Sunday, October 27, 2013

Dibrugarh University (5th Semester) - Direct Tax I Important Questions and Answers

Unit 1
Q. Write short notes on: (a) Assessment year (b) Previous Year (c) Charge of income tax (d) Capital asset  (e) Agricultural income (f) Person (g) Assessee (h) Revenue Vs Capital expenditure (i) Gross Total Income (j) Capital receipts (k) Revenue Receipts Vs Capital Receipts (l) Tax Return (m) Method of accounting   VIEW NOW  DOWNLOAD

Q. Define the term “Previous year”. And “Assessment year? “Income tax is charged on the income of the previous year.” Do you fully agree with this statement? If not, what are the exceptions?   VIEW NOW  DOWNLOAD

Q. “The incidence of tax depends upon the residential status of an assessee.” Discuss. Distinguish between Tax Evasion, Tax Avoidance, Tax mitigation and Tax Planning.  VIEW NOW  DOWNLOAD

Q. Define the term “assessee” and “person” under the income tax act. What is regarded as income under the income tax act?  VIEW NOW  DOWNLOAD

Q. How Residential Status of the following is Determined:   VIEW NOW  DOWNLOAD
Ø  Individual
Ø  HUF
Ø  Company
Ø  Firm
Ø  AOP and BOI
Q. Explain the concept of Indian Income as per Income tax Act, 1961.  VIEW NOW  DOWNLOAD

Unit 2
Q. Explain in brief various incomes which are exempted u/s 10 of the Indian income Tax Act.
Q. What are the tax benefits for industrial unit established in:
Ø  SEZ
Ø  EOU  (Export Oriented Undertakings)
Ø  FTZ (Free Trade Zone)

Unit 3
Q. Explain the provisions of the income – tax Act, 1961 with regard to the following:
Ø  Gratuity
Ø  Commuted and Uncommuted Pension
Ø  Specified Employees
Ø  Voluntary Retirement Compensation
Ø  Approved Super Annuation fund
Ø  Encashment of earned leave
Ø  Relief u/s 89(1) of the Income tax Act.
Ø  Profits in lieu of Salary

Q. What Constitutes Salary Under sec. 17 of Income tax act, 1961? Explain the essentials for taxability of income under the head salaries.   VIEW NOW   DOWNLOAD

Q. What is Allowances? What its various types?   VIEW NOW   DOWNLOAD

Q. Define ‘perquisite’ as per income tax act. Explain how perquisites are taxable in the hand of employee.

Q. Explain the various types of Provident fund with their respective treatment as per Income Tax Act, 1961.

Q. What are the essential characteristics of Salary?


Unit 4
Q. Explain the Basis of Charge of Income under the head Income from House Property.

Q. Define annul value. How does it differ from annual rental value?

Q. How would you determine the annual value of the house used by assessee as let-out and self occupied residence in computing taxable income from house property?

Q. What deductions are allowed from the annual value in computing taxable income from house property?

Q. Write Short Notes on:
Ø  Exempted House Property Income
Ø  Deemed Ownership
Ø  Income From Co-owned Property
Ø  Unrealised rent and its Treatment

Unit 5
Q. What are the authorities provided by the income tax act for administration of tax? Mention the power and function of income tax authorities.

Q. Who can appoint Income Tax authorities? Discuss briefly the duties of Income Tax authorities.

Q. State the procedure of filing an appeal under the Income Tax Act, 1961. Mention five penalties which can be imposed under the provision of Income Tax Act, 1961?

Q. What are various appellate authorities under the income tax act? Give the procedure for filling appeal to the appellate tribunal.
Q. Write Short Notes on:
Ø  Tax deduction at source
Ø  Advance payment of tax
Ø  CBDT
Ø  Self—assessment
Ø  PAN Card  

Saturday, October 26, 2013

UGC - NET: Commerce (08)

Methods adopted to reduce tax Liability

The methods adopted to reduce the tax liability can be broadly put into four categories: "Tax Evasion";”Tax Avoidance”, "Tax Mitigation", "Tax Planning".  The difference between these four methods sometimes become blurred owing to the perception of the tax authorities and / or tax payer.

Tax Evasion : Tax Evasion term is usually used to mean 'illegal arrangements where liability to tax is hidden or ignored i.e. the tax payer pays less than he is legally obligated to pay or by hiding income or information from tax authority.   Thus, here the tax liability is reduced by "illegal and fraudulent"  means. For example: understatement of income.

UGC - NET: Commerce (08)

 Valuation of Rent free furnished/unfurnished accommodation or House at concessional rent

A. For govt. employee: License fees fixed by government + 10% of cost of furniture or hire charges Less amount recovered from employee.

B. For non. Government employee:

UGC - NET: Commerce (08)

Residential Status of an Assessee

Residential status of an assessee is important in determining the scope of income on which income tax has to be paid in India. Broadly, an assessee may be resident or non-resident in India in a given previous year.
Residential Status of An individual
Ø  Resident in India: Satisfying any one of two BASIC conditions given u/s 6(1). Further classified into two parts:
a)      Resident and Ordinarily Resident: Satisfying One of the Basic Conditions [6(1] + Both the Additional Conditions [6(6)(a)&(b)

b)      Resident but not Ordinarily Resident: Satisfying One of the Basic Conditions [6(1] + Not satisfying any of the Additional Conditions [6(6)(a)&(b)

Ø  Non – Resident [Sec. 2(30)]: Not satisfying any of the Basic Conditions mentioned in [6(1)].
Remember: Ordinarily Resident and Resident but not ordinarily residential status is Applicable to individual and HUF Only

Basic Conditions Under section 6(1):
a)      182 days or more during P/Y, or
b)      At least 60 days during the relevant P/Y  + 365 days during the four years preceding that P/Y subject to following exceptions:
Ø  Individual + Citizen of India + Leaving India during P/Y + For Employment
Ø  Individual + Citizen of India + Leaving India during P/Y + As Crew member of India Ship
Ø  Individual + Citizen of India or Person of India Origin + Visit India during P/Y
Here, Person of Indian Origin: Himself + Parents + Grandparents (maternal and paternal grandparents) Born in Undivided India

Additional Conditions section 6(6):
a)      Resident in India in at least 2 out of 10 previous years (according to basic conditions noted above) preceding the relevant previous year;
b)      In India for a period of at least 730 days during 7 years proceeding the relevant previous year.

Residential Status of Firm [Sec. 6(2)]
Ø  Resident in India: Any Part of control and management of its affairs is in India during P/Y.
a)      Resident and Ordinarily Resident: Must be Resident in India + Both the Additional Conditions [6(6) (a) & (b) must be satisfied by KARTA or MANAGER.

b)      Resident but not Ordinarily Resident: Must be Resident in India + Not Satisfying any of the Additional Conditions [6(6) (a) & (b) by KARTA or MANAGER.

Ø  Non – Resident [Sec. 2(30)]: NO Part of control and management of its affairs is in India during P/Y.(Wholly Outside India)

Residential Status of Firm and AOP, or BOI [Sec. 6(2)]
Ø  Resident in India: Any Part of control and management of its affairs is in India during P/Y.
Ø  Non – Resident [Sec. 2(30)]: NO Part of control and management of its affairs is in India during P/Y. (Wholly Outside India)

Residential Status of Company [Sec. 6(3)]
Indian Company:
Ø  Resident in India: Registered in India + Deemed Company under any law of our country.
Foreign Company:
Ø  Resident In India: 100% Control and Management of its affairs in India.
Ø  Non Resident in India: Any part of Control and Management of its affairs outside India.

Residential Status of Local Authority and Artificial Judicial Person [Sec. 6(4)]
Ø  Resident in India: Any Part of control and management of its affairs is in India during P/Y.
Ø  Non – Resident [Sec. 2(30)]: NO Part of control and management of its affairs is in India during P/Y. (Wholly Outside India)


UGC - NET: Commerce (08)

Set off and Carry Forward of Losses  - Rules

Heads of Income
Set Off During the Same A/Y
Carry Forward  of Losses
Same Head
(Sect. 70)
Another Head
(Sec. 71)
Against which Head
Carry Forward
Years
Against which Head
1. Salary
Since No chances of Loss, set off and carry forward of losses is not applicable
2. House Property
YES
YES
Any Head Except Casual Income
YES
8
SAME HEAD
3. PGBF
YES
YES
(Including Speculative Business)
Any Income Excluding Salary & Casual Income
YES
8
SAME HEAD
(Including Speculative Business)
4. Long Term Capital Gain(LTCG)
YES
NO
LTCG
YES
8
LTCG
5. Short Term Capital Gain(STCG)
YES
NO
LTCG/STCG
YES
8
LTCG/STCG
6. Income from other sources
YES
YES
ANY
Not Applicable (NA)
NA
NA
7. Speculative Loss
YES
NO
Speculative Gain
YES
4
Speculative Gain
8. Unabsorbed Depreciation
YES
YES
ANY INCOME
YES
NO Limit
ANY INCOME
9. Maintenance of race horses
YES
NO
Same Item
YES
4
Same Item
10. Specified Business U/S 35AD
YES
NO
Specific Business
YES
NO Limit
Any Specific Business
11. Loss in respect of Casual Income
Cannot be set off at all
12. Loss from exempted sources
e.g. agricultural
YES
NO
Agricultural income
Cannot Be Carry Forward
Note:
1.       No deduction for expenses can be claimed against casual income
2.       For any loss to be carried forward and set-off against the income of a subsequent year the return of such loss must be filed under sec. 139. If no return is file for the year in which the loss was incurred, the right to carry forward the loss is lost.
3.       Order in which current and brought forward losses are to be adjusted:
Ø  Current depreciation
Ø  Capital expenditure on scientific research
Ø  Current loss of another business
Ø  Brought forward losses of earlier years (Oldest loss can be adjusted first)
Ø  Brought forward unabsorbed depreciation
Ø  Brought forward unabsorbed capital expenditure on scientific research.

UGC - NET: Commerce (08)

Meaning of  Capital Assets under Sec. 2(14) means:
Ø  Property of any kind held by an assessee
Ø  Which can be Sold including property of his business or profession,
Except the Following:
1. Stock-in-trade, consumable stores or raw materials held for the purpose of business or profession.
2. Personal movable properties viz. furniture, motor vehicles, refrigerators, musical instruments etc. held for personal use of the assessee or his family. But personal property does not include the following:
Ø  Jewellery
Ø  Residential house property
Ø  Archaeological collections, drawings, paintings, sculptures, or any work of art.
3. Rural Agricultural land:
Ø  Land within the jurisdiction of a municipality or cantonment board having population of 10,000 or more or
Ø  land situated within 8 kilometers from the local limits.
4. Special Bearer Bonds, 1991, 6.5% Gold Bonds, 1977 or 7% Gold Bonds, 1980 or National Defense Bonds, 1980, Gold deposit bonds issued under Gold Deposit Scheme, 1999. It is not necessary that the assessee should be the initial subscriber to the Gold Bonds.

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