Question 1

What will be the liability of Mr. Sahi for the A.Y. 2023-24, if he does not opt for section 115BAC?

Accepted Answer

**Part (a): Computation of Total Income of Mr. Sahi for A.Y. 2023-24 (Old Regime)**

**Income from Salary:**

Basic Pay: ₹8,34,000; Dearness Allowance: ₹1,28,814; House Rent Allowance (HRA): ₹75,000 — since Mr. Sahi has purchased a house and presumably resides therein, no rent is paid, hence exemption u/s 10(13A) of the Income Tax Act, 1961 is **Nil** and the entire HRA is taxable; Transport Allowance: ₹19,200 — fully taxable (separate transport allowance exemption was withdrawn from A.Y. 2019-20); Personal Allowance: ₹5,00,000; Children Education Allowance (CEA): ₹12,000 received, less exemption u/s 10(14)(ii) = 2 children × ₹100 × 12 months = ₹2,400, taxable CEA = ₹9,600; Medical Allowance: ₹15,000 — fully taxable (medical reimbursement exemption withdrawn from A.Y. 2019-20); Bonus: ₹20,000.

**Gross Salary = ₹16,01,614**

The **Employer's RPF contribution** of ₹1,14,152 is exempt since it is within 12% of salary (Basic + DA = ₹9,62,814; 12% = ₹1,15,537.68 > ₹1,14,152). Hence no addition to income.

Less: **Standard Deduction u/s 16(ia):** ₹50,000
Less: **Professional Tax u/s 16(iii):** ₹2,400

**Income from Salary = ₹15,49,214**

Note: Since the EMI split between interest and principal is not provided, no deduction u/s 24(b) for home loan interest or 80C for principal repayment is considered here.

**Gross Total Income = ₹15,49,214**

**Deductions under Chapter VI-A:**
**Section 80C:** Employee's RPF contribution ₹1,14,152 + LIC Premium ₹18,000 = ₹1,32,152 (within the maxi…

Question 2

Assuming for the purpose of carrying the burden can be an advantage is made by: Mr. Gini and his employee towards 10% - other expenses available to Mr. Gini under Question IA for the previous year 2022-23. If he does not opt for section 115BAC, the taxable income of Mr. Gini will be:

Accepted Answer

This question references 'Question IA' which contains the income and deduction details for Mr. Gini for FY 2022-23. Without the specific figures provided in that preceding question (gross income, deductible expenses, Chapter VI-A deductions, etc.), a definitive calculation cannot be performed.

However, the approach under old regime (NOT opting for Section 115BAC) is:

**Step 1:** Start with gross income as provided in Question IA.

**Step 2:** Deduct all expenses and allowances (including the mentioned 10% deduction).

**Step 3:** Apply deductions under **Section 80C, 80D, 80EE, 80G** and other applicable sections of Chapter VI-A (Income Tax Act 1961). These deductions are available only if the assessee does NOT opt for Section 115BAC.

**Step 4:** Taxable income = Gross income after Step 2 minus Chapter VI-A deductions from Step 3.

**Key Point:** If Mr. Gini does NOT opt for Section 115BAC, he is entitled to claim all permissible deductions under Chapter VI-A, resulting in a lower taxable income compared to the new regime where such deductions are blocked.

The correct answer from options (A) ₹2,78,520, (B) ₹2,59,537, (C) ₹2,50,000, or (D) ₹2,43,500 would depend on the exact figures from Question IA. Typically, the lowest figure represents maximum deductions claimed.

Question 3

Mr. Rai, aged 52 years a resident Indian, has furnished the following particulars for the year ended 31-03-2023: (i) He occupied a portion of his own house during 2023 and has not used fully for residential use in person out of ₹ 3,34,500. He has paid municipal taxes of ₹ 900 for both financial periods. (ii) As per internet certificate from ICICI bank, he paid ₹ 1,80,000 as interest and ₹ 66,000 towards principal during the financial year. (iii) Aggregate rent of his property during the financial year 2022-23. Total amount of the undertaking was ₹ 600 lakhs, which includes ₹ 100 lakhs towards undertakings in the conditions of confinement. (iv) He employed 30 new employees for the said industrial undertaking during the previous year 2023-24. Out of 30 employees, 12 were employed on 1st May …

Accepted Answer

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

Mr. Rai is a resident individual aged 52 years. His income is computed under the following heads:

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**HEAD: Income from House Property [Sections 22–24, Income Tax Act, 1961]**

The house is let out (or partially let out), and rent received/receivable is ₹3,34,500.

Gross Annual Value (GAV): ₹3,34,500
Less: Municipal Taxes paid (allowed since paid by owner): ₹900
**Net Annual Value (NAV):** ₹3,33,600
Less: Standard Deduction u/s 24(a) @ 30% of NAV: ₹1,00,080
Less: Interest on housing loan u/s 24(b): ₹1,80,000
**Income from House Property: ₹53,520**

*Note on home loan:* Interest ₹1,80,000 is deductible u/s 24(b) (for let-out property, no ceiling). Principal repayment ₹66,000 qualifies for deduction u/s 80C.

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**HEAD: Capital Gains — Sale of Vacant Land [Sections 45, 48, 50C]**

The vacant land was sold on 01-12-2022. Since it was purchased in 1997 and sold in December 2022 (held > 24 months), it is a **Long-Term Capital Asset**.

**Step 1 – Full Value of Consideration u/s 50C:**
Actual sale consideration = ₹1,50,000; Stamp Duty Value (SDV) = ₹1,55,000.
SDV as % of consideration = (1,55,000/1,50,000) × 100 = 103.3%, which is ≤ 110%.
As per the **proviso to Section 50C(1)**, where SDV does not exceed 110% of actual consideration, the actual consideration is taken as full value. Hence **Full Value = ₹1,50,000**.

**Step 2 – Indexed Cost of Acquisition:**
The asset was purchased p…

Question 4

Compute the total income of Mr. Dinesh and his wife Mrs. Matura for Assessment Year 2023-24 assuming that they have not opted to be taxed under section 115BAC.

Accepted Answer

**Note: The question as provided appears to be missing the supporting data** (i.e., the income particulars, transaction details, or given figures for Mr. Dinesh and Mrs. Matura). A complete numerical question of this type would typically include details such as salary income, house property income, capital gains transactions (with cost of acquisition, sale consideration, period of holding), business/profession income, and any losses to be set off or carried forward.

**Framework for solving such a question (AY 2023-24, PY 2022-23):**

**Step 1 – Compute income under each head separately for both individuals.**
Heads of income under Section 14 of the Income Tax Act, 1961: Salaries, House Property, Profits and Gains of Business or Profession, Capital Gains, and Other Sources.

**Step 2 – Apply clubbing provisions (Sections 60–65)** if applicable. For instance, if Mr. Dinesh transfers assets to Mrs. Matura without adequate consideration, income from such assets is clubbed in Mr. Dinesh's hands under Section 64(1)(iv). Similarly, income from a business where Mrs. Matura's capital was sourced from Mr. Dinesh may be clubbed under Section 64(1)(vi).

**Step 3 – Set off of losses** under Sections 70–74. Inter-source set-off (Section 70), inter-head set-off (Section 71), and carry forward rules apply. Key restrictions: long-term capital loss (LTCL) can only be set off against long-term capital gain (LTCG); loss from speculative business is ring-fenced.

**Step 4 – Apply Chapter VI-A d…

Question 5

During the A.Y 2022-23, Mr. A has a loss of ₹ 8 lakhs under the head 'Income from house property'. He also has income of ₹ 15 lakhs from other head of income as per the provisions of section 71. He has not exercised any option in the previous year. What is the position with regard to the loss and the return of income within the said due date. Assume, Mr. A filed his belated return of income for A.Y 2022-23. How will the loss be carried forward to the said next years assuming the assessee has exercised option under section 115BAC in A.Y 2022-23. Comment and suggest the best option.

Accepted Answer

**Answer: (C)**

When Mr. A files a belated return for A.Y. 2022-23 and exercises the Section 115BAC option:

Loss from house property carried forward under Section 71 is permitted. Per Section 71, loss from house property **can be set off against income from any head of income** (not restricted to house property income alone) in the same financial year. Any unabsorbed loss is carried forward.

In A.Y. 2023-24 and subsequent years, the carried-forward loss of ₹8 lakhs can be set off against income from **any head**—not limited to house property income. Option (B) incorrectly restricts set-off to house property income only, whereas Section 71 clearly permits set-off against any income source up to the extent available.

The ₹2 lakhs set-off in A.Y. 2023-24 represents the annual limitation on loss utilization from house property when carried forward, with the balance of ₹6 lakhs further carried to A.Y. 2024-25 and subsequent years (total 8-year carry-forward period under Section 71(2)).

Key points:
• Belated return does NOT prevent loss carry-forward under Section 71
• Section 115BAC does NOT restrict loss from house property set-off against other income
• Loss can be set off against **any income source**, not limited to house property
• Maximum 8-year carry-forward available per Section 71(2)

Question 6

Mr. Arun, an ambassador in Japan. He received certain income of ₹2,40,000 during the year 2023-24. (Given brief reason)

(a) Mr. Arun of India has appointed Mr. Arand as an ambassador in Japan. He received taxable income of ₹2,40,000 during the year 2023-24. He rendered his services in Japan. He is an Indian citizen having status of non-resident in the year 2023-24.

Mr. Kaka: a non-resident in India is engaged in operations which are confined to purchase materials in India but rendered service charges of ₹30,000 during the period.

Mr. Vikas, a non-resident in India, has earned ₹3,00,000 as royalty for a patent right made by him. He also is a non-resident. He has sought certain rights for building a commercial complex on his property in Delhi for which he has earned royalties in India.

A…

Accepted Answer

**Part (a): Taxability of Income of Non-Residents under Section 9(1) of the Income Tax Act, 1961**

**1. Mr. Arand — Indian Citizen, Non-Resident, Ambassador in Japan**

Under **Section 9(1)(iii)** of the Income Tax Act, 1961, salary paid by the Government of India to a **citizen of India** for services rendered **outside India** is deemed to accrue or arise in India. Even though Mr. Arand is a non-resident and rendered services in Japan, since he is an Indian citizen appointed by the Government of India as ambassador, his salary of ₹2,40,000 is **deemed to accrue in India and is taxable**.

However, under **Section 10(7)**, any **allowances or perquisites** paid outside India by the Government of India to an Indian citizen rendering services outside India are **exempt from tax**. Therefore, only the basic salary component is taxable; allowances/perquisites are exempt.

**Conclusion:** ₹2,40,000 (salary) is **taxable in India** under Section 9(1)(iii). Any allowances embedded therein would be exempt under Section 10(7).

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**2. Mr. Kaka — Non-Resident, Operations Confined to Purchase of Materials + Service Charges ₹30,000**

Under **Section 9(1)(i)**, income accruing from a business connection in India is deemed to accrue in India. However, the **proviso to Section 9(1)(i)** specifically provides that if operations of a non-resident are **confined solely to the purchase of goods or merchandise in India**, no income shall be deemed to accrue in India from such purchase oper…

Question 7

Determine gross total income of Mr. Nigam for the assessment year 2023-24 and the losses to be carried forward to the subsequent year assuming he has not opted to be taxed under section 115BAC.

Accepted Answer

**Note:** The specific financial data for Mr. Nigam was not included in the question as submitted. The following solution is based on a representative set of figures commonly used in CA Intermediate (Paper 4 – Taxation) examinations for this type of question. Please substitute with the actual figures from your question paper.

**Assumed Data for Mr. Nigam (Previous Year 2022-23, AY 2023-24):**
- Salary Income: ₹5,20,000
- Loss from House Property (self-occupied): ₹3,00,000
- Income from Business (non-speculation): ₹1,80,000
- Loss from Speculation Business: ₹60,000
- Short-Term Capital Gain u/s 111A: ₹40,000
- Long-Term Capital Loss: ₹1,20,000
- Winnings from Lottery: ₹30,000
- Loss from maintaining and owning race horses: ₹20,000

**Step 1 – Compute Income Under Each Head Before Set-Off**

Income from Salaries: ₹5,20,000 (no deduction u/s 16 assumed beyond standard ₹50,000 if employer-employee exists — assumed net figure given).

Income from House Property: Loss of ₹3,00,000. However, under **Section 71(3A) of the Income Tax Act, 1961**, loss under the head 'House Property' can be set off against any other head of income only to the extent of **₹2,00,000** in a year. The remaining ₹1,00,000 is carried forward for 8 years u/s 71B.

Income from Business/Profession: ₹1,80,000 (normal business). Speculation loss of ₹60,000 can only be set off against **speculation income** (Section 73). Since there is no speculation income this year, the entire ₹60,000 is **carried forward** for…

Question 8

Mr. Hari acquired some shares of XYZ (P) Ltd. in 2018 for ₹ 3,50,000 and in April 2023, when the market price was ₹ 5,15,000. The indexed cost of acquisition of shares for Mr. Hari was

Accepted Answer

**Answer: (C) ₹4,20,000**

The indexed cost of acquisition is calculated using the Cost Inflation Index (CII) under Section 48 of the Income Tax Act, 1961. The formula is:

**Indexed Cost of Acquisition = Cost of Acquisition × (CII of year of sale / CII of year of purchase)**

For Mr. Hari:
- Acquisition year: 2018-19 with CII = 280
- Sale year: 2023-24 (April 2023) with CII = 336
- Original cost of acquisition: ₹3,50,000

Indexed Cost = ₹3,50,000 × (336 ÷ 280) = ₹3,50,000 × 1.2 = **₹4,20,000**

This indexed cost is used to compute the long-term capital gain. The capital gain would be: ₹5,15,000 (market price) − ₹4,20,000 (indexed cost) = ₹95,000.

Question 9

(a) Mr. Malani, a citizen of the Country Y, is a resident but not ordinarily resident in India during the financial year 2023-24. He has two house properties in Country Y and a land in residence in India. The annual value of the house property in Country Y is ₹30,000. He took ownership and possession of a flat in Delhi on 01.10.2022, which is used for self-occupation. While his it is 10% in August, his rent used by him for 3 months of the time when he

Accepted Answer

**Note:** The question as provided is truncated after 'the time when he', so the analysis below addresses all identifiable elements fully and makes reasonable standard assumptions for the missing portion, flagged clearly.

**Residential Status and Scope of Total Income**

Mr. Malani is a **Resident but Not Ordinarily Resident (RNOR)** in India for FY 2023-24. Under **Section 5(1) read with Section 6 of the Income Tax Act, 1961**, for an RNOR, the following incomes are chargeable to tax in India:
(i) Income received or deemed to be received in India;
(ii) Income accruing or arising in India;
(iii) Income from a business controlled in India or a profession set up in India (even if received abroad).

Income from sources **outside India** that does not satisfy any of the above conditions is **NOT taxable** for an RNOR. This is the crucial difference from a Resident and Ordinarily Resident (ROR).

**Treatment of House Properties in Country Y**

The annual value of the two house properties situated in Country Y is ₹30,000. Since these properties are located outside India, the income therefrom accrues and arises outside India. As Mr. Malani is an RNOR and these properties are not connected to any business controlled from India, this income of **₹30,000 is NOT chargeable to tax in India**. It will be entirely excluded from the computation of his total income.

**Treatment of Land in India**

Bare ownership of land does not generate 'Income from House Property' unless there is a build…

Question 10

A taxpayer in the month of eligible input tax credit that can be availed by Neelkanti & Co. for the month of ______.

Accepted Answer

**The question appears incomplete.** The stem reads: 'A taxpayer in the month of eligible input tax credit that can be availed by Neelkanti & Co. for the month of ______' but lacks the case scenario with essential details needed to compute ITC. To solve an ITC computation question, the following information is required: (1) Details of purchases made and GST paid (inward supplies), (2) Details of sales/outputs and GST collected (outward supplies), (3) Nature of goods/services (whether taxable, exempt, or mixed), (4) Whether any supplies are blocked from ITC under Section 17(5) of the CGST Act 2017 (e.g., personal consumption, motor vehicles, fuel for personal use, food and beverages for employees, etc.), (5) Proportionality adjustment if both taxable and exempt supplies exist. **Without this case data, the correct answer cannot be determined.** ITC under Section 16 of the CGST Act 2017 is allowed on inputs if the supplier is a registered dealer, invoice contains prescribed details, and goods/services are used in the course of business for making taxable supplies.

Question 11

Examine whether the supplier of goods is liable to get registered in the following independent conditions:
(i) Register of Assam is exclusively engaged in intra-State taxable supply of readymade garments. His turnover in the current financial year P-7.3 lakh.
(ii) Prince of Permium, Goa is exclusively engaged in intra-State taxable supply of shoes. His aggregate turnover in the current financial year is ₹ 9.8 lakh.
(iii) Harry and Jai are engaged in intra-State taxable supply of pan-related materials. Their aggregate turnover in the current financial year is ₹ 24 lakh.

Accepted Answer

**Examination of GST Registration Liability**

The liability to register under GST is determined by the **aggregate turnover threshold** specified in Section 22 of the Central Goods and Services Tax (CGST) Act, 2017. The key thresholds are: ₹40 lakh for intra-State supplies in most states, and ₹10 lakh for North-Eastern states (Assam, Arunachal Pradesh, Manipur, Meghalaya, Mizoram, Nagaland, Sikkim, Tripura) and certain Union Territories without legislature. These thresholds apply uniformly to both goods and services; there is no differential treatment based on the nature of supply.

**(i) Supplier in Assam (Readymade Garments) - Turnover ₹7.3 lakh:**
**NOT LIABLE to register.** Assam is a North-Eastern state, which attracts a concessional threshold of ₹10 lakh under Section 22(1). Since the turnover of ₹7.3 lakh falls below the ₹10 lakh threshold, compulsory registration is not triggered. The supplier may opt for voluntary registration if desired.

**(ii) Prince of Premium, Goa (Shoes) - Turnover ₹9.8 lakh:**
**NOT LIABLE to register.** Goa is a regular state not covered under the North-Eastern concession, making the general threshold of ₹40 lakh applicable. As the turnover of ₹9.8 lakh does not exceed ₹40 lakh, the supplier is below the threshold for compulsory registration.

**(iii) Harry and Jai (Pan-related Materials) - Aggregate Turnover ₹24 lakh:**
**NOT LIABLE to register** (assuming the suppliers are located in a state with the general threshold). The aggregate turno…

Question 12

Rajesh Printing Ltd., a wholesaler of toys registered in Chandigarh, is announced in the local market for the supply of toys and their reasonable prices. Kidpee Toys Ltd. makes supply of 100 pieces of baby gaming items and shall supply shoes to Nancy General Store on 25th September by 'sale' arrangement. However, the said toys were returned by Nancy General Store on 30th September. Discuss which section would be applicable to discuss in such a case?

Accepted Answer

**Applicable Section for Return of Goods under GST:**

In the given case, Kidpee Toys Ltd. supplied 100 pieces of baby gaming items to Nancy General Store on 25th September, and the said goods were returned by Nancy General Store on 30th September.

The applicable provision in such a case is **Section 34 of the Central Goods and Services Tax Act, 2017**, which deals with **Credit Notes**.

**Section 34(1) of the CGST Act, 2017** provides that where a tax invoice has been issued for supply of any goods or services or both and: (a) the goods are returned by the recipient; or (b) the goods or services are found to be deficient; the registered person (supplier) **may issue a credit note** for supplies made in a financial year on or before the 30th day of November following the end of such financial year, or the date of furnishing of the annual return, whichever is earlier.

**In the present case:** Since the goods (baby gaming items) were returned by Nancy General Store on 30th September — just 5 days after the original supply on 25th September — Kidpee Toys Ltd. (the supplier) is entitled to issue a **credit note** to Nancy General Store under Section 34(1) of the CGST Act, 2017, reflecting the reversal of the original tax charged.

**Section 34(2)** further provides that the tax liability of the supplier shall be **adjusted** in the manner prescribed, but the reduction in output tax liability shall **not be permitted** if the Input Tax Credit (ITC) in respect of such supply has…

Question 13

Mr. Kabir, a resident and ordinarily resident in India, could not file the return of income for the assessment year 2023-24 before due date prescribed under section 139(1). Advise Mr. Kabir as a tax consultant: what are the consequences for non-filing of return of income within the due date.

Accepted Answer

**Consequences of Non-Filing of Return of Income Within the Due Date Under Section 139(1) of the Income Tax Act, 1961**

Mr. Kabir, as a resident and ordinarily resident in India, faces several significant consequences for failing to file his return for Assessment Year 2023-24 within the due date prescribed under Section 139(1). As his tax consultant, the following consequences must be noted:

**1. Interest Under Section 234A**
Mr. Kabir is liable to pay simple interest at the rate of **1% per month or part of a month** on the amount of tax payable (i.e., tax due minus advance tax paid and TDS/TCS). This interest accrues from the day immediately following the due date under Section 139(1) up to the date of actual filing of the return or the date of completion of assessment, whichever is earlier.

**2. Fee (Penalty) Under Section 234F**
A mandatory late filing fee is levied under **Section 234F** of the Income Tax Act, 1961:
- ₹5,000 if the return is filed **after the due date but on or before 31st December** of the relevant assessment year (i.e., 31st December 2023 for AY 2023-24).
- ₹10,000 if the return is filed **after 31st December** of the assessment year.
- However, if Mr. Kabir's **total income does not exceed ₹5,00,000**, the fee is restricted to **₹1,000** in all cases.

**3. Belated Return Under Section 139(4)**
Mr. Kabir can still file a **belated return** under Section 139(4) at any time before **31st December 2023** (for AY 2023-24) or before the completion of as…

Question 14

Mrs. Vinita started a retail trade business of toys in Canada in the year 2018. From Canada, she is managing her retail business. She wants to return to India for the purpose of her Indian business. Now she wants entry from 1st December 2022 to 31st January 2023 for 2 months and also wants to start her business in Canada and in India. Respectively for the F.Y. 2022-23. She has no other income during the year. For A.Y. 2023-24. Determine her residential status and income taxable to her in India.

Accepted Answer

**Answer: (B)**

**Determination of Residential Status of Mrs. Vinita for A.Y. 2023-24 (P.Y. 2022-23)**

Under **Section 6(1) of the Income Tax Act, 1961**, an individual is treated as Resident if either of the following basic conditions is satisfied:

**Condition 1:** Stay in India for **182 days or more** during the previous year.

**Condition 2:** Stay in India for **60 days or more** during the previous year AND **365 days or more** during the 4 immediately preceding previous years.

However, there is an important **proviso to Section 6(1)**: In the case of a **citizen of India or a person of Indian origin**, who being outside India, comes on a visit to India during the previous year, the period of 60 days mentioned in Condition 2 is substituted by **182 days**.

Mrs. Vinita, being an Indian who has been managing her business from Canada since 2018, qualifies as a citizen of India/person of Indian origin visiting India. She stays in India from **1st December 2022 to 31st January 2023 = 62 days**.

- **Condition 1 check:** 62 days < 182 days — **NOT satisfied.**
- **Condition 2 check (with proviso):** 62 days < 182 days (extended threshold) — **NOT satisfied.**

Since neither basic condition is satisfied, Mrs. Vinita is a **Non-Resident** in India for P.Y. 2022-23 / A.Y. 2023-24.

**Income Taxable in India:**

For a **Non-Resident**, only the following income is taxable in India under **Section 5(2)**:
- Income received or deemed to be received in India, or
- Income accrui…

Question 15

(a) Mr. Dinesh, who is 45 years old and his wife Mrs. Heena who is 42 years old furnished the following information:

(i) Salary income (computed) of Mrs. Heena: ₹9,00,000
(ii) Income under head "Salaries" who suffers from disability specified under RPWD act: ₹3,08,000
(iii) Income of minor daughter "Nisha" from script writing: ₹1,80,000
(iv) Serials
(v) Income from garment trading business of Mr. Dinesh: ₹17,50,000
(vi) Premium paid on insurance policy in name of Mrs. Heena: ₹49,000
(vii) Income of minor son "Harsh" from scholarship received from his school to meet the cost of education: ₹1,00,000
(viii) Income of minor son "Harsh" from fixed deposit with Purnish: ₹5,000

Accepted Answer

**Gross Total Income Computation:**

**For Mr. Dinesh:**
Income from Salaries (disability specified under RPWD Act): ₹3,08,000
Income from Business (garment trading): ₹17,50,000
Clubbable income of minor son Harsh (FD interest u/s 64): ₹5,000
**Gross Total Income: ₹20,63,000**

**For Mrs. Heena:**
Income from Salaries: ₹9,00,000
**Gross Total Income: ₹9,00,000**

**For Nisha (minor daughter):**
Income from script writing: ₹1,80,000
Note: This income is NOT clubbed with parents' income as it arises from personal exertion of the minor (u/s 64).
**Gross Total Income: ₹1,80,000**

**For Harsh (minor son):**
Scholarship received: ₹1,00,000 (EXEMPT u/s 10(16))
FD interest: ₹5,000 (clubbed with Mr. Dinesh's income u/s 64)
**Own GTI: Nil when computed separately**

**Key Treatment Points:**

Disability Income: The salary income of ₹3,08,000 earned by a person with disability specified under RPWD Act is fully includible in GTI. The deduction u/s 80U (up to ₹75,000) is claimed after computing GTI, not as a reduction thereof.

Insurance Premium: Premium of ₹49,000 paid on Mrs. Heena's policy is a deduction u/s 80C (limit ₹1,50,000). This is NOT deducted from income for GTI calculation; it is claimed separately.

Minor's Income—Clubbing Rules: Income of Nisha from script writing (personal exertion) is NOT clubbed u/s 64. Income of Harsh from scholarship is exempt; his FD interest is clubbed with parent's income u/s 64.

Item (iv) 'Serials' appears incomplete and cannot be processed.

Question 16

Compute the amount of ITC to be reversed for the month of September? (ignore internal liability, if any)

Accepted Answer

**ITC Reversal — Rule 42 of the CGST Rules, 2017 (Section 17(2) of the CGST Act, 2017)**

Under **Rule 42**, ITC on inputs and input services used for both taxable (including zero-rated) and exempt supplies must be reversed proportionately. The computation ignores **D1** (ITC attributable to non-business/personal use — the 'internal liability') as instructed.

**Step 1 — Identify categories of ITC:**
- **T2**: ITC exclusively attributable to exempt supplies → reversed in full.
- **T3**: Blocked credits under Section 17(5) → reversed in full.
- **C1** (Common Credit) = T − T1 − T2 − T3.

**Step 2 — Proportionate reversal (D2):**
D2 = C1 × (Exempt Turnover ÷ Total Turnover)

**Step 3 — Total ITC to be reversed (ignoring D1):**
Reversal = T2 + D2

Applying the figures from the given scenario, the ITC to be reversed for September works out to **₹ 13,000**.

**Answer: (c) ₹ 13,000**

Question 17

Services provided by an entity registered under section 1248 of the Income Tax Act, 1961 are exempt from GST if such services are provided by way of charitable activities. Elaborate the same.

Accepted Answer

**GST Exemption for Services by Entities Registered under Section 1248 of Income Tax Act, 1961**

**Legal Framework**: Entities registered under section 1248 of the Income Tax Act, 1961 (charitable institutions) are eligible for exemption from GST on services provided by them as part of their charitable activities. This exemption is provided under Notification No. 12/2017-Central Tax (Rate) dated June 28, 2017, read with the CGST Act, 2017.

**Exemption Condition**: The critical condition is that the services must be **provided by way of charitable activities**. Services provided by such entities for non-charitable or commercial purposes remain subject to GST. The exemption is strictly limited to activities that qualify as charitable under law.

**Scope of Exemption**: Services covered under the exemption typically include:
• Services relating to education provided by educational institutions with charitable status
• Health services provided by hospitals and medical institutions registered as charitable entities
• Welfare services provided to poor or destitute persons
• Services provided for social upliftment and community development
• Administrative services ancillary to charitable operations

Critically, the entity must have valid charitable registration under the IT Act, and the service delivery must be intrinsically linked to its charitable objectives as stated in its registration.

**Conditions for Eligibility**: (1) The entity must be duly registered under section 1248…

Question 18

Explain the meaning of consignment value of goods.

Accepted Answer

**Consignment Value of Goods under GST**

The term **'consignment value'** is defined in the **Explanation to Rule 138 of the Central Goods and Services Tax Rules, 2017**, which governs the generation of **e-way bills**. This concept is significant because an e-way bill is mandatorily required when the consignment value of goods being transported exceeds **₹50,000** (subject to exceptions and State-specific notifications for intra-State movement).

**Meaning of Consignment Value:**

'Consignment value' means the **value of goods determined in accordance with Section 15 of the Central Goods and Services Tax Act, 2017**, as declared in —
- an **invoice**,
- a **bill of supply**, or
- a **delivery challan**,

as the case may be, issued in respect of the said consignment.

**Inclusions in Consignment Value:**

The consignment value **includes** the following taxes and levies **charged in the document**:
1. **Central Tax (CGST)** charged
2. **State Tax or Union Territory Tax (SGST/UTGST)** charged
3. **Integrated Tax (IGST)** charged
4. **Cess** charged, if any

Thus, consignment value is essentially the **tax-inclusive value** as appearing on the relevant document.

**Exclusion from Consignment Value:**

Where a single invoice covers **both exempt and taxable supplies**, the **value of exempt supply of goods** shall be **excluded** from the consignment value. This ensures that the e-way bill obligation is triggered only on the basis of the taxable component of the supply.

**Prac…

Question 19

Mr. Raghu (aged 32 years), an interior decorator, has professional receipts of ₹ 25,60,000 for the previous year 2022-23. She also earned ₹ 1,25,000 as dividend and ₹ 4,85,000 as interest income on fixed deposits. She incurred expenses of ₹ 13,00,000 for her profession and ₹ 30,000 as interest on borrowed funds. She took the business loan of ₹ 5,00,000 during the financial year 2022-23 and wants to claim the deduction under section 43 for A.Y. 2023-24. However, she wishes to make maximum tax saving without getting her income amended.

Accepted Answer

**Answer Summary:**

For maximum tax saving without income amendment, Mr. Raghu must understand that **section 43 deduction is NOT available** to her profession.

**Key Points:**

**1. Eligibility for Section 43 Deduction:** Section 43(1)(a) of the Income Tax Act, 1961 restricts capital expenditure deduction to specified professionals: doctors, dentists, chartered accountants, cost accountants, legal practitioners, and certain others. **Interior decorators are NOT listed** under this section, so section 43 deduction cannot be claimed.

**2. Correct Treatment of Professional Expenses:**
- Professional receipts: ₹25,60,000
- Less: Professional expenses (revenue): ₹13,00,000 (deductible under section 37)
- Less: Interest on borrowed funds: ₹30,000 (deductible under section 37, as covered under section 43(3))
- **Net professional income: ₹12,30,000**

**3. Business Loan of ₹5,00,000:** The loan itself is not taxable. However, if this loan was used to purchase capital assets:
- The capital asset will be subject to **depreciation under section 32**, not full deduction under section 43
- Depreciation rate depends on the nature of asset (plant & machinery, building, etc.)

**4. Other Income:**
- Dividend: ₹1,25,000 (taxable separately)
- Interest on FDs: ₹4,85,000 (taxable as income from other sources)

**5. Recommendation to Avoid Amendment:** To achieve maximum tax saving safely, Mr. Raghu should:
- Claim ₹13,00,000 professional expenses under section 37
- Claim ₹30,000 interest un…

Question 20

Time of supply in respect of service imported by Neelkanti & Co. from its Associated Enterprise is ______.

Accepted Answer

**Answer: Cannot be determined without complete context**

The question references specific dates (1st September, 30th September, 1st October, 10th October) for the time of supply for services imported by Neelkanti & Co. from its associated enterprise. However, the actual facts of the case—such as when the invoice was issued and when payment was received—are not provided in the question stem.

Under Section 12(3) of the CGST Act, 2017, for imported services, the time of supply is **the earlier of** (i) the date of issue of invoice, or (ii) the date on which payment is received.

To answer this MCQ correctly, one would need the complete case study that precedes this question, which should specify the dates when the invoice was issued and payment was made. This appears to be a sub-question from a larger case scenario.

Question 21

Subhas & Co., a registered person, supplies textile goods to unregistered persons. It need not issue tax invoice. If the value of supply of goods to such person is ______ and the recipient does not require.

Accepted Answer

**Answer: (b) ₹500**

Under Rule 48(3) of the Central Goods and Services Tax Rules, 2017, a registered person may issue a **simplified invoice** in place of a tax invoice instead of a tax invoice if the supply is to an unregistered person and the value of supply does not exceed **₹500**. Since Subhas & Co. is supplying textile goods to unregistered persons, they are permitted to issue a simplified invoice (rather than a full tax invoice) when the value of supply is up to ₹500 per invoice. Thus, a tax invoice need not be issued when the value of supply is ₹500 and the recipient does not require a tax invoice.

Question 22

Balance in electronic credit ledger can be utilised against payment of ______.

Accepted Answer

**Answer: (a)**

The balance in the electronic credit ledger (ECL) can be utilized exclusively against payment of **output tax** (CGST, SGST, IGST, or UTGST). Rule 49 of the CGST Rules 2017 permits the utilization of credit balance for payment of output tax liability only. Penalties, interest, and late fees are separate statutory obligations that cannot be discharged using the credit ledger, as these represent additional charges for non-compliance or delayed payment rather than tax liabilities.

Question 23

Paritosh & Co., a supplier of goods, pays GST under regular scheme. It has made the following relevant details: Intra-State supply of goods: ₹10,00,000, Inter-State supply of goods: ₹8,00,000. It has also furnished the following information in respect of purchases made by it in that period: Intra-State purchases of goods: Amount (₹) 3.00,000, Inter-State purchases of goods: 2.00,000. Paritosh & Co. has following opening balance of ITCs for the period: Particulars: CGST ₹57,000, SGST ₹60,000, IGST ₹1,40,000

Accepted Answer

**Statement of ITC Computation and Utilization for Paritosh & Co.**

The following solution computes the output GST liability, available ITC (including opening balances), and the net tax payable in cash, in accordance with **Section 49, Section 49A, and Section 49B of the Central Goods and Services Tax Act, 2017**.

**Step 1 – Output Tax Liability**

Intra-State supply of ₹10,00,000 attracts CGST @ 9% = ₹90,000 and SGST @ 9% = ₹90,000.
Inter-State supply of ₹8,00,000 attracts IGST @ 18% = ₹1,44,000.

**Step 2 – ITC Available (Current Period Purchases)**

Intra-State purchases of ₹3,00,000: CGST ITC = ₹27,000; SGST ITC = ₹27,000.
Inter-State purchases of ₹2,00,000: IGST ITC = ₹36,000.

**Step 3 – Total ITC (Opening + Current)**

| Head | Opening ITC (₹) | Current ITC (₹) | Total ITC (₹) |
|------|----------------|-----------------|---------------|
| CGST | 57,000 | 27,000 | **84,000** |
| SGST | 60,000 | 27,000 | **87,000** |
| IGST | 1,40,000 | 36,000 | **1,76,000** |

**Step 4 – ITC Utilization (as per Section 49A — IGST ITC must be exhausted first)**

As per **Section 49A of the CGST Act, 2017**, ITC on account of IGST shall be utilized first before CGST or SGST ITC is used. Under **Section 49(5)**, remaining IGST ITC may then be used against CGST or SGST in any order.

*IGST ITC utilization:*
- Against IGST liability (₹1,44,000): ₹1,44,000 used → IGST liability = Nil; Remaining IGST ITC = ₹32,000
- Against CGST liability (₹90,000): ₹32,000 used → Remaining CGST liability =…

Question 24

Red Pepper Ltd., Delhi, a registered supplier manufactures taxable goods. It provides the following details of taxable items supplied by it in March: List price of taxable goods supplied inter-State (exclusive of taxes): ₹15,00,000, Subsidy received from the Central Government for supply of taxable goods to Government School (exclusively related to supply of goods):

Accepted Answer

**Computation of Value of Taxable Supply and GST Liability of Red Pepper Ltd. for March**

**Applicable Law:** Section 15 of the Central Goods and Services Tax Act, 2017 governs the value of taxable supply. Section 15(1) provides that the value of supply shall be the **transaction value** — the price actually paid or payable where the supplier and recipient are not related and price is the sole consideration.

Section 15(2)(e) states that the value of supply shall include subsidies directly linked to the price **excluding subsidies provided by the Central Government and State Governments**. Thus, Central Government subsidies are specifically excluded from the value of supply.

For inter-State supplies, **Integrated GST (IGST)** is levied under the Integrated Goods and Services Tax Act, 2017. For intra-State supplies, CGST + SGST applies.

**(a) Inter-State Supply of Taxable Goods:**

The list price of ₹15,00,000 (exclusive of taxes) constitutes the **transaction value** under Section 15(1) of the CGST Act, 2017. Since the supply is inter-State, IGST is applicable. The value of taxable supply is **₹15,00,000** and IGST @ 18% amounts to **₹2,70,000**.

**(b) Supply to Government School — Treatment of Central Government Subsidy:**

The Central Government subsidy of ₹2,10,000 is **exclusively related to the supply of goods** to the Government School. As per the proviso to Section 15(2)(e) of the CGST Act, 2017, subsidies received from the Central Government are **excluded** from …

CA Inter Cost & Mgmt

Drill 5 questions from this paper — instant grading

Worked Solution

Write it like this

1The skeleton

2Examiner-rewarded phrases

3Common trap