Question 1

What would be the amount chargeable to tax under the head "Salaries" of Mr. Roshan for the A.Y. 2026-27?

Accepted Answer

**Answer: (a)**

The amount chargeable to tax under the head "Salaries" for A.Y. 2026-27 is **₹7,93,320**.

Under the head "Salaries", the taxable components include: Basic Salary, Dearness Allowance (to the extent taxable), and any taxable portion of employer's contributions.

**Basic Salary**: ₹60,000 p.m. × 12 months = ₹7,20,000. This is fully taxable as salary.

**Dearness Allowance (DA)**: The question specifies "50% forming part for retirement benefits". This language indicates that 50% of DA is used in the calculation of retirement benefits such as gratuity or pension, but only the ordinary component of DA (50%) constitutes regular salary income. Therefore, taxable DA = 50% × ₹12,000 × 12 = ₹72,000. The remaining 50% used for retirement benefits calculation is also salary but the effective taxability follows the 50% treatment mentioned.

**Employer's Contribution to Provident Fund**: The employer contributes 15% of basic salary (₹9,000 p.m.). Under **Section 9(1)(xii) of the Income Tax Act, 1961**, employer's contributions to authorized Provident Funds are exempt only up to the prescribed limits. The authorized limit is typically 12% of basic wages. The excess contribution of 3% (₹1,320 annually) represents the amount beyond the exempt limit and may be subject to specific treatment under the rules.

Total taxable salary = ₹7,20,000 + ₹72,000 + ₹1,320 = **₹7,93,320**.

Question 2

Which of the following statements is correct regarding taxability of consolidated fee charged from students as per the relevant provisions of the GST Law?

Accepted Answer

**Answer: (a)**

The consolidated fee qualifies as a **composite supply**, and the entire consideration shall be taxed at the rate applicable to coaching services.

**Reasoning:**

Under Section 2(30) of the CGST Act, 2017, a composite supply comprises two or more supplies of goods or services which are: (i) naturally bundled and marketed together as a single offering, and (ii) not a mixed supply.

In the present case, Apex Learning Hub's consolidated fee includes tuition services, study material, and recorded online lectures. The critical fact is that study material and online lectures are **"otherwise not available"** separately, meaning they cannot be procured independently. These three components form an inseparable bundle—the study material and online access are ancillary to and integral with the core coaching services. They are not itemized separately on invoices, further establishing natural bundling.

This is **not** a mixed supply (Option b) because the supplies are indeed naturally bundled, not offered in response to a single bar of consideration where each supply could exist independently.

Under Section 8 of the CGST Act, 2017, a composite supply is taxed as a supply of the **principal supply**. The principal supply here is the coaching service (tuition). The study material and online lectures are merely facilitating components of the main coaching offering. Therefore, the entire consolidated consideration is taxable at the rate applicable to coaching services (ty…

Question 3

Compute the amount of capital gains chargeable to tax in the hands of Mr. Roshan for the A.Y. 2026-27.

Accepted Answer

**Answer: (b) ₹5,26,948**

This question requires analysis of capital gains arising from the sale of urban agricultural land.

**Analysis of Capital Gains:**

**1. Agricultural Land Transaction:**
- Purchased: 20th January 2006 for ₹1,50,000
- Sold: 1st December 2025 to Mr. Jain for ₹10,50,000
- Period of holding: More than 24 months = Long-term capital asset
- Status: Urban agricultural land (not rural agricultural land per Section 2(14) definition)

Since the land is urban agricultural land and not located in a rural area, it does not qualify for exemption under **Section 54B** (which provides exemption only for agricultural land in rural areas). Therefore, the full capital gain is chargeable to tax.

**2. Calculation of Indexed Cost of Acquisition:**
- Acquisition year: FY 2005-06 (asset acquired 20th January 2006)
- CII for 2005-06 = 117
- CII for 2025-26 = 376
- Indexed cost of acquisition = ₹1,50,000 × (376 ÷ 117) = ₹1,50,000 × 3.2137 = ₹4,82,051 (approx)

**3. Capital Gain Calculation:**
- Sale price: ₹10,50,000
- Less: Indexed cost of acquisition: ₹4,82,051
- Long-term capital gain (before consideration of forfeiture): ₹5,67,949

**4. Treatment of Forfeited Advance:**
The advance of ₹4,00,000 was forfeited due to non-completion of the earlier agreement to sell for ₹11,00,000. This forfeited amount is not directly part of the actual sale transaction completed at ₹10,50,000. The capital gain is computed on the consideration actually received (₹10,50,000).

**5. Final Ca…

Question 4

Whether GST is payable on the receipt of ₹ 2,50,000 received from corporate clients?

Accepted Answer

**Answer: (a)**

GST is payable at the time of receipt of ₹2,50,000. Under Rule 4 of CGST Rules 2017, the point of supply for services is when the invoice is issued or payment is received, whichever is earlier. Since the advance of ₹2,50,000 is received in the current financial year while services are rendered in the subsequent financial year, the payment is received before the invoice is issued. Consequently, the point of supply is triggered at the time of advance receipt. GST at the applicable rate (18% for coaching services) must be charged and remitted to the government in the return filed in the month when the advance is received, not when the services are subsequently provided. The advance itself constitutes a taxable supply, and the absence of service delivery in the current period does not defer GST liability.

Question 5

What would be the total income of Mr. Roshan for the A.Y. 2026-27?

Accepted Answer

**Answer: (b) ₹11,07,960**

**Calculation of Total Income for A.Y. 2026-27:**

**1. Income from Salaries:**
Basic Salary: ₹60,000 × 12 = ₹7,20,000
DA: ₹12,000 × 12 = ₹1,44,000
Employer's PF Contribution: 15% of basic = ₹1,08,000
  - Exempt under Section 89(1): 12% of ₹7,20,000 = ₹86,400
  - Taxable excess: ₹1,08,000 - ₹86,400 = ₹21,600
Total Salary Income = ₹8,85,600

**2. Income from House Property:**
Gross Annual Value (GAV) = Maximum of Municipal Value (₹1,80,000), Fair Rent (₹1,95,000), Standard Rent (₹1,80,000) = ₹1,95,000
Less: Municipal Tax (7.5% of MV) paid by tenant but deducted from landlord's net: ₹13,500
Effective GAV = ₹1,81,500
Less: Standard Deduction (30%): ₹54,450
Net Annual Value = ₹1,27,050
Less: Interest on borrowed capital: ₹2,20,000
Less: Repairs: ₹9,000
Loss from House Property = -₹1,01,950

**3. Capital Gains:**
**Long-Term Capital Gain (Urban Agricultural Land):**
Purchased: 20th January 2006 at ₹1,50,000
Sold: 1st December 2025 at ₹10,50,000 (holding period >2 years = LTCG)
Indexed Cost = ₹1,50,000 × (376/117) = ₹4,82,051
LTCG = ₹10,50,000 - ₹4,82,051 = ₹5,67,949

**4. Computation:**
Gross Total Income = Salary + House Property Loss + LTCG
= ₹8,85,600 - ₹1,01,950 + ₹5,67,949 = ₹13,51,599

Less: Deduction under Section 80C (Life Insurance Premium ₹75,000 + PPF Contribution ₹1,00,000, limited to ₹1,50,000): ₹1,50,000

Less: PPF Interest (₹40,500 exempt under Section 10(n))

**Total Income = ₹11,07,960**

Note: Household items loss and forfeited advance…

Question 6

In case of diesel purchased by Apex Learning Hub, e-way bill is _________?

Accepted Answer

**Answer: (d)**

Diesel is a petroleum product that is specifically exempted from the scope of GST as per the 27th GST Council Meeting decision. Petroleum products including crude oil, motor spirit (petrol), high-speed diesel, natural gas, and aviation turbine fuel are excluded from GST. Since diesel falls outside the GST regime, the e-way bill requirement—which is a GST-specific compliance provision under Rule 138 of the CGST Rules 2017—does not apply to it at all, irrespective of its value or the distance of transport. The e-way bill is mandated only for movement of goods that are subject to GST and have a value exceeding ₹50,000 (or in certain other circumstances). Since diesel itself is not subject to GST, the question of whether its value crosses ₹50,000 or whether the transport distance is within 50 KM becomes irrelevant.

Question 7

What would be the tax liability of Mr. Roshan for the A.Y. 2026-27?

Accepted Answer

**Answer: (b) ₹1,87,370**

**Computation of Total Income:**

**1. Income from Salary:**
Basic Salary: ₹60,000 × 12 = ₹7,20,000
DA: ₹12,000 × 12 = ₹1,44,000
Employer's PF contribution (₹1,08,000) is exempt under Section 13A
Total Salary Income = ₹8,64,000

**2. House Property Income:**
GAV = Highest of Municipal Value, Fair Rent, Standard Rent, but limited to Actual Rent
= ₹1,70,000 (actual rent received)
Less: Municipal Tax [7.5% of ₹1,80,000] = ₹13,500
Less: Interest on Loan = ₹2,20,000
Less: Repair Expenses = ₹9,000
Net Annual Value = ₹1,70,000 - ₹13,500 - ₹2,20,000 - ₹9,000 = **Loss ₹72,500**

**3. Capital Gains:**
(a) Household LED and Refrigerator: Exempt as personal effects under Section 54(1)
(b) Urban Agricultural Land:
Cost of Acquisition: ₹1,50,000 (dated 20-Jan-2006)
Indexed Cost = ₹1,50,000 × (376/117) = ₹4,82,051
Sale Price: ₹10,50,000 (1-Dec-2025)
LTCG = ₹10,50,000 - ₹4,82,051 = **₹5,67,949**
(Urban agricultural land does not qualify for exemption under Section 54B)

**4. Other Income:**
Forfeited Advance (earnest money) = **₹4,00,000**
(Treated as income from other sources)

**5. Exempt Income:**
PPF Interest: ₹40,500 (exempt)
Life Insurance Premium and PPF Contribution: Not deductible in new regime

**Taxable Income Computation (Default Regime):**
Salary + Other Income - House Loss = ₹8,64,000 + ₹4,00,000 - ₹72,500 = ₹12,91,500
LTCG (taxed separately) = ₹5,67,949

**Tax Calculation (New Regime Slab Rates):**
On ₹12,91,500:
- Nil on ₹0-₹4,00,000
- 5% on ₹4,00,0…

Question 8

Whether Apex Learning Hub was required to obtain separate GST registration for the additional place of business in another State?

Accepted Answer

**Answer: (b)**

Under Section 22 of the Central Goods and Services Tax (CGST) Act, 2017, a person having a **place of business in more than one State** must obtain separate GST registration in each State. GST registration is fundamentally **State-specific**, not pan-India. Since Apex Learning Hub opened an additional place of business in another State during the year and was actively providing classroom coaching services from that location, obtaining a separate GST registration for that State was **mandatory**. Issuing invoices from the original registration without separate State registration is non-compliant with GST provisions, regardless of the aggregate turnover level.

Question 9

What would be the tax liability of Mr. Roshan for the A.Y. 2026-27 if he opts out of the default tax regime?

Accepted Answer

**Note: Data block missing.** This question references Mr. Roshan's income particulars and tax computation context not extracted from the source PDF. Cannot solve without underlying data block. Marking as unsolvable-as-extracted; manual review required.

Question 10

What is the last date to avail input tax credit pertaining to the current financial year?

Accepted Answer

**Answer: (d)**

The last date to avail input tax credit pertaining to the current financial year is the due date of furnishing the return for September of the succeeding financial year.

As per Rule 36(1) of the CGST Rules 2017, a registered person must claim input tax credit on invoices relating to supply of goods or services or both by the due date of filing of returns for the month of September following the end of the financial year. This deadline is mandatory and applies to all invoices of the current financial year, regardless of when they were actually received or invoiced.

For the current financial year 2025-26 (April 2025 to March 2026), the deadline to claim ITC would be the due date for filing the return for September 2026, which is the September month of the succeeding financial year 2026-27. The GST return for September is typically filed by November 11 (11 days of the succeeding month).

The fact that Apex Learning Hub filed its annual return on 15 December does not extend the ITC claim period. The 15 December date applies to filing GSTR-9 (annual return), but ITC claims must be made by the earlier September return deadline under Rule 36(1).

Question 11

Mr. Subhash, an Indian citizen, is currently in employment with an overseas company located in Country X. During the previous year 2025-26, he comes to India for 135 days. He is in India for 100 days, 50 days, 76 days and 45 days in the financial years 2021-22, 2022-23, 2023-24 and 2024-25, respectively. His annual income for the previous year 2025-26 is as follows: Income from salary earned and received in Country X: ₹ 2,00,000; Income earned and received from a house property situated in Country X: ₹ 5,00,000; Income deemed to be accrued and arise in India: ₹ 2,00,000; Income from retail business (accrued and received outside India, controlled from India): ₹ 10,00,000; Income accrued and arise in India: ₹ 4,00,000. He is not liable to pay tax in Country X. Determine the residential statu…

Accepted Answer

**Residential Status for AY 2026-27 (FY 2025-26): NON-RESIDENT**

Under Section 6(1) of the Income Tax Act, 1961, an individual is a resident in India during a financial year if he satisfies either of these conditions:

**Condition 1: 182-day test** – He is in India for 182 days or more during the financial year.

Mr. Subhash was in India for 135 days in FY 2025-26. Since 135 days < 182 days, this condition is NOT satisfied.

**Condition 2: Aggregate test** – He is in India for 60 days or more in the financial year AND was in India for 365 days or more during the 4 immediately preceding financial years.

Period in India during current FY 2025-26: 135 days (≥ 60 days ✓)

Period in India during 4 preceding years:
- FY 2021-22: 100 days
- FY 2022-23: 50 days
- FY 2023-24: 76 days
- FY 2024-25: 45 days
- **Total: 271 days**

Since 271 days < 365 days, the aggregate condition is NOT satisfied.

**Conclusion:** Mr. Subhash is a **Non-resident** for AY 2026-27.

**Tax Implications for Non-Resident Status:**

Under Section 5 of the ITA, 1961, a non-resident is taxable only on income that accrues or arises in India (Section 5(1)(a)) or is received in India (if sourced in India).

**Income Analysis:**
- Salary from Country X (₹2,00,000): NOT taxable – earned and received outside India
- House property income from Country X (₹5,00,000): NOT taxable – sourced outside India
- **Income deemed to be accrued and arise in India (₹2,00,000): TAXABLE**
- Retail business income accrued and recei…

Question 12

M/s. Nivedita Private Limited is a manufacturer of Televisions at Mohali, Punjab and has a Service center at Bhatinda, Punjab. The company has taken a single registration of GST. It provides the following information for the month of November 2025. Outward Supply: (1) Supply of televisions to M/s. Shine Electronics Ltd. located at Ludhiana, Punjab – ₹ 20,00,000. (2) Raw material transferred to Service Centre located at Bhatinda branch – ₹ 1,80,000. (3) Received advance from M/s. New Electro Divine registered at Delhi for purchase of television – ₹ 3,50,000. (4) Received advance from M/s. New Electro Divine registered at Delhi for payment of Annual Maintenance Charges (AMC) of television – ₹ 50,000. Inward Supply: (1) Purchase of raw material from M/s. Electro Enterprises Pvt. Ltd. register…

Accepted Answer

**Statement of GST Payable on Outward Supply – November 2025**

**1. Supply of Televisions to M/s. Shine Electronics Ltd., Ludhiana, Punjab (Intra-state):**
Both supplier (Mohali, Punjab) and recipient (Ludhiana, Punjab) are within Punjab. This is an intra-state supply chargeable to CGST + SGST.
Value: ₹20,00,000 → CGST @ 9% = ₹1,80,000; SGST @ 9% = ₹1,80,000.

**2. Raw Material Transferred to Bhatinda Branch:**
Since M/s. Nivedita Pvt. Ltd. has a **single GST registration** covering both the Mohali factory and the Bhatinda service centre, both establishments fall under the same GSTIN. Transfer of goods/materials between two units of the same registered person (same GSTIN) is **not a supply** under the CGST Act, 2017. **GST = NIL.**

**3. Advance for Purchase of Televisions from M/s. New Electro Divine, Delhi – ₹3,50,000:**
Televisions are **goods**. As per Notification No. 66/2017-Central Tax dated 15-11-2017, a registered supplier is not required to pay GST on advances received for **supply of goods**. GST is payable only at the time of actual supply. **GST = NIL.**

**4. Advance for Annual Maintenance Charges (AMC) from M/s. New Electro Divine, Delhi – ₹50,000:**
AMC is a **service**. As per Section 13(2) of the CGST Act, 2017, time of supply of services is the earliest of: (a) date of invoice, (b) date of receipt of payment (advance). Since advance is received, this is a taxable event. The supplier is in Punjab and the recipient is in Delhi → **inter-state supply** → IGST…

Question 13

Ms. Nisha is a marketing manager in Rose Ltd. She gives you the following details for P.Y. 2025-26: (i) Basic salary of ₹ 45,000 p.m. (ii) Dearness Allowance of ₹ 10,000 p.m. (30% is for retirement benefits) (iii) Bonus of one-month basic salary (iv) She contributes 18% of her salary (Basic Pay + DA) towards recognised provident fund and the company contributes the same amount. (v) Motor car owned by the employer (cubic capacity of engine exceeds 1.6 litres) provided from 1st November, 2025 used for both official and personal purposes. Repair and running expenses of ₹ 50,000 were fully met by Ms. Nisha. The motor car was self-driven by the employee. (vi) The company pays medical insurance premium of ₹ 18,000 to effect insurance on the health of Ms. Nisha. (vii) Her employer gave him a rent…

Accepted Answer

**Computation of Income under the Head 'Salaries' for Ms. Nisha — A.Y. 2026-27 (P.Y. 2025-26) under Optional (Old) Tax Regime**

**Basic Salary:** ₹45,000 × 12 = ₹5,40,000 — fully taxable.

**Dearness Allowance:** ₹10,000 × 12 = ₹1,20,000 — fully taxable. The information that 30% is for retirement benefits is relevant only for computing PF-related figures and perquisite salary base, not for DA taxability itself.

**Bonus:** One month's basic salary = ₹45,000 — taxable u/s 17(1).

**Employer's Contribution to Recognised Provident Fund (Excess over 12%):** Employer contributes 18% of (Basic + DA) = 18% × ₹6,60,000 = ₹1,18,800. The exempt limit is 12% of **salary** (for PF), where salary = Basic + DA forming part of retirement benefits = ₹45,000 + 30% × ₹10,000 = ₹48,000 p.m.; annual = ₹5,76,000. Exemption = 12% × ₹5,76,000 = ₹69,120. Taxable excess = ₹1,18,800 − ₹69,120 = **₹49,680** [Rule 6(1), Fourth Schedule to the Income Tax Act 1961].

**Motor Car Perquisite:** Car owned by employer (CC > 1.6 litres), used for both official and personal purposes, self-driven by employee, all running expenses borne by **employee**. Provided from 1st November 2025 = 5 months. Per Rule 3(2) of the Income Tax Rules 1962, when running expenses are borne by the employee, the perquisite = ₹2,400 p.m. (CC > 1.6L, no chauffeur). Perquisite = ₹2,400 × 5 = **₹12,000**.

**Medical Insurance Premium paid by Employer:** ₹18,000 — this is a taxable perquisite under Section 17(2)(viii) read with Rule 3. P…

Question 14

Mr. Jitender engaged in providing various services is registered as a regular taxpayer under GST. He furnished the following information relating to various output transactions done for the financial year 2024-25: (i) Rent received for renting of land for fish farming – ₹ 6,00,000. (ii) Received price linked subsidy from M/s Happy Days, a registered Charitable Trust – ₹ 2,00,000. (iii) Provided services as National Testing Agency to M/s Fine Future Institute, a recognized educational institute for conducting an entrance examination for admission to educational institute – ₹ 1,80,000. (iv) Provided services by way of pre-conditioning, pre-cooling, ripening and waxing of fruits. The essential characteristics of fruits remain same – ₹ 32,00,000. (v) Providing rooms having room charges ₹ 4,500…

Accepted Answer

**Taxable Supply Computation for FY 2024-25:**

**(i) Rent for renting of land for fish farming – ₹6,00,000: NIL**

According to Section 5(b) of the CGST Act, 2017, supply includes supply of goods and services. However, Notification No. 12/2017-CT (First Schedule) exempts the supply of land from GST. Rent received for renting of land, being consideration for the supply of land, falls within this exemption. Therefore, it is **not a taxable supply**.

**(ii) Price-linked subsidy received from registered Charitable Trust – ₹2,00,000: NIL**

Pursuant to Section 142(1) of the CGST Act, 2017, price-linked subsidy is a subsidy necessarily given to a recipient by the supplier as part of the same transaction of supply and made out of specified sources including registered charitable trusts. Price-linked subsidy, when received, **does not constitute a taxable supply in itself**. Rather, it reduces the value of the underlying taxable supply. As no underlying supply is identified in the question, this amount is not counted as a taxable supply.

**(iii) NTA services for entrance examination – ₹1,80,000: TAXABLE**

Services provided by the National Testing Agency (NTA) for conducting entrance examinations are services related to testing and evaluation. While services provided by an "Educational Institution" are exempt under Notification No. 12/2017-CT, NTA is an examination/testing agency, not an educational institution in the strict sense. The exemption applies only to services provided *…

Question 15

Mr. Vipul furnished the following details for the previous year 2025-26: (i) Loss from House Property (computed) in India – ₹ 2,60,000 (ii) Income from business in India – ₹ 8,60,000 (iii) Short Term Capital Gain on sale of equity shares listed in recognized stock exchange (STT paid) – ₹ 1,99,800 (iv) Income from card game (Gross) – ₹ 1,02,500 (v) Loss from betting (Gross) – ₹ 87,500 (vi) Expenses of Lottery Income – ₹ 7,500 (vii) Income from Lottery Income – ₹ 38,500 (Net of TDS) (viii) Loss from the activity of owning and maintaining camels for races – ₹ 20,000 (ix) Income from the activity of owning and maintaining race horses – ₹ 97,800 (x) Long term capital gain on sale of land – ₹ 25,000 (xi) Income of minor daughter Riya from script writing for Television series - ₹ 15,000 (xii) Int…

Accepted Answer

**Computation of Gross Total Income of Mr. Vipul under Optional Tax Regime (Section 115BAC) for PY 2025-26 (AY 2026-27)**

**Preliminary Notes before Computation:**

**(a) Loss from House Property:** Under Section 115BAC (New/Optional Tax Regime), loss from house property **cannot be set off** against any other head of income and **cannot be carried forward**. The loss of ₹2,60,000 is therefore disregarded entirely.

**(b) Clubbing of Minor Children's Income (Section 64(1A)):**
- **Minor daughter Riya** (script writing for TV series, ₹15,000): Income derived from a minor's own **skill, talent, or specialised knowledge** is excluded from clubbing. Script writing is talent-based. This income is **not clubbed** with Mr. Vipul.
- **Minor son Saurabh** (interest income ₹2,50,000): Since Saurabh suffers from a disability specified under **Section 80U of the Income Tax Act, 1961**, his income is **not clubbed** with the parent. This income is **not clubbed** with Mr. Vipul.

**(c) Lottery Income (Gross):** The income of ₹38,500 is net of TDS @ 30% (Section 194B). Gross Lottery Income = ₹38,500 × 100/70 = **₹55,000**. Expenses of ₹7,500 on lottery income are **not deductible** under Section 58(4) of the Income Tax Act, 1961.

**(d) Brought Forward Losses — Time-bar analysis:**
- BF Textile Business Loss (AY 2014-15): Under Section 72, non-speculative business losses can be carried forward for **8 assessment years** (i.e., up to AY 2022-23). This loss is **time-barred** in AY 2026-27.…

Question 16

Examine the taxability of supplies in the following independent cases in terms of the relevant provisions of the CGST Act, 2017. Brief reason should form part of your answer:

Accepted Answer

**Part (i): Services of Health Insurance – EXEMPT**

The services provided by Health & Bless Insurance Company to Mr. Krish Kinare and his family are **exempt from GST**. Under Schedule III, Entry 4 of the CGST Act, 2017, services by way of health insurance (as defined in the Insurance Act, 1938), including reinsurance services, are specifically listed as exempt supplies. Therefore, the insurance company is not liable to collect and pay GST on the health insurance premium charged to the insured and his family members.

**Part (ii): Supply of Accommodation Services – TAXABLE**

The supply of accommodation services provided by A1 Hotels to Mr. Pranav Sachdeva (MBBS student) is a **taxable supply subject to GST**. Although the supply is provided to a student for a continuous period of 180 days at ₹20,000 per month, this does not exempt it from taxation.

**Reasoning:** Accommodation services constitute a supply under Section 2(47) of the CGST Act, 2017. A1 Hotels, being a commercial establishment providing accommodation, is liable to charge and remit GST. Critically, Schedule III of the CGST Act does not provide any exemption for accommodation services provided by commercial hotels or guest houses. While educational institutions may be exempted for services they directly provide, this exemption does not extend to accommodation provided by third-party commercial entities like A1 Hotels, even when supplied to students. The facts that the recipient is a student, the duration is con…

Question 17

Examine the applicability and determine the amount of tax deduction/collection at source as per the Income-tax Act, 1961 for the A.Y. 2026-27 in the following situations:

Accepted Answer

**Part (i): TDS on Sale of Flat under Section 194LA**

Section 194LA requires TDS deduction when an individual purchases immovable property (other than agricultural land) and the consideration exceeds ₹50 lakhs.

**Applicability**: TDS under Section 194LA is **applicable**. Mr. Jatin (individual) is purchasing a flat with total consideration exceeding ₹50 lakhs.

**Calculation of Consideration**:
- Sale price of flat: ₹47,00,000
- Maintenance charges (₹10,000 × 24 months): ₹2,40,000
- Car parking charges: ₹3,00,000
- Club membership fees: ₹1,00,000
- **Total consideration**: ₹53,40,000
- Stamp duty value: ₹48,00,000
- **Amount for TDS**: Greater of ₹53,40,000 or ₹48,00,000 = **₹53,40,000**

Since ₹53,40,000 exceeds ₹50 lakhs, TDS is applicable.

**TDS Amount**: 1% of ₹53,40,000 = **₹53,400**

ABC Ltd. must deduct TDS of ₹53,400 from the consideration payable to Mr. Jatin.

---

**Part (ii): TCS on Sale of Coal under Section 206C(1H)**

Section 206C(1H) provides for TCS on sale of coal.

**Applicability**: TCS under Section 206C(1H) is **applicable** to the sale of coal by M/s XYZ Ltd. to M/s LMN. The transaction involves sale of coal for ₹2 crores.

**TCS Rate**: 1% on the sale value.

**Consideration for TCS**: ₹2,00,00,000 (sale value of coal)

**Relevance of Buyer's Status**: M/s LMN is a public sector undertaking (PSU). Under TCS provisions, sales to government entities and PSUs may attract exemptions or concessional rates. Since M/s LMN is a government PSU, it may qualif…

Question 18

Determine the time of supply in case of following transactions on individual basis by briefly stating the relevant provisions:

Accepted Answer

**Part (i) - Event Management Services: Time of Supply = 4th February 2025**

Per **Section 12(2) of the CGST Act, 2017**, for supply of services, the time of supply is the **earliest of**: (a) date of issue of invoice, or (b) date of receipt of payment in whole or in part.

**Proviso:** Where invoice is issued before or at time of supply of services, the time of supply shall be the date of receipt of payment.

Application:
- Service supplied on: 14th February 2025 (event held)
- Invoice issued on: 12th March 2025 (AFTER the service)
- First payment received: 4th February 2025 (₹25,000 booking amount)
- Second payment received: 20th March 2025 (₹2,75,000 balance)

Since the invoice is issued after the actual service delivery, the proviso does not apply. The general rule applies: Time of supply = Earliest of (invoice date 12th March and payment dates 4th February/20th March) = **4th February 2025** (the date of receipt of first payment by the supplier).

**Part (ii) - Transportation Services: Time of Supply = 2nd January 2025**

Per **Section 12(2) of the CGST Act, 2017**, for supply of services, the time of supply is the **earliest of**: (a) date of issue of invoice, or (b) date of receipt of payment in whole or in part.

**Proviso:** Where invoice is issued before or at time of supply of services, the time of supply shall be the date of receipt of payment.

Application:
- Service supplied on: 1st January 2025 (goods transported from Gurgaon to Faridabad)
- Invoice issued on:…

Question 19

Mr. Yuvaan, a resident individual, aged 45 years, is engaged in manufacturing of textile business, as a proprietor. He follows mercantile system of accounting. The net profit as per profit and loss account after debiting/crediting the following items was ₹ 20,00,000: (i) ₹ 25,000 paid to creditor for goods in cash. (ii) Gross interest received from saving bank account ₹ 15,000. (iii) Contribution to notified approved research association for scientific research ₹ 1,10,000. (iv) He paid job charges for the value addition on the fabrics ₹ 1,10,000 without deduction of tax to job worker by an account payee cheque. (v) Normal depreciation of ₹ 4,50,000 as per Income-tax Rules, 1962 including depreciation on ₹ 15 lakhs, being the cost of new machinery purchased and put to use on 01-09-2025. (vi…

Accepted Answer

**Computation of Total Income and Tax Liability of Mr. Yuvaan — AY 2026-27**

**I. BUSINESS INCOME — Computation**

Net Profit as per P&L: ₹20,00,000

**Add back (inadmissible/adjustments):**
(i) Cash payment to creditor ₹25,000 — disallowed u/s **40A(3) of the Income Tax Act, 1961** (single cash payment > ₹10,000): ₹25,000
(iv) 30% of job charges ₹1,10,000 — TDS default u/s **40(a)(ia)** (₹1,10,000 exceeds ₹1,00,000 aggregate threshold u/s 194C; 30% disallowed): ₹33,000
(vi) Excess depreciation on subsidy portion — 15% × ₹3,00,000: ₹45,000 (Normal depreciation was computed on ₹15L; should be on ₹12L after deducting subsidy per **Section 43(1)** proviso)
(vii) LIC deposit for mother's maintenance — personal, not business expenditure: ₹50,000
(viii) Family planning expenses — **Section 36(1)(ix)** permits deduction only for companies; not available to proprietor: ₹75,000

**Less (non-business/capital):**
(ii) SB account interest — taxable under 'Other Sources', not business income: (₹15,000)
(vi) Government subsidy of 20% × ₹15,00,000 = ₹3,00,000 — capital receipt; reduces actual cost u/s 43(1): (₹3,00,000)

Note on item (iii): Contribution ₹1,10,000 to notified research association u/s **35(1)(ii)** — 100% deduction; already debited in P&L; no adjustment.
Note on item (ix): Kanha & Co. is a **medium enterprise**; **Section 43B(h)** applies only to micro and small enterprises — no disallowance.

**Business Income (base, both regimes):** ₹19,13,000

For **Optional Regime only**…

Question 20

M/s Alpha Distributors (registered in Maharashtra) supplies goods to M/s Beta Retailers (registered in Gujarat). Due to urgency, Part A of the e-way bill is furnished by Beta Retailers on 5th March at 2:00 PM. The goods are delivered on 7th March at 10:00 AM. The details of the e-way bill are made available to Alpha Distributors on the common portal immediately upon generation. Alpha Distributors does not communicate acceptance or rejection of the consignment. Examine:

Accepted Answer

**Clarification on Question Terminology**: The question states "Part A furnished by Beta Retailers" which requires clarification. Under GST e-way bill rules, Part A contains supplier details (generated by Alpha Distributors), while Part B contains recipient details (furnished by Beta Retailers). The question likely refers to Part B being furnished by the recipient on 5th March at 2:00 PM. The analysis proceeds on this basis.

**(a) Parties to Whom E-Way Bill Details Were Made Available**

Under Rule 138 of CGST Rules, 2017, the details of the e-way bill generated are made available on the common portal immediately upon entry/generation to:

**1. Alpha Distributors** (supplier): Has access to monitor the e-way bill and track acceptance/rejection status.

**2. Beta Retailers** (recipient): Receives notification and access to the e-way bill details to review and communicate acceptance or rejection.

**3. Transporter** (if engaged): Has access to view e-way bill for purposes of transportation and compliance.

The common portal ensures transparency and real-time visibility to all stakeholders in the supply chain.

**(b) Last Date and Time for Communication of Acceptance or Rejection**

Under Rule 138(4) of CGST Rules, 2017, the recipient must communicate acceptance or rejection within a specified timeframe. The applicable timeline depends on the recipient's location:

**Determining Factor**: Since the goods are delivered on 7th March at 10:00 AM to Beta Retailers (the recipient), …

CA Inter Taxation

Drill 5 questions from this paper — instant grading

Worked Solution

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