Taxation- Direct and Indirect - NMIMS

 

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School for Continuing Education (NGA-SCE)

Course:  Taxation- Direct and Indirect

Internal Assignment Applicable for September 2020 Examination

Assignment Marks: 30

Instructions:

·       All Questions carry equal marks.

·       All Questions are compulsory

·       All answers to be explained in not more than 1000 words for question 1 and 2 and for question 3 in not more than 500 words for each subsection. Use relevant examples, illustrations as far aspossible.

·       All answers to be written individually. Discussion and group work is not advisable.

·       Students are free to refer to any books/reference material/website/internet for attempting theirassignments, but are not allowed to copy the matter as it is from the source of reference.

·       Students should write the assignment in their own words. Copying of assignments from otherstudents is not allowed.

·       Students should follow the following parameter for answering the assignment questions.

 

For Theoretical Answer			For Numerical Answer
Assessment Parameter	Weightage		Assessment Parameter	Weightage
Introduction	20%		Understanding and usage of the formula	20%
Concepts and Application related to the question	60%		Procedure / Steps	50%
Conclusion	20%		Correct Answer & Interpretation	30%

 

 Internal Assignment Applicable for December 2020 Examination

1. GST is a tax that subsumed a number of state and central indirect taxes. Discuss the statement and also share your view on, why GST is called as an Indirect tax. Further, list down any ten taxes being subsumed under GST

Answer 1

Introduction

GST is an indirect tax imposed on every good all over the nation, making the country one whole combined market.

The GST or the Goods and Service Tax is a single tax on the goods and services supplied right from the manufacturer to the customer. The credits for the input taxes paid at each stage by the manufacturers, retailers, wholesalers, and customers will be available in the value addition stage. This makes GST a tax based only on the value addition at each location. Therefore, the final customer will

 

Ques 2. Depreciation is the reduction in the usable value of fixed assets due to normal wear and tear of time. Depreciation is an indirect non – cash expenditure which is provided on SLM or WDV basis.

Rahul is new junior accountant with Hardwork Mills Private Limited he wants to understand normal depreciation differs from additional depreciation. As a tax adviser, guide him on the two concepts and discus the cases where additional depreciation is not allowed.

Answer 2

Introduction 

Depreciation is the accounting method that allocates the cost of the tactile or physical assets over its useful life expectancy. The Depreciation value shows how much of the importance of investment has been used up.When a company performs or makes its yearly budget, the asset depreciation is usually considered fixed unless the company uses the calculation in which the amount of Depreciation changes every year. In this case, the depreciation value becomes variable when the company calculates its yearly budget.

Concept and Analysis

              Depreciation is passable as expenses in the Income Tax Act, 1961, on-premise the square of benefits on the Written Down Value (WDV) technique. Depreciation on the Straight Line Method (SLM) is not permitted. Square of advantages implies a gathering of services falling inside a class of benefits for which Depreciation's same pace is endorsed. A company's goodwill and real estate are not qualified for Depreciation. Depreciation is admissible just to the proprietor of the benefit. As indicated by Section 32 of the Income Tax Act, 1961, deterioration is permitted as a cost for a square of advantages for the calculation of Income Tax. For those benefits, which have been utilized for a time, span of under 180 days, extra deterioration allowed is half of the real rate reasonable.

On the off chance that the assessed does not guarantee the measure of Depreciation as an allowance, and, after it is all said and done, the Depreciation sum diminishes the measure of WDV conveyed forward to one year from now.  On the off chance that benefit is determined on a possible premise under section 44AD or 44AE, at that point, such announced use is thinking about after all the costs and Depreciation admissible under section 32.  Depreciation under the Income Tax Act is unique concerning that of Companies Act, 1956. Subsequently, depreciation rates recommended under salary charges are reasonable regardless of whether the Depreciation is charged in books of records. If another expansion is made in a current resource, it is considered an advantage if it increments the limit of the present help or lessens per unit cost. Else, it ought to be treated as a cost. On the off chance that there are some extra parts/machines and they are not utilized, Depreciation is reasonable on them since they are being used for the motivation behind business/calling as explained in the case of CST v. Madhya Pradesh Electricity Board [1968 (11) TMI 85 

Depreciation is characterized as the cycle wherein there is a decrease in an incentive's advantage because of the benefit's mileage. This is generally pertinent for long haul resources, which will benefit a more drawn out term of time, for example, PCs, structures, vehicles, plant and, hardware, and so forth. There are two sorts of Depreciation: the Recorded Value (WDV) Method and Straight Line Method (SLM).

As per the WDV technique, Depreciation of benefits is registered on the book estimation of the advantage. There is abatement in the book estimation of the edge each year. The WDV strategy is one of the most coherent techniques for Depreciation count, and as indicated by this strategy, the Depreciation sum continues diminishing with time. In the SLM technique, an equivalent amount of Depreciation is demanded on a benefit over the time-frame of its handiness.

Conclusion

As per Section 32 of the Income Tax Act, 1961, Depreciation is permitted as a cost for a square of benefits for the calculation of Income Tax. The Depreciation under Income Tax is passable as per the WDV technique as it were. Depreciation as a cost is amazingly essential for monetary administration, which fills in as an expense sparing choice.  Depreciation is permitted uniquely for those benefits which are expected to be utilized in business or calling. Additionally, Depreciation is allowed distinctly in using the advantage in the year wherein it was bought. As per a change made into the arrangements of Section 32 of the Income Tax Act, 1961, right now considered as Section 32(1) (iia), an extra Depreciation of 20% of the actual expense of the advantage will be permitted on those hardware or plant which have been introduced by assesse associated with the matter of assembling or in the creation of an article.

 

Ques . 3. Miss Seema, is a resident individual, shares following information in relation to previous year

Particulars	Amount in Rs
Salary Income (Net)	200000
Business Income(Net)	350000
Long term capital gain on sale of land	16000
Loss from Gambling in a game	30000
There are certain other types of losses- Unabsorbed Depreciation Short term capital Loss	15000 10500

a. Define and Compute Gross Total income (5 Marks)

b. Discuss the concept of carry forward of losses with reference to above context also, discuss the amount of Loss that can be carried forward in the said case. In case it’s any number 15000/10500/Nil give reason for the same

Answer 3

Introduction

The concept of gross Income implies adding all sorts of Income and making certain losses in the financial statement. The financial information revenue is segregated into two subparts, namely gross Income and Net Income.

Concept and Analysis

3a. Gross Total Income(GTI) is the aggregate of livelihoods registered under the five heads of pay, for example, compensation, house property, business or calling, capital increase, and different sources in the wake of applying clubbing arrangements and making modifications of set-off and

 

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