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Taxation Direct and
Indirect
September 2023
Examination
Q1. Suppose you have
been hired as a tax consultant by an individual who is an Indian citizen but
has been living outside India for the past few years. The individual wants to
know how their residential status will affect their tax liability in India. Prepare
a report that outlines the criteria for determining the residential status of
an individual under Indian tax laws and explain how the tax liability is
calculated based on the residential status.(10 Marks)
Ans :
Tax Liability in India
Based on Residential Status: A Comprehensive Guide
Introduction:
In
India, an individual's residential popularity performs multiple functions in
determining their tax legal responsibility. The Profits Tax Act of 1961
provides specific criteria for figuring out residential status, that's critical
for ascertaining the scope and applicability of taxation. This report
objectives to outline the requirements for determining residential status under
Indian tax legal guidelines and give an explanation for how tax liability is
calculated primarily based on residential repute.
Concept and
Application:
1.1 Definition of
Residential Status:
An individual's
residential reputation is
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Q2. Explain the concept
of Input Tax Credit (ITC) under the Goods and Services Tax (GST) regime in
India. Discuss the conditions for claiming ITC, and the various scenarios where
ITC can or cannot be claimed. Provide examples to support your explanation. (10
Marks)
Ans :
Introduction:
Under
India's goods and services Tax (GST) regime, enter Tax credit (ITC) is a
crucial concept that lets businesses say credit for the taxes paid on the
inputs used in producing or delivering goods and services. ITC allows to put
off the cascading effect of taxes and ensures that the final consumer bears the
tax burden handiest. It is a fundamental function of GST that promotes an
unbroken float of credit scores throughout the supply chain, making the tax
gadget more transparent and efficient.
Concept and
Application:
1. Meaning of Input Tax
Credit (ITC):
Input
Tax credit refers to the recognition that a registered taxpayer can claim for
the GST
Q3. A) Compute the
taxable income from salaries for Mr. Rohit, a resident individual in India, for
the assessment year 2022-23. Provide a detailed computation of his gross
salary, exemptions, deductions, and tax liability. (5 Marks)
Given details:
- Basic salary: Rs. 5,
00,000 per annum
- Dearness Allowance:
Rs. 1, 00,000 per annum
- House Rent Allowance
(HRA): Rs. 2, 00,000 per annum (out of which Rs. 1, 00,000 is exempt)
- Leave Travel
Allowance (LTA): Rs. 50,000 per annum (fully exempt)
- Medical
Reimbursement: Rs. 20,000 per annum (fully exempt)
- Professional Tax: Rs.
2,400 per annum
- Provident Fund
Contribution: Rs. 60,000 per annum
- Standard Deduction:
Rs. 50,000 per annum
Ans:
Introduction:
The
computation of taxable income from salaries is a vital aspect of personal
finance, particularly for individuals residing in India. Understanding how
exclusive income additives are considered for taxation functions and using the
applicable exemptions and deductions can help individuals efficaciously plan
their finances and optimize their tax liability.
In
this state of affairs, we can recognize the case of Mr. Rohit, a resident of
India, and
Q3. B) Compute the
taxable income from other sources for Mr. Aryan, a resident individual in
India, for the assessment year 2022-23. Provide a detailed computation of his
income from other sources, exemptions, deductions, and tax liability. (5 Marks)
Given details:
- Interest earned on
savings bank account: Rs. 15,000 per annum’
Interest earned on fixed deposit: Rs. 30,000
per annum
- Dividend received
from stocks: Rs. 12,000 per annum
- Gift received from a
relative: Rs. 75,000
- Interest received on
loan given to a friend: Rs. 20,000 per annum
- Professional Tax
paid: Rs. 2,400 per annum
- Standard Deduction:
Rs. 50,000 per annum
Ans:
Introduction:
To
compute the taxable profits from other sources for Mr. Aryan, we need to
consider the income he earned from various resources and apply the applicable
exemptions and deductions. Let us calculate his taxable profits step by step.
Concept
& Application:
1. Interest earned on
savings bank account: Rs. 15,000 per annum
Interest
earned on financial savings accounts is taxable beneath "profits from
other sources."
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