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Direct tax exercise, Exercises of Business Taxation and Tax Management

Shri Govind Guru UniversityBusiness Taxation and Tax Management

Examples of income tax calculations for different scenarios. It includes details such as income from salary, residential status, deductions, and exemptions. The examples cover topics such as capital expenditure, GST liability, and income from different sources. useful for students studying income tax laws and for individuals preparing for tax assessments or returns.

Typology: Exercises

2021/2022

Available from 11/27/2022

Pandeyji_30
Pandeyji_30 🇮🇳

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Page 1 of 3
Examples for Practice
1) Mr. A, leaves India on 18th April, 2019 and then comes back to India on 9th
January, 2020. His stay in India during earlier years is as follows: 2018-19:
Nil; 2017-18: 54 days; 2016-17: 162 days. Prior to this, he never went out of
India. Determine his residential status.
2) 2) Mr. X is a manager of a textile company at japer since 1986. He submits
the following particulars of his income for the financial year 2010-20211:
(a) Basic Salary Rs. 240000 Per Annum.
(b) Dearness allowance Rs. 5000 P.M (200 P.M enters into retirement benefit).
(c) Education allowance for two children @150 P.M per child.
(d) Commission on sales @ 1% of turnover of Rs. 10,00,000.
(e) Travelling allowance Rs. 30,000. The entire amount was spent by him for
official purpose.
(f) He was given cloth worth Rs. 1000 by his employer free of cost.
(g) He resides in the flat of the company at Jaipur (26 Lacs Population).
(h) A cook and a watchman have been provided by the company at the
bungalow who are paid @ 400 each P.M
(i) He has been provided with a motor car of 1.8 Ltrs Engine capacity for his
official and personal use. All expenses are borne by employer of the car.
(j) Employer’s contribution to RPF is Rs. 40000 and interest credited to RPF
@13% amounted to Rs. 16250.
(k) His own contribution to RPF Rs. 40000.
(l) Rent of house recovered from his salary Rs. 1500 P.M
Compute the Income from Salary for the assessment year 2011-12.
3) Mr. X furnishes the following particulars for the previous year relevant to A/Y
2020-21. Profit and Loss A/c for the year ending 31-3-2019
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Examples for Practice

  1. Mr. A, leaves India on 18th April, 2019 and then comes back to India on 9th January, 2020. His stay in India during earlier years is as follows: 2018-19: Nil; 2017-18: 54 days; 2016-17: 162 days. Prior to this, he never went out of India. Determine his residential status.
    1. Mr. X is a manager of a textile company at japer since 1986. He submits the following particulars of his income for the financial year 2010-20211: (a) Basic Salary Rs. 240000 Per Annum. (b) Dearness allowance Rs. 5000 P.M (200 P.M enters into retirement benefit). (c) Education allowance for two children @150 P.M per child. (d) Commission on sales @ 1% of turnover of Rs. 10,00,000. (e) Travelling allowance Rs. 30,000. The entire amount was spent by him for official purpose. (f) He was given cloth worth Rs. 1000 by his employer free of cost. (g) He resides in the flat of the company at Jaipur (26 Lacs Population). (h) A cook and a watchman have been provided by the company at the bungalow who are paid @ 400 each P.M (i) He has been provided with a motor car of 1.8 Ltrs Engine capacity for his official and personal use. All expenses are borne by employer of the car. (j) Employer’s contribution to RPF is Rs. 40000 and interest credited to RPF @13% amounted to Rs. 16250. (k) His own contribution to RPF Rs. 40000. (l) Rent of house recovered from his salary Rs. 1500 P.M Compute the Income from Salary for the assessment year 2011-12.
  3. Mr. X furnishes the following particulars for the previous year relevant to A/Y 2020-21. Profit and Loss A/c for the year ending 31-3-

Particulars Rs. Particulars Rs. To salary to staff 22000 By Gross Profit 250000 To entertainment expenses 13000 To general expenses 11000 To bad debts 4500 To reserve for bad debts 10000 To advertising expense 7000 To interest on X Capital A/C

To acquisition of patent’s rights

To telephone expenses 12000 To depreciation 10000 To provision of income tax 4000 To Net Profit 125500 250000 250000 Other information:

  1. Salary to staff includes salary paid to a relative which is unreasonable to the extent of Rs.3,100.
  2. Provision for income tax is excessive to the extent of Rs.3,
  3. Depreciation according to the income tax provision comes to Rs.9,
  4. During the previous year 2019-20 the following payment were made and the same have not been debited to profit and loss account of 2019-
  5. a. Rs.3,000 paid on 10-6-2019 on account of outstanding customs duty of the previous year 18-19, and b. Rs.5,000 paid on 15-6-2020 on account of outstanding GST of the previous year 2019-
  6. Patents were acquired on 4-11- Find out the taxable income of X for the A/Y 2020-21. Due date of filling return of income of assessment year 2019-20 and 2020-21 is 31st July of the relevant A/Y.
  1. Mrs.X is getting family pension of 7,000 p.m. and has incurred50 p.m. as bank collection charges. She also has dividend income from domestic company of 7,00,000 and bank collection charges are1,000. She has long
  1. Mr. X furnishes the following particulars for the previous year relevant to A/Y 2020-21. Profit and Loss A/c for the year ending 31-3-2019. Particulars Rs. Particulars Rs. To salary to staff 11500 By Gross Profit 125000 To entertainment expenses 6500 To general expenses 5500 To bad debts 2250 To reserve for bad debts 5000 To advertising expense 3500 To interest on X Capital A/C

To acquisition of patent’s rights

To telephone expenses 6000 To depreciation 5000 To provision of income tax 2000 To Net Profit 62750 125000 125000 Other information:

  1. Salary to staff includes salary paid to a relative which is unreasonable to the extent of Rs.1,550.
  2. Provision for income tax is excessive to the extent of Rs.1,
  3. Depreciation according to the income tax provision comes to Rs.4,
  4. During the previous year 2019-20 the following payment were made and the same have not been debited to profit and loss account of 2019-20. a. Rs.1,500 paid on 10-6-2019 on account of outstanding customs duty of the previous year 18-19, and b. Rs.2,500 paid on 15-6-2020 on account of outstanding GST of the previous year 2019-
  5. Patents were acquired on 4-11- Find out the taxable income of X for the A/Y 2020-21. Due date of filling return of income of assessment year 2019-20 and 2020-21 is 31st July of the relevant A/Y.
  1. Mrs.X has received incomes as given below during the previous year 2019-20: a. Interest on savings bank account with State Bank 15,500 (gross). b. Interest from Government securities1,000 on 01.01. (collection charge paid to bank @ 1.5%). c. Interest from ABC Ltd on non listed debentures 4,000 (gross) on 01.03.2020 (collection charge paid to the bank30). d. Interest credited to post office savings bank account during the year `

e. Interest credited to public provident fund during the year 12,000. f. Interest received from XYZ Ltd on listed debentures 5, (gross). (Collection charge 30) The amount was invested by taking a loan of1,00,000 @ 7% p.a.

  1. Determine the residential status of A for AY 2020-21 A is an Indian Citizen and goes from India to Spain for visit purposes on 27th December, 2019. Prior to this, he had never been out of India.
  2. Shri Hari is an employee of a Guwahati based company. He provides the following particulars of his salary income: a. Basic Salary Rs. 15000/- b. Bonus Rs. 15000. c. Commission on turnover achieved Rs. 40000. d. Club Facility Rs. 7000. e. Rent free house provided for employer. Lease rent paid by employer Rs. 7200 f. Transport Allowance Rs. 2000 P.M g. Free education facility of three children (bills issued in the name of employer)R i. Interest credited to recognized provident fund @ 12% amount amounted to Rs. h.Free use of motor car of 1.8 Ltr capacity for both official and personal purposes- expenses are met by employer. i. He paid Rs. 3000 as professional tax Compute shri Hari’s income - the head income from salary A.Y 2018-
  1. Mr. Avinash furnishes the following particulars of his income for the A/Y 2020-21. Profit And loss account for year ending31-03-2020. Particulars Rs. Particulars Rs. To office expenses 12400 By Gross Profit 298000 To general expenses 12000 By sundry receipts 19000 To legal expenses 8000 By custom duties recovered back from Govt. (earlier not allowed as deduction)

To depreciation on Machinery 11000 By bad debts recovered (earlier allowed as deduction)

To staff salary 21000 By gift from son 40000 To bonus to staff 15000 To contribution to approved gratuity fund

To outstanding liability for GST

To audit fees 21000 To Net Profit 240900 375300 375300 Other information:

  1. Bonus to employees according to the Payment of Bonus Act 1965, comes to Rs. 4,200.
  2. Depreciation on machinery shown in the profit and loss account is calculated according to the income tax provisions.
  3. General expense includes payment of Rs.9,000 to an approved educational institute for the purpose of carrying on scientific research in natural science. The research is, however now related to the business of the assessee.
  4. During the previous year Mr. Avinash also made a capital expenditure of Rs.5,000 for the purpose of carrying on scientific research related to his business. This expenditure is however not recorded in the profit and loss account.
  5. Outstanding liability in respect of GST amounting to Rs.10, was paid on 10-4- 2020, Rs.1,000 on. 10-5-2020, Rs.2,000 on 30-6- 2020, Rs.1,000 on 10-7-2020 and Rs.3,500 is still outstanding. The return is furnished on 31-7-2020.
  1. No tax has been deducted at source on the audit fees of Rs.21,000. Determine the taxable income of Mr. Avinash for the assessment year 2020-21 assuming he, annually deposits Rs.10,000 in a public provident fund account and his turnover for P/Y 2019-20 was Rs.70,00,000.
  1. Mr.X has income from business of owning and maintaining race camels 60,000, loss from owning and maintaining race horses7,000 and income from horse races 7,000. He has brought forward business loss of7,000 of the assessment year 2005-06 and brought forward business loss of `7, of the assessment year 2017-18. Compute his tax liability for the assessment year 2020- 21