
(iii) ACD Ltd. deducted discount of Rs. 15,000 at the time of final payment, which was not as per
agreement.
(iv) SQM Ltd. collected Rs. 9,500 as TCS (tax collected at source) under the provisions of the
income Tax Act, 1961.
Compute the value of taxable supply as per the provision of GST law, considering that the price
is the sole consideration for the supply and both parties are unrelated to each other.
Note: correct legal provision should form part of your answer.

Q-50 Mrs. Pragati received legal advice for her personal problems & paid 1,000 pound as a legal
fee to Miss Unnati of U.K. (London).
Explain wither the above activity of import of service would amount to supply u/s 7 of the CGST
Act, 2017?

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If in above case both of them are real sisters & no consideration is paid then will it change your
answer?
Further in the above case if both of them are real sisters & Mrs. Pragati receives legal advice for
her business & she doesn’t pay any consideration then what will be your answer?

Suggested Answers

A-1 Computation of total income of Mr. Dheeraj for A, Y, 2023 – 24

Particulars Rs. Rs. Rs.

I. Income from house property
Let out proportion [first floor]
Gross Annual Value [Rent received is taken as GAV, in the 334000
absence of other information]
Less: Municipal taxes paid by him in the P.Y. 2022 – 23 15000
pertaining to let out portion [ Rs. 30000/2]
Net Annual Value (NAV) 319000
Less: Deduction u/s 24
(a) 30% of Rs. 319000 95700
(b) Interest on housing loan [Rs. 180000/2] 90000 185700
Self – occupied portion [Ground floor] 133300
Annual Value Nil
[No deduction is allowable is respect of municipal taxes
paid]
Less: Interest o housing loan 90000

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 (90000)
Income from house property [Rs. 133300 – Rs. 90000] 43300
II. Profit and gains of business or profession
Income from SEZ units 4500000
III. Capital gains
Long – term capital gains on land (since held for more
than 24 months)
Full value of Consideration [Actual consideration of Rs. 13 1300000
lakhs, since stamp duty value of Rs. 14 lakhs does not
exceed actual consideration bymore than 10%]
Less: Indexed Cost of acquisition [Rs. 380000 x 331/100] 1257800 42200
Cost of acquisition
Higher of –
- Actual cost Rs. 2.80 lakhs + Rs. 0.12 lakhs = Rs. 2.92
lakhs and
- Fair Market Value (FMV) as on 1.4.2001 = Rs. 4.8
lakhs but cannot exceed stamps duty value of Rs. 3.8
lakhs.
IV. Income from other sources
Interest on savings bank deposits 30000
Interest on Fixed deposits 45000 75000
Gross Total Income 466050
Less: Deduction u/s 10AA 1350000
[Since the industrial undertaking is established in SEZ, it is
entitled to deduction u/s 10AA @ 100% of export profits,
since P.Y. 2022 – 23 being the 3rd year of operations]
[profits of the SEZ x Rs. 120 lakhs/ Rs. 400 lakhs x 100%]
Less: Deduction under Chapter VI – A
Deduction under section 80C

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 Repayment of principal amount of housing loan 95000
Insurance premium aid on life insurance policy of son 49000 144000
allowable, even though not dependent on Mr. Dheeraj
Deduction under section 80JJAA 943200
30% of the employee cost of the new employees
employed during the P.Y. 2022 – 23 allowable as
deduction [30% of Rs. 3144000 [Rs. 2376000 912 x 18000
x 11) + Rs. 768000 (8 x 12000 x8)]
Deduction under section 80TTA
Interest on savings bank account, restricted to Rs. 10000 10000
1097200
Total Income 2213300

Computation of tax liability of Mr. Dheeraj for A.Y. 2023 – 24 under the normal provisions of
the Act

Particulars Rs. Rs.

Tax on total income of Rs. 2213300
Tax on LTCG of Rs. 42200 @ 20% 8440
Tax on remaining total income of 2171100
Upto Rs. 250000 Nil
Rs. 25001 – Rs. 500000 [ @ 5% of Rs. 2.50 lakh] 12500
Rs. 500001 – Rs. 1000000 [@20% of Rs. 500000] 100000
Rs. 1000001 – Rs. 2171100 [@30% of Rs. 1171100] 351330 463830
472270
Add: Health and education cess @4% 18891
Total tax liability 491161
Tax liability (rounded off) 491160

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Computation of tax liability of MR. Dheeraj for A.Y. 2023 – 24 under the special provision of
the Act (Alternate Minimum Tax)

Particulars Rs.
Computation of adjusted total income
Total income as per the normal provision of the Act 2213300
Add: Deduction u/s 10AA 1350000
Deduction u/s 80JJAA 943200
4506500
AMT @ 18.5% 833703
Add: HEC @ 4% 33348
AMT liability 867051
AMT liability (rounded off) 867050

Since the regular income tax payable is less than the AMT, the adjusted total income of Rs.
45,06,500 would be deemed to be the total income and tax would be payable @ 18.5% plus
HEC@4%. The total tax liability would be Rs. 8,67,050. In this case, AMT credit of Rs. 3,75,890
(Rs. 8.67,050 – Rs. 4,91,160) can be carried forward.

Mr. Dheeraj also can opt to pay tax as per the provisions of section 115BAC if tax liability there
under is lower. In such case, the AMT provisions would not apply on him. The computation of
total income and tax liability as per the provisions of section 115BAC would be as follows:

Computation of total income of Mr. Dheeraj as per section 115BAC for A.Y. 2023-24

Particulars Rs. Rs.

Gross Total Income as per regular provisions of the Income-tax Act 4660500
Add: Interest on borrowing in respect of self-occupied house property
not allowable as deduction as per section 115BAC 90000
Gross Total Income as per section 115BAC 1750500

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 Less: Deduction under section 80JJAA
30% of the employee cost of the new employees employed during the 943200
P.Y. 2022-23 allowable as deduction [30% of Rs. 31,44,000 [Rs. 23,76,000
(12 x18,000 x 11) + Rs. 7,68,000 (8 x 12,000 x 8)]
No deduction under section 10AA or under Chapter VI-A allowable
except u/s 80JJAA
943200
Total income 3807300
Computation of tax liability as per section 115 BAC

Particulars Rs. Rs.

Tax on total income of Rs. 3807300
Tax on LTCG of Rs. 42200 @ 20% 8440
Tax on remaining total income of Rs. 3765100
Upto Rs. 250000 Nil
Rs. 250001 – Rs. 500000 [@5% of Rs. 2.50 lakhs] 12500
Rs. 500001 – Rs. 750000 [@5% of Rs. 2.50 lakhs] 25000
Rs. 750001 – Rs. 1000000 [@5% of Rs. 2.50 lakhs] 37500
Rs. 1000001 – Rs. 1250000 [@5% of Rs. 2.50 lakhs] 50000
Rs. 1250001 – Rs. 1500000 [@5% of Rs. 2.50 lakhs] 62500
Rs. 1500001 – Rs. 3765100 [@5% of Rs. 2.50 lakhs] 679530 867030
875470
Add: Health and education cess @4% 35019
Total tax liability 910489
Tax liability (round off) 910490

Since tax liability as per section 115BAC is higher than the tax liability of Rs. 8,67,050 being
higher of AMT liability and tax liability computed as per normal provisions of the Income-tax
Act, 1961, it is beneficial for Mr. Dheeraj not to exercise option under section 115BAC. In such

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case, his tax liability, therefore, would be Rs. 8,67,050. Moreover, Mr. Dheeraj would also be
eligible to claim carry forward of AMT credit of Rs. 3,75,890.

A-2

i. Computation of amount chargeable to tax under the head “Capital Gains” in the hands
of Mr. Navee

Particulars Rs.
(i) Sale of 10,000 shares of Y Ltd. on 5.4.2022 @ 650 per share
Sales consideration (10,000 x 650) 6500000
Less: Cost of acquisition 300000
Higher of:
- Actual cost (10,000 x Rs. 100) Rs. 1000000
- Lowerof : 30,00,000
 Rs. 30,00,000 (300 x 10,000), being fair market value as on
31.1.2018 (Highest price of the shares traded on 31.1.2018); and
 Rs. 65,00,000, being full value of consideration on transfer
Long-term capital gain under section 112A [Since shares held for more
than 12 months and STT is paid both at the time of purchase and sale. 3500000
Benefit of indexation is, however, not available on LTCG taxable u/s
112A].
(ii) Sale of 1,000 units of AB Mutual Fund on 20.5.2022 @ Rs. 50 per unit
Sale consideration (1,000 x Rs. 50) 50000
Less: Cost of acquisition - Higher of – 50000
- Actual cost (1,000 x Rs. 10) 10000
- Lower of: 50000
Rs. 55000(Rs. 55 x 1000), FMV, being Net Asset Value as on
31.1.2018;

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 Rs. 50000, being full value of consideration on transfer
Long-term capital gain under section 112A [Since shares are held for
more than 12 months and STT is paid at the time of sale]
(iii) Sale of 100 shares of C Ltd. on 27.9.2022 @ 200 per share
Sale consideration (100 x Rs. 200) 20000
Less: Indexed Cost of acquisition [100 x Rs. 50 (being FMV on 1.4.2001) x 16550
331/100]
Long-term capital gain under section 112 [Since shares are unlisted and 3450
held for more than 24 months]
Tax under section 112A @ 10% on long – term capital gains of Rs. 3400000
3400000 [LTCG of Rs. 3500000 (-) Rs. 100000] arising on sale of shares of
Y Ltd.
Tax under section 112 @ 20% on long – term capital gains of Rs. 3450 690
arising on sale of unlisted shares of C Ltd.
Total Tax payable 340690

ii. Computation of Taxable Income of Mr. Ramesh for A.Y. 2023 – 24 under the regular
provision of the Act
Particulars Amount Rs. Amount Rs.
Income from house property
Unit – 1 [50% of floor area – let out]
Gross Annual Value, higher of
- Expected rent Rs. 114000 [higher of Municipal Value Rs.
94000 p.a. and Fair Rent of Rs. 124000 p.a., but restricted to
Standard Rent of Rs. 114000 p.a.]
- Actual rent Rs. 147000 [Rs. 15000 x 10] less unrealized rent
of Rs. 3000
Gross Annual Value 147000

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 (Alternatively, Rs. 150000 can be shown as actual rent and gross
annual value, and thereafter, deduct Rs. 3000 unrealized rent
there from)
Less: Municipal taxes [50% of Rs. 20000] 10000
Net annual value 137000
Less: Deduction from Net Annual Value
a. 30% of Net Annual Value 41100
b. Interest on loan [50% of Rs. 60000] 30000 65900
Until – 3 [25% of floor area – Self occupied]
Net Annual Value -
Less: Annual Value 15000 (15000)
Less: Interest on loan [25% of Rs. 60000] 50900
Income from house property
Profits and gains from business or profession
Business Income[ without expenditure on until – 2 25% floor 140000
area used for business purpose]
Less: Expenditure in respect of Unit – 2
- Municipal taxes [25% of Rs. 20000] 5000
- Repair [25% of Rs. 5000] 1250
- Interest on loan [25% of Rs. 60000] 15000
- ground rent [25% of Rs. 6000] 1500
- Fire Insurance premium [25% of Rs. 60000] 15000
37750 102250
Taxable Income 153150

A-3 Computation of “Income from Other Sources” of Mr. Lalit for the A.Y. 2023-24

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 Particulars Rs.
(i) Motor car is not included in the definition of “property” for the purpose of -
section 56(2)(x), hence, value of the same is not taxable, even though it is
received without any consideration.
(ii) Cash gift is taxable under section 56(2)(x) 84000
[since the aggregate of 84,000 ( 21,000 x 4) exceeds 50,000]
(iii) Stamp value of plot of land at Jaipur, received without consideration, is 600000
taxable under section 56(2)(x), since the same exceeds Rs. 50,000
(iv) Difference of 2 lakh [1000 shares x 200] in the value of shares of ABC Ltd. -
purchased from Mr. Abhishek, a dealer in shares, is not taxable as it
represents the stock-in-trade of Mr. Lalit (since he is a dealer in shares) and
not capital asset.
(v) Difference between the stamp duty value of Rs. 24 lakh on the date of 400000
booking (since advance was paid by account payee cheque on that date) and
the actual consideration of Rs. 20 lakh paid is taxable under section 56(2)(x)
since the difference exceeds Rs. 2,00,000, being the higher of Rs. 50,000 and
10% of consideration
(vi) Distribution of assets by ABC (P) Ltd. on liquidation attributable to the 125000
accumulated profits (general reserve) of the company is taxable as dividend
under section 2(22)(c).
Income taxable under the head "Income from other sources" 1209000

Computation of “Capital Gains” of Mr. Lalit for the A.y.2023-24

Particulars Rs.
Capital gains on sale of land at Jaipur
Sale Consideration 800000
Less: Cost of acquisition [deemed to be stamp value charged to tax under section 600000
56(2)(x)]

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 Short – term capital gains (since held for a periods of not more than 24 months. 200000
period of holdings of previous owner, Mr. Kabra not to be considered)
Capital gains on distribution of assets on liquidation of ABC (P) Ltd.
Full value of consideration for capital gains on distribution of assets on
liquidation of ABC (P) Ltd.
FMV of assets distribution 1500000
Cash 50000
200000
Less: Deemed dividend under section 2(22)(c) 125000
Full value of consideration for computing capital gains 75000

Note –

(i) As cost of acquisition of shares in ABC (P) Ltd. is not given in the question, capital gains
on distribution of assets on liquidation of ABC (P) Ltd. in the hands of Mr. Lalit has not
been computed.
(ii) As per section 56(1)(i), dividend income is chargeable under the head “Income from
Other Sources”. Hence, deemed dividend u/s 2(22)(c would be taxable under the head
“Income from Other Sources” in the hands of Mr. Lalit, who is a dealer in shares.

A-4 Computation of profit and gains of business or profession for A.Y. 2023 – 24

Particulars Rs. in lakhs

Profit from business of setting up of warehouse for storage of edible oil (before 31
providing for depreciation under section 32)
Less: Depreciation under section 32 3
10% of Rs. 30 lakh, being (Rs. 50 lakh – Rs. 30 Lakh + Rs. 10 lakh)
Income chargeable under “profits and gains from business or profession” 28

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Computation of income/loss from specified business under section 35AD

Particulars Food Grains Sugar Total

Rs. in lakhs
(a) Profits from the specified business of setting up a 16 14 30
warehousing facility (before providing under
section 35 AD)
Less: Deduction under section 35 AD
(b) Capital expenditure incurred prior to 1.4.2022 30 20 50
(i.e., prior to commencement of business) and
capitalized in the books of account as on 1.4.2022
(excluding the expenditure incurred on
acquisition of land) = Rs. 30 lakh (Rs. 80 lakh – Rs.
50 lakh) and Rs. 20 lakh (Rs. 60 lakh – Rs. 40 lakh)
(c) Capital expenditure incurred during the P.Y. 2022 20 15 35
– 23
(d) Total Capital expenditure (B + C) 50 35 85
(e) Deduction under section 35 AD
100% of capital expenditure (food grains/ sugar) 50 35 85
Total deduction u/s 35 AD for A.Y. 2023 -24 50 35 85
(f) Loss from the specified business of setting up
And operation a warehousing facility (after (34) (21) (55)
providing for deduction under section 35 AD) to
be carried forward as per section 73A (A – E)

Notes:

(1) Deduction of 100% of the capital expenditure is available under section 35AD for A.Y.2023-
24 in respect of specified business of setting up and operating a warehousing facility for
storage of sugar and setting up and operating a warehousing facility for storage of

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 agricultural produce where operations are commenced on or after 01.04.2012 or on or after
01.04.2009, respectively.
(2) However, since setting up and operating a warehousing facility for storage of edible oils is
not a specified business, Mr. A is not eligible for deduction under section 35AD in respect of
capital expenditure incurred in respect of such business.
(3) Mr. A can, however, claim depreciation@10% under section 32 in respect of the capital
expenditure incurred on buildings. It is presumed that the buildings were put to use for
more than 180 days during the P.Y.2022-23.
(4) Loss from a specified business can be set-off only against profits from another specified
business. Therefore, the loss of Rs. 55 lakh from the specified businesses of setting up and
operating a warehousing facility for storage of food grains and sugar cannot be set-off
against the profits of Rs. 28 lakh from the business of setting and operating a warehousing
facility for storage of edible oils, since the same is not a specified business. Such loss can,
however, be carried forward indefinitely for set-off against profits of the same or any other
specified business.

A-5 Computation of total income of Mr. Gurnam for the Assessment year 2023 – 24

Particulars Rs. Rs. Rs.

Income From salary 550000
Interest on saving bank deposit 14500
Gross Total Income 564500
Less: Deduction under Chapter VI A
Under section 80 C (See Note 1)
Life Insurance premium paid for life insurance of:
- major son 25500
- self Rs. 22500 restricted to 10% of Rs. 200000 20000 45500
Under section 80 D (See note 2)

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 Premium paid for Rs. 26000 health insurance of Self and wife 25000
by cheque, restricted to
Payment made for health check – up for parents 4500 29500
Under section 80E
For payment of interest on loan taken from bank for MBA 6500
course of his daughter
Under section 80TTA (See note 4)
Interest on savings bank account Rs. 14500 restricted to 10000 91500
Total Income 473000

Notes:

(1) As per section 80C, no deduction is allowed in respect of premium paid for life insurance of
parents, whether they are dependent or not. Therefore, no deduction is allowable in
respect of Rs. 25,000 paid as premium for life insurance of dependent parents of Mr.
Gurnam.
In respect of insurance policy issued on or after 01.04.2012, deduction shall be allowed for
life insurance premium paid only to the extent of 10% of sum assured. In case the insurance
policy is issued before 01.04.2012, deduction of premium paid on life insurance policy shall
be allowed.
Therefore, in the present case, deduction of Rs. 25,500 is allowable in full in respect of life
insurance of Mr. Gurnam's son since the insurance policy was issued before 01.04.2012 and
the premium amount is less than 20% of Rs. 3,50,000. However, in respect of premium paid
for life insurance policy of Mr. Gurnam himself, deduction is allowable only up to 10% of Rs.
2,00,000 since, the policy was issued on or after 01.04.2012 and the premium amount
exceeds 10% of sum assured.
(2) As per section 80D, in case the premium is paid in respect of health of a person specified
therein and for health check-up of such person, deduction shall be allowed up to Rs. 25,000.
Further, deduction up to Rs. 5,000 in aggregate shall be allowed in respect of health check-

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 up of self, spouse, children and parents. In order to claim deduction under section 80D, the
payment for health-checkup can be made in any mode including cash. However, the
payment for health insurance premium has to be paid in any mode other than cash.
Therefore, in the present case, in respect of premium of Rs. 26,000 paid for health
insurance of self and wife, deduction would be restricted to Rs. 25,000. Since the limit of Rs.
25.000 has been exhausted against medical insurance premium, no deduction is allowable
for preventive health check- up for self and wife. However, deduction of Rs. 4,500 is
allowable in respect of health check-up of his parents, since it falls within the limit of Rs.
5,000.
(3) No deduction shall be allowed under section 80G in case the donation is made in cash of a
sum exceeding Rs. 2,000. Therefore, deduction under section 80G is not allowable in
respect of cash donation of Rs. 5,000 made to an institution approved for the purpose of
section 80G for promotion of family planning.
(4) As per section 80TTA, deduction shall be allowed from the gross total income of an
individual or Hindu Undivided Family in respect of income by way of interest on deposit in
the savings account included in the assessee's gross total income, subject to a maximum of
Rs. 10,000. Therefore, deduction of Rs. 10,000 is allowable from the gross total income of
Mr. Gurnam, though the interest from savings bank account is Rs. 14,500.

A-6 Computation of total income of Mr. Praveen for the A.Y. 2023 – 24

Particulars Rs. Rs.

Salaries
Income from salaries 220000
Less: Loss from house property set – off against as per section 71 (1) & 200000 20000
71 (3A)
Profit and gains of business or profession
Income from speculation business 40000

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 Less: Loss from toy business set off 40000 Nil
Capitals gains
Long – term capital gains from sale of urban land 250000
Long – term capital loss on sale of listed shares on which STT is paid can 110000
be such shares is taxable under section 112 A
140000
Less: Loss from toy business set off 90000 50000
Income from other sources
Income total betting 45000
Gross total income 115000
Less: Deduction under section 80C (life insurance premium paid) 20000
Total income 95000

Losses to be carried forward:

Particulars Rs.
(1) Loss from house property (Rs. 250000 – s. 200000) 50000
(2) Loss from toy business (Rs. 130000 – Rs. 40000 – Rs. 90000) Nil
(3) Loss from specified business covered by section 35AD 20000
Notes:

(i) As per section 71(3A), loss from house property can be set-off against any other head of
income to the extent of Rs. 2,00,000 only. As per section 718, balance loss not set-off
can be carried forward to the next year for set-off against income from house property
of that year. It can be carried forward for a maximum of eight assessment years Le, upto
A.Y. 2031-32, in this case.
(ii) Loss from specified business covered by section 35AD can be set-off only against profits
and gains of any other specified business. Therefore, such loss cannot be set off against
any other income. If loss cannot be so set-off, the same has to be carried forward to the
subsequent year for set-off against profits and gains of any specified business, if any, in

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 that year. As per section 73A(2), such loss can be carried forward indefinitely for set-off
against profits of any specified business.
(iii) Business loss cannot be set off against salary income. However, business loss of Rs.
90,000 (Rs. 1,30,000 – Rs. 740,000 set-off against income from speculation business) can
be set-off against long-term capital gains from sale of urban land. Consequently, the
taxable long-term capital gains would be Rs. 50,000.
(iv) Loss from card games can neither be set off against any other income, nor can it be
carried forward.
(v) For providing deduction under Chapter VI-A, gross total income has to be reduced by
the amount of long-term capital gains and casual income. Therefore, the deduction
under section 80C in respect of life insurance premium paid has to be restricted to Rs.
20,000 [ie, Gross Total Income of Rs. 1.15,000 – Rs. 50,000 (LTCG) - Rs. 45,000 (Casual
income)].
(vi) Income from betting is chargeable at a flat rate of 30% under section 115BB and no
expenditure or allowance can be allowed as deduction from such income, nor can any
loss be set-off against such income.

A-7

a. [First Alternative]
Consequences for non-filing return of income within the due date under section 139(1)
Interest under section 234A
Interest under section 234A@1% per month or part of the month for the period
commencing from the date immediately following the due date under section 139(1) till the
date of furnishing of return of income is payable, where the return of income is furnished
after the due date. However, no interest u/s 234A shall be charged on self-assessment tax
paid by the assessee on or before the due date of filing of return.
Fee under section 234F

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 Late fee of 5,000 would be payable under section 234F, if the return of income is not filed
before the due date specified in section 139(1).
However, such fee cannot exceed 1,000, if the total income does not exceed Rs. 5,00,000.
Carry forward and set-off of certain losses not permissible
Following losses would not be allowed to be carried forward, where a return of income is
not furnished within the time allowed under section 139(1):
- business loss, speculation business loss, loss from specified business,
- Loss under the head "Capital Gains"; and
- Loss from the activity of owning and maintaining race horses.

A-8 Since Mr. Sitaram's turnover from business of trading of cement is Rs. 10 crores which
exceeds Rs. 1 crore, being the threshold limit for tax audit under section 44AB, he is subjected
to tax audit. Accordingly, Mr. Sitaram, is required to furnish the following particulars along with
his return of income-

(i) The report of audit referred to in section 44AB.

(ii) The particulars of the location and style of the principal place where he carries on the
business or profession and all the branches thereof.

A-9 TDS implications

(i) On pre-mature withdrawal from EPF

No tax is deductible under section 192A even though the employee, Mr. Kunal, has not
completed 5 years of continuous service, since termination of employment is on
account of his ill-health. Hence, Rule 8 of Part A of the Fourth Schedule is applicable in
this case.
(ii) On payment of service fee to bank

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 Even though service fee is included in the definition of "interest" under section 2(28A),
no tax is deductible at source under section 194A, since the service fee is paid to a
banking company, i.e., Indian Bank.
(iii) On payment of rent by a salaried individual
Mr. Agam, a salaried individual, is not liable to deduct tax at source @5% under section
194-IB on Rs. 1,60,000 (being rent for 5 months from October 2022 to February 2023)
from the rent of Rs. 32,000 payable on 1st day of every month, since the monthly rent
does not exceed Rs. 50,000.

A-10 Computation of Gross Total Income of Mr. X for A.Y. 2023 – 24

Particulars Rs.
Basic Salary = Rs. 20000 x 10 200000
Dearness Allowance = 50% of basic salary 10000
Gift Voucher (See Note - 1) 6000
Transfer of car (See Note – 2) 56000
Gratuity (See Note – 3) 80769
Leave encashment (See Note – 4) 130000
Uncommuted pension (Rs. 5000 x 2) 10000
Commuter pension (See Note – 5) 150000
Gross Salary 732769
Less: Standard deduction u/s 16(is) 50000
Taxable Salary / Gross Total Income 682769

Notes:

(1) As per Rule 3(7)(iv), the value of any gift or voucher or token in lieu of gift received by the
employee or by member of his household not exceeding Rs. 5,000 in aggregate during the
previous year is exempt. In this case, the amount was received on his retirement and the

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 sum exceeds the limit of Rs. 5,000. Therefore, the entire amount of Rs. 6,000 is liable to tax
as perquisite.
Note-An alternate view possible is that only the sum in excess of Rs. 5000 is taxable. In such
a case, the value of perquisite would be Rs. 1,000 and gross taxable income would be Rs.
7,27,769,
(2) Perquisite value of transfer of car: As per Rule 3(7)(viii), the value of benefit to the
employee, arising from the transfer of an asset, being a motor car, by the employer is the
actual cost of the motor car to the employer as reduced by 20% of WDV of such motor car
for each completed year during which such motor car was put to use by the employer.
Therefore, the value of perquisite on transfer of motor car, in this case, would be:

Particulars Rs.
Purchase price (30.1.20) 500000
Less: Depreciation @ 20% 100000
WDV on 29.1.2021 400000
Less: Depreciation @ 20% 80000
WDV on 29.1.2022 320000
Less: Depreciation @ 20% 64000
WDV on 29.1.2023 256000
Less: Amount recovered 200000
Value of perquisite 56000

The rate of 15% as well as the straight line method adopted by the company for depreciation of
vehicle is not relevant for calculation of perquisite value of car in the hands of Mr. X.

(3) Taxable gratuity

Particulars Rs.
Gratuity received 600000
Less: Exempt under section 10(10) – Least of the following:

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 (i) Notified limit = Rs. 2000000
(ii) Actual gratuity = Rs. 600000
(iii) 15/26 x last drawn salary x no. of completed years of services or part in 519231
excess of 6 months 15/26 x Rs. 30000 x 30 = Rs. 519231
Taxable Gratuity 80769

Note:

As per the Payment of Gratuity Act, 1972, D.A. is included in the meaning of salary. Since in this
case, Mr. X is covered under payment of Payment of Gratuity Act, 1972, D.A. has to be included
within the meaning of salary for computation of exemption under section 10(10).

(4) Taxable leave encashment

Particulars Rs.
Leave Salary received 330000
Less: Exempt under section 10(10AA) – Least of the following :
(i) Notified limit Rs. 300000
(ii) Actual leave salary Rs. 330000
(iii) 10 months x Rs. 20000 Rs. 200000
(iv) Cash equivalent of leave to his credit Rs. 220000
330
( 30 x 20000) 200000

Taxable Leave encashment 130000

Note - It has been assumed that dearness allowance does not form part of salary for retirement
benefits. In case it is assumed that dearness allowance forms part of pay for retirement
benefits. then, the third limit for exemption under section 10(10AA) in respect of leave
encashment would be Rs. 3,00,000 (ie. 10 x Rs. 30,000) and the fourth limit Rs. 3,30,000, in

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which case, the taxable leave encashment would be 30,000 (Rs. 3,30,000 – Rs. 3,00.000). In
such a case, the gross total income would be Rs. 6,32,769.

(5) Commuted Pension

Since Mr. X is a non-government employee in receipt of gratuity, exemption under section

10(10A) would be available to the extent of 1/3rd of the amount of the pension which he would
have received had he commuted the whole of the pension.

Particulars Rs.
Amount received 300000
1 3
Exemption under section 10(10A) = 3 x [300000 x 2] 150000

Taxable amount 150000

(6) The taxable provision under section 56(2)(x) are not attracted in respect of television
received from colleagues, since television is not included in the definition of property
therein.

A-11

a. Since GST on services provided or agreed to be provided by an arbitral tribunal to any

business entity located in the taxable territory is payable under reverse charge, in the given
case, GST is payable by the recipient-business entity.
b. GST on sponsorship services provided by any person to anybody corporate or partnership
firm located in the taxable territory is payable under reverse charge. Since in the given case,
services have been provided to an individual, reverse charge provisions will not be
attracted. GST is payable under forward charge by the supplier - company.
c. GST on services provided or agreed to be provided by the Central Government, State
Government, Union Territory, or local authority to any business entity located in the taxable
territory is payable under reverse charge. In case of, renting of immovable property service

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 RCM is applicable only if providing to registered person. Therefore, in the given case,
reverse charge provisions will be attracted. GST is payable under Reverse charge by the
Recipient.
d. Since GST on services provided or agreed to be provided by a Director to any Company
located in the taxable territory is payable under reverse charge. GST is applicable on whole
of India including the States of Jammu & Kashmir. In the given case GST is payable by the
recipient – Company.
e. Since GST on services provided or agreed to be provided by members of Overseeing
Committee to Reserve Bank of India is payable under reverse charge, in the given case, GST
is payable by the recipient - Reserve Bank of India.

A-12 As per notification No. 66/2017 CT dated 15.11.2017, a registered person (excluding
composition supplier) has to pay GST on the outward supply of goods at the time of supply as
specified in section 12(2)(a), i.e. date of issue of the last date on which invoice ought to have
been issued in terms of section 31.

As per section 31(4), in case of continuous supply of goods before or at the time of each such
statement is issued or, as the case may be, each such payment is received. Therefore, invoice
should be issued on August 5, September 5 and October 6 when monthly payments of Rs. 2
lakh are received.

Thus, the time of supply for the purpose of payment of tax will be August 5, September 5, and
October 6 respectively for goods value at Rs. 2 lakh each. For goods valued at Rs. 56000, the
time of supply for the purpose of payment of tax will be October 3, the date of issuance of
invoice.

A-13

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a. Rule 138 (1) of the CGST Rules, 2017 provides that e – way bill is mandatorily required to be
generated if the goods are moved, inter alia, in relation to supply and the consignment
value of goods shall be the value, determined in accordance with the provisions of section
15, declared in an value, determined in accordance with the provisions of section 15,
declared in an invoice, a bill of supply or a delivery challan, as the case may be, issued in
respect of the said consignment and also includes CGST, SGST/UTGST, IGST and cess
charger, if any, in the document and shall excluded the value of exempt supply of goods
where the invoice is issued in respect of both exempt and taxable supply of goods.
Accordingly, in the given case, the consignment value will be as follows:
= Rs. 48000 x 118%
= Rs. 56640.
Since the movement of goods is in related to supply of goods and the consignment value
exceeds Rs. 50000, e – way bill is mandatorily to be issued in the given case.

b. An e – way bill contains two parts namely, part A to be furnished by the registered person
who is causing movement of goods of consignment value exceeding Rs, 50000/- and part B
is to furnished by the person who is transporting the goods.
Where the goods are transported by the registered person as a consignor or the recipient of
supply as the consignee, whether in his own conveyance or a hired one or a public
conveyance, by road, the said person shall generate the e – way bill on the common portal
after furnishing information in part B.
Where the goods are transporter by railway or by air or vessel, the e – way bill shall be
generated by the registered person, being the supplier or the recipient, who shall, either
before or after the commencement of movement, furnish, on the common portal, the
information in Part B.
Where the goods are handed over to a transporter for transportation by road, the
registered person shall furnish the information relating to the transporter on the common

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 portal and e – way bill shall be generated by the transporter on the basis of the information
furnished by the registered person in Part A.
Where the consignor or the consignee has not generated the e – way bill and the aggregate
of the consignment value of goods carried in the conveyance is more than Rs. 50000/, the
transporter, except in case of transportation of goods by railways, air and vessel, shall, in
respect of inter – State supply, generate the e – way bill on the basis of invoice or bill of
supply or delivery challan, as the case may be, and may also generate a consolidated e –
way bill on the common portal prior to the movement of goods.

c. It is mandatory to generate e – way bill in cases where the value of consignment of goods
being transported is more than Rs. 50000/- and it is not otherwise exempted in terms of
rule 138(14) of CGST Rules, 2017. If e – way bills, wherever required, are not issued in
accordance with the provision contained in rule 138, the same will be considered as
contravention of Rules. As per section 122(1)(xiv) of CGST Act, 2017, a taxable person who
transports any taxable goods without the cover of specified documents (e – way bill is one
of the specified documents) shall be liable to a penalty of Rs. 10000/- or tax sought to be
evaded (Wherever applicable) whichever is greater, Moreover, as per section 129(1) of
CGST Act, 2017, where any person transports any goods or stores while they are in transit in
contravention of the provision of this Act or the Rules made there under, all such goods and
conveyance relating to such goods and conveyance shall be liable to detention or seizure.

A-14

S. No. Particulars Taxability

(i) Supply of manpower for cleanliness of roads not involving any Exempt
supply of goods. [Pure services provided to Government are
exempt.]
(ii) Service provided by Fair Price Shops by way of sale of sugar under Exempt

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 Public Distribution System
[Service provided by Fair Price Shops to Government by way of sale
of sugar under Public Distribution System against consideration in
the form of commission is exempt.]
(iii) Service of maintenance of street lights in a Municipal area involving Taxable
replacement of defunct lights and other spares constituting 35% of
the supply of service.
[Composite supply of goods and services to Government in which
the
value of supply of goods constitutes not more than 25% of the value
of thesaid composite supply is exempt. Since, in this case value of
supply of goods constitutes 35% of the supply of composite service,
same is taxable.]
(iv) Service of brochure distribution provided under a training Taxable
programme. [Services provided to the Government under any
training programme for which 75% or more of the total expenditure
is borne by the Government is exempt. Since in the given case, 70%
of the total expenditure is borne by the Government, it is taxable.]

A-15

I. Intra – State supply of goods y A to B

Rs.
Value charged for supply of goods 50000
Add: CGST @ 9% 4500
Add: SGST @ 9% 4500
Total price charged by A from B 59000

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A is the first stage supplier of goods and hence, does not have credit of CGST,

SGST or IGST (Assumed). Thus, the entire CGST (Rs. 4500) & SGST (Rs. 4500) charged will be
paid in cash by A to the Central Government and Karnataka Government respectively.

II. Inter – State supply of goods by B to X Ltd. – Margin @ 10%1

Rs.
Value charged for supply of goods (Rs. 50000 x 110%) 55000
Add: IGST @ 18% 9900
Total price charged by B from X Ltd. 64900

Computation of IGST payable by B to Central Government in cash

Rs.
IGST payable 9900
Less: Credit of CGST 4500
Less: Credit of SGST 4500
IGST payable to Central Government in cash 900

Credit of CGST and SGST can be used to pay IGST [Section 49(5) of the CGST Act, 2017].
Karnataka Government will transfer SGST credit of Rs. 4500 utilised in the payment of IGST to
the Central Government.

III. Intra – State supply of goods by X Ltd. To Y

Rs.
Value charged for supply of goods (Rs. 50000 x 110%) 60500
Add: CGST @ 9% 5445
Add: SGST @ 9% 5445

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 Total price charged by x Ltd. from Y 71390

Computation of CGST and SGST payable y X Ltd. in cash

It has logically presumed that 10% margin is on the value of goods (exclusive of taxes).

Rs.
CGST payable 5445
Less: Credit of IGST 5445
CGST payable to Central Government in cash Nil
SGST payable 5445
Less: Credit of IGST [Rs. 9900 – Rs. 5445] 4455
SGST payable to telangana Government n cash 990

Credit of IGST can be used to pay IGST, CGST and SGST in that order [Section 49(5) of the CGST
Act, 2017]. Central Government will transfer IGST of Rs. 4455 utilized in the payment of SGST to
Telangana Government.

A-16 Time of supply will be:

a. if the invoice is issued within 30 days of supply of service, date of invoice

OR date of receipt of payment, (whichever is earlier)
b. if the invoice is not issued within 30 days of supply of service, date of provision of
service
OR date of receipt of payment, (whichever is earlier)
In accordance with aforesaid provisions, time of supply is:
1. 01.08.2017 since the invoice is not issued within 30 days of supply of service.
2. 07.09.2017 since the invoice is issued within 30 days of supply of service.
3. 03.08.2017 viz. earlier of 07.09.2017 or 03.08.2017

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 4. 07.09.2017 viz. earlier of 07.09.2017 or 15.09.2017

A-17 Section 18 of the CGST Act, 2017 read with the CGST Rules, 2017 provides that if capital
goods or plant and machinery on which input tax credit has been taken are supplied outward by
the registered person, he must pay an amount that is the higher of the following:

a. input tax credit taken on such goods reduced by 5% per quarter of a year or part thereof
from the date of issue of invoice for such goods (ie., input tax credit pertaining to remaining
useful life of the capital goods), or
b. tax on transaction value.

Accordingly, the amount payable on supply of needle detecting machine shall be computed as
follows:

Particulars Rs. Rs.

Input tax credit taken on the machine (Rs. 100000 x 18%) 180000
Less: Input tax credit to be reversed @ 5% per quarter for the period of
use of machine
(i) For the year 2017 – 18 = (Rs. 180000 x 5%) x 3 quarters 27000
(ii) For the year 2018 – 19 = (Rs. 180000 x 5%) x 3 quarters 27000 54000
Amount required to be paid (A) 126000
Duty Leviable on transaction value (Rs. 750000 x 18%) (B) 135000
Amount payable towards disposal of machine is higher of (A) and (B) 135000

A-18

(i) Casual taxable person means a person who occasionally undertakes transactions
involving supply of goods and/or services in the course or furtherance of business,

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 whether as principal, agent or in any other capacity, in a State/UT where he has no fixed
place of business.
(ii) No, a casual taxable person cannot opt for the composition scheme.
(iii) A casual taxable person (CTP) is liable to obtain registration compulsorily under GST
laws, at least 5 days prior to commencement of business.
However, threshold limit of 20 lakh (10 lakh in case of Special Category States other
than Jammu & Kashmir) is available in case of CTP making taxable supplies of
specified handicraft goods.
(iv) The registration certificate issued to a casual taxable person will be valid for:
(a) the period specified in the registration application, or
(b) 90 days from the effective date of registration whichever is earlier.
(v) Yes, the validity of registration certificate issued to a casual taxable person can be
extended. It can be extended by a further period not exceeding 90 days.

A-19 A supplier whose aggregate turnover in a financial year exceeds 20 lakh in a State/UT [10
lakh in 4 special category states] is liable to apply for registration within 30 days from the date
of becoming liable to registration (i.e., the date of crossing the threshold limit of Rs. 20 lakh/Rs.
10 lakh) vide section 22 of COST Act, 2017.

Where the application is submitted within said period, the effective date of registration is the
date on which the person becomes liable to registration; otherwise it is the date of grant of
registration.

Every registered person who has been granted registration with effect from a date earlier than
the date of issuance of registration certificate to him may issue revised tax invoices in respect
of taxable supplies affected during this period within 1 month from the date of issuance of
registration certificate.

In the given case, Luv & Kush Pvt. Ltd is located in UK. Thus, since Luv & Kush Pvt. Ltd. has made
the application for registration within 30 days of becoming liable for registration, the effective

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date of registration becomes the date on which the company becomes liable to registration Le.
05.09.20XX

Thus, Luv & Kush Pvt. Ltd. may issue revised tax invoices against the invoices already issued
during the period between effective date of registration (05.09.20XX) and the date of issuance
of registration certificate (06.10.20XX), within 1 month from 06.10.20XX. Further, Luv & Kush
Pvt. Ltd may issue a consolidated revised tax invoice in respect of all taxable supplies.

A-20

Taxable/Not Amount liable Reason

Taxable to tax (Rs)
(i) Taxable 6,50,000 As per section 9(1)(iii), salaries payable by the
Government to a citizen of India for service rendered
outside India shall be deemed to accrue or arise in
India. Therefore, salary paid by Central Government
to Mr. John for services rendered outside India would
be deemed to accrue or arise in India since he is a
citizen of India. He would be entitled to standard
deduction of Rs 50,000 under section 16(ia).
(ii) Taxable 5,00,000 As per section 9(1)(v)(c), interest payable by a non-
resident on moneys borrowed and used for the
purposes of business carried on by such person in
India shall be deemed to accrue or arise in Indian in
the hands of the recipient.
(iii) Partly Taxable 5,500 The interest on Post Office Savings Bank a/c, would
be exempt u/s 10(15)(i), only to the extent of Rs
3,500 in case of an individual a/c. Further, interest
upto Rs 10,000, would be allowed as deduction u/s

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 80TTA from Gross Total Income. Balance Rs 5,500 i.e.
Rs 19,000 – Rs 3,500 – Rs 10,000 would be taxable in
the hands of Mr. Ram, a resident.
(iv) Not Taxable -- Royalty paid by a resident to a non-resident in respect
of a business carried outside India would not be
taxable in the hands of the non-resident provided the
same is not received in India. This has been provided
as an exception to deemed accrual mentioned in
section 9(1)(vi)(b).
(v) Taxable 5,00,000 In case of a non-resident, any income which accrues
or arises in India or which is deemed to accrue or
arise in India or which is received in India or is
deemed to be received in India is taxable in India.
Therefore, legal charges paid in India to a non-
resident lawyer of UK, who visited India to represent
a case at the Delhi High Court would be taxable in
India.

A-21 This statement is correct.

As per Explanation to section 9, income by way of interest, royalty or fees for technical services
which is deemed to accrue or arise in India by virtue of clauses (v), (vi) and (vii) of section 9(1),
shall be included in the total income of the non-resident, whether or not-

(i) Non-resident has a residence or place of business or business connection in India; or

(ii) The non-resident has rendered services in India.

In effect, the income by way of fees for technical services, interest or royalty from services
utilized in India would be deemed to accrue or arise in India in case of a non-resident and be

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included in his total income, whether or not such services were rendered in India and
irrespective of whether the non-resident has a residence or place of business or business
connection in India.

A-22 Multiple taxes: Despite the introduction of the principle of taxation of value added in
India-at the Central level in the form of CENVAT and at the State level in the form of State VAT-
its application has remained limited because of the following reasons:

 Several local levies in State VAT such as luxury tax, entertainment tax, etc.
 Cascading of taxes on account of levy of CST, inclusion of CENVAT/excise duty in the value
for imposing VAT.
 No CENVAT credit after manufacturing stage.
 Non-integration of VAT & service tax.

Cascading effect: In the old regime, a manufacturer of excisable goods charges excise duty and
value added tax (VAT) on intra-state sale of goods and the VAT dealer on his subsequent intra-
state sale of goods charges VAT (as per prevalent VAT rate as applicable in the respective state)
on value comprising of (basic value + excise duty charged by manufacturer + profit by dealer)
which creates cascading effect.

Double taxation: Double taxation of a transaction was exist prior to introduction of GST i.e. a
particulars transaction chargeable to tax by treating it service as well as goods but after
introduction of GST such kinds of composite supplies shall be treated only as service e.g.-
Services by a Restaurant, works contract service, service provided by job worker etc.

No Uniformity: Multiple taxes- Multiple Procedure. Under old laws there was multiple taxes
therefore multiple taxable events, multiple registrations, multiple returns i.e. no uniformity in
earlier.

A-23 It has been clarified vide Circular No. 116/35/2019 GST dated 11.10.2019 that when the
name of the donor is displayed in the religious institution premises, by placing a name plate or

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similar such acknowledgement, which can be said to be an expression of gratitude and public
recognition of donor’s act of philanthropy and is not aimed at giving publicity to the donor in
such manner that it would be an advertising or promotion of his business, then it can be said
that there is no supply of service for a consideration (in the form of donation). There is no
obligation (quid pro quo) on part of recipient of the donation or gift to do anything (supply a
service). Therefore, there is no GST liability on such consideration.

In the given case, there is no reference or mention of any business activity of the donor which
otherwise would have got advertised. Thus, since the gift or donation is made to a charitable
organization, the payment has the character of gift or donation and the purpose is
philanthropic (i.e., it leads to no commercial gain) and not advertisement, hence GST is not
leviable.

A-24 Computation of business income and agricultural income of Ms. Vivitha for the A.Y. 2023-
24

S. Source of Income Gross Business income Agricultural

No. (Rs) Income
% Rs Rs
(i) Sale of centrifuged latex from rubber 3,00,000 35% 1,05,000 1,95,000
plants grown in India.
(ii) Sale of coffee grown and cured in 1,00,000 25% 25,000 75,000
India.
(iii) Sale of coffee grown, cured, roasted 2,50,000 100% 2,50,000 --
and grounded outside India (See
Note 1 below)
(iv) Sale of tea grown and manufactured 4,00,000 40% 1,60,000 2,40,000
in India.
(v) Saplings and seedlings grown in 80,000 Nil 80,000

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 nursery in India (See Note 2 below)
Total 5,40,000 5,90,000

Notes:

1. Where income is derived from sale of coffee grown, cured and roasted and grounded by the
seller in India, 40% of such income is taken as business income and the balance as
agricultural income. However, in this question, these operations are done in Colombo, Sri
Lanka. Hence, there is no question of such apportionment and the whole income is taxable
as business income. Receipt of sale proceeds in India does not make this agricultural
income. In the case of an assessee, being a resident and ordinarily resident, the income
arising outside India is also chargeable to tax.
2. Explanation 3 to section 2(1A) provides that the income derived from saplings or seedlings
grown in a nursery would be deemed to be agricultural income whether or not the basic
operations were carried out on land.

A-25 Computation of tax liability of Mr. D for the A.Y. 2023-24

(A) Tax payable including surcharge on total income of Rs 5,01,00,000

Rs 2,50,000 – Rs 5,00,000 @5% Rs 12,500
Rs 5,00,001 – Rs 10,00,000 @20% Rs 1,00,000
Rs 10,00,001 – Rs 5,01,00,000 @30% Rs 1,47,30,000
Total Rs 1,48,42,500
Add: Surcharge @37% Rs 54,91,725
Tax liability without marginal relief Rs 2,03,34,225

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(B) Above amount is restricted to
Tax on 5 crore + (NTI – 5 Cr) Rs 1,86,15,625
(1,48,12,500 + 25% surcharge) + 1,00,000

(C) Tax payable: lower of (A) & (B) Rs 1,86,15,625

Add: Health and education cess @4% Rs 7,44,625
Tax liability Rs 1,93,60,250
Marginal relief (A-B) 17,18,600

A-26 Computation of income under the head “Salaries” of Mr. Raja for the A.Y. 2023-24

Particulars Rs Rs
Basic Salary = Rs 25,000 x 9 months 2,25,000
House Rent Allowance = Rs 6,000 x 9 months 54,000
Less: Least of the following exempt under section 10(13A) 36,000 18,000
(i) House rent allowance actually received = Rs 6,000 x 9 = Rs
54,000
(ii) Rent paid (-) 10% of salary for the relevant period [Rs 58,500
(i.e., Rs 6,500 x 9) (-) Rs 22,500 (10% of salary i.e., 10% of Rs
2,25,000 (Basic Salary)] = Rs 36,000
(iii) 50% of salary for the relevant period [50% of Rs 2,25,000 (Basic
salary)] Rs 1,12,500
Gratuity 3,50,000
Less: Least of the following exempt under section 10(10)(ii) 3,50,000 Nil
(i) Actual Gratuity received Rs 3,50,000
(ii) 15 days salary for every year of completed service [15/26 x Rs
25,000 x 26] = Rs 3,75,000

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(iii) Notified limit = Rs 20,00,000
Leave encashment 3,15,000
Less: Least of the following exempt under section 10(10AA) 2,50,000 65,000
(i) Rs 3,00,000
(ii) Leave salary actually received Rs 3,15,000
(iii) Rs 2,50,000, being 10 months’ salary x Rs 25,000
(iv) Cash equivalent of leave standing at the credit of the employee
based on the average salary of last 10 months’ (max. 30 days
per year of service) for every year of actual service rendered for
the employer from whose service he has retired.
375/30 x Rs 25,000 = Rs 3,12,500
[Leave Due = Leave allowed – Leave taken]
= 750 (30 days per year x 25 years) – 375 days (15 days x 25)
= 375 days]
Uncommuted Pension received [(Rs 5,000 x 1) + (Rs 5,000 x 2 x 40%)] 9,000
Commuted Pension received 3,00,000
Less: Exempt under section 10(10A) 1,66,667 1,33,333
1/3 x Rs 3,00,000/60% x 100%)
Gift voucher [As per Rule 3(7)(iv), the value of any gift or voucher or Exempt
token in lieu of gift received by the employee or by member of his
household not exceeding Rs 5,000 in aggregate during the previous
year is exempt]
Mobile Phone received as gift from colleagues (Neither taxable under Nil
the head “Salaries” nor “Income from other sources”, since taxability
provisions under section 56(2)(x) are not attracted in respect of mobile
phone received from colleagues, as mobile phone is not included in the
definition of “Property” thereunder)
Gross Salary 4,50,333
Less: Standard deduction u/s 16 [Actual salary or Rs 50,000, whichever 50,000

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 is less]
Net Salary 4,00,333

A-27 Since the assessee is a resident and ordinarily resident in India, her global income would
form part of her total income i.e., income earned in India as well as outside India will form part
of her total income.

She possesses a self-occupied house at Los Angeles as well as at Chennai. She can take the
benefit of “Nil” Annual Value in respect of both the house properties.

As regards the Bangalore house, arrears of rent will be chargeable to tax as income from house
property in the year of receipt under section 25A. It is not essential that the assessee should
continue to be the owner. 30% of the arrears of rent shall be allowed as deduction.

Accordingly, the income from house property of Mrs. Rohini Ravi for A.Y. 2023-24 will be
calculated as under:

Particulars Rs Rs
1. Self-occupied house at Los Angeles
Annual value Nil
Less: Deduction under section 24 Nil
Chargeable income from this house property Nil
2. Self-occupied house property at Chennai
Annual value Nil
Less: Deduction under section 24 1,91,940
Interest on borrowed capital (See Note Below) (1,91,940)
3. Arrears in respect of Bangalore property (Section 25A)
Arrears of rent received 60,000
Less: Deduction @30% u/s 25A(2) 18,000 42,000

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 Loss under the head “Income from house property” (1,49,940)

Note: Interest on borrowed capital

Particulars Rs
Interest for the current year (Rs 50,800 + Rs 1,31,300) 1,82,100
Add: 1/5th of pre-construction interest (Rs 49,200 x 1/5) 9,840
Interest deduction allowable under section 24 1,91,940

A-28

(i) Renting of community hall by Amar Jyoti charitable trust is exempt from GST, as rent is
less than Rs 10,000 per day. The Exemption Notification No. 12/2017/Notification No
9/2017 has exempted the said service wholly from GST.
The said notification provides exemption to services by a person inter alia by way of
renting of precincts of a religious place meant for general public, owned or managed by
an entity registered as a trust or an institution under section 10(23C)(v) of the Income-
tax Act. However, this exemption does not apply where renting charges of premises,
community halls, Kalyanmandapam or open area are Rs 10,000 or more per day.
(ii) It will be taxable however if Services by the Department of Posts by way of post card,
inland letter, book post and ordinary post (envelops weighing less than 10 grams) then it
will be exempted.
Exemption Notification inter alia provides exemption to services by the Department of
Posts by way of speed post, express parcel post, life insurance, and agency services
provided to the Central Government, State Government, Union territory. Therefore GST

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 is payable, if such service is provided to a person other than Central Government/State
Government/Union Territory.
(iii) GST is not payable in case of hiring of trucks to Jaggi Transporters. The Exemption
Notification No. 12/2017 CT(R) dated 28.06.2017/Notification No. 9/2017 IT(R) dated
28.06.2017 provides exemption to services by way of giving on hire inter alia to a goods
transport agency, a means of transportation of goods.

A-29 Computation of GST payable by Parikshit Ltd. for the month of March

Particulars Value GST @18%

(Rs) (Rs)
Fees from prospective employers for campus interview in its 5,20,000 93,600
college.
[Taxable since such services are not specifically exempt]
Five buses each with seating capacity of 40 passengers given on Nil Nil
hire to State Transport Undertaking.
[Services by way of giving on hire to a State transport undertaking
(STU), a motor vehicle meant to carry more than 12 passengers,
are exempt vide Notification No. 12/2017 CT(R) dated 28.06.2017
(hereinafter referred to as exemption notification)].
Receipts of Shiny- a coaching institute 1,82,000 32,760
[Services provided by an educational institution to its students,
faculty and staff are exempt vide exemption notification. However,
coaching institute is not an educational institution.]
Interest received on fixed deposits of the company with Nil Nil
Dhanvarsha Bank
[Services by way of extending deposits, loans or advances in so far
as the consideration is represented by way of interest or discount
(other than interest involved in credit card services) are exempt
vide exemption notification.]

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Receipts from Boarding School including receipts for residential Nil Nil
dwelling service
[Services provided by an educational institution to its students,
faculty and staff are exempt vide exemption notification. Boarding
School providing education up to higher secondary school or
equivalent is an educational institution since it provides composite
supply of education service coupled with other services like
providing dwelling units for residence and food wherein the
principal supply is supply of education service].
Receipts of Sikshit Samudai Nil Nil
[Services provided by an educational institution to its students,
faculty and staff are exempt vide exemption notification. Sikshit
Samudai is an educational institution running approved vocational
education course].
Receipts of ‘Pratibha Institute’ running Modular Employable Skill Nil Nil
Course
[Services provided by an educational institution to its students,
faculty and staff are exempt vide exemption notification. Pratibha
Institute is an educational institution running approved vocational
education course].
Professional services provided to foreign diplomatic mission 1,04,000 18,720
located in India
[While services provided by a foreign diplomatic mission located in
India are exempt from GST vide exemption notification, no such
exemption is available to the service provided to such mission].
GST payable 8,06,000 1,45,080

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A-30 Computation of value of taxable supply and tax liability

Particulars Amount (Rs)

Price of the goods [Note-1] 2,00,000
(vi) Packing charges [Note-2] 5,000
(vii) Freight & Cartage [Note-3] 2,000
(viii) Transit insurance [Note-3] 1,500
(ix) Extra Designing charges [Note-4] 6,000
(x) Taxes by Municipal Authority [Note-5] 500
Value of taxable supply 2,15,000
CGST @9% 19,350
SGST @9% 19,350

Notes:-

1. As per section 15(1) of the CGST Act, 2017, the value of a supply is the transaction value i.e.
the price actually paid or payable for the said supply.
2. All incidental expenses including packing charged by the supplier to the recipient are
includible in the value of supply in terms of section 15(2) of the CGST Act, 2017.
3. The given supply is a composite supply involving supply of goods (stationery items) and
services (transit insurance and freight) where the principal supply is the supply of goods.
As per section 8(a) of the CGST Act, 2017, a composite supply is treated as a supply of the
principal supply involved therein and charged to tax accordingly.
4. Any amount charged for anything done by the supplier in respect of the supply of goods or
services or both at the time of, or before delivery of goods or supply of services; is includible
in the value of supply vide section 15(2) of the CGST Act, 2017. Thus, extra designing
charges are to be included in the value of supply.
5. The taxes by Municipal Authorities are includible in the value of supply in terms of section
15(2) of the CGST Act, 2017.

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6. In the given case, Mr. Mehta is allowed a discount of Rs 20,000 on the goods supplied to
him in the month of November, 20XX. Since the said goods have already been delivered by
Kamal Book Depot, this discount will be post-supply discount.

Further, value of supply shall not include any discount which is given after supply has been
effected, if-

(i) Such discount is established in terms of an agreement entered into at or before the time
of such supply and specifically linked to relevant invoices; and
(ii) Input tax credit as it attributable to the discount on the basis of document issued by the
supplier has been reversed by the recipient of the supply [Section 15(3) of the CGST Act,
2017].

However, in the given case, post-supply discount given to Mr. Mehta will not be allowed as a
deduction from the value of supply since the discount policy was not known before the time of
such supply although the discount can be specially linked to relevant invoice (invoice pertaining
to stationery items supplied to Mr. Mehta in November, 20XX).

In case the expenses (i) to (v) given in above table are already included in the price of Rs
2,00,000:

Since these expenses are includible in the value of supply by virtue of the reasons mentioned in
explanatory notes above, no further addition will be required. Resultantly, the value of taxable
supply will be Rs 2,00,000 and CGST and SGST will be Rs 18,000 and Rs 18,000 respectively.

A-31 Computation of “Capital Gains” of Mrs. Yuvika for A.Y.2023 - 24

Particulars Rs. (in lakhs) Rs. (in lakhs)

Capital Gains on sale of residential building
Actual sale consideration Rs. 810 lakhs
Value adopted by Stamp Valuation Authority Rs. 890 lakhs

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[Where the actual sale consideration is less than the value
adopted by the Stamp Valuation Authority for the purpose of
charging stamp duty, and such stamp duty value exceeds 110%
of the actual sale consideration, then, the value adopted by
the Stamp Valuation Authority shall be taken to be the full
value of consideration as per section 50C.
However, where the date of agreement is different from the
date of registration, stamp duty value on the date of
agreement can be considered provided the whole or part of
the consideration is received by way of account payee
cheque/bank draft or by way of ECS through bank account or
through prescribed electronic modes on or before the date of
agreement.
In this case, since advance of Rs. 80 lakh is received by RTGS,
i.e., one of the prescribed modes, stamp duty value on the
date of agreement can be adopted as the full value of
consideration. However, in the present case since stamp duty
value on the date of agreement does not exceed 110% of the
actual consideration, actual sale consideration would be taken
as the full value of consideration) 810.00
Gross Sale consideration (actual consideration, since stamp
duty value on the date of agreement does not exceed 110% of
the actual consideration)
Less: Brokerage @1% of sale consideration (1% of Rs. 810 8.10

GMTESTSERIES.COM®
lakhs) 801.90
Net Sale consideration
Less: Indexed cost of acquisition
- Cost of vacant land, Rs. 80 lakhs, plus registration and 257.77
other expenses i.e..Rs. 8 lakhs, being 10% of cost of 529.08
land [ Rs. 88 lakhs 331/113 ] 271.31
- Construction cost of residential building (Rs. 100 lakhs x
331/122) 272.82

Long-term capital gains

Since the residential house property was held by Mrs. Yuvika
for more than 24 months immediately preceding the date of its
transfer, the resultant gain is a long-term capital gain]
130.00

Less: Exemption under section 54

Where long-term capital gains exceed ?Rs. 2 crore, the capital

gain arising on transfer of a long-term residential property
shall not be chargeable to tax to the extent such capital gain is
invested in the purchase of one residential house property in
India, one year before or two years after the date of transfer of
original asset.
Therefore, in the present case, the exemption would be
available only in respect of the one residential house acquired
in India and not in respect of the residential house in UK. It
would be more beneficial for her to claim the cost of
acquisition of residential house at Delhi, i.c., Rs. 130 lakhs as
exemption. 50.00

Less: Exemption under section 54EC

GMTESTSERIES.COM®
 Amount invested in capital gains bonds of NHAI within six
months after the date of transfer (i.e., on or before 13.7.2022),
of long-term capital asset, being land or building or both,
would qualify for exemption, to the maximum extent of Rs. 50
lakhs, whether such investment is made in the current financial
year or subsequent financial year.
Therefore, in the present case, exemption can be availed only
to the extent of Rs. 50 lakh out of Rs. 90 lakhs, even if the both
the investments are made on or before 13.7.2022(i.c., within
six months after the date of transfer).
Long term capital gains chargeable to tax 92.82

Note: Advance of Rs. 20 lakhs received from Mr. Johar, would have been chargeable to tax
under the head "Income from other sources", in the A.Y. 2016- 17, as per section 56(2)(ix), since
the same was forfeited on or after 01.4.2014 as a result of failure of negotiation. Hence, the
same should not be deducted while computing indexed cost of acquisition.

A-32 Computation of “Income from other source” of Mr. A for the A.Y. 2023 – 24

Particulars Rs.

(1) Cash gift is taxable under section 56(2)(x), since it exceeds Rs. 50,000 75000

(2) Since bullion is included in the definition of property, therefore, when bullion 60000
is received without consideration, the same is taxable, since the aggregate fair
market value exceeds Rs. 50,00

GMTESTSERIES.COM®
 (3) Stamp value of plot of land at Faridabad, received without consideration, is 500000
taxable under section 56(2)(x)

(4) Difference of Rs. 2 lakh in the value of shares of X Ltd. purchased from Mr. C, a -
dealer in shares, is not taxable as it represents the stock-in-trade of Mr. A.
Since Mr. A is a dealer in shares and it has been mentioned that the shares
were subsequently sold in the course of his business, such shares represent
the stock- in-trade of Mr. A.

(5) Difference between the stamp duty value of Rs. 23 lakh on the date of booking 300000
and the actual consideration of Rs. 20 lakh paid is taxable under section
56(2)(x) since the difference exceeds Rs. 2,00,000, being the higher of Rs.
50,000 and 10% of consideration

Income from Other Sources 935000

Computation of “Capital Gains” of Mr. A for the A.Y. 2023 – 24

Particulars Rs.
Sale Consideration 700000
Less: Cost of acquisition [deemed to be the stamp value charged to tax under 500000
section 56(2)(x) as per section 49(4)]
Short-term capital gains. 200000

Note: The resultant capital gains will be short-term capital gains since for calculating the period
of holding, the period of holding of previous owner is not to be considered.

Q-33

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(i) As per Explanation 3 to section 40(b), "book profit" shall mean the net profit as per the profit
and loss account for the relevant previous year computed in the manner laid down in Chapter
IV-D as increased by the aggregate amount of the remuneration paid or payable to the partners
of the firm if the same has been already deducted while computing the net profit. In the
present case, the net profit given is before deduction of depreciation on plant and machinery,
interest on capital of partners and salary to the working partners. Therefore, the book profit
shall be as follows:

Computation of Book Profit of the firm under section 40(b)

Particulars Rs. Rs.

Net profits (before deduction of depreciation, salary and interest) 700000
Less: Depreciation under section 32 150000
interest @ 12% p.a. [being the maximum allowable as per section 40 60000 210000
(b)] (500000 x 12%)
Book Profits 490000

(ii) Salary actually paid to working partners = Rs. 20000 x 2 x 12 = Rs. 480000

As per the provisions of sections 40(b)(v), the salary paid to the workings partners is allowed
subjects to the followings limits -

On the first Rs. 300000 of book profits or in Rs. 150000 or 90% of book profits, whichever
case of loss is more
O the balance of book profits 60% of the balance book profits

Therefore, the maximum allowable workings partner’s salary for the A.Y. 2023 – 24 in this case
would be:

Particulars Rs.
On the first Rs. 300000 of book profits [(Rs. 150000 or 90% of Rs. 300000) 270000

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 whichever is more]
of book profits [60% of (Rs. 490000 – Rs. 300000)] 114000
Maximum allowable partner’s salary 384000

Hence, allowable workings partner’s salary for the A.Y. 2023 – 24 as per provisions of sections
40(b)(v) is Rs. 384000.

A-34 Computation of value of taxable supply made by Shri Krishna Pvt. Ltd.to ShriBalram Pvt.
Ltd.

Particulars Amount (Rs.)

Price of the goods 100000
Municipal tax [Includible in the value as per section 15(2)(a)] 2000
Inspection charges [Any amount charged for anything done by the supplier 15000
in respect of the supply of goods at the time of/before delivery of goods is
includible in the value as per section 15(2)(c)]
Subsidy received from Shri Ram Trust [Since the subsidy is received from a 50000
non-Government body and directly linked to the supply, the same is includible
in the value in terms of section 15(2)(e)]
Late fees for delayed payment [Not includible since the same is waived off] Nil
Weighment charges paid to Radhe Pvt. Ltd. on behalf of Shri Krishna Pvt. Ltd. 2000
[Any amount that the supplier is liable to pay in relation to the supply but has
been incurred by the recipient and not included in the price actually paid or
payable for the goods, is includible in the value of supply in terms of
section 15(2)(b)]
Value of taxable supply 169000

GMTESTSERIES.COM®
A-35 Computation of ITC available with Siddhi Ltd.

S. No. Particulars Inputs tax Rs.

1. Capital goods Nil
Since depreciation has been claimed on the tax component of the
value of the capital goods, ITC of such tax cannot be availed in terms
of section 16 of the CGST Act, 2017.]
2. Goods purchased from Ravi Traders Nil
[ITC in respect of goods not received cannot be availed (Section 16 of
the CGST Act, 2017). Since the goods have been received in the
month of March 2019, ITC thereon can be availed in March 2019 and
not January 2019 even though the invoice for the same has been
received in January 2019]
3. Cars purchased for making further supply Nil
[Though ITC on motor vehicles used for further supply of such
vehicles is not blocked, ITC on goods destroyed for whichever reason
is blocked (Section 17(5) of the CGST Act, 2017).]
4. Goods used for setting telecommunication towers Nil
[TTC on goods used by a taxable person for construction of
immovable property on his own account is blocked even when such
goods are used in the course or furtherance of business (Section 17
of the CGST Act, 2017).]
5. Goods purchased from Pooja Ltd. 10000
[ITC can be claimed provisionally in January 2019 since all the
conditions necessary for availing the same have been complied with
(Section 16 of the
CGST Act, 2017).
However, the claim will get confirmed only when the tax charged in

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 respect of such supply has been actually paid to the Government.]
6. Trucks purchased for delivery of output goods 80000
[ITC on motor vehicles used for transportation of goods is not
blocked (Section 17(5) of the CGST Act, 2017).]
Total ITC available with Siddhi Ltd 90000

Note: The above answer is based on the assumption that the ITC available is to be computed
for the month of January, 2019. However, since the question does not specify the period for
which ITC available is to be computed, the question may also be answered without referring to
any particular period.

A-36

Particulars Rs. Rs. Rs.

I. Income from business or profession
Net profit as per profit and loss account 5,61,000
Add: Items not credited but taxable while computing
business income
- Commission from agent on settlement (since
deduction was allowed in respect of commission in
50,000
earlier year and during the P.Y. 2022-23 Mrs. Nisha
received back such amount due to settlement, the
same would be deemed as her income)
- Interest on capital from partnership firm (Rs.
2,00,000/15% x 12%) (since interest on capital
from M/s Ramji textiles is authorized by
partnership deed, interest @ 12% p.a. would be
1,60,000
allowed as deduction in the hands of firm under

GMTESTSERIES.COM®
 section 40(b). Consequently, interest @ 12% p.a.
would be the business income of Mrs. Nisha under
section 28. For allowability of interest in the hands
of the firm, there is no requirement that the
partner should be a working partner)
2,10,000
7,71,000
Less: Items not debited but allowable while
computing business income
- Job charges without deduction of tax (Rs. 90,000 –
30% of Rs. 90,000) (Mrs. Nisha’ s turnover for the 63,000
p.y. 2021-22 exceeds Rs. 1 crore, hence, she is
liable to deduct tax at source u/s 194C on job
charges of Rs. 90,000. Since Mrs. Nisha has not
deducted tax at source on Rs. 90,000, 30% would
be disallowed under section 40 (a) (ia). Remaining
job charges paid would be allowable as deduction
while computing business income
- Payment to creditor in cash [payment to creditor
in cash is not allowable as business expenditure,
since such amount exceeds Rs. 10,000 and paid in
cash by virtue of section 40A(3)]
63,000
7,08,000
Less: Depreciation as per Income- tax Rules
Opening WDV of machinery 4,75,000
Add: purchase of machinery for Rs. 7,25,000 during
the P.Y. 2022-23 by A/c payee cheque. Subsidy of Rs.
1,45,000, being 20% of cost, received from Central

GMTESTSERIES.COM®
 Government on new
Machinery is to be reduced from actual cost 5,80,000
(Rs. 7,25,000 – Rs. 1,45,000). 10,55,000
Less: Sale proceeds 75,000
WDV as on 31.3.2023 before depreciation for p.y.
2022-23 9,80,000
Depreciation @ 15% on Rs. 9,80,000 1,47,000
Additional Depreciation @ 20% on Rs. 5,80,000 1,16,000
(As new machinery is used in manufacturing business
and put to use for more than 180 days in the p.y. 2,63,000
2022-23, depreciation and additional depreciation will
be allowed in full)
Less: Loss from eligible transaction carried out in 4,45,000
respect of trading in derivatives in a recognized stock
exchange is not a speculative business and hence, the 1,17,500
same is allowed to be set off from textile business
income as per section 70.
II. Capital Gains 3,27,500
Long term capital gain on sale of gold bracelet since it 5,00,000
is held for more than 36 months
Sales consideration
Less: Cost of acquisition (40,000 x 331/ 113) 1,17,168
Less: Cost of improvement (50,000 x 331/ 129) 1,28,295
Long-term capital gain on sale of gold bracelet 2,54,537
Note- In the additional information (xiii), it is
mentioned that Mrs. Nisha has purchased a new
residential house during the previous year. In such a
case, she would be eligible for exemption u/s 54F in
respect of amount invested in purchase of new

GMTESTSERIES.COM®
 residential house from long term capital gain on sale
of gold bracelet. However, the cost of new residential
house is not provided in the question but only stamp
duty and registration fee is given which would also be
the part of cost of house. In such case exemption u/s
54F would be Rs. 2,54,537 x 1,55,000/5,00,000 = Rs.
78,906. Accordingly, long term capital gain would be
Rs. 1,00,631 (instead of Rs. 1,79,537). In such a case,
Rebate u/s 87A would be Rs. 3,626 (instead of Rs.
12,500) and tax liability of Mrs. Nisha would be Nil
(instead of Rs. 7,180)
Less: Long term capital loss from sale of STT paid
shares of an Indian company allowed to be set off 75,000
from long term capital gain on sale of gold bracelet as
per section 70.
III. Income from other sources 1,79,537
Fair market value of gold coin received from cousin 55,000
[Taxable u/s 56(2)(x), since cousin is not a relative and
the fair market value exceeds Rs. 50,000]
Pre- mature withdrawal from post office time deposit 60,000
[Amount including interest received on pre- mature
withdrawal from post office time deposit, in respect of
which deduction u/s 80C was claimed, would be
deemed to be the income of Mrs. Nisha] 1,15,000

GMTESTSERIES.COM®
 Gross Total Income 6,22,037
Less: Deduction under chapter VI-A
Deduction under section 80C
Stamp duty and registration fee of Rs. 1,55,000 for the 1,50,000
purpose of transfer of house property, restricted to
Deduction under section 80DD
Sum deposited with LIC for the maintenance of her
dependent mother and suffering from severe disability
[Eligible for higher deduction 1,25,000
Rs. 1,25,000 in case of severe disability irrespective of
amount deposited with LIC]
Total Income 2,75,000

3,47,037

Computation of tax liability of Mrs. Nisha for A.Y. 2023-24

Particulars Rs.
Tax on long – term capital gains @ 20% on Rs. 97,037 [Rs.1,79,537 – Rs. 82,500, 19,407
being unexhausted basic exemption limit (Rs. 2,50,000 – 1,67,500)]
Tax on other income of Rs. 1,67,500 [Rs. 3,47,037 – Rs. 1,79,537, being LTCG], Nil
being lower than the basic exemption limit
19,407
Less: Rebate u/s 87A [ Tax payable or Rs. 12,500, whichever is less ] 12,500
6,907
Add: Health and education cess @4% 276
Tax liability 7,183
Tax liability (rounded off)
7,180

Note- The last two lines in the first para of the question reads as follows-

GMTESTSERIES.COM®
“The net profit as per the profit and loss account as on 31.3.2023 is Rs. 5,61,000. She provides
the following additional information those were not considered while making the profit and
loss account for the previous year 2022-23”
Items (i) to (xiii) are listed there under.
On a plain reading of the above sentences, it appears that none of the expenditures/receipts in
(i) to (xiii) were considered while making the profit and loss account. The above solution has
been prepared accordingly.
Alternatively, it is possible to interpret the last sentence (bold underlined above) to mean that
as far as items (iii) and (v) are concerned, wherein disallowance of expenditure is attracted u/s
40 (a) (ia) and 40A (3), respectively, such disallowance (and not the expenditure itself) were not
considered while making the profit and loss account of the previous year 2022-23. If so
interpreted, then, for item (iii), instead of reducing Rs. 63,000, Rs. 27,000 has to be added back.
Likewise for item (v), Rs. 25,000 has to be added back. In such a case, profits and gains from
business and profession, Gross Total Income, Total Income and Tax payable would change
accordingly. An alternate solution based on this interpretation has been worked out as follows:
Alternate solution
Computation of total income of Mrs. Nisha for A.Y. 2023-24
Particulars Rs. Rs. Rs.
I. Income from business or profession
Net profit as per profit and loss account 5,61,000
Add: Items not credited but taxable while
computing business income
- Commission from agent on settlement [ since 50,000
deduction was allowed in respect of commission
in earlier year and during the P.Y. 2022-23 Mrs.
Nisha received back such amount due to
settlement, the same would be deemed as her
income]
- Interest on capital from partnership firm [Rs. 1,60,000

GMTESTSERIES.COM®
 2,00,000/15% x 12%] [since interest on capital
from M/s Ramji textiles is authorized by
partnership deed, interest@12% p.a. would be
allowed as deduction in the hands of firm under
section 40(b). Consequently, interest @ 12% p.a.
would be the business income of Mrs. Nisha
under section 28. For allowability of interest in
the hands of the firm, there is no requirement
that the partner should be a working partner]
2,10,000
7,71,000
Add: Disallowances not considered while
computing business income
- Job charges without deduction of tax [ 30% of Rs. 27,000
90,000+ *Mrs. Nisha’s turnover for the P.Y. 2021-
22 exceeds Rs. 1 crore, hence, she is liable to
deduct tax at source u/s 194C on job charges of
Rs. 90,000. Since Mrs. Nisha has not deducted tax
at source on Rs. 90,000, 30% would be
disallowed under section 40(a)(ia).
- Payment to creditor in cash [Payment to creditor 25,000
in cash is not allowable as business expenditure,
since such amount exceeds Rs. 10,000 and paid
in cash as per section 40A(3)] 52,000

8,23,000
Less: Depreciation as per Income- tax Rules

GMTESTSERIES.COM®
 Opening WDV of machinery 4,75,000
- Add: Purchase of machinery for Rs.7,25,000
during the P.Y. 2022-23 by A/C payee cheque.
Subsidy of Rs. 1,45,000, being 20% of cost,
received from Central government on new
machinery is to be reduced from actual cost ( Rs.
7,25,000- Rs. 1,45,000). 5,80,000

10,55,000
Less: Sale proceeds 75,000
WDV as on 31.3.2023 before depreciation for P.Y.
2022-23 9,80,000
Depreciation @ 15% on Rs. 9,80,000 1,47,000
Additional Depreciation @20% on Rs. 5,80,000 1,16,000
(As new machinery is used in manufacturing business 2,63,000
and put to use for more than 180 days in the
P.Y.2022-23, depreciation and additional
depreciation will be allowed in full)
5,60,000
Less: Loss from eligible transaction carried out in 1,17,500
respect of trading in derivatives in a recognized stock
exchange is not a speculative business and hence,
the same is allowed to be set off from textile
business income as per section 70.
4,42,500
II. Capital gains
Long term capital gain on sale of gold bracelet since 5,00,000
it is held for more than 36 months
Sales consideration

GMTESTSERIES.COM®
 Less: Cost of acquisition (40,000 x 331/113) 1,17,168
Less: Cost of improvement (50,000 x 331/129) 1,28,295
Long- term capital gain on sale of gold bracelet 2,54,537
Note- In the additional information (xiii), it is
mentioned that Mrs. Nisha has purchased a new
residential house during the previous year. In such a
case, she would be eligible for exemption u/s 54F in
respect of amount invested in purchase of new
residential house from long term capital gain on sale
of gold bracelet. However, the cost of new
residential house is not provided in the question but
only stamp duty and registration fee is given which
would also be the part of cost of house. In such case,
exemption u/s 54F would be Rs. 2,54,537 x
1,55,000/5,00,000 = Rs. 78,906. Accordingly, long
term capital gain would be Rs. 1,00,631 (instead of
Rs. 1,79,537). In such a case, Rebate u/s 87A would
remain as Rs. 12,500 and tax liability of Mrs. Nisha
would be Rs. 9,621, before rounding off (instead of
Rs. 26,033).
Less: Long term capital loss from sale of STT paid 75,000
shares of an Indian company allowed to be set off
from long term capital gain on sale of gold bracelet
as per section 70.
1,79,537

GMTESTSERIES.COM®
 Income from other sources
Fair market value of gold coin received from cousin 55,000
[Taxable u/s 56(2)(x), since cousin is not a relative
and the fair market value exceeds Rs. 50,000]
Pre – mature withdrawal from post office time 60,000
deposit [Amount including interest received on pre- 1,15,000
mature withdrawn from post office time deposit, in
respect of which deduction u/s 80C was claimed,
would be deemed to be the income of Mrs. Nisha
7,37,037
Gross Total Income
Less: Deduction under chapter VI-A
Deduction under section 80C
Stamp duty and registration fee of Rs. 1,55,000 for 1,50,000
the purpose of transfer of house property, restricted
to
Deduction under section 80DD
Sum deposited with LIC for the maintenance of her 1,25,000
dependent mother and suffering from severe
disability [Eligible for higher deduction Rs. 1,25,000
in case of severe disability irrespective of amount
deposited with LIC]
2,75,000
Total income
4,62,037

Computation of tax payable by Mrs. Nisha for A.Y.2023-24

Particulars Rs.
Tax on long- term capital gains @20% on Rs. 1,79,537 35,907
Tax on other income of Rs. 2,82,500 [Rs. 4,62,037 – Rs. 1,79,537, being LTCG] 1,625

GMTESTSERIES.COM®
 -5% of Rs. 32,500 (Rs. 2,82,500 – basic exemption limit Rs. 2,50,000) 37,532
Less: Rebate u/s 87A [Tax payable or Rs. 12,500, whichever is less] 12,500
Add: Health and education cess@4% 25,032
Tax payable 1,001
Tax payable( rounded off) 26,033
26,030
(14 marks)

A-37

(i) Computation of “ Capital Gains “ of Mr. Sarthak for A.Y. 2023-24

Particulars Rs.
Capital Gains on sale of residential house
Actual sale consideration Rs. 1,50,00,000
Value adopted by Stamp Valuation Authority on the date of agreement
Rs. 1,70,00,000
[As per section 50C, where the actual sale consideration is less than the value
adopted by the Stamp Valuation Authority for the purpose of charging stamp
duty, and such stamp duty value exceeds 110% of the actual sale consideration,
then, the value adopted by the Stamp Valuation Authority shall be taken to be
the full value of consideration.
In a case where the date of agreement is different from the date of registration,
stamp duty value on the date of agreement can be considered provided the
whole or part of the consideration is paid by way of account or through such
other electronic mode as may be prescribed, on or before the date of agreement.
In this case, since 20% of Rs. 150 lakhs is paid through account payee bank draft
on the date of agreement, stamp duty value on the date of agreement would be

GMTESTSERIES.COM®
 considered for determining the full value of consideration ]
Full value of sale consideration [stamp duty value on the date of agreement , 1,70,00,000
since it exceeds 110% of the actual sale consideration]
Less: Indexed cost of acquisition of residential house [ Rs. 30 lakhs x 331/100] 99,30,000
Long- term capital gains [since the residential house property was held by Mr. 70,70,000
sarthak for more than 24 months immediately preceding the date of its transfer]
Less: Exemption u/s 54
Since, long- term capital gains does not exceed Rs. 2 crore, he would be eligible 55,00,000
for exemption in respect of both the residential house properties purchased in
India. The capital gain arising on transfer of a long- term residential property
shall not be chargeable to tax to the extent such capital gain is invested in the
purchase of these residential house properties in India within one year before or
two years after the date of transfer of original assest. Thus, he would be eligible
for exemption of Rs. 55,00,000 being Rs. 20,00,000 and Rs. 35,00,000 invested on
acquisition of residential house property in Kanpur and Delhi, respectively.
Long term capital gains chargeable to tax 15,70,000

(ii) Computation of Income from house property of Mr. Naveen for A.Y. 2023-24

Particulars Rs. Rs.

Annual value is nil (since house is self occupied) Nil
Less: Deduction under section 24(b)
Interest paid on borrowed capital Rs. 15,00,000 @12% 1,80,000
Pre – construction interest Rs. 3,60,000/5 72,000
2,52,000
As per second proviso to section 24(b), interest deduction 2,00,000
restricted to Loss under the head “Income from house property” of (2,00,000)
Mr. Naveen

Computation of income from house property of Mr. Vikas for A.Y. 2023-24

GMTESTSERIES.COM®
 Particulars Ground First floor
floor self
occupied)
Gross annual value (see Note below) Nil 60,000
Less: Municipal taxes (for first floor) 4,000
Net annual value(A) Nil 56,000
Less: Deduction under section 24
(a) 30% of net annual value 16,800
(b) interest on borrowed capital
Current year interest
Rs. 10,00,000 x 10% = 1,00,000 50,000 50,000
Pre- construction interest
Rs. 10,00,000 x 10% x 21/12 = Rs. 1,75,000
Rs. 1,75,000/5 = Rs. 35,000 per annum 17,500 17,500
Total deduction under section 24 67,500 84,300
Income from house property (A) – (B) (67,500) (28,300)
Loss under the head “Income from house property” of Mr. Vikas (95,800)
(both ground floor and first floor)

Note: Computation of Gross Annual Value (GAV) of first floor of Vikas’s house

If a single unit of property (in this case the first floor of Vikas’s house) is let out for some
months and self – occupied for the other months, then the Expected Rent of the property shall
be taken into account for determining the annual value. The Expected Rent shall be compared
with the actual rent and Whichever is higher shall be adopted as annual value. In this case, the
actual rent shall be the rent for the period for which the property was let out during the
previous year.

The Expected Rent is the higher of fair rent and municipal value. This should be considered for 6
months since the construction of property was completed only on 30.9.2022.

GMTESTSERIES.COM®
Expected rent = Rs. 50,000 being higher of-

Fair rent = 1,00,000 x 6/12 = Rs. 50,000 Municipal value = 72,000 x 6/12 = Rs.36,000

Actual rent = Rs. 60,000(Rs. 20,000 p.m. for 3 months from October to December, 2022)

Gross Annual value = Rs.60,000 (being higher of Expected Rent of Rs. 50,000 and actual rent of
Rs.60,000).

A-38 Allow ability of the expenses incurred by Mr. Manav, a wholesale dealer in commodities,
while computing profits and gains from business or profession
(i) Construction of school building in compliance with CSR activities
Under section 37(1), only expenditure not being in the nature of capital expenditure or
personal expense and not covered under sections 30 to 36, and incurred wholly and exclusively
for the purposes of the business is allowed as a deduction while computing business income.
However, any expenditure incurred by an assessee on the activities relating to corporate social
responsibility referred to in section 135 of the Companies Act, 2013 shall not be deemed to
have been incurred for the purpose of business and hence, shall not be allowed as deduction
under section 37.
Accordingly, the amount of Rs. 5,60,000 incurred by Mr. Manav, towards construction of school
building in compliance with CSR activities shall not be allowed as deduction under section 37.
(ii) Purchase of building for setting up and operating a warehousing facility for storage of food
grains
Mr. Manav, would be eligible for investment- linked tax deduction under section 35AD @100%
in respect of amount of Rs. 4,50,000 invested in purchase of building for setting up and
operating a warehousing facility for storage of food grains which commences operation on or
after 1st April, 2009 (P.Y.2022-23, in this case), if Mr.Manav does not opt for section 115BAC.
Therefore, the deduction under section 35AD while computing business income of such
specified business would be Rs. 4,50,000, if Mr. Manav opts for section 35AD.
(iii) Interest on loan paid to Mr.X (a resident) Rs. 50,000 on which tax has not been deducted

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As per section 194A, Mr. Manav, being an individual is required to deduct tax at source on the
amount of interest on loan paid to Mr. X, since his turnover during the previous year 2021-22
exceeds Rs. 100 lakhs.
Therefore, Rs. 15,000, being 30% of Rs. 50,000, would be disallowed under section 40(a)(ia)
while computing the business income of Mr. Manav for non – deduction of tax at source under
section 194A on interest of Rs. 50,000 paid by it to Mr. X.
The balance Rs. 35,000 would be allowed as deduction under section 36(1)(iii), assuming that
the amount was borrowed for the purposes of business.
(iv) Commodities transaction tax of Rs. 20,000 paid on sale of bullion commodities transaction
tax paid in respect of taxable commodities transactions entered into in the course of business
during the previous year is allowable as deduction, provided the income arising from such
taxable commodities transactions is included in the income computed under the head “Profits
and gains of business or profession”.
Taking that income from this commodities transaction is included while computing the business
income of Mr. Manav, the commodities transaction tax of Rs. 20,000 paid is allowable as
deduction under section 36(1)(xvi).

A-39 Computation of total income of Mr. A, Mrs. A and their minor son for the A.Y. 2023-24

Particulars Mr. A Mrs. A Minor

(Rs.) (Rs.) Son (Rs.)
Income under the head “Salaries”
Salary income (of Mrs. A) - 2,40,000 -
Pension income (of Mr. A) (Rs.10,000 x 12) 1,20,000 -
Less: Standard deduction under section 16(ia) 50,000 50,000
70,000 1,90,000
Income from House Property 52,000 - -

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[See Note (3) below]
Income from other sources
Interest on Mr. A’s fixed deposit with Bank of 45,000 - -
India (Rs. 5,00,000 x 9%) [see Note (1) below]
Commission received by Mrs. A from a 25,000 70,000 - -
partnership firm, in which Mr. A has
substantial interest [see Note (2) below]
Income before including income of minor son 1,92,000 1,90,000 -
under section 64(1A)
Income of the minor son from the investment 18,500 - -
made in the business out of the amount gifted
by Mr. A [see Note (4) below]
Income of the minor son from through a - - 20,000
business activity involving application of his
skill and talent [see Note (5) below]
Total Income 2,10,500 1,90,000 20,000

Notes:
(1) As per section 60, in case there is a transfer of income without transfer of asset from which
such income is derived, such income shall be treated as income of the transferor. Therefore,
the fixed deposit interest of Rs. 45,000 transferred by Mr. A to Mr. B shall be included in the
total income of Mr. A.
(2) As per section 64(1)(ii), in case the spouse of the individual receives any amount by way of
income from any concern in which the individual has substantial interest (i.e. holding shares
carrying at least 20% voting power or entitled to at least 20% of the profits of the concern),
then, such income shall be included in the total income of the individual. The only exception is
in a case where the spouse possesses any technical or professional qualification and the income

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earned is solely attributable to the application of her technical or professional knowledge and
experience, in which case, the clubbing provisions would not apply.
In this case, the commission income of Rs. 25,000 received by Mrs. A from the partnership firm
has to be included in the total income of Mr. A, as Mrs. A does not possess any technical or
professional qualification for earning such commission and Mr. A has substantial interest in the
partnership firm as he holds 75% profit share in the firm.
(3) According to section 27(i), an individual who transfers any house property to his or her
spouse otherwise than for adequate consideration or in connection with an agreement to live
apart, shall be deemed to be the owner of the house property so transferred. Hence, Mr. A
shall be deemed to be the owner of the flat gifted to Mrs. A and hence, the income arising from
the same shall be computed in the hands of Mr. A.
Note: The provisions of section 56(2)(x) would not be attracted in the hands of Mrs. A, since she
has received immovable property without consideration from a relative i.e., her husband.
(4) As per section 64(1A), the income of the minor child to be included in the total income of
the parent whose total income (excluding the income of minor child to be so clubbed) is
greater. Further, as per section 10(32), income of a minor child which is includible in the income
of the parent shall be exempt to the extent of Rs. 1,500 per child.
Therefore, the income of Rs. 20,000 received by minor son from the investment made out of
the sum gifted by Mr. A shall, after providing for exemption of Rs. 1,500 under section 10(32),
be included in the income of Mr. A,
Since Mr. A’s income of Rs. 1,92,000 (before including the income of the minor child) is greater
than Mrs. A’s income of Rs. 1,90,000. Therefore, Rs. 18,500 (i.e., Rs. 20,000 – Rs.1,500) shall be
included in Mr. A’s income. It is assumed that this is the first year in which clubbing provisions
are attracted.
Note- The provisions of section 56(2)(x) would not be attracted in the hands of the minor son,
since he has received a sum of money exceeding Rs. 50,000 without consideration from a
relative i.e., his father.

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(5) In case the income earned by the minor child is on account of any activity involving
application of any skill or talent, then, such income of the minor child shall not be included in
the income of the parent, but shall be taxable in the hands of the minor child.
Therefore, the income of Rs. 20,000 derived by Mr. A’s minor son through a business activity
involving application of his skill and talent shall not be clubbed in the hands of the parent. Such
income shall be taxable in the hands of the minor son.

A-40 Taxability of perquisites provided by ABC Co. Ltd. to Shri Bala

(i) Domestic servant was employed by the employee and the salary of such domestic servant
was paid/ reimbursed by the employer. It is taxable as perquisite for all categories of
employees.
Taxable perquisite value = Rs.1,500 x 12 = Rs.18,000.
If the company had employed the domestic servant and the facility of such servant is given to
the employee, then the perquisite is taxable only in the case of specified employee. The value
of the taxable perquisite in such a case also would be Rs. 18,000.
(ii) Where the educational institution is owned by the employer, the value of perquisite in
respect of free education facility shall be determined with reference to the reasonable cost of
such education in a similar institution in or near the locality. However, there would be no
perquisite if the cost of such education per child does not exceed Rs. 1,000 per month.
Therefore, there would be no perquisite in respect of cost of free education provided to his
child Arthy, since the cost does not exceed Rs. 1,000 per month.
However, the cost of free education provided to his child Ashok would be taxable, since the
cost exceeds Rs. 1,000 per month. The taxable perquisite value would be Rs. 14,400 (Rs.1,200 x
12).
Note – An alternate view possible is that only the sum in excess of Rs. 1,000 per month is
taxable . In such a case, the value of perquisite would be Rs. 2,400.
(iii) Where the employer has provided movable assets to the employee or any member of his
household, 10% per annum of the actual cost of such asset owned or the amount of hire

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charges incurred by the employer shall be the value of perquisite. However, this will not apply
to laptops and computers. In this case, the movable assets are television, refrigerator and air
conditioner and actual cost of such assets is Rs. 1,10,000.
The perquisite value would be 10% of the actual cost i.e., Rs. 11,000, being 10% of Rs. 1,10,000.
(iv) The value of any gift or voucher or token in lieu of gift received by the employee or by
member of his household not exceeding Rs. 5,000 in aggregate during the previous year is
exempt. In this case, the amount was received on the occasion of marriage anniversary and the
sum exceeds the limit of Rs. 5,000.
Therefore, the entire amount of Rs. 10,000 is liable to tax as perquisite.
Note- An alternate view possible is that only the sum in excess of Rs.5,000 is taxable. In such a
case, the value of perquisite would be Rs. 5,000
(v) Telephone provided at the residence of the employee and payment of bill by the employer
is a tax free perquisite.
(vi) The value of the benefit to the assessee resulting from the provision of interest- free or
concessional loan made available to the employee or any member of his household during the
relevant previous year by the employer or any person on his behalf shall be determined as the
sum equal to the interest computed at the rate charged per annum by the State Bank of India
(SBI) as on the 1st day of the relevant previous year in respect of loans for the same purpose
advanced by it. This rate should be applied on the maximum outstanding monthly balance and
the resulting amount should be reduced by the interest, if any, actually paid by him.
“Maximum outstanding monthly balance” means the aggregate outstanding balance for loan as
on the last day of each month.
The perquisite value for computation is 10%-6% = 4%
Month Maximum outstanding balance Perquisite value at 4% for
as on last date of month (Rs.) the month (Rs.)
April, 2022 5,88,000 1,960
May, 2022 5,76,000 1,920
June, 2022 5,64,000 1,880
July, 2022 5,52,000 1,840

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 August, 2022 5,40,000 1,800
September, 2022 5,28,000 1,760
October, 2022 5,16,000 1,720
November, 2022 5,04,000 1,680
December, 2022 4,92,000 1,640
January, 2023 4,80,000 1,600
February, 2023 4,68,000 1,560
March, 2023 4,56,000 1,520
Total value of this perquisite 20,880

Total value of taxable perquisite = Rs. 74,280 [i.e. Rs. 18,000 + Rs. 14,400 + Rs. 11,000 + Rs.
10,000 + Rs. 20,880].
Note- In case the alternate views are taken for items (ii) & (iv), the total value of taxable
perquisite would be Rs. 57,280 [i.e., Rs. 18,000 + Rs. 2,400 + Rs. 11,000 + Rs. 5,000 + Rs.
20,880].

A-41 Computation of total income of Mr. Harsh for the A.Y. 2023-24
Particulars Rs. Rs.
Profits and gains from business and profession
Salary received from partnership firm (would be fully taxable in 8,50,000
the hands of Mr. Harsh as business income, since the same was
allowed to the firm as deduction)
Less: Loss from house property Rs. 2,50,000 (can be set- off 2,00,000
against income from any other head only to the extent of Rs. 2
lakhs)
6,50,000
Less: Set- off of brought forward business loss of A.Y. 2015-16 6,00,000
(since the eight year time period for set- off has not expired)

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 50,000
Capital Gains
Long – term capital gain on sale of land 5,00,000
Less: Set-off of long- term capital losses (since held for 18
months i.e., more than 12 months) on sale of STT paid listed
shares [such set- off is permissible since it is a loss from a source 5,00,000 -
of income taxable u/s 112A]

Income from other sources

Income from betting (gross)
[No Loss can be set off against income from betting] 50,000
Loss of Rs. 35,000 from card games can neither be set-off nor be
carried forward -
Total Income 1,00,000
Losses to be carried forward to A.Y. 2024-25 Rs
Loss from house property (Rs. 2,50,000- Rs. 2,00,000) 50,000
Loss from specified business covered u/s 35AD [Entire loss is to
be carried forward, since there is no income from any specified 3,50,000
business for A.Y. 2023-24. Such loss has to be carried forward for
set-off against income from any specified business in A.Y. 2024-
25]
Long- term capital loss on sale of listed shares (STT paid) [Rs.
6,00,000- Rs. 5,00,000] 1,00,000

A-42 Deduction available to Mr. Dhyanchand under chapter VI-A for A.Y. 2023-24
Section Particulars Rs. Rs.

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80C Deposit in public provident fund 1,50,000
Life insurance premium paid Rs. 62,000 (deduction 40,000
restricted to Rs. 40,000, being 10% of Rs. 4,00,000,
which is the sum assured, since the policy was
taken on or after 01.04.2012)
Five year term deposit with bank 45,000 1,50,000
2,35,000
Restricted to 1,40,000

80CCD(1) Contribution to NPS of the central government, Rs.

1,60,000 [Rs. 2,10,000- Rs. 50,000, being deduction
under section 80CCD (1B)], restricted to 10% of
salary [Rs. 2,10,000 x 10/15] [See Note 1]

2,90,000
80CCE Aggregate deduction under section 80C and
1,50,000
80CCD(1), Rs. 2,90,000, but restricted to
80CCD(1B) Rs. 50,000 would be eligible for deduction in
50,000
respect of contribution to NPS of the Central
Government
80CCD(2) Employer contribution to NPS, restricted to 10% of
1,40,000
salary [See Note 2]
80D (i) (a) Medical insurance premium for self and his
wife, deduction would be equal to Rs. 47,000 (Rs. 47,000
27,000 + Rs. 20,000), being 1/4th of lumpsum
premium, since policies would be in force for four
previous years.
(b) Preventive health check up Rs. 6,000 for wife
restricted to Rs. 3,000 (Rs. 50,000 – Rs. 47,000,
since maximum allowable deduction is Rs. 50,000

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 in case assessee or one of the family member is
senior citizen)
3,000
(ii) Medical Expenditure for his father would be 50,000
fully allowed as deduction, since no insurance 46,000
policy is taken on his name
Total of (i) and (ii) 96,000
80DD Deduction of Rs. 1,25,000 in respect of 1,25,000
expenditure on medical treatment of his mother,
being a person with severe disability would be
allowed irrespective of the fact that amount of
expenditure incurred is Rs. 90,000
50,000
80TTB Interest on fixed deposits with bank of Rs. 75,000,
deduction restricted to

Deduction under Chapter VI-A 6,11,000

Notes:

(1) The deduction under section 80CCD (1B) would not be subject to overall limit of Rs. 1.50
lakhs under section 80CCE. Therefore, it is more beneficial for Mr. Dhyanchand to claim
deduction under section 80CCD (1B) first in respect of contribution to NPS. Thereafter, the
remaining amount of Rs. 1,60,000 can be claimed as deduction under section 80CCD (1), subject
to a maximum limit of 10% of salary i.e. Rs. 1,40,000
(2) The entire employer’s contribution to notified pension scheme has to be first included under
the head “Salaries” while computing gross total income and thereafter, deduction under
section 80CCD (2) would be allowed, subject to a maximum of 10% of salary. Deduction under
section 80CCD (2) is also not subject to the overall limit of Rs. 1,50,000 under section 80CCE.

A-43 Computation of total income of Mr. Suresh for the A.Y. 2023-24

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 S. No. Particulars Mr.Ramesh Mr. Suresh
(Non- (Resident)
Resident) (Rs.)
(Rs.)
1. Interest on Canada Development Bond (see Note 2) 17,500 40,000
2. Dividend from British Company received in London (see - 20,000
Note 3)
3. Profits from a business in Nagpur but managed directly 1,00,000 1,40,000
from London (see Note 2)
4. Short term capital gain on sale of shares of an indian 60,000 90,000
company received in india (see Note 2)
5. Income from a business in Chennai (see Note 2) 80,000 70,000
6. Fees for technical services rendered in india, but
received in Canada (see Note 2) 1,00,000 -
7. Interest on savings bank deposit in UCO Bank, Delhi (See 7,000 12,000
Note 2)
8. Agriculture income from a land situated in Andhra - -
Pradesh (See Note 4)
9. Income from house property at Bhopal (See Note5) 70,000 42,000
Gross Total income 4,34,500 4,14,000
Less: Deduction under Chapter VI-A
Section 80C – Life insurance premium - 30,000
Section 80TTA (See Note 6) 7,000 10,000
Total Income 4,27,500 3,74,000

Notes:
1. Mr. Ramesh is a non- resident since he has been living in Canada since 1996. Mr. Suresh, is
settled in delhi, and thus, assumed as a resident and ordinarily resident.

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2. In case of a resident and ordinarily resident, his global income is taxable as per section 5(1).
However, as per section 5(2), in case of a non- resident, only the following incomes are
chargeable to tax:
(i) Income received or deemed to be received in India; and
(ii) Income accruing or arising or deemed to accrue or arise in India.
Therefore, fees for technical services rendered in india would be taxable in the hands of Mr.
Ramesh, even though he is a non- resident.
The income reffered to in SI. No. 3,4,5 and 7 are taxable in the hands of both Mr. Ramesh and
Mr. Suresh since they accrue or arise/ deemed to accrue or arise in india.
Interest on Canada Development Bond would be fully taxable in the hands of Mr. Suresh,
whereas only 50%, which is received in India, is taxable in the hands of Mr. Ramesh.
3. Dividend received from British Company in London by Mr. Ramesh, a non- resident, is not
taxable since it accrued and is received outside India. However, such dividend received by Mr.
Suresh is taxable, since he is a resident and ordinarily resident.
4. Agricultural income from a land situated in India is exempt under section 10(1) in the case of
both non-residents and residents.
5. Income from house property-
Mr. Ramesh Mr. Suresh
(Rs.) (Rs.)
Rent received 1,00,000 60,000
Less: Deduction under section 24 (a) @30% 30,000 18,000
Net income from house property 70,000 42,000

The net income from house property in India would be taxable in the hands of both Mr.
Ramesh and Mr. Suresh, since the accrual and receipt of the same are in India.
6. In case of an individual, interest upto Rs. 10,000 from savings account with, inter alia, a bank
is allowable as deduction under section 80TTA.

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A-44 The proviso to section 234C contains the provisions for payment of advance tax in case of
capital gains and casual income.

Advance tax is payable by an assessee on his/its total income, which includes capital gains and
casual income like income from lotteries, crossword puzzles, etc.

Since it is not possible for the assessee to estimate his capital gains, or income from lotteries
etc., it has been provided that if any such income arises after the due date for any instalment,
then, the entire amount of the tax payable (after considering tax deducted at source) on such
capital gains or casual income should be paid in the remaining instalments of advance tax,
which are due.

Where no such instalment is due, the entire tax should be paid by 31st March of the relevant
financial year.

No interest liability on late payment would arise if the entire tax liability is so paid.

Note: In case of causal income the entire tax liability is fully deductible at source @30% under
section 194B and 194BB. Therefore, advance tax liability would arise only if the surcharge, if
any, and health and education cess @4% in respect thereof, along with tax liability in respect of
other income, if any, is Rs. 10,000 or more.

A-45 Notification No. 12/2017 exempts services by an artist by way of a performance in folk or
classical art forms of (i) music, or (ii) dance, or (iii) theatre. If the consideration charged for such
performance is not more than rs. 1,50,000. However, exemption will not apply to service
provided by such artist as a brand ambassador.

In view of the aforesaid provisions, services provided by Kesar Maharaj are exempt from GST as
consideration for the classical dance performance has not exceeded Rs. 1,50,000. Therefore, his
GST liability is nil. If Kesar Maharaj is-a brand ambassador of a food product and aforesaid
performance is for the promotion of such food product, he will be liable to pay GST as aforesaid
exemption is not applicable to service provided by an artist as a brand ambassador. His CGST

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and SGST liability would, therefore, be Rs. 13,365 (Rs. 1,48,500 x 9%) and Rs. 13,365 (Rs.
1,48,500 x 9%) respectively.

(i) If Kesar Maharaj gives a contemporary Bollywood style dance performance, such
performance will not be eligible for aforesaid exemption. The reason for the same is that
although the consideration charged does not exceed Rs. 1,50,000, said performance is not in
folk or classical art forms of dance. Hence, GST would be payable on the same. His CGST and
SGST liability would, therefore, be Rs. 13,365 (Rs. 1,48,500 x 9%) and Rs. 13,365 (Rs. 1,48,500 x
9%) respectively.

(ii) If the consideration charged for the classical dance performance by Kesar Maharaj is Rs.
1,60,000, he will be liable to pay GST on the same as although the performance is by way of
classical art form of dance, consideration charged for such performance has exceeded Rs.
1,50,000. His CGST and SGST liability would, therefore, be Rs. 14,400 (Rs. 1,60,000 x 9%) and Rs.
14,400 (Rs. 1,60,000 x 9%) respectively.

A-46 As per section 31(2) read with rule 47 of CGST Rules, the tax invoice is to be issued within
30 days of supply of service. In the given case, the invoice is not issued within the prescribed
time limit. As per section 13 (2)(b), in a case where the invoice is not issued within the
prescribed time, the time of supply of service is the date of provision of service or receipt of
payment, whichever is earlier.

Therefore, the time of supply of service to the extent of Rs. 3,000 is 6 th May as the date of
payment of Rs. 3000 is earlier than the date of provision of service. The time of supply of
service to the extent of the balance Rs. 12,000 is 15th September which is the date of provision
of service.

A-47 As per section 22 of the CGST Act, 2017 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

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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:-
a) Rs. 10 lakh for the Special Category State of Mizoram, Tripura, Manipur and Nagaland.
b) Rs. 20 lakh for the State of Arunachal Pradesh, Meghalaya, Puducherry, Sikkim, Telangana
and Uttarakhand.
c) Rs. 40 lakh for rest of India, However, the higher threshold limit of Rs. 40 lakh is not
available to person engaged in making supplies of ice cream and other edible ice, whether
or not containing cocoa, Pan masalas and Tobacco and manufactured tobacco substitutes,
Bricks and earthen/Roofing Tiles.
The threshold limit for a person making exclusive taxable supply of services or supply of both
goods and services is as under:-
a) Rs. 10 lakh for the Special Category States of Mizoram, Manipur and Nagaland.
b) Rs. 20 lakh for the rest of India.
In the light of the afore-mentioned provisions, the answer to the independent cases is as
under:-
(i) Happy Ltd. being exclusively engaged in supply of pan masala is not eligible for higher
threshold limit of Rs. 40 lakh. The applicable threshold limit for registration in this case is 20
lakh. Thus, Happy Ltd. is liable to get registered under GST.
(ii) Though Akki Ltd. is dealing in Assam, it is not entitled for higher threshold limit for
registration as the same is applicable only6 in case of exclusive supply of goods while it is
exclusively engaged in providing services. Thus, the applicable threshold limit for
registration in this case is Rs. 20 lakh and hence, Akki Ltd. is liable to get registered under
GST.
(iii) Since Aaru Ltd. is engaged in supply of both taxable goods and services, the applicable
threshold limit for registration in case is Rs. 20 lakh. Thus, Aaru Ltd. is liable to get
registered under GST as its turnover is more than the threshold limit.

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A-48 Mr. Anurag, an author, can choose to pay tax under forward charge provided he fulfills the
following conditions:-
(i) He has taken registration under the GST law.
(ii) He has filed a declaration, in the prescribed form,
That he exercise the option to pay tax on the said service under forward charge and, to comply
with all the provisions of the GST law as they apply to a person liable for paying the tax in
relation to the supply of any goods and/ or services and
That he shall not withdraw the said option within a period of 1 year from the date of exercising
such option.
(iii) He makes a declaration on the invoice issued by him in prescribed form to the publisher.

A-49 Computation of value of taxable supply

S. No. Particulars Amount (Rs.)
List price (exclusive of taxes and discount) 9,50,000
(i) Municipal taxes [Note -1] 45,000
(ii) Outward freight charges [Note -2] 65,000
Value of taxable supply 10,60,000

Notes:
1. Tax other than GST, if charged separately, is includible in the value in terms of section 15.
2. Since contract is to deliver machine at buyer’s factory, It is a composite supply wherein the
freight charges will be added to the value of principal supple of machine.
3. Value of supply includes interest charged for delayed payment. However, since the interest
on delayed payment has been waived off, the same has not been added to the value.
4. Subsidy provided by non- Government bodies is includible in the value in terms of section
15 provided the same is directly linked to the price. Since subsidy received from NGO is not
directly linked to the price of the machine, the same has not been added to the value.

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5. Since the discount was not known or agreed to at the time of supply of goods to the buyers,
such discount cannot be reduced from the price, in terms of section 15.
6. TCS is not includible in the value of supply as it is an interim levy not having the character of
tax.
A-50 Supply, under section 7 of the CGST Act, 2017, inter alia,
 Include import of services for a consideration
 Even if it is not in the course or furtherance of business.
Thus, although the import of service for consideration by Mrs. Pragati is not in course or
furtherance of business, it would amount to supply.
Further, import of services by a taxable person from a related person located outside india,
without consideration is treated as supply if it is provided in the course or furtherance of
business.
In the given case, import of service without consideration by Mrs. Pragati from her real sister –
miss Unnati [real sister4, being members of the same family, is a related person] will not be
treated as supply as it is not in course or furtherance of business.
However import of service without consideration by Mrs. Pragati from her sister – Miss Unnati
(related person) will be treated as supply if she receives legal advice for her business, i.e. in
course or furtherance of business.

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