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Past papers/ Taxation/ May 2023
Paper 34 Qs
Question Paper · May 2023

CA Inter Taxation

This page contains all 34 questions from the CA Inter Taxation Question Paper for the May 2023 attempt cycle, sourced from CATS, VSI Jaipur.

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Q.(b)(i) 03 marks medium QRMP scheme, GST ⚡ Try this Q →
Mr. Sumit is a registered dealer in the state of Punjab. In the month of May he decides to apply for QRMP scheme. As he wants to switch to QRMP scheme he had not filed his returns for the months of May and June. Please guide to Mr. Sumit regarding the following: (A) Conditions and restrictions of QRMP scheme. (B) Manner of exercising option of QRMP scheme.
CTTP

Worked Solution

✓ Verified

QRMP Scheme – Conditions, Restrictions and Exercise of Option

A) CONDITIONS AND RESTRICTIONS OF QRMP SCHEME:

Eligibility Condition: The QRMP (Quarterly Return Monthly Payment) scheme is available to registered dealers whose aggregate turnover (including exempt supplies) in a financial year does not exceed ₹5 crores. This is the primary eligibility criterion, and once the turnover exceeds this limit, the dealer loses the right to continue with QRMP.

Key Restrictions:

1. No switching back within FY: Once a dealer exercises the option to opt for QRMP, they cannot revert to normal monthly return filing (GSTR-3B) in the same financial year. The option remains valid throughout the FY in which it is exercised.

2. Continuation requirement: The dealer must file quarterly returns (once every 3 months) for the entire financial year. Partial exercise is not permitted.

3. Turnover breach: If at any point during the FY the aggregate turnover exceeds ₹5 crores, the dealer must immediately switch to normal return filing and loses the QRMP option.

4. Monthly tax payment: Despite filing quarterly returns, the dealer must pay tax on a monthly basis (as per GST liability).

5. No re-option in same FY: If a dealer withdraws from QRMP or loses eligibility during a FY, they cannot re-exercise the option in the same financial year.

B) MANNER OF EXERCISING OPTION OF QRMP SCHEME:

Method of Exercise: The dealer exercises the QRMP option by filing the first return under QRMP for the applicable quarter. The option is deemed to be exercised from the date of filing the first quarterly return.

For Mr. Sumit's Specific Situation:

1. Outstanding returns: Sumit should file returns for May and June (which he has not filed). These can be filed even after the due date, though applicable interest and late fees may be applicable under GST provisions.

2. Timing of option: After filing May-June returns, Sumit can exercise the QRMP option by filing his first quarterly return (typically for the quarter April-June or July-September, depending on when he makes the filing).

3. Exercise formality: The option requires no separate application. It is exercised simply by filing the quarterly return instead of monthly returns. The return filing itself constitutes exercise of the option.

4. Continuance: Once the option is exercised, it remains valid for the rest of the financial year automatically, and Sumit must continue filing quarterly returns (GSTR-3B once every 3 months) and making monthly tax payments.

5. Withdrawal: Sumit can voluntarily withdraw from QRMP by giving notice and reverting to normal monthly return filing, but cannot re-exercise the option in the same FY.

Rule 3(5) of CGST Rules 2017Notification No. 10/2019-Central Tax dated 08.03.2019Section 39 of CGST Act 2017
PLAN

Write it like this

Time target 5 min 24 sec

1The skeleton

- Split into Part A and Part B with bold headings immediately — the question is two-part and the examiner awards marks per part, so don't blend them or you lose easy marks on structure.
- Open Part A with the ₹5 crore turnover threshold in line 1 — this is the eligibility anchor; if it's buried after three lines of explanation, the examiner may not tick it.
- List restrictions as numbered points: (i) monthly tax payment despite quarterly filing, (ii) no switching back in same FY, (iii) turnover breach triggers exit — these are the three checkboxes the model answer expects, write them clean and fast.
- Open Part B by stating 'no separate application is required' — the option is exercised by filing the first quarterly return itself; this single line is worth a dedicated tick.
- End with Sumit's specific situation: pending May/June returns must be filed first before QRMP kicks in — the question planted this detail deliberately; if you ignore it, you're leaving a direct application mark on the table.

2Examiner-rewarded phrases

“aggregate turnover not exceeding ₹5 crore in the preceding financial year”“the option once exercised shall remain valid for that quarter and all subsequent tax periods of that financial year”“monthly payment of tax in PMT-06 is required despite quarterly filing of GSTR-3B”

3Common trap

Don't fall for this

Most students write a general note about QRMP but completely skip Sumit's unfiled May-June returns — that's the practical twist the question is testing and it's likely worth 1 of the 3 marks. Also watch out: don't say 'file an application to opt into QRMP' — there is no separate application, and writing that shows you've confused QRMP with composition scheme opt-in.

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Q.(b)(ii) 02 marks easy Job worker, entry bill, GST Laws ⚡ Try this Q →
When goods are transferred by principal to job worker, there is no need to issue entry bill. Comment on the validity of the above statement with reference to GST Laws.
CTTP

Worked Solution

✓ Verified

The statement is VALID. When goods are transferred by a principal to a job worker, no entry bill is required under GST laws.

Legal Basis: Rule 45 of the CGST Rules, 2017 governs the transfer of goods to job workers. The rule does not mandate the issuance of an entry bill. Instead, it specifies the documentary requirements and procedures.

Key Requirements Under GST Law: (1) The principal must furnish a declaration to the job worker identifying the goods and providing job work details. (2) The job worker must issue a receipt acknowledging receipt of goods. (3) A challan or consignment note accompanying the goods serves as the transfer document.

Distinction from Entry Bill: An entry bill is a document issued when goods are received in a warehouse or storage facility for customs/excise purposes. Job work involves execution of manufacturing or processing operations on goods, not their storage or receipt in the traditional sense. Since the principal retains ownership throughout the job work process and goods are sent for processing (not custody or storage), an entry bill is not applicable.

Position Under Rule 45A: When goods are sent to a job worker without payment of IGST, the principal need only maintain: (a) declaration in prescribed form, (b) supporting documents like purchase invoice or previous challan, and (c) records of goods sent. No entry bill is mentioned as a requirement. The job worker issues a receipt, and an invoice is raised only when the processed goods are received back by the principal.

Conclusion: The absence of entry bill requirement reflects the legal nature of job work—goods remain the principal's property, and only processing occurs. The required documentation (declaration and receipt) serves to track movement and protect tax revenue, making entry bills redundant.

Rule 45 of CGST Rules, 2017Rule 45A of CGST Rules, 2017Section 2(59) of CGST Act, 2017 (definition of job worker)
PLAN

Write it like this

Time target 3 min 36 sec

1The skeleton

- Start with 'The statement is VALID' — write this in your very first line so the examiner doesn't have to hunt for your answer; validity questions lose marks when the verdict is buried.
- Drop Rule 45 of CGST Rules, 2017 in line 2 — section/rule citation in opening is worth a quick mark and signals you know the source, not just the concept.
- Contrast entry bill vs. challan in one crisp line — examiner wants to see you know WHY there's no entry bill: it's a customs/warehouse instrument, whereas job work uses a challan; this is the conceptual split that earns the second mark.
- List what IS required (declaration + challan + receipt) — don't just say what's not needed; showing the positive list proves you understand the full Rule 45 framework and pre-empts part-marks loss.
- Close with one ownership-retention line — 'principal retains ownership throughout' is the legal reason entry bill is inapplicable; one sentence here rounds off the logic neatly for a 2-mark answer.

2Examiner-rewarded phrases

“as per Rule 45 of the CGST Rules, 2017”“the principal shall retain ownership of the goods throughout the job work process”“the goods shall be sent to the job worker under the cover of a challan”

3Common trap

Don't fall for this

Most students write 'no entry bill is needed' and stop there — but you need to name Rule 45 AND briefly say what document IS required (challan), otherwise it looks like you're guessing and you hand away the second mark for free.

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Q.1 14 marks very hard Income Computation - Individual Professional Services ⚡ Try this Q →
Mr. Bhasin, a resident individual, aged 52 years, provides management consultancy services to various corporate and non-corporate clients. His Income & Expenditure A/c for the year ended 31st March, 2023 is under: [Financial table showing various expenditure items including Employees Remuneration ₹15,00,000, Office & Administrative Expenses ₹5,00,000, Rates and Taxes ₹15,000, Interest Expenses ₹80,000, Office Rent ₹2,40,000, Insurance Premium ₹72,000, Professional Fees ₹2,00,000, Depreciation on Computers ₹1,20,000, Excess of Income over Expenditure ₹36,97,500; and Income items including Gross Receipts from Profession ₹60,00,000, Interest on Savings Bank Account ₹25,000, Winnings from Lottery ₹99,500, Rent Received ₹2,40,000]
CTTP

Worked Solution

✓ Verified

Computation of Total Income of Mr. Bhasin — Assessment Year 2023-24 (Previous Year 2022-23)

A. Income from Profession (Section 28 of the Income Tax Act, 1961)

Net Profit as per Income & Expenditure Account: ₹36,97,500

Less: Non-professional incomes incorrectly credited to I&E Account (to be assessed under respective heads):
- Interest on Savings Bank Account: ₹25,000
- Winnings from Lottery: ₹99,500
- Rent Received: ₹2,40,000
Total deductions: ₹3,64,500

Adjusted Professional Profit = ₹33,33,000

Add: Book Depreciation on Computers (disallowed — to be substituted with Income Tax depreciation): ₹1,20,000
Less: Depreciation allowable under Section 32 on Computers @ 40% on WDV of ₹3,00,000 = ₹1,20,000 (Net effect: NIL)

Income from Profession = ₹33,33,000

All other expenses — Employees Remuneration, Office & Administrative Expenses, Rates & Taxes, Interest Expenses, Office Rent, Insurance Premium, and Professional Fees — are wholly and exclusively incurred for the profession and are allowable under Section 37(1). Since gross receipts (₹60,00,000) exceed the ₹50,00,000 threshold applicable for AY 2023-24, Section 44ADA (Presumptive Taxation for Professionals) does not apply, and tax audit is mandatory under Section 44AB(b).

---

B. Income from House Property (Section 22 of the Income Tax Act, 1961)

Gross Annual Value (Rent Received): ₹2,40,000
Less: Municipal Taxes paid by owner: NIL (not stated)
Net Annual Value (NAV): ₹2,40,000
Less: Standard Deduction under Section 24(a) @ 30% of NAV: ₹72,000

Income from House Property = ₹1,68,000

---

C. Income from Other Sources (Section 56 of the Income Tax Act, 1961)

Interest on Savings Bank Account: ₹25,000
Winnings from Lottery [Section 115BB]: ₹99,500

Income from Other Sources = ₹1,24,500

Lottery winnings are taxable at a flat rate of 30% under Section 115BB. No deduction of any expenditure or allowance is permitted against such income, and the benefit of the basic exemption slab is not available against it.

---

Computation of Gross Total Income and Total Income:

Income from Profession: ₹33,33,000
Income from House Property: ₹1,68,000
Income from Other Sources: ₹1,24,500
Gross Total Income (GTI): ₹36,25,500

Less: Deduction under Section 80TTA — Interest on Savings Bank Account (Mr. Bhasin is 52 years, not a senior citizen; limit = ₹10,000): ₹10,000

Total Income = ₹36,15,500

---

Computation of Tax Liability (Old Tax Regime, AY 2023-24):

Lottery winnings (₹99,500) are taxed @ 30% separately u/s 115BB = ₹29,850

Balance income (₹36,15,500 − ₹99,500 = ₹35,16,000) taxed at slab rates:
- Up to ₹2,50,000 → NIL
- ₹2,50,001 to ₹5,00,000 → 5% on ₹2,50,000 = ₹12,500
- ₹5,00,001 to ₹10,00,000 → 20% on ₹5,00,000 = ₹1,00,000
- ₹10,00,001 to ₹35,16,000 → 30% on ₹25,16,000 = ₹7,54,800
Tax on regular income = ₹8,67,300

Total Tax before Cess = ₹8,67,300 + ₹29,850 = ₹8,97,150
Add: Health and Education Cess @ 4% = ₹35,886

Total Tax Liability = ₹9,33,036

No surcharge is levied as total income is below ₹50,00,000. Rebate under Section 87A is not applicable as total income exceeds ₹5,00,000.

Section 28 of the Income Tax Act 1961 — Profits and gains of business or professionSection 32 of the Income Tax Act 1961 — DepreciationSection 37(1) of the Income Tax Act 1961 — General deduction for business/professional expensesSection 22 of the Income Tax Act 1961 — Income from house propertySection 24(a) of the Income Tax Act 1961 — Standard deduction at 30% of NAVSection 56 of the Income Tax Act 1961 — Income from other sourcesSection 115BB of the Income Tax Act 1961 — Tax on winnings from lotteries at 30%Section 80TTA of the Income Tax Act 1961 — Deduction for interest on savings account (max ₹10,000)
PLAN

Write it like this

Time target 25 min 12 sec

1The skeleton

- Open with the computation heading including AY 2023-24 and PY 2022-23 — examiners allocate 1 mark just for this; missing it is a free mark thrown away.
- Your first move under profession: strip out non-professional credits (rent, lottery, SB interest) from the I&E surplus — if you start adjusting expenses before doing this, your base figure is wrong and every subsequent line bleeds marks.
- Call out §44ADA explicitly and eliminate it — state receipts ₹60L > ₹50L threshold, so presumptive scheme doesn't apply and §44AB(b) tax audit kicks in; this one sentence shows the examiner you understand the full picture, not just arithmetic.
- Handle depreciation as a two-line swap — disallow book depreciation, allow IT depreciation @40% on WDV; show both lines even if the net is NIL, because the examiner is looking for the methodology, not just the number.
- For IFOS, split SB interest and lottery on separate lines with their own sections (§56 and §115BB) — and then pull §80TTA only against SB interest, not lottery; confirm age 52 ≠ senior citizen so cap is ₹10,000, not ₹50,000.
- In tax computation, isolate lottery income first, tax it flat @30%, then apply slabs to the balance — writing one combined slab calculation is the single most penalised structural error in this question type.

2Examiner-rewarded phrases

“wholly and exclusively incurred for the purposes of profession and hence allowable under Section 37(1)”“taxable at a flat rate of 30% under Section 115BB; no deduction of any expenditure or allowance is permissible against such income”“Standard Deduction under Section 24(a) @ 30% of Net Annual Value”

3Common trap

Don't fall for this

Heads up — the most expensive mistake here is applying §44ADA just because you see 'management consultancy' and 'profession' in the same line. The moment receipts cross ₹50L, §44ADA is dead and you must compute actual income; writing a presumptive 50% answer for a ₹60L receipt question loses the entire profession section.

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Q.1 00 marks hard Income Tax - Residency status, income classification ⚡ Try this Q →
Case: Mr. Jal Chand (an Indian citizen) left India for employment in country X on 5th June, 2014. He regularly visited India and stayed for 60 days in every previous year since then. However, in the financial year 2022-23, he did not come to India at all. He owns a commercial building in Delhi which is let out. He has also set up a retail store in India which is controlled by his brother from India.
Mr. Jal Chand (an Indian citizen) left India for employment in country X on 5th June, 2014. He regularly visited India and stayed for 60 days in every previous year since then. However, in the financial year 2022-23, he did not come to India at all. He owns a commercial building in Delhi which is let out. He has also set up a retail store in India which is controlled by his brother from India. He provides the following information to you regarding his income for the financial year 2022-23 :
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Q.1 08 marks very hard GST calculation, input tax credit, composite supplies, inter ⚡ Try this Q →
Case: Jino Enterprises, a GST-registered partnership firm engaged in supplying air conditioners, accessories, repair services, and purchasing air tickets with various transaction scenarios in October 2022.
Jino Enterprises, a partnership firm is a regular taxable person registered in Guwahati, Assam and is engaged in supply of Air conditioners and its accessories as well as air conditioned repairing services. Details of their various activities for the month of October 2022 are as follows: (i) Intra-state supply of Air conditioner to customers in Assam freight is separately charged in invoices for delivery of goods at customer's doorstep. Value of goods: ₹40,000 Value of Freight charges charged separately in above: ₹1,00,000 (ii) Intra-state supply of repairing services wherein apart from charging service charges, cost of parts/spares provided to customers is also charged and consideration for the same is separately mentioned in the invoices. Value of services component of invoices: ₹3,00,000 Value of parts/spares component in invoices: ₹50,000 (iii) In order to enhance their sales and to clear the stock of old models of air-conditioner, Jino Enterprises made combo offers to customers wherein, if a customer purchases an Air-conditioner along with a stabilizer, the same is offered at a combo price of ₹20,000/- as against the original price of ₹30,000/- (Air-conditioner ₹22,000 & stabilizers ₹8,000) if these are purchased separately. During October 22, Jino Enterprises had made inter-state supply of 10 numbers of such combo products. (iv) Purchased business class air tickets for intra state travel from Guwahati, Assam to Dibrugarh Airport, Assam for its executive employees relating to business of the concern. Basic Air fare was ₹40,000/- and airlines charges GST @ 2.5% CGST, SGST each on basis freight, in case the same is applicable. Additional Information: (a) All figures mentioned above are exclusive of taxes. (b) In respect of few of the invoices relating to F.Y. 2021-2022, involving ITC of CGST ₹20,000/-, SGST of ₹20,000/-, IGST ₹80,000/- was not taken earlier. Jino Enterprises now want to avail credit in respect of such invoices in the current year. (c) The Rates of GST applicable on various supplies are as follows: - Air-Conditioner, Parts and accessories (Except Stabilizers): CGST 6%, SGST 6%, IGST 12% - Services: CGST 9%, SGST 9%, IGST 18% - Stabilizers: CGST 9%, SGST 9%, IGST 18% - Freight: CGST 6%, SGST 6%, IGST 12% Calculate the amount of minimum CGST, SGST & IGST tax payable in cash by Jino Enterprises for the month of October 2022. Working Notes (legal provisions) should form part of your answer.
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Q.1 20 marks very hard Economic Batch Quantity (EBQ), Inventory Management ⚡ Try this Q →
TSK Limited manufactures a variety of products. The annual demand for one of its products - Product 'X' is estimated as 1,35,000 units. Product 'X' is to be manufactured done in batches. Set up cost of each batch is ₹ 3,375 and inventory holding cost is ₹ 5 per unit. It is expected that demand of Product 'X' would be uniform throughout the year. Required: (i) Calculate the Economic Batch Quantity (EBQ) for Product 'X'.
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Q.1 00 marks easy Labour costing, incentive schemes (Rowan Premium Plan, Halse ⚡ Try this Q →
Case: SMC Company Limited is producing a particular design of toys under the following existing incentive system: Normal working hours in the week: 48 hours; Late shift hours in the week: 12 hours; Rate of payment - Normal working: ₹ 150 per hour, Late shift: ₹ 300 per hour; Average output per operator for 60 hours per week (including late shift hours): 80 toys. The standard time allotted for ten toys is seven and half hours. Time rate: ₹ 150 per hour (as usual).
Assuming that the operator works for 48 hours in a week and produces 100 toys, you are required to calculate the weekly earnings for one operator under:
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Q.1 10 marks very hard Contract Costing, Escalation Clause ⚡ Try this Q →
B Limited has taken a contract for ₹ 70,00,000 and furnishes the following information: [Table: 1st Year and 2nd Year data - Materials: 12,30,000 / 13,65,000; Wages: 12,50,000 / 11,44,000; Direct Expenses: 4,20,000 / 3,80,000; Indirect Expenses: 2,70,000 / 2,60,000; Work Certified: 32,00,000 / 70,00,000; Work Uncertified: 2,19,000 / -] Other Information: Plant costing ₹ 3,40,000 was bought at the commencement of the contract. Depreciation of ₹ 85,000 per annum is charged on the plant on Straight Line Method (SLM) basis. There is a provision for escalation clause in the contract for increase in material rate and wage rate in the second year only. Standard material for the first and second year was 12,000 units each year @ ₹ 90 per unit whereas the actual consumption was 12,500 @ ₹ 100 per unit in the first year and 13,000 units @ ₹ 105 per unit in the 2nd year. Standard labour hours for first year were 10,000 hours and for the second year it was 9,000 hours. Standard wage rate was ₹ 120 per hour. 10,000 hours @ ₹ 125 per hour in the first year and 8,900 hours @ ₹ 130 per hour in the second year.
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Q.2 00 marks easy Break-even analysis, contribution, margin of safety ⚡ Try this Q →
Case: Profit volume ratio: 30%; Margin of Safety (as % of total sales): 25%; Fixed cost: ₹ 12,60,000.
The following information pertains to ZB Limited for the year:
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Q.2 10 marks very hard Product Costing, Marginal Costing ⚡ Try this Q →
PQR Limited manufactures three products – Product X, Product Y and Product Z. The output for the current year is 2,50,000 units of Product X, 2,80,000 units of Product Y and 3,20,000 units of Product Z respectively. Selling price per unit is ₹ 12 for Product X. Product X is 1.25 times of Product Z whereas Product Y can be sold at double the price at which product Z can be sold. Product Z can be sold at a profit of 20% on its marginal cost. Other Information are as follows: [Table: Direct Material Cost (per unit) - Product X: ₹ 20, Product Y: ₹ 20, Product Z: ₹ 20; Direct Wages Cost (per unit) - Product X: ₹ 16, Product Y: ₹ 24, Product Z: ₹ 16; Raw material used for manufacturing all the three products is the same. Direct Wages are paid @ ₹ 4 per labour hour.]
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Q.2a 10 marks very hard Cost accounting - Material consumption, inventory valuation, ⚡ Try this Q →
Case: A Limited has furnished the following information for the months from January to 30th April, 2023: Number of Working days: January 25, February 24, March 26, April 25. Production (in units) per working day: January 50, February 55, March 60, April 52. Raw Material Purchases (% of total): January 21%, February 26%, March 30%, April 23%. Purchase price of raw material (per kg): January ₹16, February ₹12, March ₹13, April ₹11. Quantity of raw material per unit of product: 4 kg. Opening stock of raw material on 1st January: 6,020 kg, Cost ₹63,210. Closing stock of raw material on 30th April: 5,100…
A Limited company production and raw material inventory data for January to April 2023.
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Q.3 12 marks very hard Income Tax - Income computation, deductions, rental income, ⚡ Try this Q →
Case: Employee's Remuneration includes a sum of ₹ 3,00,000 paid to his wife, Mrs. Beena who is working as a manager in his office. She does not have any technical or professional qualification or experience required for the job. The payment of salary was as per market rates in comparison to similar work profile. Mr. Bhasin owns a big house with 2 independent units. Unit – I (with 50% share) has been let out for residential purposes at a fixed monthly rent of ₹ 20,000 for the entire year; Unit-2 (with the balance 50% of floor area) is used by Mr. Bhasin as his residence-cum-office. Other particulars …
You are required to compute the total income under proper heads of income of Mr. Bhasin for A.Y. 2023-24 under regular provisions of Income-tax Act 1961, assuming that he has not opted to pay tax under Section 115BAC. Also calculate the total tax payable by him.
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Q.3 00 marks easy Cost Accounting - Cost Sheet ⚡ Try this Q →
Selling and distribution expenses are to be charged at 20 paise per unit. Assume that one production cycle is completed in one month. Required: (i) Prepare a cost sheet for the month ended on April 30, 2023, showing the various elements of cost (raw material consumed, prime cost, factory cost, cost of production, cost of goods sold, and cost of sales). (ii) Calculate the selling price per unit if profit is charged at 20 percent on sales.
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Q.3a 07 marks hard Income-tax computation, SEZ benefits (Section 10AA), Section ⚡ Try this Q →
Mr. Bhagat, an individual aged 50 years, set up a unit in Special Economic Zone (SEZ) in F.Y.2017-18 for the production of computers. The unit fulfills the conditions of Section 10AA of the Income-tax Act. Also, he set up a hospital in a district of Maharashtra with 110 beds for patients. It fulfills all the conditions of Section 35AD. Capital expenditure in respect of the said hospital amounted to ₹65 lakhs (comprising of cost of land ₹15 lakhs and the balance was the cost of construction of building). The building became operational with effect from 1st April, 2022 and the expenditure of ₹65 lakhs was capitalized in the books of accounts on that date. Relevant data for F.Y.2022-23 are as follows: - Profit of unit located in SEZ: ₹36 lakhs - Export sales of SEZ unit: ₹75 lakhs - Domestic sales of SEZ unit: ₹25 lakhs - Profit from operation of hospital facility (Before considering deduction under Section 35AD): ₹90 lakhs Compute the income-tax (including AMT under Section 115C and AMT credit, if any, under Section 115JEE) payable by Mr. Bhagat for A.Y.2023-24 under regular provisions of the Income-tax Act i.e. ignoring the provisions of Section 115BAC. Ignore marginal relief, if any.
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Q.3b 08 marks hard Taxable salary computation, retirement benefits (gratuity, l ⚡ Try this Q →
Mr. Rohan retired from M/s. QRST Ltd., a private sector company, on 31st March, 2023 after completing 28 years and 3 months of service. He received the following sums/gifts on his retirement: (i) Gratuity of ₹7,50,000. He was covered under the Payment of Gratuity Act, 1972. (ii) Leave encashment of ₹3,25,000 for 210 days leave balance in his account. He was credited with 30 days leave for each completed year of service. (iii) Crockery set worth ₹4,500 from his employer at the farewell party which was organised by the HR department a day before his retirement. He drew a basic salary of ₹25,000 per month alongside 50% of basic salary as dearness allowance (not forming part of retirement benefits) for the period from 1st April, 2022 to 31st March, 2023. Further, during the year, his employer provided him a motor car of 1800 cc which was used by him and his family solely for personal purposes. The cost of fuel and repairs were met by Mr. Rohan and was purchased by the employer on 1st April, 2021 at a cost of ₹8,00,000. Salary of driver amounting to ₹10,000 per month was met by the employer only. Upon retirement, he gave the car back to the employer. You are required to compute the taxable salary of Mr. Rohan for A.Y.2023-24 assuming that he neither claims any relief under Section 89 nor does he opt to pay tax under Section 115BAC.
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Q.4(a) 10 marks hard Process Costing - Joint Products and By-products ⚡ Try this Q →
ABC Company produces a Product 'X' that passes through three processes: R, S and T. Three types of raw materials, viz., J, K, and L are used in the ratio of 40:40:20 in process R. The output of each process is transferred to next process. Process loss is 10% of total input in each process. At the stage of output in process T, a by-product 'Z' is emerging and the ratio of the main product 'X' to the by-product 'Z' is 80:20. The selling price of product 'X' is ₹ 60 per kg. The company produced 14,500 kg of product 'X'. Process costs are as follows: | Process | Variable cost per kg (₹) | Fixed cost of input (₹) | |---|---|---| | R | 5.00 | 42,000 | | S | 4.50 | 5,000 | | T | 3.40 | 4,800 | The by-product 'Z' cannot be processed further and can be sold at ₹ 30 per kg at the split-off stage. There is no realizable value of process losses at any stage. Required: Present a statement showing the apportionment of joint costs on the basis of the sales value of product 'X' and by-product 'Z' at the split-off point and the profitability of product 'X' and by-product 'Z'.
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Q.4(b) 05 marks medium Activity Based Costing ⚡ Try this Q →
Beta Limited produces 50,000 Units, 45,000 Units and 62,000 Units of product 'A', 'B' and 'C' respectively. At present the company follows absorption costing method and absorbs overhead on the basis of direct labour hours. Now, the company wants to adopt Activity Based Costing.
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Q.4d 00 marks hard Cost accounting - Toll plaza pricing, cost recovery, revenue ⚡ Try this Q →
Case: RST Toll Plaza Limited built an 80 kilometres long highway between two cities. The company operates a toll plaza to collect tolls from passing vehicles using the highway. The company has 12,000 medium weight and 10,000 heavy weight vehicles using the highway in one month for outward journey and the same number for return journey. The toll charges for medium weight vehicles is to be fixed at 2.5 times of the light weight vehicles and that of heavy weight vehicles as 2 times of the medium weight vehicles. The toll operating and maintenance cost for a month is ₹ 59,09,000. The company requires a …
RST Toll Plaza Limited operates an 80 km highway toll plaza with specified toll rates, exemptions, and return journey concession policies.
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Q.5 00 marks easy Residential status determination ⚡ Try this Q →
Mr. Jai Chand has the following incomes: Income from commercial building in Delhi – ₹ 12,00,000 (computed as per the provisions of the Act); Income from retail store – ₹ 4,50,000 (computed as per the provisions of the Act). Country X does not tax any individual on their income as there is no personal income-tax regime there.
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Q.5 04 marks medium Residential status and taxable income computation ⚡ Try this Q →
Mr. Prashant (aged 35 years) is an Australian citizen who is settled in Australia and visits India for 125 days in every financial year since past 11 years. During the FY 2022-23, he visited India for a total period of 200 days. The purpose of his visit was to meet his family members who are settled in India and also for managing his business in Sri Lanka through his office in Chennai, India. During the FY 2022-23, he has the following incomes: (A) Income from business in Australia controlled from Australia – ₹ 20,00,000; (B) Income from business in Sri Lanka controlled from Chennai – ₹ 16,00,000; (C) Short-term capital gains on sale of shares of an Indian company received in Australia – ₹ 50,000. The shares were sold online from Australia.; (D) Income from agricultural land in Australia, received there and then brought to India – ₹ 2,00,000.
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Q.5 15 marks very hard Standard Costing, Variance Analysis, and Cost Accounting ⚡ Try this Q →
NC Limited uses a standard costing system for the manufacturing of its product 'X'. The following information is available for the last week of the month: 25,000 kg of raw material were actually purchased for ₹ 3,12,500. The expected output is 8 units of product 'X' from one kg of raw material. There is no opening and closing inventories. The material price variance and material cost variance, as per cost records, are ₹ 12,500 (F) and ₹ 1,600 (A), respectively. The standard time to produce a batch of 10 units of product 'X' is 15 minutes. The standard wage rate per labour hour is ₹ 50. The company employs 125 workers in two categories, skilled and semi-skilled, in a ratio of 60 : 40. The hourly wages actually paid were ₹ 50 per hour for skilled workers and ₹ 40 per hour for semi-skilled workers. The weekly working hours are 40 hours per worker. Standard wage rate is the same for skilled and semi-skilled workers. The monthly fixed overheads are budgeted at ₹ 76,480. Overheads are evenly distributed throughout the month and assume 4 weeks in a month. In the last week of the month, the actual fixed overhead expenses were ₹ 17,600.
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Q.5(a)(i) 05 marks medium Composition scheme, GST eligibility ⚡ Try this Q →
Who are not eligible to opt for composition scheme for goods under GST?
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Q.5(b) 05 marks medium Rule 86A, COST Rules, electronic credit ledger, CBIC ⚡ Try this Q →
Rule 86A of the COST Rules, 2017 provides that in certain specified circumstances, Commissioner on the basis of reasonable belief may not allow debit of an amount equivalent to such credit in electronic credit ledger. State the grounds (as guided by CBIC) on which the reasons for such belief must be based on.
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Q.6 07 marks hard TDS on consideration for promotional gifts/services ⚡ Try this Q →
Miss Tara, a resident individual aged 32 years, is a social media influencer. She makes videos reviewing various electronic items and posts those videos on social media. On 1st December 2022, XYZ Ltd., an Indian company manufacturer of electronic cars gave her a brand new car having fair market value of ₹ 6 lakhs to promote on her personal purposes, recorded a video reviewing the car and then returned the car to the company.
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Q.6 00 marks easy TDS on payment for supply of staff ⚡ Try this Q →
Mr. Arma is a Chief Executive Officer of a multinational company. She hires Mr. Suresh for supply of her housing staff (like gardener, chef and drivers etc.) and makes the following payments to him, on 10th August, 2022 and ₹ 30,000 on 23rd November, 2022.
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Q.6 00 marks easy TDS implications on catering services ⚡ Try this Q →
By virtue of an agreement with Nationalized Bank, Ms ABC Pvt Ltd., a company engaged in catering business received ₹ 60,000 per month supply of food, water, snacks, etc. during office hours to the employees of the bank.
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Q.6 20 marks very hard Cost Accounting - Cost Objects, Capacity Planning, Activity ⚡ Try this Q →
Answer any four of the following:
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Q.7(a) 05 marks medium GST - Discharge of GST liability under CGST Act ⚡ Try this Q →
Mr. Manik provides the following information regarding his tax & other liabilities under GST Act as per Electronic Liability Register: Tax due for the month of May ₹25,000; Interest due for the month of May ₹2,000; Penalty due for the month of May ₹3,000; Tax due for the month of June ₹35,000; Liability arising out of demand notice U/s 73 ₹48,000. Mr. Manik wants to clear his liability of demand notice U/s 73 first. Discuss the provisions of order of discharge of GST liability U/s 49(5) of CGST Act & advise to Mr. Manik.
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Q.8(a) 00 marks easy Standard Costing and Budgeting ⚡ Try this Q →
Total overhead cost of the company is ₹52,50,000 for the year, out of which ₹1 per labour hour is variable and the rest is fixed. In the next year it is expected that sales of product X and product Z will increase by 12% and 15% respectively and sale of product Y will decline by 5%. The total overhead cost of the company for the next year remain unchanged. It is anticipated that all other costs will remain same for the next year and there is no opening and closing stock. Selling Price per unit of each product will remain unchanged in the next year. Required: Prepare a budget showing the current position and the position for the next year clearly indicating the total product-wise contribution and profit for the company as a whole.
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Q.8(b) 10 marks hard Cost Accounting and Inventory Valuation ⚡ Try this Q →
The following information is available from SN Manufacturing Limited's books for the month of April 2023: Opening inventories (April 1) - Stock of finished goods: 2,500 units; Stock of raw materials: ₹42,500; Work-in-progress: ₹42,500. Closing inventories (April 30) - Stock of finished goods: ?; Stock of raw materials: ₹38,600; Work-in-progress: ₹42,800. Other data: Raw materials purchased ₹6,95,000, Carriage inward ₹3,650, Direct wages paid ₹3,22,800, Royalty paid for production ₹15,800, Purchases of special designs, moulds and patterns (estimated life 12 production cycles) ₹1,53,600, Power, fuel and haulage (factory) ₹70,600, Research and development costs for improving the production process (amortized) ₹31,680, Primary packing cost (necessary to maintain quality) ₹6,920, Administrative Overhead ₹46,765, Salary and wages for supervisor and foremen ₹28,000. Other information: Opening stock of finished goods is to be valued at ₹8.05 per unit. During the month of April, 1,52,000 units were produced and 1,52,600 units were sold. The closing stock of finished goods is to be valued at the relevant month's cost of production. The company follows the FIFO method.
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Q.12 12 marks very hard Absorption Costing, Activity Based Costing, Overhead Allocat ⚡ Try this Q →
The information provided by Beta Limited is as follows: Floor Space Occupied: Product A: 5,000 Sq. Ft., Product B: 4,500 Sq. Ft., Product C: 6,200 Sq. Ft. Direct Labour Hours: Product A: 7,500 Hours, Product B: 7,200 Hours, Product C: 7,800 Hours Direct Machine Hours: Product A: 6,000 Hours, Product B: 4,500 Hours, Product C: 4,650 Hours Power consumption: Product A: 32%, Product B: 28%, Product C: 40% Overhead for year: Rent & Taxes: ₹ 8,63,500 Electricity Expenses: ₹ 10,66,475 Indirect labour: ₹ 13,16,250 Repair & Maintenance: ₹ 1,28,775 Total: ₹ 33,75,000
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Q.13 05 marks hard Product Mix Optimization, Contribution Margin, Linear Progra ⚡ Try this Q →
MSP Company Limited produces two products 'A' and 'B'. The relevant costs and sales price per unit of output is as follows: | Particulars | Product A (₹) | Product B (₹) | |---|---|---| | Direct material | 55 | 60 | | Direct labour | 35 | 45 | | Variable factory overheads | 40 | 20 | | Selling Price | 180 | 175 | The availability of machine hours is limited to 55,000 hours for the month. The monthly demand for product 'A' and product 'B' is 5,000 units and 6,000 units, respectively. Fixed expenses of the company are ₹ 1,40,000 per month. Variable factory overheads are ₹ 4 per machine hour. The company can produce both products according to the market demand.
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Q.13(a) 04 marks medium GST - Supply valuation and taxability ⚡ Try this Q →
Case: Mr. Jayesh, a registered supplier of Mumbai, received the following amounts in respect of the various activities undertaken by him during the month of October, 2023. Commission received as a recovery agent from non-Banking Finance Company (NBFC): ₹60,000. Actionable claim received from normal business debtors: ₹10,50,000. Amount received from ABC Ltd. for performance of classical dance in one program: ₹1,74,500. Business assets (old computers) given to a friend free of cost, the market value of all the computers was ₹51,000. No input tax credit has been availed on such computers when used for …
You are required to compute Gross value of supplies, on which GST to be paid by Mr. Jayesh for the month of October, 2022.
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Q.13(b) 04 marks medium GST - Taxability of healthcare services ⚡ Try this Q →
Mr. Shyam Das was admitted to Suraksha Hospital in Mumbai for 3 days in relation to diagnosis of removal of stones from his kidney. For the said services, Suraksha hospital charged the following: (i) Room rent ₹7000/- per day for 2 days. (ii) Operation theatre charges ₹5000/-. (iii) Doctors Consultation Charges ₹8000/-. (iv) Other services ₹4000/-. In each of the above scenarios explain whether Suraksha Hospital should levy GST or not in line with the relevant provisions of the GST laws.
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