MODEL TEST PAPERS

(RELEVANT FOR MAY, 2025 EXAMINATION AND ONWARDS)

INTERMEDIATE COURSE

GROUP - I

BOARD OF STUDIES
THE INSTITUTE OF CHARTERED ACCOUNTANTS OF INDIA
 MODEL TEST PAPERS
INTERMEDIATE COURSE GROUP - I
Contents
S. MODEL TEST PAPERS QUESTIONS PAGE NO.
NO.
PAPER - 1 ADVANCED ACCOUNTING
Model Test Paper 1 1
Model Test Paper 2 14
Model Test Paper 3 26
Model Test Paper 4 35
Model Test Paper 5 47
Model Test Paper 6 61
Model Test Paper 7 72
Model Test Paper 8 83
PAPER 2 CORPORATE AND OTHER LAWS
Model Test Paper 1 97
Model Test Paper 2 108
Model Test Paper 3 119
Model Test Paper 4 129
Model Test Paper 5 138
Model Test Paper 6 147
Model Test Paper 7 157
Model Test Paper 8 167
PAPER 3 TAXATION
SECTION A – INCOME TAX LAW
Model Test Paper 1 178
Model Test Paper 2 186
Model Test Paper 3 193
Model Test Paper 4 201
Model Test Paper 5 208
Model Test Paper 6 215
Model Test Paper 7 223
Model Test Paper 8 231
SECTION B – GOODS AND SERVICES TAX
Model Test Paper 1 239
Model Test Paper 2 245
Model Test Paper 3 251
Model Test Paper 4 257
Model Test Paper 5 263
Model Test Paper 6 269
Model Test Paper 7 276
Model Test Paper 8 284
MODEL TEST PAPERS ANSWERS
PAPER - 1 ADVANCED ACCOUNTING
Model Test Paper 1 291
Model Test Paper 2 304
Model Test Paper 3 316
Model Test Paper 4 328
Model Test Paper 5 340
Model Test Paper 6 357
Model Test Paper 7 371
Model Test Paper 8 386

PAPER - 2 CORPORATE AND OTHER LAWS

Model Test Paper 1 401

Model Test Paper 2 411
Model Test Paper 3 420
Model Test Paper 4 430
Model Test Paper 5 438
Model Test Paper 6 447
Model Test Paper 7 455
Model Test Paper 8 463
 PAPER - 3 TAXATION
SECTION A – INCOME TAX LAW
Model Test Paper 1 478
Model Test Paper 2 489
Model Test Paper 3 498
Model Test Paper 4 509
Model Test Paper 5 518
Model Test Paper 6 528
Model Test Paper 7 536
Model Test Paper 8 544
SECTION B – GOODS AND SERVICES TAX
Model Test Paper 1 553
Model Test Paper 2 560
Model Test Paper 3 568
Model Test Paper 4 573
Model Test Paper 5 579
Model Test Paper 6 587
Model Test Paper 7 594
Model Test Paper 8 601
 MODEL TEST PAPER 1
INTERMEDIATE COURSE: GROUP - I
PAPER – 3: TAXATION
Time Allowed – 3 Hours Maximum Marks – 100
SECTION – A: INCOME TAX LAW (50 MARKS)
Working Notes should form part of the answer. Wherever necessary, suitable
assumptions may be made by the candidates and disclosed by way of a note.
However, in answers to Questions in Division A, working notes are not
required.
The relevant assessment year is A.Y.2025-26.
Division A – Multiple Choice Questions
Write the most appropriate answer to each of the following multiple choice
questions by choosing one of the four options given. All questions are
compulsory.
1. Mr. Kamal, aged 45 years, commenced operations of the business of a new
three-star hotel in Delhi on 1.4.2024. He incurred capital expenditure of ₹ 50
lakhs on land in March, 2024 exclusively for the above business, and
Past capitalized the same in his books of account as on 1 st April, 2024. Further,

D
eductions during the P.Y. 2024-25, he incurred capital expenditure of ₹ 2 crores (out of
which ₹ 50 lakhs was for acquisition of land and ₹ 1.50 crore was for
acquisition of building) exclusively for the above business. The payments in
respect of the above expenditure were made by account payee cheque. The
profits from the business of running this hotel (before claiming deduction
under section 35AD) for the A.Y.2025-26 is ₹ 85 lakhs.
He has employed 220 new employees during the P.Y.2024-25, the details of
whom are as follows –

No. of Date of Regular/ Total monthly

employees employment Casual emoluments per
employee (₹)

(i) 40 1.6.2024 Regular 24,000

(ii) 80 1.7.2024 Regular 24,500

(iii) 50 1.7.2024 Casual 25,500

(iv) 30 1.9.2024 Regular 25,000

(v) 20 1.12.2024 Casual 24,000

All regular employees participate in recognized provident fund and their

emoluments are paid by account payee cheque. His gross revenue from the
hotel is ₹ 11 crores. Mr. Kamal has opted out of the default tax regime under
section 115BAC.

178
 Mr. Kamal also has another existing business of running a four-star hotel in
Ahmedabad, which commenced operations twenty years back, the profits
from which are ₹ 140 lakhs for the A.Y.2025-26.
Based on the facts of the case scenario given above, choose the most
appropriate answer to the following questions:
(i) Assuming that Mr. Kamal has fulfilled all the conditions specified for
claim of deduction under section 35AD and has not claimed any
deduction under Chapter VI-A under the heading “C. – Deductions in
respect of certain incomes”, what would be the quantum of deduction
under section 35AD, which he is eligible to claim as deduction for
A.Y.2025-26?
(a) ₹ 250 lakhs
(b) ₹ 200 lakhs
(c) ₹ 100 lakhs
(d) ₹ 150 lakhs
(ii) What would be the income chargeable/loss under the head “Profits and
gains of business or profession” for the A.Y.2025-26 in the hands of
Mr. Kamal?
(a) ₹ 75 lakhs
(b) ₹ 140 lakhs
(c) ₹ 25 lakhs
(d) (₹ 10 lakhs)
(iii) Would Mr. Kamal be eligible for deduction under section 80JJAA in the
A.Y.2025-26? If so, what is the quantum of deduction?
(a) No, he would not be eligible for deduction u/s 80JJAA
(b) Yes; ₹ 75,00,000
(c) Yes; ₹ 81,72,000
(d) Yes; ₹ 99,72,000 (3 x 2 = 6 Marks)
2. Mr. Arvind, an Indian citizen, wants to file his return of income for the
previous year 2024-25. He required assistance for which he has approached

Residential
you. He has shared the following details relevant to the P.Y. 2024-25.
Mr. Arvind owned a house property in Bangalore and the same was rented
out for ₹ 65,000 p.m. to Mr. Arjun, a salaried employee. He claims that this
states
t
was the only income which he earned during the P.Y. 2024-25. However,
when you had sought for his bank statement, you observed the following
information additionally.

Adva There is a credit for ₹ 23,975 towards income-tax refund which includes
₹ 5,775 towards interest on income-tax refund. On 15th August, 2024, the
bank statement showed a credit of ₹ 55,000 which he claimed to have

Rol
received as a gift from his grandchildren on his 60th birthday. On further
assessment you were able to understand that Mr. Arvind and his wife had
t 179

IDS
 travelled to Mauritius during the P.Y. 2024-25 to spend some time with their
son, who is staying in Mauritius. On scrutiny of their passport and relevant
documents you conclude that they had left India on 27th September, 2024
and retuned on 31st March, 2025. During the 4 years preceding previous
year 2024-25, both had stayed in India for 320 days. Prior to that, they had
been staying only in India.
Based on the facts of the case scenario given above, choose the most
appropriate answer to the following questions:
(i) What is the residential status of Mr. Arvind for the P.Y. 2024-25?
(a) Resident and ordinarily resident
(b) Resident but not ordinarily resident
(c) Non-resident
(d) Deemed resident but not ordinarily resident
(ii) Is there any requirement to deduct tax at source under section 194-IB
on such rent by Mr. Arjun? If yes, what would be the amount of TDS to
be deducted?
(a) No, there is no requirement to deduct tax at source under section
194-IB, since Mr. Arjun is a salaried employee
(b) Yes, Mr. Arjun is required to deduct tax at source of ₹ 39,000
under section 194-IB
(c) Yes, Mr. Arjun is required to deduct tax at source of ₹ 15,600
under section 194-IB
(d) No, there is no requirement to deduct tax at source under section
194-IB, since Mr. Arvind is a non-resident
(iii) Which of the following statements is correct with respect to advance
tax liability of Mr. Arvind for P.Y. 2024-25?
(a) Advance tax liability shall not arise to Mr. Arvind since he is a
non-resident
(b) Advance tax liability shall not arise, since Mr. Arvind is a resident
senior citizen and he has no income chargeable under the head
“Profits and gains of business or profession
(c) Advance tax liability shall arise, since he is a non-resident
(d) Advance tax liability shall arise, since his tax liability is not less
than ₹ 10,000 (3 x 2 = 6 Marks)
3. Roshini Ltd. has two units, one unit at Special Economic Zone (SEZ) and
other unit at Domestic Tariff Area (DTA). The unit in SEZ was set up and
started manufacturing from 12.5.2015 and unit in DTA from 15.6.2018. Total

Seculoft turnover of Roshini Ltd. and Unit in DTA is ₹ 12,50,00,000 and 4,50,00,000,
respectively. Export sales of units in SEZ and DTA is ₹ 3,50,00,000 and
₹ 2,25,00,000, respectively and net profit of Unit in SEZ and DTA is
₹ 95,00,000 and ₹ 80,00,000, respectively. Out of the export sales of
₹ 3,50,00,000, ₹ 2,00,00,000 have been received in convertible foreign
180
 exchange by 30.9.2025. Roshini Ltd. would be eligible for deduction under
section 10AA for -
(a) ₹ 20,78,125
(b) ₹ 41,56,250
(c) ₹ 11,87,500
(d) ₹ 23,75,000 (2 Marks)
4. What would be the tax liability of Ms. Savita, a resident, who attained the
age of 60 years on 01.04.2025 on the total income of ₹ 7,25,000, comprising
of of salary income and interest on fixed deposits under default tax regime
Basic under section 115BAC?
(a) ₹ 28,600
TAX (b) ₹ 26,000
(c) ₹ 23,400
(d) ₹ 2,600 (1 Mark)

Division B – Descriptive Questions

Question No. 1 is compulsory
Attempt any two questions from the remaining three questions
1. Mr. Amit, having business of manufacturing of furniture, gives the following
Trading and Profit & Loss Account for the year ended 31.03.2025:

Master Trading and Profit & Loss Account

Particulars ₹ Particulars ₹
Question Opening Stock 5,62,500 Sales 2,33,25,000

All Purchases 1,88,62,500 Closing Stock 6,75,000

CMIX Freight & Cartage 1,89,000

concepts) Gross profit 43,86,000

2,40,00,000 2,40,00,000
Bonus to staff 71,250 Gross profit 43,86,000
Rent of premises 80,250 Income-tax refund 30,000
Advertisement 7,500 Warehousing 22,50,000
charges
Bad Debts 1,12,500
Interest on loans 2,51,250
Depreciation 1,07,250
Goods and Services tax 1,62,525
demand paid

181
 Salary 5,50,000
Miscellaneous 2,38,475
expenses
Net profit 50,85,000
66,66,000 66,66,000

Following are the further information relating to the financial year 2024-25:
(i) Income-tax refund includes amount of ₹ 4,570 of interest allowed
thereon.
(ii) Salary includes ₹ 30,000 paid to his brother which is unreasonable to
the extent of ₹ 5,000.
(iii) Advertisement expenses include an amount of ₹ 2,500 paid for
advertisement published in the souvenir issued by a political party. The
payment is made by way of an account payee cheque.
(iv) Miscellaneous expenses include an amount of ₹ 1,00,000 paid to
Political Party by cheque.
(v) Goods and Services Tax demand paid includes an amount of ₹ 5,300
charged as penalty for delayed filing of returns and ₹ 12,750 towards
interest for delay in deposit of tax.
(vi) Mr. Amiit had purchased a warehouse building of ₹ 20 lakhs in rural
area for the purpose of storage of agricultural produce. This was made
available for use from 15.07.2024 and the income from this activity is
credited in the Profit and Loss account under the head “Warehousing
charges”.
(vii) Depreciation under the Income-tax Act, 1961 works out at ₹ 65,000
excluding depreciation on warehouse building.
(viii) Interest on loans includes an amount of ₹ 80,000 paid to Mr. Mohit, a
resident, on which tax was not deducted.
Compute the total income and tax liability of Mr. Amit for the A.Y. 2025-26 in
a most beneficial manner. (15 Marks)

Topol
2. (a) Mr. Akash, an Indian citizen aged 45 years, worked in XYZ Ltd. in
Delhi. He got a job offer from ABC Inc., California on 01.06.2023. He
left India for the first time on 31.07.2023 and joined ABC Inc. on
Residential 08.08.2023. During the P.Y. 2024-25, Mr. Akash visited India from
25.05.2024 to 22.09.2024. He has received the following income for the
previous year 2024-25:
states Particulars ₹
Salary from ABC Inc., California received in California 7,00,000
(Computed)
Dividend from Indian companies 5,00,000
Agricultural income from land situated in Nepal, received 4,00,000
in Nepal
182
 Rent received/receivable from house property in Delhi 5,50,000
Profits from a profession in California, which was set up in 6,00,000
India, received there

Determine the residential status of Mr. Akash and compute his total
income for the A.Y. 2025-26 under default tax regime. (6 Marks)
(b) Examine and compute the liability for deduction of tax at source, if any,

ES
in the cases stated hereunder, for the financial year ended 31 st March,
2025.
(i) State Bank of India pays ₹ 70,000 per month and ₹ 60,000 per
month as rent to the Central Government and Mr. Kunal,
respectively for building in which its branches are situated.
(ii) Payment of ₹ 2,50,000 to Mr. Deepak, a transporter who owns 8
goods carriages throughout the previous year. He does not
furnish his PAN. (4 Marks)
3. (a) Mr. Sahil, a resident individual, aged 40 years, is an assistant manager
of Fox Ltd. He is getting a salary of ₹ 55,000 per month. During the
previous year 2024-25, he received the following amounts from his
Salary employer.
(i) Dearness allowance (10% of basic pay which forms part of salary
for retirement benefits).
(ii) Bonus of ₹ 60,000.
(iii) Fixed Medical allowance of ₹ 50,000 for meeting medical
expenditure.
(iv) He was also reimbursed the medical bill of his mother dependent
on him amounting to ₹ 6,500.
(v) Mr. Sahil was provided;
• a laptop both for official and personal use. Laptop was
acquired by the company on 1 st June, 2022 at ₹ 35,000.
• a domestic servant at a monthly salary of ₹ 8,000 which was
reimbursed by his employer.
(vi) Fox Ltd. allotted 700 equity shares in the month of October 2024
@ ₹ 170 per share against the fair market value of ₹ 280 per
share on the date of exercise of option by Mr. Sahil. The fair
market value was computed in accordance with the method
prescribed under the Act.
(vii) Professional tax ₹ 2,200 (out of which ₹ 1,400 was paid by the
employer).
Compute the Income under the head “Salaries” of Mr. Sahil for the
assessment year 2025-26 if he is paying tax under default tax regime
under section 115BAC. (5 Marks)

183
 (b) Mr. Kushal is a resident but not ordinarily resident in India during the
Assessment Year 2025-26. He furnishes the following information
House regarding his income/expenditure pertaining to his house properties for
the previous year 2024-25:
Property • He owns two houses, one in New York and the other in
Ahmedabad.
• The house in New York is let out there at a rent of $ 5,000 p.m.
The entire rent is received in India. He paid Property tax of
$ 1,250 and Sewerage Tax $ 750 there. ($ 1 = INR 81)
• The house in Ahmedabad is self-occupied. He had taken a loan of
₹ 30,00,000 to construct the house on 1 st September, 2019
@10%. The construction was completed on 31 st May, 2021 and
he occupied the house on 1 st June, 2021.
The entire loan is outstanding as on 31 st March, 2025. Property tax
paid in respect of the second house is ₹ 2,800.
Compute the income chargeable under the head "Income from House
property" in the hands of Mr. Kushal for the Assessment Year 2025-26
if he has opted out of the default tax regime under section 115BAC.
(5 Marks)
4. (a) Mr. Vishal, aged 33 years, submits the information of following
transaction/income during the P.Y. 2024-25
(i) Mr. Vishal had a house in Delhi. During financial year 2023-24, he
clubbing had transferred the said house to Ms. Deepika, daughter of his
brother without any consideration. House would go back to Mr.
t Vishal after the life time of Ms. Deepika. The transfer was made
with a condition that 10% of rental income from such house shall
of R be paid to Mrs. Vishal. Rent received by Ms. Deepika during the
Set previous year 2024-25 from such house property is ₹ 5,50,000.

alosses (ii) Mr. Vishal holds preference shares in M/s A Pvt. Ltd. He
of instructed the company to pay dividend to Ms. Chandni, daughter
of his servant. The transfer is irrevocable for the lifetime of
Chandni. Dividend receivable by Ms. Chandni during the previous
year 2024-25 is ₹ 4,50,000.
(iii) Mr. Vishal has a short term capital loss of ₹ 16,000 from sale of
property and long term capital gain of ₹ 15,000 from sale of property.
(iv) Other income/loss of Mr. Vishal includes
- Interest from saving bank account of ₹ 1,75,000
- Cash gift of ₹ 75,000 received from daughter of his sister on
his birthday.
- Income from betting of ₹ 25,000
- Income from card games of ₹ 46,000
- Loss on maintenance of race horses of ₹ 14,600
184
 Compute the total income of Mr. Vishal for the Assessment Year
2025-26 if he has opted out of the default tax regime and the losses to
be carried forward. (6 Marks)
(b) Enumerate the cases where a return of loss has to be filed on or before
the due date specified u/s 139(1) for carry forward of the losses. Also
Rol enumerate the cases where losses can be carried forward even though
the return of loss has not been filed on or before the due date.
(4 Marks)
OR
(b) Mr. Vishnu has undertaken certain transactions during the F.Y.204-25,
which are listed below. You are required to identify the transactions in
respect of which quoting of PAN is mandatory in the related
documents–
Par S. No. Transaction

CARD 1. Sale of scooter for ₹ 70,000 X

X 2. Payment of life insurance premium of ₹ 67,000 to
insurance company ~ >50K
3. Purchase of plot for ₹ 9 lakhs while the stamp duty of the
same is ₹ 11 lakhs F
4. Applied to PNB for issue of credit card.
(4 Marks)

185
 MODEL TEST PAPER 2
INTERMEDIATE COURSE: GROUP - I
PAPER – 3: TAXATION
Time Allowed – 3 Hours Maximum Marks – 100
SECTION – A: INCOME TAX LAW (50 MARKS)
Working Notes should form part of the answer. Wherever necessary, suitable
assumptions may be made by the candidates and disclosed by way of a note.
However, in answers to Questions in Division A, working notes are not
required.
The relevant assessment year is A.Y.2025-26.
Division A – Multiple Choice Questions
Write the most appropriate answer to each of the following multiple choice
questions by choosing one of the four options given. All questions are
compulsory.

Top-10 1. Mr. Pankaj, an Indian resident, purchased a residential house property at

Kanpur on 20.08.1998 for ₹ 20.5 lakhs. The fair market value and the stamp
os duty value of such house property as on 1.4.2001 was ₹ 28.5 lakhs and ₹ 25
ch + lakhs, respectively. On 05.02.2016, Mr. Pankaj entered into an agreement
with Mr. Gyan for the sale of such property for ₹ 61 lakhs and received an
+ Rol amount of ₹ 2.5 lakhs as advance. However, as Mr. Gyan did not pay the
balance amount, Mr. Pankaj forfeited the advance.
On 10.05.2024, Mr. Pankaj sold the house property to Mr. Rohan for ₹ 1.50
crores, when the stamp duty value of the property was ₹ 2 crores. Further,
he purchased two residential house properties at Delhi and Mumbai for ₹ 57
lakhs each on 28.09.2025. Mr. Pankaj has no other income during the
P.Y. 2024-25. The due date for filing return of income for Mr. Pankaj is
31st July, 2025.
On 31.01.2026, Mr. Pankaj decided to sell the house property at Mumbai to
his brother, Mr. Gaurav, for ₹ 58 lakhs, from whom ₹ 25,000 was received in
cash on 15.01.2026 as advance for signing the agreement to sale. Sale
deed was registered on 30.03.2026 on receipt of the balance amount
through account payee cheque from Mr. Gaurav. The stamp duty value of
house property at Mumbai on 31.01.2026 and 30.03.2026 was ₹ 61 lakhs
and ₹ 64 lakhs, respectively.
Cost inflation index –
P.Y. 2024-25: 363; P.Y. 2015-16: 254; P.Y. 2001-02: 100
Based on the facts of the case scenario given above, choose the most
appropriate answer to the following questions:
(i) What shall be the indexed cost of acquisition of residential house
property at Kanpur for computation of capital gains in the hands of
Mr. Pankaj?
186
 (a) ₹ 81,67,500
(b) ₹ 90,75,000
(c) ₹ 94,38,000
(d) ₹ 1,03,45,500
(ii) The amount of capital gains taxable for A.Y. 2025-26 in the hands of
Mr. Pankaj for sale of residential house property at Kanpur is -
(a) Nil
(b) ₹ 81,67,500
(c) ₹ 52,25,000
(d) ₹ 1,09,25,000
(iii) The amount of capital gains taxable for A.Y. 2026-27 in the hands of
Mr. Pankaj for sale of residential house property at Mumbai is -
(a) ₹ 8 lakhs
(b) ₹ 7 lakhs
(c) ₹ 64 lakhs
(d) ₹ 1 lakh
(iv) The amount taxable under section 56(2)(x) in the hands of Mr. Gaurav,
if any, is -
(a) Nil
(b) ₹ 1 lakh
(c) ₹ 3 lakhs
(d) ₹ 6 lakhs
(v) What shall be the tax credit available with Mr. Pankaj with respect to
sale of property at Kanpur during P.Y. 2024-25 assuming the tax was
fully deducted by Mr. Rohan?
(a) ₹ 2,00,000
(b) ₹ 1,50,000
(c) ₹ 1,00,000
(d) ₹ 87,000
(vi) Is Mr. Pankaj required to file his return of income for A.Y. 2025-26?
(a) Yes, since his total income exceeds the basic exemption limit
(b) No, since his total income does not exceed the basic exemption
limit
(c) Yes, since tax deducted in his case exceeds ₹ 25,000
(d) Yes, since his total income before exemption under section 54
exceeds the basic exemption limit (6 x 2 = 12 Marks)
187
 2. Mrs. Deepika, wife of Mr. Santosh, started a business of trading in beauty
products on 15.7.2024. She invested ₹ 5 lakhs in the business on 15.7.2024
clubbing out of gift received from her husband, Mr. Santosh. She invested ₹ 4 lakhs
from her own savings on the same date. She earned profits of ₹ 9,00,000
from her business for the financial year 2024-25. Which of the following
ofIncome statements is correct?
(a) Share of profit of ₹ 9,00,000 is includible in the hands of Mrs. Deepika
(b) Share of profit of ₹ 5,00,00 is includible in the hands of Mr. Santosh
and share of profit of ₹ 4,00,000 is includible in the hands of
Mrs. Deepika
(c) Share of profit of ₹ 4,00,000 is includible in the hands of Mr. Santosh
and share of profit of ₹ 5,00,000 is includible in the hands of
Mrs. Deepika
(d) Share of profit of ₹ 9,00,000 is includible in the hands of Mr. Santosh
(2 Marks)
3. Mr. X, a resident 47 years, has salary income (computed) of ₹ 7,25,000 and
agricultural income of ₹ 1,00,000 for the P.Y. 2024-25. Compute his tax
liability for A.Y. 2025-26 if he has opted out of the default tax regime under
Partial section 115BAC.
a(a) ₹ 59,800

integratin (b)
(c)
(d)
₹ 72,500
₹ 75,400
₹ 80,600 (1 Mark)

Division B – Descriptive Questions

Question No. 1 is compulsory.
Attempt any two questions from the remaining three questions.
1. Mr. Sunil, aged 48 years, a resident Indian has furnished the following
particulars for the year ended 31.03.2025:

Masteror
our
(i) He occupies ground floor of his residential building and has let out first
floor for residential use at an annual rent of ₹ 2,95,000. He has paid
municipal taxes of ₹ 25,000 for the current financial year. Both these
floors are of equal size.
Chix (ii) As per interest certificate from HDFC bank, he paid ₹ 1,50,000 as
interest and ₹ 80,000 towards principal repayment of housing loan
borrowed for the above residential building in the year 2018.
(iii) He owns an industrial undertaking established in a SEZ and which had
commenced operation during the financial year 2019-20. Total turnover
of the undertaking was ₹ 400 lakhs, which includes ₹ 150 lakhs from
export turnover. Out of ₹ 150 lakhs, only ₹ 120 lakhs have been
received in India in convertible foreign exchange on or before
188
 30.9.2025. This industrial undertaking fulfills all the conditions of
section 10AA of the Income-tax Act, 1961. Profit from this industry is
₹ 40 lakhs.
(iv) He employed 20 new employees for the said industrial undertaking
during the previous year 2024-25. Out of 20 employees, 12 were
employed on 1st May 2024 for monthly emoluments of ₹ 18,000 and
remaining were employed on 1 st September 2024 on monthly
emoluments of ₹ 12,000. All these employees participate in recognised
provident fund and they are paid their emoluments directly to their bank
accounts.
(v) He earned ₹ 30,000 and ₹ 40,000 as interest on saving bank deposits
and fixed deposits, respectively.
(vi) He also sold his vacant land on 01.12.2024 for ₹ 15 lakhs. The stamp
duty value of land at the time of transfer was ₹ 16 lakhs. This land was
acquired by him on 15.10.1998 for ₹ 2.80 lakhs. The FMV of the land
as on 1st April, 2001 was ₹ 4.8 lakhs and Stamp duty value on the said
date was ₹ 4 lakhs. He had incurred registration expenses of
₹ 12,000 at that time.
The cost of inflation index for the financial year 2024-25 and 2001-02
are 363 and 100, respectively.
(vii) He paid insurance premium of ₹ 40,000 towards life insurance policy of
his son, who is not dependent on him.
You are requested to compute total income and tax liability of
Mr. Sunil for the Assessment Year 2025-26 under default tax regime.

ra
(15 Marks)
2. (a) Mrs. Sia D’Souza is an American, got married to Mr. Kabir of India in
New York on 14.02.2024 and came to India for the first time on
18.03.2024. She left for Australia on 16.08.2024. She returned to India

Residential again on 23.03.2025.

On 01.04.2024, she had purchased a Flat in Mumbai, which was let out

status to Mr. Sameer on a rent of ₹ 26,000 p.m. from 1.6.2024. She had taken
:

loan from an Indian bank for purchase of this flat on which bank had
t charged interest of ₹ 2,05,000 upto 31.03.2025.
S While in India, during the previous year 2024-25, she had received a
P +
H .
gold chain from her in laws worth ₹ 1,50,000 and ₹ 1,65,000 from very
close friends of her husband.
From the information given above, you are required to determine her
the residential status and compute her total income chargeable to tax
for the Assessment Year 2025-26 assuming she has shifted out of the
default tax regime under section 115BAC. (6 Marks)
(b) Briefly discuss the provisions of tax deduction/collection at source
under the Income-tax Act, 1961 and determine the amount, if any, of
fasites TDS and TCS in respect of the following payments:

189
 (i) Mr. Harish bought an overseas tour programme package for
Switzerland for himself and his family of ₹ 10 lakhs on 01-11-2024
from an agent who is engaged in organising foreign tours in
course of his business. He made the payment by an account
payee cheque and provided the permanent account number to the
seller.
(ii) Mr. Aditya pays ₹ 55,00,000 during April 2024 to Mr. Naresh, for
supply of labour, for carrying out the construction work of his
factory. During the P.Y. 2023-24, Mr. Aditya’s turnover was ₹ 95
lakhs. (4 Marks)
3. (a) Ms. Priyanka, General Manager of ABC Ltd., Mumbai, furnishes the
following particulars for the financial year 2024-25:
(i) Salary ₹ 40,000 per month
(ii) Value of medical facility in a hospital maintained by the company
₹ 10,000
(iii) Rent free accommodation owned by the company during
P.Y. 2024-25
(iv) Housing loan of ₹ 7,00,000 given on 01.04.2024 at the interest
rate of 6% p.a. (No repayment made during the year). The rate of
interest charged by State Bank of India (SBI) as on 01.04.2024 in
respect of housing loan is 9.5%.
(v) A dining table was provided to Ms. Priyanka at her residence. This
was purchased on 1.6.2021 for ₹ 60,000 and sold to Ms. Priyanka
on 1.5.2024 for ₹ 30,000.
(vi) Personal purchases through credit card provided by the company
amounting to ₹ 10,000 was paid by the company. No part of the
amount was recovered from Ms. Priyanka.
(vii) A Maruti Suzuki car which was purchased by the company on
16.7.2022 for ₹ 2,50,000 was sold to the assessee on 14.7.2024
for ₹ 1,60,000.
Other income received by the assessee during the previous year
2024-25:
Particulars ₹
(a) Interest on Fixed Deposits with a company 7,000
(b) Income from specified mutual fund 3,000
(c) Interest on bank fixed deposits of a minor married 4,000
daughter
(viii) Deposit in PPF Account made during the year 2024-25 ₹40,000

190
 Compute the gross total income of Ms. Priyanka for the Assessment
year 2025-26 if she exercised the option to shift out of the default tax
regime under section 115BAC. (6 Marks)
(b) M/s. Ravi & sons, a partnership firm consisting of two partners, reports
a net profit of ₹ 7,50,000 before deduction of the following items:

+PBP ➢ Salary of ₹ 25,000 each per month payable to two working

partners of the firm (as authorized by the deed of partnership)
Salary ➢ Depreciation on plant and machinery under section 32 is
₹ 2,50,000
➢ Interest on capital 15% per annum (as per the deed of
partnership).
The amount of capital eligible for interest is ₹ 6,00,000 for both
partners
➢ Carry forward loss of P.Y. 2023-24 - ₹ 50,000
Compute for A.Y. 2025-26:
(i) Book-profit of the firm under section 40(b) of the Income-tax Act,
1961.
(ii) Amount of salary that can be paid to working partners as per
section 40(b). (4 Marks)
4. (a) The following are the details relating to Mr. Roshan, a resident Indian,
relating to the year ended 31.03.2025
of
off Particulars Amount
set (₹)
Short term capital gain 1,50,000
losses Loss from house property [let out property] 2,50,000
Loss from speculative business 50,000
Loss from card games 20,000
Brought forward long term capital loss of A.Y. 2022-23 86,000
Dividend from ABC Ltd. 11,00,000
Loss from tea business 1,06,000
Mr. Roshan’s wife, Shamita is employed with Ray Ltd., at a monthly
salary of ₹ 25,000, where Mr. Roshan holds 21% of the shares of the
company. Shamita is not adequately qualified for the post held by her
in Ray Ltd.
You are required to compute taxable income of Mr. Roshan for the
A.Y. 2025-26 if he has exercised the option to shift out of the default
tax regime under section 115BAC. Ascertain the amount of losses
which can be carried forward. (6 Marks)
(b) In the following cases relating to P.Y.2024-25, the total income of the
assessee or the total income of any other person in respect of which
Rol he/she is assessable under Income-tax Act does not exceed the basic
191
 exemption limit. You are required to state with reasons, whether the
assessee is still required to file the return of income or loss for
A.Y.2025-26 in each of the following independent situations:
(i) Manish & Sons (HUF) sold a residential house on which there
arose a long term capital gain of ₹ 12 lakhs which was invested in
Capital Gain Bonds u/s 54EC so that no long term capital gain
was taxable.
(ii) Samarth has incurred an expenditure of ₹ 1,20,000 towards
consumption of electricity, the entire payment of which was made
through banking channels. (4 Marks)
OR

Tar
(b) Briefly mention the provisions of Income-tax Act, 1961 with regard to
quoting Aadhaar Number under section 139AA of the Act. (4 Marks)

192
 MODEL TEST PAPER 3
INTERMEDIATE COURSE: GROUP - I
PAPER – 3: TAXATION
Time Allowed – 3 Hours Maximum Marks – 100
SECTION – A: INCOME TAX LAW (50 MARKS)
Working Notes should form part of the answer. Wherever necessary, suitable
assumptions may be made by the candidates and disclosed by way of a note.
However, in answers to Questions in Division A, working notes are not
required.
The relevant assessment year is A.Y.2025-26.
Division A – Multiple Choice Questions
Write the most appropriate answer to each of the following multiple choice
questions by choosing one of the four options given. All questions are
compulsory.
1. Mr. Rudra is engaged in the business of trading since 2018. His turnover for
the P.Y. 2023-24 was ₹ 6 crores. His minor daughter’s marriage is fixed in
December, 2024. He planned destination wedding in Goa for his minor
TDS daughter. For the wedding, he withdrew ₹ 40,00,000 cash in the month of
September, 2024 and ₹ 65,00,000 cash in the month of October, 2024 from
T Hamara Paisa Bank.
He booked 30 rooms for 5 days for the accommodation of his relatives in
Raho Hotel and paid ₹ 40,000 in cash as advance and balance by account
payee cheque. He took the catering services of Tasty Caterers, a sole
Proprietor, for the wedding for which he paid ₹ 10,20,000 on 15.10.2024. For
her wedding, he gifted his daughter a house property, purchased from SK
Builders on 10.10.2024 by account payee cheque for ₹ 15,00,000. The
stamp duty value of the property on 10.10.2024 is ₹ 16,00,000 and on the
date of transfer to minor daughter is ₹ 20,00,000.
Mr. Rudra paid ₹ 45,000 in cash and balance in cheque to travel agent for
the return ticket of some of his relatives to US. He regularly files his return of
income.
Based on the facts of the case scenario given above, choose the most
appropriate answer to the following questions:
(i) The amount of tax to be deducted by Hamara Paisa Bank on cash
withdrawals by Mr. Rudra is -
(a) ₹ 10,000
(b) ₹ 25,000
(c) ₹ 1,70,000
(d) ₹ 1,85,000

193
 (ii) The amount of tax to be deducted by Mr. Rudra on payment made to
Tasty Caterers is -
(a) ₹ 10,200
(b) ₹ 20,400
(c) ₹ 51,000
(d) Nil
(iii) What shall be the amount taxable and in whose hands with respect to
purchase of immovable property by Mr. Rudra from SK Builders and
gift of the same to his daughter?
(a) ₹ 1,00,000 in the hands of Mr. Rudra and ₹ 20,00,000 in the
hands of minor daughter
(b) Nothing is taxable in the hands of Mr. Rudra and Minor daughter
(c) ₹ 1,00,000 in the hands of Mr. Rudra and nothing is taxable in the
hands of minor daughter
(d) Nothing is taxable in the hands of Mr. Rudra but ₹ 20,00,000 is
taxable in the hands of minor daughter (3 x 2 = 6 Marks)
2. Mr. Mayank had bought a residential house worth ₹ 2.5 crores at South
Extension, Delhi in 2018 and let out the house on rent to Mr. Rihaan. The
property was funded through loan from PNB. The interest due for

HP F.Y. 2024-25 to PNB is ₹ 25 lakhs, out of which he paid only ₹ 20 lakhs

during the year. Mr. Mayank then took a loan of ₹ 1.5 crores from SBI on
1.7.2024 for construction of first floor in that house for self-occupation. The
t construction is in progress as on 31.3.2025. Mr. Mayank started repaying
EMIs due to SBI. During the P.Y. 2024-25, he repaid principal amount of
Clubbing ₹ 25 lakhs and ₹ 5 lakhs to PNB and SBI, respectively. He also paid interest
of ₹ 8 lakhs to SBI out of ₹ 10 lakhs, being interest due for the period from
1.7.2024 to 31.3.2025.
T Mr. Mayank owns another house in Haryana. He transferred that house to

Deduction
his minor daughter Miss Sia on her birthday as her birthday gift. Miss Sia
gave the said house to the local Panchayat from September, 2024 at a rent
of ₹ 5,000 per month. Mrs. Mayank’s total income for A.Y.2025-26 is higher
than that of Mr. Mayank. This is the first year when Miss Sia has any source
of income.
Mr. Mayank bought electric vehicle worth ₹ 50 lakhs on loan from BSM Bank
which it sanctioned on 1.4.2022. BSM Bank charged interest of ₹ 7 lakhs on
electric vehicle for the P.Y.2024-25. Mr. Mayank has also taken loan from
ABC Bank for his daughter’s higher education. He paid ₹ 50,000 as interest
to ABC Bank. He also paid mediclaim of ₹ 20,000 to New India Assurance
Scheme for insuring his health.
Based on the facts of the case scenario given above, choose the most
appropriate answer to the following questions:
(i) What is the amount of interest allowable as deduction u/s 24 to
Mr. Mayank for A.Y.2025-26?
194
 (a) ₹ 2 lakhs
(b) ₹ 25 lakhs
(c) ₹ 28 lakhs
(d) ₹ 35 lakhs
(ii) What is the amount of deduction permissible to Mr. Mayank under
Chapter VI-A of Income-tax Act, 1961 for A.Y. 2025-26 if he has opted
out of the default tax regime?
(a) ₹ 1,70,000
(b) ₹ 2,20,000
(c) ₹ 3,70,000
(d) ₹ 9,20,000
(iii) In whose hands would Sia’s rental income from house property at
Haryana be taxable and how much income would be taxable?
(a) In Sia’s hands; ₹ 24,500
(b) In Mr. Mayank’s hands; ₹ 24,500
(c) In Mrs. Mayank’s hands; ₹ 23,000
(d) It would change every year depending on the parent whose
income is higher in that year. (3 x 2 = 6 Marks)
3. Mr. Arpan (aged 35 years) submits the following particulars for the purpose
of computing his total income:
Particulars ₹
off Income from salary (computed) 4,00,000
Set
Loss from let-out house property (-) 2,20,000
losses
Brought forward loss from let-out house property for the (-)2,30,000
A.Y. 2024-25
Business loss (-)1,00,000
Bank interest (FD) 80,000
Compute the total income of Mr. Arpan for the A.Y.2025-26 and the amount
of loss that can be carried forward for the subsequent assessment year
under normal provisions of the Act?
(a) Total income ₹ 2,00,000 and loss from house property of ₹ 2,50,000
and business loss of ₹ 20,000 to be carried forward to subsequent
assessment year.
(b) Total income ₹ 1,60,000 and loss from house property of ₹ 2,30,000 to
be carried forward to subsequent assessment year.
(c) Total income ₹ 4,00,000 and business loss of ₹ 20,000 to be carried
forward to subsequent assessment year.
(d) Total income is Nil and loss from house property of ₹ 70,000 to be
carried forward to subsequent assessment year. (2 Marks)
195
 4. Mr. Raja, aged 64 years, was not able to provide satisfactory explanation to
the Assessing Officer for the investments of ₹ 7 lakhs not recorded in the
books of accounts. What shall be the tax payable by him on the value of
undisclose such investments considered to be deemed income as per section 69?
(a) ₹ 2,18,400
In corre (b) ₹ 55,000
(c) ₹ 5,46,000
(d) ₹ 54,600 (1 Mark)

Division B – Descriptive Questions

Question No. 1 is compulsory.
Attempt any two questions from the remaining three questions.
1. Mr. Ayush, a resident individual, aged 54 years, is engaged in the business
of manufacturing textiles. He earned profit of ₹ 82,45,000 as per profit and

Master loss account after debiting and crediting the following items:
(i) Depreciation ₹ 15,40,000
Question (ii) Short term capital gains on 01.05.2024 on transfer of listed equity
shares in a company on which STT is paid ₹ 10,00,000 -

(MiHestial
(iii)He received income-tax refund of ₹ 15,550 which includes interest on
refund of ₹ 4,550. -oS LE]
C)
(iv) Dividend income from Indian companies ₹ 15,00,000. Dividend
received from each company is less than ₹ 5,000.
Additional information –
(i) Mr. Ayush installed new plant and machinery for ₹ 65 lakhs on
1.10.2024 which was put to use on 1.1.2025. Depreciation (including
additional depreciation) on this amount of ₹ 65 lakhs is included in the

7
depreciation debited to profit and loss account which has been

SoX
computed as per Income-tax Rules, 1962. ~
(ii) Mr. Ayush took a loan from SBI of ₹ 50 lakhs on 1.9.2024 @10.5% p.a.
to purchase such plant and machinery. Total interest upto 31.3.2025

& 20%..
has been paid on 31.3.2025 and the same has been debited to profit
and loss account.

X
(iii) Advance tax paid during the year is ₹17,50,000
(iv) Ayush purchased goods for ₹ 40 lakhs from Mr. Ram, his brother. The But
market value of the goods is ₹ 35 lakhs.
(v) He paid ₹ 40,000 as life insurance premium taken on the life of his
married daughter who is not dependent on him. The sum assured is
₹ 5,00,000 and the policy was taken on 1.4.2017.
(vi) He paid ₹ 45,000 by cheque towards health insurance policy covering
himself, his spouse and his children.
god
196
25000
 (vii) On 1.7.2024, Mr. Ayush withdrew ₹ 1.5 crores in cash from three
current accounts maintained by him with SBI. There are no other
withdrawals during the year. He regularly files his return of income.
You are required to compute the total income and tax payable by Mr. Ayush
for the A.Y. 2025-26 assuming that he has shifted out of the default tax
regime under section 115BAC. (15 Marks)
2. (a) Miss Geeta, a citizen of India, got married to Mr. Peter of Australia and
left India for the first time on 20.8.2024. She has not visited India again
during the P.Y. 2024-25. She has derived the following income for the

Agriculture
year ended 31-3-2025:
Particulars ₹

Income
(i) Income from sale of centrifuged latex processed 1,50,000
from rubber plants grown in kanyakumari.
(ii) Income from sale of coffee grown, cured, roasted 5,00,000
and grounded in Colombo. Sale consideration was
received in Chennai.
(iii) Income from sale of tea grown and manufactured in 12,00,000
West Bengal.
(iv) Income from sapling and seedling grown in a 2,00,000
nursery at Cochin. Basic operations were not
carried out by her on land.
You are required to determine the residential status of Miss Geeta and
compute the business income and agricultural income of Miss. Geeta
for the Assessment Year 2025-26. (6 Marks)
(b) Briefly discuss the provisions of tax deduction at source under the
Income-tax Act, 1961 and determine the amount, if any, of TDS in
TDS respect of the following payments:
(i) Mr. Vikas received a sum of ₹ 10,20,000 on 28.02.2025 as pre-
mature withdrawal from Employees Provident Fund Scheme
before continuous service of 5 years on account of termination of
employment due to ill-health.
(ii) Indian Bank sanctioned and disbursed a loan of ₹ 12 crores to B
Ltd. on 31-12-2024. B Ltd. paid a sum of ₹ 1,20,000 as service fee
to Indian Bank for processing the loan application. (4 Marks)
3. (a) Mr. Jain and his wife Mrs. Jain are partners in a partnership firm
holding 25% share each. During the F.Y. 2024-25, the firm paid
₹ 2,50,000 to each of them as remuneration. Apart from this, they
Clubbing provide you the following information in respect of F.Y. 2024-25:
(i) Salary received by Mr. Jain from his employer ₹ 12,50,000.
(ii) Interest on fixed deposit earned by Mrs. Jain ₹ 14,00,000. (The
fixed deposit was opened by using her "Stridhan")
(iii) Income of their three minor children Neeta, Meeta and Seeta was
₹ 15,000; ₹ 10,000 and ₹ 2,000 respectively.
197
 You are required to compute the gross total income of Mr. and
Mrs. Jain as per the provisions of Income-tax Act for the A.Y. 2025-26
assuming that they have shifted out of the default tax regime.
(4 Marks)
(b) Mr. Ram, an employee of the Central Government is posted at New
Delhi. He joined the service on 1 st February, 2021. Details of his
income for the previous year 2024-25, are as follows:
Salary (i) Basic salary: ₹ 3,80,000
+ (ii) Dearness allowance: ₹ 1,20,000 (40% forms part of pay for
retirement benefits)

Deduction (iii) Both Mr. Ram and Government contribute 20% of basic salary to
the pension scheme referred to in section 80CCD.
(iv) Gift received by Ram’s minor son on his birthday from friend:
₹ 70,000. (No other gift is received by him during the previous
year 2024-25)
(v) On 25.03.2024, Mr. Ram gifted a sum of ₹ 6,00,000 to Mrs. Ram
to start a business by introducing such amount as her capital. On
1st April, 2024, her total investments in business was ₹ 10,00,000
which includes ₹ 6,00,000 gifted by Mr. Ram. During the previous
year 2024-25, she has loss from such business ₹ 1,30,000.
(vi) Mr. Ram deposited ₹ 70,000 in Sukanya Samridhi account on
23.01.2025. He also contributed ₹ 40,000 in an approved annuity
plan of LIC to claim deduction u/s 80CCC.
(vii) He has taken an educational loan from SBI for his major son who
is pursuing MBA course from Gujarat University. He has paid
₹ 15,000 as interest on such loan.
Determine the total income of Mr. Ram for the assessment year
2025-26. Ignore provisions under section 115BAC. (6 Marks)
4. (a) Determine the capital gains/loss on transfer of listed equity shares (STT
paid both at the time of acquisition and transfer of shares) and units of
equity oriented mutual fund (STT paid at the time of transfer of units) for

Capital the A.Y.2025-26 and tax, if any, payable thereon, in the following cases,
assuming that these are the only transactions covered under section
112A during the P.Y.2024-25 in respect of these assessees:

Gains (i) Mr. Shagun purchased 300 shares in A Ltd. on 20.5.2017 at a

cost of ₹ 400 per share. He sold all the shares of A Ltd. on
31.5.2024 for ₹ 1200. The price at which these shares were
traded in National Stock Exchange on 31.1.2018 is as follows –
Particulars Amount in ₹
Highest Trading Price 700
Average Trading Price 680
Lowest Trading Price 660

198
 (ii) Mr. Raj purchased 200 units of equity oriented fund, Fund A on
1.2.2017 at a cost of ₹ 550 per unit. The units were not listed at
the time of purchase. Subsequently, units of Fund A were listed
on 1.1.2018 on the National Stock Exchange. Mr. Raj sold all the
units on 3.4.2024 for ₹ 900 each. The details relating to quoted
price on National Stock Exchange and net asset value of the units
are given hereunder:
Particulars Fund A
Amount in ₹
Highest Trading Price 750 (on 31.1.2018)
Average Trading Price 700 (on 31.1.2018)
Lowest Trading Price 650 (on 31.1.2018)
Net Asset Value on 31.1.2018 800
(4 Marks)
OR
(a) Mr. Aman has furnished the following particulars relating to payments
made and expenditure incurred towards scientific research for the year

PuBP ended 31.3.2025:

Sl. Particulars ₹ (in lakhs)
No.
(i) Payment made to AB University, an approved 15
University
(ii) Payment made to Siya College 17
(iii) Payment made to IIT, Bangalore (under an 12
approved programme for scientific research)
(iv) Machinery purchased for in-house scientific 25
research
Compute the deduction available under section 35 of the Income-tax
Act, 1961 for A.Y. 2025-26, while computing his income under the head
“Profits and gains of business or profession” under default tax regime
under section 115BAC. (4 Marks)
(b) Mr. Sailesh is a Marketing Manager in Smile Ltd. From the following
information, you are required to compute his income chargeable under
the head Salary for assessment year 2025-26. He has opted out of the
section 115BAC.
(i) Basic salary is ₹ 70,000 per month.
(ii) Dearness allowance @ 40% of basic salary
(iii) He is provided health insurance scheme approved by IRDA for
which ₹ 20,000 incurred by Smile Ltd.
(iv) Received ₹ 10,000 as gift voucher on the occasion of his marriage
anniversary from Smile Ltd.
199
(v) Smile Ltd. allotted 800 sweat equity shares in August 2024. The
shares were allotted at ₹ 450 per share and the fair market value
on the date of exercising the option by Mr. Sailesh was ₹ 700 per
share.
(vi) He was provided with furniture during September 2020. The
furniture is used at his residence for personal purpose. The actual
cost of the furniture was ₹ 1,10,000. On 31st March, 2025, the
company offered the furniture to him at free of cost. No amount
was recovered from him towards the furniture till date.
(vii) Received ₹ 10,000 towards entertainment allowance.
(viii) Housing Loan@ 4.5% p.a. provided by Smile Ltd., amount
outstanding as on 01.04.2024 is ₹ 15 Lakhs. ₹ 50,000 is paid by
Mr. Sailesh every quarter towards principal starting from June
2024. The lending rate of SBI for similar loan as on 01.04.2024
was 8%.
(ix) Facility of laptop costing ₹ 50,000 (6 Marks)

200
 MODEL TEST PAPER 4
INTERMEDIATE COURSE: GROUP - I
PAPER – 3: TAXATION
Time Allowed – 3 Hours Maximum Marks – 100
SECTION – A: INCOME TAX LAW (50 MARKS)
Working Notes should form part of the answer. Wherever necessary, suitable
assumptions may be made by the candidates and disclosed by way of a note.
However, in answers to Questions in Division A, working notes are not
required.
The relevant assessment year is A.Y.2025-26.
Division A – Multiple Choice Questions
Write the most appropriate answer to each of the following multiple choice
questions by choosing one of the four options given. All questions are
compulsory.
1. Mr. Sambhav (aged 48 years) furnishes the following particulars for the
previous year 2024-25 in respect of an industrial undertaking established in
"Special Economic Zone" in March 2018. It began manufacturing in April

lott 2018.
Particulars (₹)
Total sales 85,00,000
Export sales [proceeds received in India by 30.9.2025] 45,00,000
Domestic sales 40,00,000
Profit from the above undertaking 20,00,000
Export Sales of F.Y. of 2024-25 include freight and insurance of ₹ 5 lakhs for
delivery of goods outside India.
He received rent of ₹ 30,000 per month for a commercial property let out to
Mr. Akash, a salaried individual. He earned interest on savings bank A/c of
₹ 15,000 and interest on Post Office savings A/c of ₹ 7,000 during the
P.Y. 2024-25.
Mr. Sambhav has shifted out of the default tax regime under section
115BAC.
Based on the facts of the case scenario given above, choose the most
appropriate answer to the following questions:
(i) Compute the amount of export turnover and total turnover for purpose
of computing deduction under section 10AA for A.Y. 2025-26.
(a) ₹ 45,00,000 and ₹ 85,00,000, respectively
(b) ₹ 40,00,000 and ₹ 80,00,000, respectively
(c) ₹ 45,00,000 and ₹ 80,00,000, respectively
(d) ₹ 40,00,000 and ₹ 85,00,000, respectively

201
 (ii) Compute the amount of deduction available to Mr. Sambhav under
section 10AA for A.Y. 2025-26.
(a) ₹ 10,00,000
(b) ₹ 4,70,577
(c) ₹ 5,62,500
(d) ₹ 5,00,000
(iii) Compute the total income of Mr. Sambhav for A.Y. 2025-26.
(a) ₹ 17,60,500
(b) ₹ 12,60,500
(c) ₹ 18,72,000
(d) ₹ 17,64,000 (3 x 2 = 6 Marks)
2. Mr. Anshul, aged 54 years, an Indian citizen, is working as Assistant
Manager in ABC India Ltd. He is getting basic salary of

Residential ₹ 58,000 per month. He used

work. He left India from Delhi
to travel frequently out of India for his office
Airport on 5 th October, 2024 and returned to
India on 2 nd April, 2025.
states For previous year 2024-25, following information are relevant;
t (a) Dearness Allowance - 10% of Basic Pay (considered for retirement
purposes)

Salary (b)
(c)
Bonus - ₹ 98,000
Medical allowance paid during P.Y. 2024-25 amounting to ₹ 60,000
(d) He was also reimbursed medical bill of his mother amounting to
₹ 15,000.
(e) He was also reimbursed salary of house servant of ₹ 4,000 per month.
(f) Professional tax paid by employer amounting to ₹ 2,400.
(g) 400 equity shares allotted by ABC India Ltd. at the rate of
₹ 250 per share against fair market value of share of ₹ 350 on the date
of exercise of option.
(h) Mr. Anshul has exercised the option to shift out of the default tax
regime under section 115BAC.
Based on the facts of the case scenario given above, choose the most
appropriate answer to the following questions:
(i) What is Mr. Anshul’s residential status for the A.Y. 2025-26?
(a) Resident but can’t determine resident and ordinarily resident or
resident but not ordinarily resident from the given information
(b) Non-Resident
(c) Resident but not ordinarily resident
(d) Resident and ordinarily resident

202
 (ii) What are his taxable perquisites for A.Y. 2025-26?
(a) ₹ 55,000
(b) ₹ 90,400
(c) ₹ 1,05,400
(d) ₹ 1,03,000
(iii) What is the income chargeable under the head “Salaries” in the hands
of Mr. Anshul for A.Y. 2025-26?
(a) ₹ 9,76,600
(b) ₹ 9,86,600
(c) ₹ 9,71,600
(d) ₹ 9,61,600 (3 x 2 = 6 Marks)
3. Mr. Ross, an Australian citizen, is employed in the Indian embassy in
Australia. He is a non-resident in India for A.Y. 2025-26. He received salary
Salary and allowances in Australia from the Government of India for the year ended
31.03.2025 for services rendered by him in Australia. In addition, he was
allowed perquisites by the Government. Which of the following statements
are correct?
(a) Salary, allowances and perquisites received outside India are not
taxable in the hands of Mr. Ross, since he is non-resident
(b) Salary, allowances and perquisites received outside India by
Mr. Ross are taxable in India since they are deemed to accrue or arise
in India
(c) Salary received by Mr. Ross is taxable in India but allowances and
perquisites are exempt
(d) Salary received by Mr. Ross is exempt in India but allowances and
perquisites are taxable (2 Marks)
4. Which of the following returns can be revised under section 139(5)?
(i) A return of income filed u/s 139(1)
Return (ii) A belated return of income filed u/s 139(4)
(iii) A return of loss filed u/s 139(3)
Choose the correct answer:
(a) Only (i)
(b) Only (i) and (ii)
(c) Only (i) and (iii)
(d) (i), (ii) and (iii) (1 Mark)

203
 Division B – Descriptive Questions
Question No. 1 is compulsory.
Attempt any two questions from the remaining three questions.
1. Ms. Farah, aged 40 years, is an advocate (Taxation). She keeps her books
of accounts on accrual basis. Her profit & loss account for the year ended on
March 31, 2025 is as follows:
Total Profit & Loss Account for the year ending March 31, 2025

Income Amount
(₹)
Amount
(₹)
mit Staff salary 40,10,000 Fees Earned from:

Question
Rent 9,00,000 Taxation services 50,00,000
Administrative 6,50,000 Appeals 16,00,000
expenses
Incentives to office 2,00,000 Consultancy 15,00,000 81,00,000
staff
Meetings, 1,70,000 Dividend from an Indian 11,00,000
Seminars and company (gross)
conferences
Purchase of car 3,00,000 Interest on deposit 25,000
(for official use) on certificates issued under gold
01.07.2024 monetization scheme, 2015
Repairs and 35,000 Honorarium received for 50,000
Maintenance of car valuation of answer papers
Travelling 5,00,000 Rent received in respect of 90,000
Expenses house property
Municipal tax paid 9,000
in respect of house
property
Net profit 25,91,000
93,65,000 93,65,000
Other information:
(i) Administrative expenses include ₹ 50,000 paid to a tax consultant in
cash for assisting Ms. Farah in one of the professional assignments.
(ii) The traveling expenses include expenditure incurred on foreign
professional tour of ₹ 50,000 which was within the RBI norms.
(iii) Ms. Farah paid medical insurance premium for her parents (senior
citizens and not dependent on her) online amounting ₹ 47,000. She
also paid ₹ 8,500 by cash towards preventive health check-up for
herself and her spouse.
(iv) Repairs and maintenance of car is for the period from 1-10-2024 to
30-09-2025.

204
 (v) She has paid ₹ 1,00,000 towards advance tax during the P.Y. 2024-25.
Compute Total Income and Net tax payable as per the most beneficial
taxation scheme for Ms. Farah for the A.Y. 2025-26. (15 Marks)
2. (a) Sagar, a Chartered Accountant, is presently working in a firm in India.
He has received an offer for the post of Chief Financial Officer from a
company at New York. As per the offer letter, he should join the
company at any time between 1st September, 2024 and 31st October,
2024. He approaches you for your advice on the following issues to
mitigate his tax liability in India:
(i) Date by which he should leave India to join the company;
(ii) Direct credit of part of his salary to his bank account in Delhi
maintained jointly with his mother to meet requirement of his
family. (6 Marks)
(b) Briefly discuss the provisions of tax deduction/collection at source
under the Income-tax Act, 1961 and determine the amount, if any, of
TDS and TCS in respect of the following payments:
fasIiS (i) Mr. Deepak wishes to purchase a residential house costing ₹ 60
lakhs from Ms. Priya. The house is situated at Chennai and its
stamp duty value is ₹ 65 lakhs. He also wants to purchase
agricultural lands in a rural area for ₹ 65 lakhs. Both the buyer as
well as the sellers are residents in India.
(ii) ABC & Co., a partnership firm is having a car dealership show-
room – 2. They have purchased cars for ₹ 2 crores from XYZ Ltd.,
car manufacturers, the cost of each car being more than ₹12
lakhs. They sell the cars to individual buyers at a price yielding
10% margin on cost. Turnover of ABC & Co. and XYZ Ltd. was
less than ₹ 10 crores during the P.Y. 2023-24. (4 Marks)
3. (a) Mr. Kamal, a resident but not ordinarily resident in India during the
Assessment Year 2025-26. He owns two houses, one in Dubai and the
property other in Mumbai. The house in Dubai is let out there at a rent of DHS
20,000 p.m. (1DHS=INR 22). The entire rent is received in India. He
House paid property tax of DHS 2,500 and Sewerage Tax DHS 1,500 there,
for the Financial Year 2024-25. The house in Mumbai is self-occupied.
He had taken a loan of ₹ 10,00,000 to construct the house on 1 st June,
2021 @12%. The construction was completed on 31 st May, 2023 and
he occupied the house on 1 st June, 2023. The entire loan is
outstanding as on 31 st March, 2025. Property tax paid in respect of the
second house is ₹ 2,400 for the Financial Year 2024-25. Compute the
income chargeable under the head "Income from House property" in
the hands of Mr. Kamal for the Assessment Year 2025-26 under
regular provisions of the Act. (5 Marks)
(b) Mr. Ashish entered into an agreement with Mr. Dhaval to sell his
residential house located at Navi Mumbai on 16.08.2024 for

Capital ₹ 80,00,000.

Gains 205
 The sale proceeds was to be paid in the following manner;
(i) 20% through account payee bank draft on the date of agreement.
(ii) 60% on the date of the possession of the property.
(iii) Balance after the completion of the registration of the title of the
property.
Mr. Dhaval was handed over the possession of the property on
15.12.2024 and the registration process was completed on 14.01.2025.
He paid the sale proceeds as per the sale agreement.
The value determined by the Stamp Duty Authority on 16.08.2024 was
₹ 90,00,000 whereas on 14.01.2025 it was ₹ 91,50,000.
Mr. Ashish had acquired the property on 01.04.2001 for ₹ 20,00,000.
After recovering the sale proceeds from Dhaval, he purchased another
residential house property in Kanpur for ₹ 15,00,000 during April, 2025.
Compute the income under the head "Capital Gains" for the
Assessment Year 2025-26.
Cost Inflation Index for Financial Year(s)
2001-02 - 100
2024-25 - 363 (5 Marks)
4. (a) Mr. Mohit submits the following information for the previous year
2024-25:

setof
use (i) Income from salary
(Amount in ₹)
6,50,000
(ii) Income from House-I 55,000
(iii) Loss from House-II (self-occupied property) 1,25,000
(iv) Loss from House-III 190,000
(v) Loss from leather business 68,000
(vi) Profit from cloth business 1,70,000
(vii) Short term capital loss in equity-oriented 35,000
funds on which STT was paid
(viii) Income from crossword puzzles 12,000
(ix) Dividend from foreign company (Gross) 8,500
(x) Loss on owning and maintenance of race 7,500
horses
(xi) Income from owning and maintenance of race 9,000
bulls

Compute the gross total income and losses to be carried forward of

Mr. Mohit for assessment year 2025-26 under regular provisions of the
Act. Mr. Mohit has filed his return of income on 25.07.2025. (6 Marks)

206
Return (b) What are the consequences of failure to intimate Aadhar Number. Is
there any fee for such default? (4 Marks)
OR
(b) (i) What is the fee for default in furnishing return of income u/s
234F?

Returome (ii) To whom the provisions of section 139AA relating to quoting of

Aadhar Number do not apply? (4 Marks)

207
 MODEL TEST PAPER 5
INTERMEDIATE COURSE: GROUP - I
PAPER – 3: TAXATION
Time Allowed – 3 Hours Maximum Marks – 100
SECTION – A: INCOME TAX LAW (50 MARKS)
Working Notes should form part of the answer. Wherever necessary, suitable
assumptions may be made by the candidates and disclosed by way of a note.
However, in answers to Questions in Division A, working notes are not
required.
The relevant assessment year is A.Y.2025-26.
Division A – Multiple Choice Questions
Write the most appropriate answer to each of the following multiple choice
questions by choosing one of the four options given. All questions are
compulsory.
1. Mr. Raja, an Indian citizen, aged 61 years, has set-up his business in
Canada and is residing in Canada since 2009. He owns a house property in

at
Residentia
Canada, half of which is used by him for his residence and half is given on
rent (converted into INR is ₹ 12,00,000 p.a.).
He purchased a flat in Delhi on 13.10.2019. He has taken a loan from
Canara Bank in India of ₹ 34,00,000 for purchase of this flat. The interest on
such loan for the F.Y. 2024-25 was ₹ 3,14,000 and principal repayment was
Hi ₹ 80,000. Mr. Raja has given this flat on monthly rent of ₹ 32,500 since April,
- 2024. The annual property tax of Delhi flat is ₹ 40,000 which is paid by
Mr. Raja, whenever he comes to India to meet his parents. Mr. Raja visited
c . 4 India for 124 days during the previous year 2024-25. Before that he visited
India in total for 366 days during the period 1.4.2020 to 31.3.2024.
He had a house in Ranchi which was sold in May 2021. In respect of this
house, he received arrears of rent of ₹ 2,96,000 in February 2025 (not taxed
earlier).
Mr. Raja has sold 10,000 listed shares @ ₹ 480 per share of A Ltd., an
Indian company, on 15.9.2024, which he acquired on 05-04-2017 @ ₹ 100
per share. STT was paid both at the time of acquisition as well as at the time
of transfer of such shares.
On 31-01-2018, the shares of A Ltd. were traded on a recognized stock
exchange as under:
Highest price - ₹ 300 per share
Average price - ₹ 290 per share
Lowest price - ₹ 280 per share
Mr. Raja wants to pay tax under default tax regime under section 115BAC.

208
 Based on the facts of the case scenario given above, choose the most
appropriate answer to the following questions:-
(i) What would be the residential status of Mr. Raja for the A.Y. 2025-26?
(a) Resident and ordinarily resident in India
(b) Resident but not ordinarily resident in India
(c) Non-resident
(d) Deemed resident
(ii) What would be amount of income taxable under the head “Income from
house property” in the hands of Mr. Raja for the A.Y. 2025-26?
(a) ₹ 2,52,200
(b) ₹ 1,38,200
(c) ₹ 9,78,200
(d) ₹ 10,92,200
(iii) What amount of capital gain would arise in the hands of Mr. Raja on
transfer of shares of A Ltd?
(a) ₹ 18,00,000
(b) ₹ 19,00,000
(c) ₹ 20,00,000
(d) ₹ 38,00,000 (3 x 2 = 6 Marks)
2. Mr. Anay (aged 52 years), is a CEO of XYZ Enterprise Limited. During the
previous year 2024-25, he earned salary of ₹ 1,65,00,000 and long-term
capital gain on sale of listed equity shares (STT paid) amounting to
Ch ₹ 1,06,500. He earned interest of ₹ 4,82,778 on saving bank account.
Further, he has provided the following other information for filing his return of

Seduction income:
He does not receive house rent allowance from his employer. Mr. Anay took
a loan from State Bank of India on 27 th October 2021 for repairing his house
(self-occupied) at Delhi and paid interest on such borrowings of ₹ 80,000
and ₹ 1,50,000 towards principal amount during the previous year 2024-25.
Mr. Anay has made the following payments towards medical insurance
premium for health policies taken for his family members:
Medical premium for his brother: ₹ 13,500 (by cheque)
Medical premium for his parents: ₹ 17,670 (by cheque)
Medical premium for self and his wife: ₹ 21,000 (by cheque).
He also incurred ₹ 6,400 towards preventive health check-up of his wife in
cash. He deposited ₹ 1,00,000 towards PPF. He also deposited ₹ 50,000
and ₹ 2,50,000 towards Tier I and Tier II NPS A/c, respectively.

209
 He has paid ₹ 5,30,000 as advance tax. His employer has deducted tax at
source of ₹ 51,89,000. He is of the opinion that the balance amount of tax, if
any, he will pay on 27 th July 2025.
Mr. Anay shift out of the default tax regime under section 115BAC.
Based on the facts of the case scenario given above, choose the most
appropriate answer to the following questions:-
(i) What would be the amount of deduction available to Mr. Anay under
Chapter VI-A for the assessment year 2025-26?
(a) ₹ 2,04,070
(b) ₹ 2,42,670
(c) ₹ 2,52,670
(d) ₹ 2,02,670
(ii) Assume that, for the purpose of answering this question alone, that
Mr. Anay pays rent of ₹ 65,000 per month for his rented house at
Mumbai to Mr. C, a resident individual. Is Mr. Anay liable to deduct
TDS on such rent? If so, what would be the rate and amount of TDS?
(a) Yes, Mr. Anay is liable to deduct TDS @ 3.75% amounting to
₹ 2,438 every month i.e., at the time of payment of such rent
(b) Yes, Mr. Anay is liable to deduct TDS @2% amounting to
₹ 15,600 in the month of March 2025
(c) Yes, Mr. Anay is liable to deduct TDS @5% amounting to
₹ 39,000 in the month of March 2025
(d) No, Mr. Anay is not liable to deduct TDS, since he is a salaried
person
(iii) What would be the amount of interest chargeable under section 234B
on account of short payment of advance tax?
(a) ₹ 1,980
(b) Nil
(c) ₹ 3,130
(d) ₹ 2,410 (3 x 2 = 6 Marks)
3. On 20.10.2024, Piya (minor child) gets a gift of ₹ 20,00,000 from her father’s
friend. On the same day, the amount is deposited as fixed deposit in Piya’s
bank account. On the said deposit, interest of ₹ 13,000 was earned during
clubbing the P.Y. 2024-25. In whose hands the income of Piya shall be taxable? Also,

showe compute the amount of income that shall be taxable if both parents pay tax
under default tax regime.
(a) Income of ₹ 20,11,500 shall be taxable in the hands of Piya’s father.
(b) Income of ₹ 20,13,000 shall be taxable in the hands of Piya’s father.
(c) Income of ₹ 20,11,500 shall be taxable in the hands of Piya’s father or
mother, whose income before this clubbing is higher.
210
 (d) Income of ₹ 20,13,000 shall be taxable in the hands of Piya’s father or
mother, whose income before this clubbing is higher. (2 Marks)
4. Rohit, a resident Indian, has incurred ₹ 15,000 for medical treatment of his
dependent brother, who is a person with severe disability and has deposited
₹ 20,000 with LIC for his maintenance. Rohit shifts out of the default tax
Deduction regime for A.Y. 2025-26. Rohit would be eligible for deduction under section
80DD of an amount equal to –
(a) ₹ 15,000
(b) ₹ 35,000
(c) ₹ 75,000
(d) ₹ 1,25,000 (1 Mark)

Division B – Descriptive Questions

Question No. 1 is compulsory.
Attempt any two questions from the remaining three questions.
1. Mr. Amit, aged 45 years, a resident Indian has provided you the following
information for the previous year ended 31.03.2025
(i) He received royalty of ₹ 2,88,000 from abroad for a book authored by
20045
18
28800 him in the nature of artistic. The rate of royalty as 18% of value of
books and expenditure made for earning this royalty was ₹ 40,000. The
Incone amount remitted to India till 30th September, 2025 is ₹* -
2,30,000. Line =
24s , wo
1 , 90a0

sa (ii)
He owns an industrial undertaking established in a SEZ and which had
commenced operation during the financial year 2021-22. Total turnover jo gas
Eof the undertaking was ₹ 200 lakhs, which includes ₹140 lakhs from
zolach export turnover which have been received in India in convertible foreign commence
exchange on or before 30.9.2025. Profit from this industry is ₹ 20 lakhs.- After
income (iii) He was holding 30% equity shares in TSP (P) Ltd., an Indian company.
Company allotted shares to shareholders on 1st October, 2020. The 334/3/20
paid up share capital of company is ₹ 20 lakh divided into 2 lakh shares
% No 10 AA
& (X30
of ₹ 10 each which were issued at a premium of ₹ 30 each. -401-
-
He sold all these shares on 30th April, 2024 for ₹ 60 per share. Equity
w shares of TSP (P) Ltd. are listed on National Stock Exchange and = Normal
so , Mr. Amit has paid STT both at the time of acquisition and transfer of
such shares. FMV on 31.1.2018 was ₹ 50 per share.
(iv) Received ₹ 30,000 as savings bank deposits. OS
(v) He occupies ground floor of his residential building and has let out first
floor for residential use at an annual rent of ₹ 2,28,000. He has paid
municipal taxes of ₹ 60,000 for the current financial year. Both floor are
of equal size.
HP 22800 -
30 , 0021980 - 5940

211
E
 (vi) He paid insurance premium of ₹ 39,000 on life insurance policy of son,
who is not dependent on him and ₹ 48,000 on life insurance policy of
his dependent father.
(vii) He paid tuition fees of ₹ 42,000 for his three children to a school. The
fees being ₹ 14,000 p.a. per child.
You are required to compute the total income and tax liability of Mr. Amit
under normal provisions for the A.Y. 2025-26. (15 Marks)
2. (a) Mrs. Riya, aged 62 years, was born and brought up in New Delhi. She
got married in Russia in 1996 and settled there since then. Since her
marriage, she visits India for 60 days each year during her summer
break. The following are the details of her income for the previous year
Residential ended 31.03.2025:
S. Particulars Amount
status
-

No. (in ₹)
1. Pension received from Russian Government 65,000
2. Long-term capital gain on sale of land at New Delhi 3,00,000
(computed)
3. Short-term capital gain on sale of shares of Indian 60,000
listed companies in respect of which STT was paid
both at the time of acquisition as well as at the
time of sale (computed)
4. Premium paid for self to Russian Life Insurance 75,000
Corporation at Russia
5. Rent received (equivalent to Annual Value) in 90,000
respect of house property in New Delhi
You are required to ascertain the residential status of Mrs. Riya and
compute her total income in India for Assessment Year 2025-26 under
default tax regime. (6 Marks)
(b) Mr. Sameer, aged 52 years, provides you the following information and
requests you to determine his advance tax liability with due dates for
the financial year 2024-25.

Advancea Estimated tax liability for the financial year 2024-25

Tax deducted at source for this year
₹ 80,000
₹ 12,000
(4 Marks)
3. (a) Mr. Piyush runs a sole proprietorship firm and owns four machines
which was put in use for business in March, 2023. The depreciation on
these machines is charged @ 15%. The written down value of these

Detail
machines as on 1 st April, 2024 was ₹ 7,70,000. Two of the old
machines were sold on 15th July, 2024 for ₹ 10,00,000. A second hand
plant was bought for ₹ 6,10,000 on 30th December, 2024.
Further, Mr. Piyush has furnished the following particulars relating to
payments made and expenditure incurred towards scientific research
for the year ended 31.3.2025:
212
 Sl. No. Particulars ₹ (in lakhs)
(i) Payment made to UV University, an 15
approved University
(ii) Payment made to Satywati College 17
Compute the following for Assessment Year 2025-26
(i) Claim of depreciation
(ii) Capital gains liable to tax
(iii) Deduction available under section 35 if he has shifted out of the
default tax regime (6 Marks)
(b) Mr. Asif bought a vacant land for ₹ 80 lakhs in March 2005.
Registration and other expenses were 10% of the cost of land. He
constructed a residential building on the said land for ₹ 100 lakhs

Capital
during the financial year 2006-07.
He entered into an agreement for sale of the above said residential
house with Mr. Hari (not a relative) in July 2024. The sale consideration
was fixed at ₹ 600 lakhs and on the date of agreement, Mr. Asif
Gains received ₹ 20 lakhs as advance in cash. The stamp duty value on that
date was ₹ 620 lakhs.
The sale deed was executed and registered on 10-2-2025 for the
agreed consideration. However, the State stamp valuation authority
had revised the values, hence, the value of property for stamp duty
purposes was ₹ 670 lakhs. Mr. Asif paid 1% as brokerage on sale
consideration received.
Subsequent to sale, Mr. Asif made investments in NHAI bond: ₹ 45
lakhs on 29-5-2025 and ₹ 15 lakhs on 12-7-2025.
Compute the Capital Gain chargeable to tax for A.Y. 2025-26.
Cost Inflation Index: F.Y. 2004-05 113
F.Y. 2006-07 122
F.Y. 2024-25 363 (4 Marks)
4. (a) Vijay Prasad, a non resident aged 50 years furnishes the following
information of the income from India for the year ended on 31-03-2025:

of Income by way of salary (computed) 2,75,000

setort Short term capital loss (1,85,000)
Business income - Retail business 1,20,000
losses Business income - whole sale business (1,00,000)

patio
Brought forward business loss (A.Y. 2022-23) (1,35,000)
Long term capital gain from sale of building
in April 2024 2,00,000
Lottery winnings (gross) 45,000

213
 Contribution to provident fund and NSC 1,50,000
Income of minor daughter Manisha from special talent 2,00,000
Compute his income tax liability assuming that he opts out of the
default tax regime under section 115BAC. (6 Marks)
(b) Mr. Kailash, a resident and ordinarily resident in India, could not file his
return of Income for the assessment year 2025-26 before due date
gliem prescribed
consultant.
under section 139(1). Advise Mr. Kailash as a tax
Return
What are the consequences for non-filing of return of Income within the
due date under section 139(1)?
OR
(b) Mr. Naksh has undertaken certain transactions during the F.Y.2024-25,
which are listed below. You are required to identify the transactions in
respect of which quoting of PAN is mandatory in the related

PAT documents–
S. Transaction
No.
1. Payment of life insurance premium of ₹ 40,000 in the
F.Y.2024-25 by account payee cheque to LIC for insuring life
of self and spouse
2. Payment of ₹ 1,10,000 to RBI for acquiring its bonds
3. Applied for issue of credit card to SBI
4. Payment of ₹ 1,00,000 by account payee cheque to travel
agent for travel to Singapore for 3 days to visit
(4 Marks)

214
 MODEL TEST PAPER 6
INTERMEDIATE COURSE: GROUP-I
PAPER – 3: TAXATION
Time Allowed – 3 Hours Maximum Marks – 100
SECTION – A: INCOME TAX LAW (50 MARKS)
Working Notes should form part of the answer. Wherever necessary, suitable
assumptions may be made by the candidates and disclosed by way of a note.
However, in answers to Questions in Division A, working notes are not
required.
The relevant assessment year is A.Y.2025-26.
Division A – Multiple Choice Questions
Write the most appropriate answer to each of the following multiple choice
questions by choosing one of the four options given. All questions are
compulsory.
1. Mr. Ashish born on 1.4.1964 furnished his return of income for Assessment
Year 2025-26 on 10.07.2025. He has paid tax under default tax regime. He
had shown the following income in his original return of income -

Total
- Salary of ₹ 10.50 lakhs from PQR (P) Ltd (Computed)
- Interest from savings bank account of ₹ 15,700

Income - Interest from fixed deposits with SBI of ₹ 50,000.

During the P.Y. 2024-25, he paid interest on loan of ₹ 2,50,000 for purchase
of self-occupied property. He contributed ₹ 1,50,000 towards the PPF. He
mix paid health insurance premium of ₹ 40,000 by account payee cheque for self
and wife. He paid ₹ 2,200 in cash for his health check-up and ₹ 4,000 by
austic cheque for preventive health check-up of his parents. He also paid medical
insurance premium of ₹ 29,000 during the year to insure the health of his
mother, aged 80 years. He further incurred medical expenditure of ₹ 18,000
on his father, aged 81 years, who is staying with him. His father is not
covered under any mediclaim policy.
He met one of his friends, CA. Ashwin on 01.02.2026. While discussing with
his friend, his friend told him that the default tax regime under section
115BAC is not beneficial to him. He advised him to revise his return of
income and shift out of the default tax regime. However, Mr. Ashish’s son,
who is employed in the accounts department of TQM (P) Ltd., is of the view
that once tax is paid under section 115BAC in original return, it cannot be
changed in revised return.
Based on the facts of the case scenario given above, choose the most
appropriate answer to the following questions:-
(i) What is the total deduction under Chapter VI-A allowable to Mr. Ashish
if he shifts out of the default tax regime under section 115BAC?
(a) ₹ 2,34,800
(b) ₹ 2,35,000
215
 (c) ₹ 2,92,000
(d) ₹ 2,92,200
(ii) What is total income of Mr. Ashish under normal provisions of the Act
for A.Y. 2025-26?
(a) ₹ 5,73,700
(b) ₹ 6,23,700
(c) ₹ 6,48,700
(d) ₹ 6,30,700
(iii) Can Mr. Ashish file his revise return of income for A.Y. 2025-26 and
declare income under the regular provisions of the Act?
(a) Yes, Mr. Ashish can revise his return of income and declare
income under the regular provisions of the Act
(b) No, though he can file a revised return of income, option to shift
out from section 115BAC once not opted in original return of
income cannot be opted in revised return of income if he is filing
revised return after due date.
(c) No, Mr. Ashish cannot revise his return of income for
A.Y. 2025-26
(d) No, he cannot do so since he is a salaried employee. He would
have made a declaration to pay tax under section 115BAC to his
employer, which cannot be changed subsequently at the time of
fling of return of income (3 x 2 = 6 Marks)
2. Mr. Rajiv, an Indian resident, purchased a residential house property at
Gwalior on 28.05.1999 for ₹ 28.5 lakhs. The fair market value and the stamp
duty value of such house property as on 1.4.2001 was ₹ 33.5 lakhs and

Capital ₹ 32.4 lakhs, respectively. On 25.03.2014, Mr. Rajiv entered into an

agreement with Mr. Virat for sale of such property for ₹ 74 lakhs and
received an amount of ₹ 3.9 lakhs as advance. However, as Mr. Virat did not
Gains pay the balance amount, Mr. Rajiv forfeited the advance.
On 15.04.2024, Mr. Rajiv sold the house property to Mr. Suraj for ₹ 2.10
crores, when the stamp duty value of the property was ₹ 2.33 crores.
Cost inflation index –
P.Y. 2024-25: 363; P.Y. 2013-14: 220; P.Y. 2001-02: 100
Based on the facts of the case scenario given above, choose the most
appropriate answer to the following questions:-
(i) What shall be the indexed cost of acquisition of residential house
property at Gwalior for computation of capital gains in the hands of Mr.
Rajiv?
(a) ₹ 1,17,61,200
(b) ₹ 1,03,45,500
(c) ₹ 1,07,44,800
216
 (d) ₹ 1,05,27,200
(ii) The amount of capital gains for A.Y. 2025-26 in the hands of Mr. Rajiv
for sale of residential house property at Gwalior is -
(a) ₹ 1,13,38,800
(b ₹ 1,15,38,800
(c) ₹ 1,29,54,500
(d) ₹ 1,25,55,200
(iii) The amount required to be deducted as TDS by Mr. Suraj under
section 194-IA, is -
(a) ₹ 2,33,000
(b) Nil
(c) ₹ 2,10,000
(d) ₹ 23,000 (3 x 2 = 6 Marks)
3. Mr. Sushil is a person of Indian origin, residing in Canada. During
P.Y. 2024-25, he visited India on several occasions and his period of stay, in

Residential
total, amounted to 129 days during P.Y. 2024-25 and his period of stay in
India during P.Y. 2023-24, P.Y. 2022-23, P.Y.2021-22, P.Y. 2020-21 was
135 days, 115 days, 95 days and 125 days, respectively. He earned the
statis following incomes during the P.Y. 2024-25:
Source of Income Amount (₹)
Income received or deemed to be received in India 2,50,000
Income accruing or arising or which is deemed to accrue or 3,75,000
arise in India
Income accruing or arising and received outside India from 5,50,000
business controlled from India
Income accruing or arising and received outside India from 6,50,000
business controlled outside India
What is the residential status of Mr. Sushil for A.Y. 2025-26 and his income
liable to tax in India during A.Y. 2025-26?
(a) Non-Resident; ₹ 6,25,000 is liable to tax in India
(b) Resident and ordinary resident; ₹ 18,25,000 is liable to tax in India
(c) Resident but not ordinarily resident; ₹ 11,75,000 is liable to tax in India
(d) Non-Resident; ₹ 11,75,000 is liable to tax in India (2 Marks)
4. Mr. Arora made the following cash withdrawals during the P.Y.2024-25 -
Date Amount From
1.6.2024 ₹ 70 lakhs Canara Bank
-DS
1.8.2024 ₹ 50 lakhs Canara Bank
1.10.2024 ₹ 60 lakhs Repco Bank (Co-operative Bank)

217
 1.11.2024 ₹ 10 lakhs SBI
1.12.2024 ₹ 10 lakhs Repco Bank (Co-operative Bank)
20.1.2025 ₹ 20 lakhs Repco Bank (Co-operative Bank)
1.2.2025 ₹ 15 lakhs Repco Bank (Co-operative Bank)
10.2.2025 ₹ 75 lakhs SBI
1.3.2025 ₹ 15 lakhs SBI
Which of the above banks are required to deduct tax at source on cash
withdrawals made by Mr. Arora in the P.Y.2024-25 if he regularly files his
return of income?
(a) Canara Bank
(b) SBI & Repco
(c) Repco & Canara Bank
(d) Repco (1 Mark)
Division B – Descriptive Questions
Question No. 1 is compulsory
Attempt any two questions from the remaining three questions
1. Mr. Ashok, aged 61 years, a resident individual, engaged in a wholesale
business of stationary products provides you the following information for the

Total year ended 31.3.2025. He is also a partner in UVW & Co., a partnership
firm.

income Sl.
No.
Particulars ₹ ₹

Er (i) Interest on capital received from UVW & Co., at 1,40,000

Mix 14% [in accordance with the partnership deed]
(ii) Share of profit from the firm 44,000
(iii) Salary as working partner (fully allowed in the 1,00,000
hands of the firm)
(iv) Interest from bank on fixed deposit (Net of 49,500
TDS)
(v) Interest on saving bank account 13,300
(vi) Income-tax refund received relating to 34,500
assessment year 2024-25 including interest of
₹ 1,400
(vii) Net profit from wholesale business 6,60,000
Amounts debited include the following:
-
- Depreciation as per books 34,000 #
- Motor car expenses 40,000 * 20 %+ Saut
- Municipal taxes for the shop 7,000 -

3500 +
-

218
 (For two half years; payment for one half year
made on 12.7.2024 and for the other on
31.12.2025)
- Salary to manager by way of a single cash 22,000 #
payment
(viii) The WDV of the assets (as on 1.4.2024) used
in above wholesale business is as under:
- Computers 2,40,000
- Computer printer 1,50,000
340 %
(ix) Motor car acquired on 31.12.2024 (20% used 6,80,000 ↓ 15 %
for personal use)
(x) He owned a house property in Mumbai which 1,35,000
was sold in January, 2021. He received arrears
of rent in respect of the said property in
October, 2024.
(x) LIP paid for independent son 60,000 80C
(xi) PPF of his wife 70,000 80C
(xii) Health insurance premium paid by way of A/c 35,000 fD- 2517
payee cheque for self
(xiii) Contribution toward Prime Minister National 50,000 lay
Relief Fund
fost

You are required to compute the total income and tax liability of Mr. Ashok
for the A.Y. 2025-26 assuming he opts out from the provisions of section
115BAC. (15 Marks)
2. (a) Mr. Sudesh (aged 58 years), a citizen of India, serving in the Ministry of
Finance in India, was transferred to Indian Embassy in UK on 15 th

Ristate
March 2024. His income during the financial year 2024-25 is given
hereunder:
Particulars ₹
Rent from a house situated at UK, received in UK. 5,25,000
Thereafter, remitted to Indian bank account.
Salary from Government of India 9,25,000
Foreign Allowances from Government of India 8,00,000
Mr. Sudesh did not come to India during the financial year 2024-25.
Compute his total income for the Assessment year 2025-26. (3 Marks)
(b) Mr. Sumit has submitted his income-tax return containing certain
losses/deductions in respect of the P.Y. 2024-25 on 22.10.2025. The
due date for filing the return for Mr. Sumit was 31st July, 2025 under
Rol section 139(1). You are required to examine with reference to the
relevant provisions of Income-tax Act, 1961 whether the following
losses/deductions can be carried forward/claimed in subsequent years
by Mr. Sumit if he pays tax under default tax provisions of the Act.
219
 (i) Loss from the business carried on by him as a proprietor:
₹ 10,80,000 (computed)
(ii) Unabsorbed Depreciation: ₹ 2,00,000 (computed)
(iii) Loss from let out house property: ₹ 2,50,000 (computed)
(3 Marks)
(c) Briefly discuss the provisions of tax deducted at source under the
Income-tax Act, 1961 in respect of the following payments:
(i) Mr. Shamsher (a resident individual aged 65 years) has
TPS maintained two fixed deposits in two different branches of HFC
Bank of India (working on core banking solution). During the year
2024-25, the bank paid ₹ 32,000 and ₹ 17,000 as interest on
these fixed deposits.
(ii) Mr. Chetan, a pensioner, pays ₹ 55,00,000 in November 2024 to
Mr. Gopi, for contract payment for reconstruction of his residential
house. (4 Marks)
3. (a) Mr. Yogesh constructed a house in P.Y. 2017-18 with 3 independent
units. During the P.Y. 2024-25, Unit - 1 (50% of floor area) is let out for
residential purpose at monthly rent of ₹ 20,000. Rent of January, 2025
P could not be collected from the tenant and a notice to vacate the unit
H
.

was given to the tenant. No other property of Mr. Yogesh is occupied

by the tenant. Unit - 1 remains vacant for February and March 2025
when it is not put to any use. Unit - 2 (25% of the floor area) is used by
Mr. Yogesh for the purpose of his business, while Unit - 3 (the
remaining 25%) is utilized for the purpose of his residence. Other
particulars of the house are as follows:
Municipal valuation - ₹ 2,88,000
Fair rent - ₹ 2,98,000
Standard rent under the Rent Control Act - ₹ 2,78,000
Municipal taxes - ₹ 30,000 paid by Mr. Yogesh
Repairs - ₹ 7,000
Interest on capital borrowed for the construction of the property -
₹ 90,000,
Ground rent - ₹ 6,000 and
Fire insurance premium paid - ₹ 60,000.
Income of Yogesh from the business is ₹ 2,40,000 (without debiting
house rent and other incidental expenditure).
Determine the taxable income of Mr. Yogesh for the assessment year
2025-26 if he pays tax under section 115BAC. (5 Marks)
(b) Mr. Soham, a builder, entered into an agreement on 1.4.2024 with
Mr. Aman to transfer 4 th Floor in Tower A of a new project for
₹ 1,50,00,000. He received ₹ 25 lakhs as advance in cash on 1.4.2024.

ch+ o The stamp duty value of such floor on that date was ₹ 1,70,00,000. The
220
 sale deed was executed and registered on 15.6.2024 for the agreed
consideration. However, the stamp duty value on that date was
₹ 1,75,00,000.
Discuss the tax consequences of above, in the hands of Mr. Soham
and Mr. Aman. (5 Marks)
4. (a) Mr. Mohan, aged 30 years, submits the information of following
transaction/income during the P.Y. 2024-25

Tor (i) Mr. Mohan had a house in Delhi. During financial year 2020-21,
he had transferred the said house to Ms. Veena, daughter of his
Income brother without any consideration. House would go back to
Mr. Mohan after the life time of Ms. Veena. The transfer was
made with a condition that 15% of rental income from such house
shall be paid to Mrs. Mohan. Rent received by Ms. Veena during
the previous year 2024-25 from such house property is
₹ 6,50,000.
(iii) Mr. and Mrs. Mohan forms a partnership firm with equal share in
profits. Mr. Mohan transferred a fixed deposit of ₹ 50 lakhs to
such firm. Firm had no income or expense other than the interest
of ₹ 6,00,000 received from such fixed deposit. Firm distributed
the entire surplus to Mr. and Mrs. Mohan at the end of the year.
(iv) Mr. Mohan holds preference shares in M/s X Pvt. Ltd. He
instructed the company to pay dividends to Ms. Roshni, daughter
of his servant. The transfer is irrevocable for the life time of
Roshni. Dividend received by Ms. Roshni during the previous year
2024-25 is ₹ 10,00,000.
(v) Mr. Mohan has a short term capital loss of ₹ 16,000 from sale of
property and long term capital gain of ₹ 15,000 from sale of
property.
(vi) Other income of Mr. Mohan includes
- Interest from saving bank account of ₹ 2,00,000
- Cash gift of ₹ 75,000 received from daughter of his sister on
his birthday.
- Income from betting of ₹ 34,000
- Income from card games of ₹ 46,000
- Loss on maintenance of race horses of ₹ 14,600
Compute the total income of Mr. Mohan for the Assessment Year
2025-26 and the losses to be carried forward if he pays tax under
default tax regime. (7 Marks)
(b) Mr. Prince, a senior citizen, has reported a Total Income ₹ 1,90,000.
He has claimed exemption of ₹ 50,000 under section 54EC in respect

Rol
of long term capital gain on sale of house property and deductions
under Chapter VI-A amounting to ₹ 1,50,000 for the previous year

221
 2024-25. Is he liable to file his return of income under section 139(1)
for the Assessment year 2025-26? If so why? (3 Marks)
OR
(b) Examine with reasons, whether the following statements are true or
false, with regard to the provisions of the Income-tax Act, 1961:

Rol (i) The Assessing Officer has the power, inter alia, to allot PAN to
any person by whom no tax is payable.
(ii) Where the Karta of a HUF is absent from India, the return of
income can be verified by any male member of the family.
(3 Marks)

222
 MODEL TEST PAPER 7
INTERMEDIATE COURSE: GROUP-I
PAPER – 3: TAXATION
Time Allowed – 3 Hours Maximum Marks – 100

SECTION – A: INCOME TAX LAW (50 MARKS)

Working Notes should form part of the answer. Wherever necessary, suitable
assumptions may be made by the candidates and disclosed by way of a note.
However, in answers to Questions in Division A, working notes are not
required.

The relevant assessment year is A.Y.2025-26.

Division A – Multiple Choice Questions

Write the most appropriate answer to each of the following multiple choice
questions by choosing one of the four options given. All questions are
compulsory.
1. Mr. Amit, an Indian citizen, aged 61 years, has set-up his business in France
and is residing in France since 2010. He owns a house property in France,
Total half of which is used by him for his residence and half is given on rent
(converted into INR is ` 12,00,000 p.a.).
Income Mr. Amit visited India for 65 days during the previous year 2024-25. Before
that he visited India in total for 366 days during the period 1.4.2020 to
31.3.2024.
He derived some other incomes during the F.Y. 2024-25 which are as follows:
(i) Profit from business in France ` 2,75,000
(ii) Interest on bonds of a Co. in France ` 6,20,000 out of which 50% was
received in India.
(iii) Income from Apple Orchid in Nepal given on contract and the yearly
contract fee of ` 5,00,000 for F.Y. 2024-25, was received by Amit in
Nepal.
Mr. Amit has sold 10,000 listed shares @ ` 480 per share of ABC Ltd., an
Indian company, on 15.9.2024, which he acquired on 05-04-2021 @ ` 100 per
share. STT was paid both at the time of acquisition as well as at the time of
transfer of such shares.
On 31-01-2018, the shares of ABC Ltd. were traded on a recognized stock
exchange as under:
Highest price - ` 300 per share
Average price - ` 290 per share
Lowest price - ` 280 per share

223
 Based on the facts of the case scenario given above, choose the most
appropriate answer to the following questions:-
(i) What would be the residential status of Mr. Amit for the A.Y. 2025-26?
(a) Resident and ordinarily resident in India
(b) Resident but not ordinarily resident in India
(c) Non-resident
(d) Deemed resident
(ii) What amount of capital gain would arise in the hands of
Mr. Amit on transfer of shares of ABC Ltd?
(a) ` 18,00,000
(b) ` 19,00,000
(c) ` 20,00,000
(d) ` 38,00,000
(iii) What would be the total income of Mr. Amit for the A.Y. 2025-26?
(a) ` 41,10,000
(b) ` 38,00,000
(c) ` 21,10,000
(d) ` 49,50,000 (3 x 2 = 6 Marks)
2. Miss Himani transferred to his husband, Mr. Hemant, a residential property
worth ` 45 lakhs located in Nagpur without any consideration. The expected

HP
rent of such property is ` 5 lakhs. Municipal tax of ` 5,000 paid by Miss Himani
for this property during the previous year 2024-25. Miss Himani has three
residential properties in Mumbai. The expected rent from the 3 properties
situated in Mumbai is ` 10 lakhs, ` 11 lakhs and ` 12 lakhs respectively. She
X purchased the properties out of her own funds. Municipal taxes due are
` 15,000, ` 20,000 and ` 25,000. The same have, however, not been paid this
Rol year in respect of the three properties. The expected rent is lesser than the
standard rent in case of all the aforementioned properties. Miss Himani does
not have any income from any other source.
Miss Himani’s father, aged 58 years had capital gains of ` 5 crores from sale
of house property. He reinvested the proceeds from sale in another residential
house of ` 4.98 crores and the remaining sale proceeds were deposited in his
savings bank account. He has paid ` 1,50,000 towards LIC premium. He has
no other source of income.
Based on the facts of the case scenario given above, choose the most
appropriate answer to the following questions:
(i) What is the amount of income liable to be taxed in the hands of Miss
Himani under the head “Income from House Property” for A.Y.2025-26?
(a) ` 7,00,000
(b) ` 10,46,500
224
 (c) ` 10,50,000
(d) ` 13,76,500
(ii) What would be tax liability of Miss Himanil for the A.Y. 2025-26?
Compute in a manner so that her tax liability is minimum.
(a) ` 66,300
(b) ` 59,250
(c) ` 69,650
(d) ` 1,31,510
(iii) Is Himani’s father required to furnish his return of income in India for the
A.Y.2025-26?
(a) No, he is not required, since his income does not exceed basic
exemption limit
(b) Yes, he is required to furnish return of income on or before 31 st
July, 2025
(c) Yes, he is required to furnish return of income on or before 30 th
September, 2025
(d) Yes, he is required to furnish return of income on or before 31 st
October, 2025
(3 x 2 = 6 Marks)
3. During the P.Y.2024-25, Mr. Ranjit has short-term capital gains of ` 95 lakhs
taxable under section 111A, long-term capital gains of ` 110 lakhs taxable

Basi
under section 112A and business income of ` 90 lakhs. Which of the following
statements is correct if Mr. Ranjit is paying tax under default tax regime?
(a) Surcharge @15% is leviable on income-tax computed on total income of
` 2.95 crore.
(b) Surcharge @25% is leviable on income-tax computed on total income of
` 2.95 crore, since total income exceeds ` 2 crore.
(c) Surcharge @15% is leviable in respect of income-tax computed on
capital gains of ` 2.05 crore; in respect of business income, surcharge
is leviable @25% on income-tax, since total income exceeds ` 2 crore.
(d) Surcharge @15% is leviable in respect of income-tax computed on
capital gains of ` 2.05 crore; surcharge @10% is leviable on income-tax
computed on business income, since the same exceeds ` 50 lakhs but
is less than ` 1 crore. (2 Marks)
4. Mr. Raj incurred short-term capital loss of ` 10,000 on sale of shares through
the National Stock Exchange. Such loss -

sofopt (a)
(b)
can be set-off only against short-term capital gains
can be set-off against both short-term capital gains and long-term capital
gains.

225
 (c) can be set-off against any head of income.
(d) not allowed to be set-off.
(1 Mark)
Division B – Descriptive Questions
Question No. 1 is compulsory
Attempt any two questions from the remaining three questions
1. (a) Mr. Sahil, resident Indian aged 40 years, a Manufacturer at Chennai,
gives the following Manufacturing, Trading and Profit & Loss Account for
the year ended 31.03.2025.

Totaleme
Manufacturing, Trading and Profit & Loss Account
for the year ended 31.03.2025
Particulars ` Particulars `
To Opening Stock 4,97,000 By Sales 3,04,50,000
To Purchase of Raw By Closing Stock 14,00,000
Materials 1,20,43,500
To Manufacturing
Wages & Expenses 40,63,500
To Gross Profit 1,52,46,000
Total 3,18,50,000 Total 3,18,50,000
To Administrative By Gross Profit 1,52,46,000
Charges 20,30,000 By Dividend From
To SGST Penalty Domestic 1,05,000
Paid Companies
(It is not 49,000 By Winning from
compensatory nature)
To GST Paid 7,70,000 Lotteries (Net of 73,500
TDS) (TDS 31,500)
To General Expenses 3,85,000 By Profit on Sale of
To Miscellaneous Shares 3,15,000
Expenses 10,53,500
To Loss on Sale of 1,40,000
Shares
To Interest to Bank for 4,20,000 >
na02280m +
-

term loan
To Depreciation 14,00,000
To Net Profit 94,92,000
Total 1,57,39,500 Total 1,57,39,500

226
 Following are the further information relating to Financial Year 2024-
2025:
(i) Administrative Charges include ` 46,000 paid as commission to
000
A brother of the assessee. The Commission amount at the market
10 ,
rate in ` 36,000.
(ii) The assessee paid ` 33,000 in cash to a Transport Carrier on
26.12.2024. This amount is included in Manufacturing Expenses.
(Assume that the provisions relating to TDS are not applicable on
X
this payment.)
(iii) Bank Term Loan Interest actually paid upto 31.03.2025 was
` 1,40,000 and the balance was paid in October 2025.
(iv) Miscellaneous Expenses include ` 10,000 contributed to Prime
Minister's Relief Fund by account payee cheque. +
809
(v) Loss on Sale of Shares represents shares sold within a period of 6
months from the date of purchase.
(vi) Profit on Sale of Shares represents shares sold in December 2024
and held for 2 years & Securities Transaction Tax was paid on it.
(vii) Housing Loan Principal repaid during the year was ` 50,000 and it
relates to residential property occupied by him. Interest on Housing
Loan was ` 2,60,000. Housing Loan was taken from Canara Bank.
(Value of house property is ` 45 lakhs, loan value ` 25 lakhs and
sanction date 31.03.2020). These amounts were not dealt with in
the Profit and Loss Account given above.
(ix) Deprecation allowable under the Act to be computed on the basis
of following information:
Plant & Machinery (Depreciation Rate @15%) `
Opening WDV (as on 01.04.2024) 84,00,000
Additions During the year (Used for more than 180 14,00,000
Days)
Total Additions during the year 28,00,000
Note: Ignore Additional Depreciation u/s 32(1)(iia)
Compute the total income and tax liability of Mr. Sahil for the
A.Y. 2025-26 if he has exercised the option of shifting out of the default
tax regime provided under section 115BAC(1A). (15 Marks)
2. (a) Mr. Tilak aged 35 years, furnishes the following information regarding
his income for the assessment year 2025-26. Compute the total income

Residential
if he is:

I
(1) Resident and Ordinarily Resident.

starte
(2) Resident but Not Ordinarily Resident
(Ignore the provisions of Section 115BAC).

227
 (i) FTS of ` 50,000 for service rendered in Malaysia to a non-resident
for business in Malaysia, credited to his bank account in Malaysia
and immediately remitted to his bank account in India.
(ii) Profits from a business in England controlled from Bombay
` 3,00,000 (out of which ` 25,000 is received in India).
(iii) Amount brought to India out of past untaxed profits earned in
Singapore ` 1,00,000.
(iv) Capital gain on sale of land in India but received in Malaysia
` 2,00,000.
(v) Income from agriculture land at Nepal of ` 18,000, received there
and then brought to India.
(vi) He paid ` 50,000 towards principal payment of loan taken for
construction of his self-occupied house in India.
(vii) Interest on saving bank deposit in State Bank of India of
` 12,000. (6 Marks)
(b) Examine the applicability of Tax Deduction at Sources (TDS) or Tax
Collection at Source (TCS) as per the Income Act, 1961 for the
assessment year 2025-26 in the following independent situations.
posies (i) ABC Limited paid rent of ` 75,000+18% GST per month to Mr. Ram
for the office premises from 01.04.2024 to 31.03.2025. Mr. Ram
has furnished his PAN and also filed his return of income before
due date regularly.
(ii) XYZ Pvt. Ltd sells two cars to Mrs. Anju costing ` 4,00,000 and
` 12,00,000 respectively on 01.05.2024 and 25.12 2024. Mrs. Anju
has furnished her PAN and filed her return of income regularly
before the due date. (4 Marks)
3. (a) (i) Mr. Ravi received an advance of ` 2,00,000 on 10.5.2024 from a
closely held manufacturing company (private company in which the
Div public are not substantially interested) in which he holds 22%
Deemed shareholding. The company had an accumulated profit of
` 1,00,000 at the time of giving the advance. Compute the amount
of income to be included in the hands of Mr. Ravi for the
assessment year 2024-25 and also state the head under which it is
to be included. (2 Marks)
(ii) Mr. Rajo has commenced business on 1.4.2024. He finished the
following information regarding the payments made towards
Scientific Research during the financial year 2024-25:

Puri (i) Revenue expenditure on Scientific Research incurred during

the year ` 1,00,000.
(ii) Capital Expenditure for Scientific Research ` 3,00,000.
(iii) Contribution to Notified approved research association
` 1,50,000.

228
 (iv) Amount paid to H Limited an Indian company which has as its
main object scientific research and approved by the
prescribed authority ` 2,50,000.
(v) Expenditure of ` 2,50,000 towards purchase of Land for
scientific research.
(vi) He also incurred revenue expenditure of ` 2,00,000 towards
salary of research staff in the F.Y.2023-24 and certified by the
prescribed authority.
Compute the deduction allowable u/s 35 for the assessment year
2025-26 assuming that he has opted out of default tax regime u/s
115BAC. (4 Marks)
(b) Mr. Surinder furnishes the following particulars for the previous year
ending 31.03.2025. He had a Residential House, inherited from his father
in December 2009, the Fair Market Value of which on 01.04.2001 is ` 13
hars
Cal lakhs. In the year 2013-2014, further construction and improvements
costing of ` 10 lakhs. The House was originally purchased by his father
on 01.03.2000 for ` 10 Lakhs. On 10.05.2024, the House was sold for
` 85 Lakhs. Expenditure in connection with transfer is ` 50,000. On
20.12.2024, he purchased a Residential House for ` 12 lakhs and he
does not own any other house.
Compute the taxable Capital Gain for the assessment year 2025-26.
(Cost Inflation Index: F.Y. 2013-14:220, F.Y.2024-25:363, F.Y. 2009-
10:148 and F.Y. 2001-02:100) (4 Marks)
4. (a) Mr. Joshi, resident Indian, aged about 58 years, furnished the following
details of his income for the previous year 2024-25:

suchis
(i) Income from House property (computed) ` 2,00,000.
(ii) Income from Proprietary Business ` 3,00,000.
(iii) Short Term Capital Gain on sale of Land ` 2,00,000.
(iv) Short Term Capital loss on sale of equity shares listed in
recognized stock exchange (STT paid) ` 75,000.
(v) Interest on Bank fixed deposit ` 50,000 received by his son, aged
21 years, out of money gifted by Mr. Joshi in 2023.
(vi) Loss from Speculation Business ` 40,000.
(vii) Loss from Owning and Maintenance of Race Horses ` 50,000.
Following are the losses:
(a) Brought forward House property loss of assessment year 2022-23
` 2,50,000.
(b) Business loss of Proprietary business from assessment year 2014-
15 ` 50,000.
(c) Unabsorbed Depreciation relating to assessment year 2015-16
` 1,00,000.
229
 (d) Brought forward Long Term Capital Loss from assessment year
2019-20 ` 90,000.
Return of income for all the years were filed before the due date except
for A.Y. 2019-20.
Compute the total income of Mr. Joshi for the assessment year 2025-26
and show the items eligible for carry forward, assuming that he exercises
the option of shifting out of the default tax regime provided under Section
115BAC(1A). (6 Marks)
(b) State with reason whether the following persons are required to file their
return of income as per the provisions of the Income Tax Act, 1961 for
the assessment year 2025-26:

Rol (i) Mr. Aneesh aged 31 years, who pays tax under default tax regime
u/s 115BAC(1A) had a total income of ` 2,90,000 for the previous
year 2024-25.
(ii) Smt. Patel, aged 65 years, has a TDS credit of ` 55,000 during the
previous year 2024-25.
(iii) The gross receipts of Mr. Ajit, aged 45 years, an architect for the
previous year 2024-25 was ` 12,00,000, but his profit from
profession was only ` 2,25,000 and he has no other income.
(4 Marks)
OR
(b) State the persons who are required to file their return of income in

Rol pursuance of the notification issued by the CBDT has vide Notification
No. 37/2022 dated 21.04.2022. (4 Marks)

230
 MODEL TEST PAPER 8
INTERMEDIATE COURSE: GROUP-I
PAPER – 3: TAXATION
Time Allowed – 3 Hours Maximum Marks – 100

SECTION – A: INCOME TAX LAW (50 MARKS)

Working Notes should form part of the answer. Wherever necessary, suitable
assumptions may be made by the candidates and disclosed by way of a note.
However, in answers to Questions in Division A, working notes are not
required.

The relevant assessment year is A.Y.2025-26.

Division A – Multiple Choice Questions

Write the most appropriate answer to each of the following multiple choice
questions by choosing one of the four options given. All questions are
compulsory.
1. Ms. Prerna is having a residential house property in Nagpur, of which 1/3 rd is
self- occupied and 2/3d is let out for commercial purposes at a monthly rent

H8 of ` 12,000. Fair rent (for let out portion only) was ` 30,000 p.m., Municipal
value for the property was ` 2,40,000 and standard rent under the Rent
Control Act was ` 3,00,000 for the entire property. Municipal taxes are 10%
of municipal valuation and are paid by her on 30 th July, 2024. She took a loan
of ` 45,00,000 for the construction of this house from a scheduled bank on
1.4.2022. She repaid the entire loan along with interest on 30.6.2024. The
interest rate for this loan was 10% p.a. The construction was completed on
30th June, 2023. She earns other income of ` 2,00,000 during the previous
year 2024-25. She wishes to pay tax under default tax regime.
Based on the facts of the case scenario given above, choose the most
appropriate answer to the following questions:-
(i) The Net Annual Value (NAV) of the house property for the A.Y. 2025-26
is:
(a) ` 1,28,000
(b) ` 1,44,000
(c) ` 1,84,000
(d) ` 2,00,000
(ii) Deduction in respect of interest on loan for the P.Y. 2024-25 shall be:
(a) ` 2,02,500
(b) ` 1,35,000
(c) ` 5,62,500
(d) ` 1,12,500

231
 (iii) Compute her total income for the assessment year 2025-26
(a) ` 1,93,800
(b) ` 2,00,000
(c) Nil
(d) ` 2,05,000 (3 x 2 = 6 Marks)
2. Mr. Desai (aged 52 years) is an Indian resident. He gives the following
information to you relating to the P.Y. 2024-25:

Tothore
(i) Profit from the business carried out in Dubai controlled from Dubai
` 13,10,000 (received in a bank account in Dubai).
(ii) Loss from a business in Delhi - ` 4,50,000
(iii) During the F.Y. 2024-25, he also played some online games on a
particular Indian website Game.com. Game.com is a manufacturer of
men's shirts. During the year, Mr. Desai won 6 such shirts. The cost to
manufacture such shirts by Game.com is ` 3,000 per piece and it sells
these shirts at ` 10,000 per piece (excluding GST @18%). However, to
play such games, Mr. Desai had to deposit a sum of ` 50,000 with the
website as a refundable deposit.
(iv) On 23rd May 2024, he gifted listed equity shares in an Indian company
to his son's daughter, Ms. Shanaya. These shares were purchased by
him on 1.4.2020 for ` 65,000. The market value as on the date of transfer
was ` 1,00,000. Shanaya sold these shares for a consideration of
` 50,000 on 31.3.2025.
(v) He had taken a loan of ` 25,00,000 for the purchase of an electric vehicle
(for his personal purposes) on 1.4.2022 from a scheduled bank. He paid
` 5,00,000 as interest on such loan during the P.Y. 2024-25.
(vi) He wants to pay tax under default tax regime.
Based on the facts of the case scenario given above, choose the most
appropriate answer to the following questions:-
(i) What shall be the total income of Mr. Desai for the A.Y. 2025-26?
(a) ` 8,78,000
(b) ` 8,63,000
(c) ` 9,20,000
(d) ` 7,70,000
(ii) Which of the following statement is correct in respect of deductions
available to him under Chapter VI-A?
(a) He shall be eligible for a deduction of ` 1,50,000 in respect of
interest on loan irrespective of the tax regime opted by him.
(b) He shall not be eligible for any deduction under Chapter VI-A
irrespective of the tax regime opted by him.

232
 (c) He shall be eligible for a deduction of ` 1,50,000 in respect of
interest on loan only if he opts out of the default tax regime.
(d) He shall be eligible for a deduction of ` 50,000 in respect of interest
on loan only if he opts out of the default tax regime.
(iii) What is the requirement of deduction of tax at source by Game.com in
respect of such winning by Mr. Desai?
(a) Game.com has to ensure, before releasing the winnings, that the
tax amounting to ` 18,000 has been paid.
(b) Game.com has to ensure, before releasing the winnings, that the
tax amounting to ` 5,400 has been paid.
(c) There is no requirement for deduction of tax at source. However,
Mr. Desai need to collect tax at source from the security deposit.
(d) Game.com needs to deduct tax at source amounting to ` 18,000.
(3 x 2 = 6 Marks)
3. Mr. Sundaram owns two residential house properties in Chennai, one of which
is used by him and his family for their residential purposes. Both the houses
are exactly identical and their expected rent/municipal value etc. are also the
same. He let out the other house for a rent of ` 1,15,000 p.m. He took two
similar loans for the purchase of these two houses on 1.4.2023. The stamp
duty value of these houses is ` 30 lakhs each. During the F.Y. 2024-25, he
paid ` 4,00,000 as interest for each of the houses. He does not have any other
income or investments during the year. He did not file his return of income
within the due date under section 139(1). What shall be his total income
chargeable to tax?
(a) ` 2,16,000
(b) ` 3,66,000
(c) ` 5,66,000
(d) ` 1,66,000 (2 Marks)
4. During the year 2024-25, Mrs. Kalis (aged 65 years), received ` 10,50,000 a
family pension. She had to spend ` 26,000 to get such income towards
documentation and processing charges. She does not have any other income.
Assuming she pays tax under default tax regime, what shall be her total
income chargeable to tax?
(a) ` 10,35,000
(b) ` 10,24,000
(c) ` 10,50,000
(d) ` 10,25,000 (1 Mark)

233
 Division B – Descriptive Questions
Question No. 1 is compulsory
Attempt any two questions from the remaining three questions
1. Mr. Raman, a resident individual aged 62 years, is engaged in the business
of manufacturing and sales of spare parts for motor bikes, as a proprietor. He

Tate
prepares his accounts on mercantile basis. This business is carried out on the
ground floor of a two storied commercial building owned by him, the written
down value of which is ` 8 lakhs as on April 1, 2024. The Statement of Profit

M
and Loss for the previous year ended on March 31, 2025 shows a net profit of
` 9.25 lakhs (before taxation and depreciation) after debiting/crediting the
following items:
(i) Administrative expenses include ` 9,525 paid towards interest on delay
in deposit of GST.
(ii) General expenses include a sum of ` 3,88,000 paid to a non-resident as
fee for technical services without deduction of tax at source.
(iii) Fire insurance premium of ` 66,000 for the entire building remained
unpaid till 31st March, 2025.
(iv) Expenditure of ` 75,000, was paid to a scientific research association
approved under section 35. Out of ` 75,000, ` 50,000 was utilised
towards the purchase of land by the research association.
(v) He let out first floor of his commercial building to Mr. Aman on April 1,
2024 and received rent of ` 35,000 per month. Municipal taxes ` 20,000
relating to the building were paid equally by both Mr. Raman and Mr.
Aman. Rent received was credited and municipal taxes of ` 10,000
(relating to ground floor) was debited to the statement of profit and loss.
(vi) He sold a piece of land for ` 44 lakhs on 12 th April, 2024. He had acquired
the land for 40 lakhs on 1 st January, 2023. The gain of 4,00,000 is
credited to the statement of profit and loss.
(CII for F.Y. 2021-22:317; F.Y. 2024-25:363)
Additional Information:
(i) Mr. Raman purchased raw material from M/s. Paul Industries, a micro
enterprise, for ` 49,000 on March 10, 2025. However, the payment to
M/s. Paul Industries was made on April 5, 2025 by cheque. No written
agreement for payment existed between M/s. Paul Industries and Mr.
Raman. Another supplier M/s. Kal Industries, a small enterprise, with
whom also no written agreement existed for payment, was paid
` 1,34,000 in cash on April 5, 2025 for purchase of raw material on March
31, 2025. Both M/s. Paul Industries and M/s. Kal Industries follow
mercantile system of accounting.
(ii) Mr. Raman acquired a registered trademark on July 15, 2024 for
` 2,00,000. Mr. Raman started using this trademark for his business from
January 15, 2025. Mr. Raman omitted to enter any transaction relating
to this trademark in his books of accounts.
234
 (iii) Mr. Raman bought a car for personal use on 12 th April, 2021 for
` 5,40,000. He started using this car for business purposes from
01.04.2024. As on that day, the market value of the car was ` 2,10,000.
Assume the rate of depreciation to be 15%.
(iv) He incurred ` 2,50,000 on the purchase of a new machinery to be used
in the production of spare parts for motor bikes on May 15, 2024.
(v) He has paid tuition fees of ` 25,000 for the education of his daughter to
a college.
(vi) During the year, Mr. Raman has incurred ` 9,500 in cash for preventive
health check-up where ` 5,000 was for himself and ` 4,500 was for his
parents who are super senior citizens.
(vii) Donation paid to a registered political party by way of cheque ` 20,000.
Compute the total income and tax liability of assessment year 2025-26 of
Mr. Raman under both the regimes. (15 Marks)
2. (a) Mr. Madan, a citizen of India and the Karta of an HUF, is employed in
M/s. PCS Pvt. Ltd. He is drawing monthly salary of ` 65,500 in India. On

es
June 1, 2024, he purchased one residential house property in Mumbai

Residentit
for ` 18,00,000 in his individual capacity. The market value of the
property is ` 32,00,000 and value for the purpose of charging stamp duty
is ` 23,00,000. On August 31 st, 2024 he was transferred to the branch
office of M/s. PCS Pvt. Ltd. in U.S.A. and he left India on September 1 st,
2024. The overseas branch paid him a salary of $ 2,500 per month in
USA. He managed business of HUF from USA when he was not in India.
He had also gone out of India for 99 days and 201 days in previous years
2023-24 and 2022-23, respectively. He had never gone out of India prior
to that.
He visited India from January 1, 2025 to January 15, 2025 for training on
a project and received 15 days salary in India as per his Indian monthly
salary before being transferred.
Mr. Rajeev, one of his friends, gifted him a sculpture in India on August
10, 2024. The market value is ` 45,100.
Determine the residential status of Mr. Madan and his HUF and compute
gross total income of Mr. Madan for the assessment year 2025-26
assuming he opted out of the default tax regime. The value of one USD
($) may be taken as ` 70. (4 Marks)
(b) Answer the following:
(i) M/s. PQR & Co., a proprietary firm of Mr. Yogesh, paid an amount
of ` 30,500 to Mr. Amit, a resident individual aged 45 years, on

Tos June 1, 2024 towards fees for professional services. Subsequently,

another payment of ` 60,000 was due to Mr. Amit on January 30,
2025. Tax was not deducted from both the transactions. Mr. Amit
has filed his return of income for assessment year 2025-26 on May
2, 2025, taking into account professional fees from M/s. PQR & Co.
and paid the taxes due on the income declared in the return of
235
 income. Firm’s turnover for the P.Y. 2023-24 is ` 5 crores.
What are the TDS and interest obligations in the hands of M/s. PQR
& Co.?
(ii) M/s. Fastest Ltd. is an Indian car manufacturer. During the
F.Y. 2024- 25, it sold cars for ` 150 lakhs to M/s. Race LLP, a
distributor of cars where the sale price of each car was ` 7.5 lakhs.
The turnover for the F.Y. 2023-24 of M/s. Fastest Ltd. was ` 15
crores and M/s. Race LLP was 8 crores. What shall be the
TCS/TDS implications on M/s. Fastest Ltd. and M/s. Race LLP?
(6 Marks)
3. (a) The particulars given below are of Mr. Radhey's income (age 47 years)
posted in a private company in Delhi, for the previous year 2024-25:
(i) Basic Pay ` 35,000 per month till January 31, 2025, ` 40,000 p.m.
from February 2025.
(ii) Dearness allowance 30% of basic salary (54% of DA forms part of
retirement benefits)
Salary -

(iii) His employer gave him a rent-free accommodation (fully furnished)

in Delhi from 01.04.2024. This house is owned by his employer.
The furniture and appliances provided with the house were bought
by the employer at an aggregate cost of ` 1,50,000 on 01.04.2024.
Electricity and water bills of ` 4,000 p.m. for the said house were
paid by the employer.
(iv) The employer also spent ` 50,000 on a refresher course for
upgrading Mr. Radhey's skills.
(v) During the previous year his wife had been admitted in a notified
hospital for treatment of her kidney disease, the hospital bills
amounting to ` 3,50,000 were paid by the employer.
You are required to compute the taxable salary income of Mr. Radhey
for the Assessment Year 2025-26 under default tax regime under section
115BAC. (6 Marks)
(b) Mr. Raj a resident individual, aged 69 years sold an urban agricultural
land for ` 75,00,000 to Mr. Vipul on December 15, 2024 when the stamp
duty value of agricultural land was ` 95 lakhs. However, the “agreement
to sell” the agricultural land was entered on July 15, 2024 and Mr. Vipul
Cap gave ` 4 lakhs as advance through IMPS. The stamp duty value at the
time of agreement was ` 85 lakhs. Mr. Raj paid 1% of sale consideration
as as commission to a broker. The land was purchased by him on May 15,
2002 for ` 10.85 lakhs and it was being used for agricultural purposes
by him since its purchase.
Mr. Raj purchased another rural land in rural area on January 1, 2025
for ` 40 lakhs and this land was sold by him on March 12, 2026 for ` 45
lakhs.

236
 Compute capital gain for assessment year 2025-26 if Mr. Raj exercises
the option of shifting out of the default tax regime provided under section
115BAC(1A).
Cost Inflation Index for: F.Y. 2002-03:105; F.Y. 2024-25:363.
(4 Marks)
4. (a) Mr. Suraj, (39 years), his wife Megha (35 years) and minor son Dev (12
years), provide the following details of their income/losses for the

ent
previous year 2024-25:

set
Mr. Suraj
(i) Salary received as a partner from a partnership firm - ` 6,15,000
He is a working partner in the firm and the salary is as per the limits
prescribed under section 40(b).
(ii) Income (loss) from house property:
Brought forward loss from House -A (let out) - ` 96,000
Current year loss from House B (let out) - ` 2,30,000
(iii) Interest received on enhanced compensation - ` 2,00,000
It relates to transfer of a piece of land in the financial year 2018-19.
Out of the above ` 35,000 relates to previous year 2024-25 and the
balance relate to preceding previous year.
(iv) Gift from grandfather's younger sister by cheque - ` 1,25,000
(v) Dividend on listed equity shares of domestic companies (Gross) -
` 50,000
(vi) On 1st December 2024, Mr. Suraj received ` 75 lakhs as maturity
proceeds from his life insurance policy which was taken on 1st May
2013. He paid ` 6,00,000 as annual premium and the sum assured
was ` 65 lakhs.
Mrs. Megha
(i) Current year loss from business. (She carried on this business with
funds which Mr. Suraj gifted to her) - ` 8,10,000.
(ii) Mrs. Megha purchased a house property from her "Stridhan" and
gifted the same to her minor son, Dev on 1 stApril, 2024 out of love
and affection. The FMV of the house on the date of transfer was
` 51 lakhs.
Master Dev
Rent received from house property received from Mrs. Megha - ` 35,000
p.m.
Compute gross total income of Mr. Suraj, Mrs. Megha and Dev for the
assessment year 2025-26 assuming Mr. Suraj has decided to pay tax
237
 under default tax regime provided under section 115BAC, whereas
Mrs. Megha and Dev have opted out of the default tax regime. Briefly
explain the reasons for the treatment of each item. (6 Marks)
(b) Answer the following:
(i) Vegetable Ltd. filed its return of income for the A.Y. 2024-25, on
15th December 2024. On 2nd January 2025, the accountant of
Rol Vegetable Ltd. realised that he had forgotten to claim a genuine
business expenditure amounting to ` 15 lakhs. He wants to file
revised return to claim such expenditure as the assessment is not
yet completed. Whether the action of the accountant of Vegetable
Ltd. is valid?
(ii) Mahendra, a resident individual aged 45 years earned a salary
income of ` 2 crores during the F.Y. 2024-25. He also earned
Ri dividend from unlisted shares amounting to ` 4 lakhs. He wants to
file his return of income for the A.Y. 2025-26 through a Tax Return
Preparer. Can he do so? (4 Marks)
OR
(b) Rani, an Indian resident aged 34 years did not file her return of income
for the A.Y. 2022-23, 2023-24 and 2024-25. She gives the following
information regarding each of the A.Y.-

p A.Y. 2022-23
(i)
(ii)
Tax liability on the total income of Rani - ` 14,50,000
TDS deducted - ` 5,00,000
A.Y. 2023-24
(i) Tax liability on the total income of Rani - ` 5,60,000
(ii) TDS deducted - ` 10,00,000
A.Y. 2024-25
(i) Tax liability on the total income of Rani - ` 6,30,000
(ii) TDS deducted - ` 2,00,000
(iii) Interest payable under section 234A, 234B and 234C - ` 90,000
(calculated till 31 st May 2025)
(iv) Self-assessment tax paid - ` 1,00,000
She approaches you to file updated return under section 139(8A) on
16.5.2025. You are required to advise her for which years she can file
an updated return and also the amount of tax to be paid. (4 Marks)

238
 MODEL TEST PAPER 1
SECTION B – GOODS AND SERVICES TAX (50 MARKS)
QUESTIONS
(i) Working Notes should form part of the answers. However, in answers to
Questions in Division A, working notes are not required.
(ii) Wherever necessary, suitable assumptions may be made by the
candidates, and disclosed by way of notes.
(iii) All questions should be answered on the basis of the provisions of the
CGST Act, 2017 and the IGST Act, 2017 as amended by the
Finance (No. 2) Act, 2024 including significant notifications and circulars
issued and other legislative amendments made, which have become
effective up to 31.10.2024.
Division A - Multiple Choice Questions (MCQs)
Write the most appropriate answer to each of the following multiple-choice
questions by choosing one of the four options given. All questions are
compulsory.
Total Marks: 15 Marks
XYZ Electronics Pvt. Ltd. is a leading electronic goods manufacturing company in
Delhi. The company produces a wide range of products, including smartphones,
laptops, and home appliances.
The sales by the Company are mainly through its distributors on the following credit
terms:
For laptops – up to 15 days
For smartphones – up to 90 days
For other home appliances – up to 45 days
During the year, the Company purchased plant and machinery worth ` 1 crore
exclusive of GST. The GST rate for such plant and machinery is 18%. The input
tax credit on such plant and machinery is not blocked under any provision of the
CGST Act, 2017.
The Company is planning to demerge its operations in relation to the laptops and
other computer accessories from the next financial year. The demerged entity will
be a separate legal entity of the Company in form of a wholly owned subsidiary of
the Company having common Board of Directors.
The Company also participates in domestic and international level trade fairs to
showcase its products and sale through those events. The Electronics Association
of Rajasthan is organising a trade fair in Jaipur. The Company is keen to participate
in the same. To ensure the GST compliances, the Company wants to obtain the
GST registration as casual taxable person in the state of Rajasthan. The Company
obtained the GST registration as casual taxable person in the state of Rajasthan
with the validity period of 45 days.
The Company transferred the goods from one of its godown in Delhi to another
godown in Gujarat wherein the Company has a registered place of business. The
239
value of goods transferred is ` 5 crores and the rate of GST applicable on such
transfer is 18%. The tax invoice was issued, and GST was deposited by the
Company. However, the consideration was not paid by the Gujarat office of the
Company to the Delhi office even after 180 days of the invoice date. Further, there
was no reverse movement of such goods from Gujarat godown to Delhi Godown.
Based on the facts of the case scenario given above, choose the most appropriate
answer to Q. Nos. 1 to 6 below:
1. What shall be the time limit to issue invoice for supply of smartphones on
credit:
(a) Invoice shall be issued on 31st day from the date of removal of
smartphones to distributors.
(b) Invoice shall be issued before or at the time of removal of smartphones
to distributors.
(c) Invoice shall be issued at the time of receiving payment from distributors.
(d) Invoice shall be issued upon completion of credit term, i.e. 90 days.
2. In relation to the plant and machinery purchased by the Company, select the
correct alternative from the following:
(a) ITC of ` 18 lakh can be claimed and value of asset on which depreciation
can be claimed under the provisions of Income- Tax Act, 1961 shall be
` 1.18 crore.
(b) ITC of ` 18 lakh can be claimed and value of asset on which depreciation
can be claimed under the provisions of Income- Tax Act, 1961 shall be
` 1 crore.
(c) ITC cannot be claimed in such transaction and value of asset on which
depreciation can be claimed under the provisions of Income- Tax Act,
1961 shall be ` 1 crore.
(d) ITC of ` 18 lakh can be claimed and value of asset on which depreciation
can be claimed under the provisions of Income- Tax Act, 1961 shall be
` 82 lakh.
3. How shall the demerged entity be treated under the provisions of GST Law?
(a) The demerged entity shall be treated as related party of the Company.
(b) The demerged entity shall be treated as distinct entity of the Company.
(c) The demerged entity shall be treated as additional place of business of
the Company.
(d) The demerged entity shall be treated as sole selling agent of the
Company.
4. The period of retention of books of accounts related to period prior to
demerger under GST Law is:
(a) 36 months from the end of financial year
(b) 60 months from the end of financial year
(c) 72 months from the end of financial year
240
 (d) 72 months from due date of furnishing annual return for the relevant
financial year
5. The validity of GST registration as a casual taxable person in the state of
Rajasthan is:
(a) 45 days
(b) 90 days
(c) 180 days
(d) 135 days
6. Which of the following statements is true in relation to the non-payment of
consideration by the Gujarat godown to Delhi godown?
(a) The Gujarat godown shall reverse the ITC availed on the goods received
from Delhi and also required to pay interest computed from the date of
invoice till the date of reversal of ITC.
(b) The Gujarat godown shall reverse the ITC availed on the goods received
from Delhi and no interest shall be applicable.
(c) The restriction of 180 days for payment of consideration is not applicable
in the present case.
(d) The Delhi godown shall issue a credit note to Gujarat godown to reverse
the supply. (6 x 2 Marks = 12 Marks)
7. Sanu Associates, Delhi dealing in garments has ordered ladies suits from
Sahiba Garments in Ludhiana (Punjab) which is 350 km away from its
warehouse. E-way bill is generated by Sahiba Garments and the order is
coming by a normal cargo. For how many days will the e-way bill be valid from
the time it is generated?
(a) 24 hours
(b) 2 days
(c) 5 days
(d) 7 days (2 Marks)
8. ‘Pihu’ Ltd. has its registered office, under the Companies Act, 2013, in the
State of Maharashtra from where it ordinarily carries on its business of taxable
goods. It also has a warehouse in the State of Telangana for storing said
goods. What will be the place of business of ‘Pihu’ Ltd. under the GST law?
(a) Telangana
(b) Maharashtra
(c) Both (a) and (b)
(d) Neither (a) nor (b) (1 Mark)

241
 Division B - Descriptive Questions
Question No. 1 is compulsory.
Attempt any two questions out of remaining three questions.
Total Marks:35 Marks
1. (a) Vishnu Pvt. Ltd., a registered supplier of goods and services at Kolkata
has furnished the following information for the month of February:
S. No. Particulars Amount (`)
(i) Intra-State supply of taxable goods including 4,00,000
` 1,00,000 received as advance in January,
the invoice for the entire sale value is issued
on 15th February
(ii) Purchase of goods from a composition dealer, 5,50,000
registered in Kolkata
(iii) Services provided by way of labour contracts 1,00,000
for repairing a single residential unit otherwise
than as a part of residential complex (It is an
intra-State transaction)
(iv) Membership of a club availed for employees 1,75,000
working in the factory (It is an intra-State
transaction)
(v) Goods transport services received from a GTA. 2,00,000
GTA has exercised option to pay tax @12% (It
is an inter-State transaction)
(vi) Inter-State services provided by way of training 10,000
in sports
(vii) Inter-State security services provided to Bharat 15,000
higher secondary school for their annual day
function organised in Kaman Auditorium
outside the School campus
(vii) Inputs to be received in 4 lots, out of which 2nd 40,000
lot was received during the month
The company has following ITCs with it at the beginning of the tax period:
Particulars Amount (`)
CGST 57,000
SGST Nil
IGST 50,000
Note:
(i) Rates of CGST, SGST and IGST are 9%, 9% and 18% respectively.
(ii) Both inward and outward supplies are exclusive of taxes, wherever
applicable.
(iii) All the conditions necessary for availing the ITC have been fulfilled.
242
 (iv) The turnover of Vishnu Pvt. Ltd. was ` 2.5 crore in the previous
financial year.
Compute the minimum GST, payable in cash, by Vishnu Pvt. Ltd. for the
month of February. Make suitable assumptions as required.
(10 Marks)
(b) Gulati Ltd., a registered supplier in Mumbai (Maharashtra), has supplied
goods to Mridul Traders and Kalu Motors Ltd. located in Ahmedabad
(Gujarat) and Pune (Maharashtra) respectively. Gulati Ltd. has
furnished the following details for the current month:
S. No. Particulars Mridul Kalu Motors
Traders (`) Ltd. (`)
(i) Price of the goods (excluding 10,000 30,000
GST)
(ii) Packing charges 500
(iii) Commission 500
(iv) Weighment charges 2,000
(v) Discount for prompt payment 1,000
(recorded in the invoice)
Items given in points (ii) to (v) have not been considered while arriving
at price of the goods given in point (i) above.
Compute the GST liability [CGST & SGST or IGST, as the case may be]
of Gulati Ltd. for the given month. Assume the rates of taxes to be as
under:
Particulars Rate of
tax
Central tax (CGST) 9%
State Tax (SGST) 9%
Integrated tax (IGST) 18%
Make suitable assumptions, wherever necessary. (5 Marks)
2. (a) Nath Services Limited, registered under GST, is engaged in providing
various services to Government. The company provides the following
information in respect of services provided during the month of April:
S. Description of Services provided
No.
(i) Supply of manpower for cleanliness of roads not involving any
supply of goods.
(ii) Service provided by Fair Price Shops owned by Nath Services
Limited by way of sale of sugar under Public Distribution
System against consideration in the form of commission.
(iii) Service of maintenance of street lights in a Municipal area
involving replacement of defunct lights and other spares
243
 alongwith maintenance. Generally replacement of defunct
lights and other spares constitutes 35% of the supply of
service.
(iv) Service of brochure distribution provided under a training
programme for which 70% of the total expenditure is borne by
the Government.
Comment on the taxability or otherwise of the above transactions under
GST law. Also state the correct legal provisions for the same. (4 Marks)
(b) Mr. Shubh, director of Star Company Private Limited, provided service
to the company for remuneration of ` 1,25,000. Briefly answer whether
GST is applicable in the below mentioned independent cases? If yes,
who is liable to pay GST?
(i) Mr. Shubh is an independent director of Star Company Private
Limited and not an employee of the company.
(ii) Mr. Shubh is an executive director, i.e. an employee of Star
Company Private Limited. Out of total remuneration amounting to
` 1,25,000, ` 60,000 has been declared as salaries in the books of
Star Company Private Limited and subjected to TDS under section
192 of the Income-Tax Act (IT Act). However, ` 65,000 has been
declared separately other than salaries in the Star Company
Private Limited’s accounts and subjected to TDS under section
194J of the IT Act as professional services. (6 Marks)
3. (a) Examine whether the supplier of goods is liable to get registered in the
following independent cases:
(i) Om Sai Builders of Rohini, Delhi is exclusively engaged in intra-
State taxable supply of building bricks. It’s aggregate turnover in
the current financial year is ` 23 lakh.
(ii) Hukum Chand of Himachal Pradesh is exclusively engaged in intra-
State taxable supply of footwear. His turnover in the current
financial year (FY) from Himachal Pradesh showroom is ` 32 lakh.
He has another showroom in Nagaland with a turnover of ` 11 lakh
in the current FY. (5 Marks)
(b) Mr. Mehta is engaged in the business of trading of books. He is eligible
for composition scheme and has opted for the same. He seeks your
advice for records which are not required to be maintained by him as
composition taxable person. (5 Marks)
4. (a) An event management company provided services for organizing a
sporting event for a Sports Federation which is held in multiple States?
What would be the place of supply of services in this case? (5 Marks)
Or
(a) Discuss taxability of shares held in a subsidiary company by holding
company? (5 Marks)
(b) How a return can be revised after filing of the same, if some changes are
required to be made? (5 Marks)
244
 MODEL TEST PAPER 2
SECTION B – GOODS AND SERVICES TAX (50 MARKS)
QUESTIONS
(i) Working Notes should form part of the answers. However, in answers to
Questions in Division A, working notes are not required.
(ii) Wherever necessary, suitable assumptions may be made by the
candidates, and disclosed by way of notes.
(iii) All questions should be answered on the basis of the provisions of the
CGST Act, 2017 and the IGST Act, 2017 as amended by the
Finance (No. 2) Act, 2024 including significant notifications and circulars
issued and other legislative amendments made, which have become
effective up to 31.10.2024.
Division A - Multiple Choice Questions (MCQs)
Write the most appropriate answer to each of the following multiple-choice
questions by choosing one of the four options given. All questions are
compulsory.
Total Marks: 15 Marks
Ecotech Solutions Private Limited is engaged in manufacturing and supply of
energy products and solutions across multiple States in India. The Company
manufactures solar panels and also imports certain category of solar panels as per
the customer orders. The company also provides installation services and annual
maintenance contracts for its products.
The Company received an advance payment for a bulk order of goods in March
2024, but the delivery was completed in May 2024. The amount of advance
received by the Company was ` 1 crore.
During the month of March 2024, the Company sold goods worth ` 5 crores and
provided services amounting to ` 1 crore to its customers across India. The goods
worth ` 1 crore sold under multiple invoices were returned by a customer due to
defective quality in the month of March, 2024 which were originally sold by the
Company in January, 2024. The Company issued a GST credit note against the
returned goods in March, 2024.
The Company incurred an amount of ` 5 lakh on the repair of the returned goods
to make them resalable in the market to customers other than a related party.
Further, the customers who returned the goods issued an invoice to Gujarat unit of
the Company of ` 1 lakh for the expense related to return of goods. The goods
were initially sold from the Gujarat unit of the Company but the same were returned
to Maharashtra unit of the Company and subsequently moved by the Company
from Maharashtra unit to Gujarat Unit i.e. the original place of supply. The Company
is registered under GST in both the States i.e. Gujarat and Maharashtra.
Based on the facts of the case scenario given above, choose the most appropriate
answer to Q. Nos. 1 to 6 below:
1. At what point of time, tax will be payable in relation to the advance received
by the Company of ` 1 crore?

245
 (a) The tax is payable at the time of receipt of advance.
(b) The tax is payable at the time of supply of goods.
(c) 50% of tax is payable at the time of receipt of advance.
(d) Tax is payable at the time of issuance of receipt voucher.
2. The total amount of supply during the month of March, 2024 to be reported in
GSTR -1 by the Company is ________.
(a) ` 1 crore
(b) ` 5 crores
(c) ` 6 crores
(d) ` 7 crores
3. Which of the following options is correct in relation to the returned goods of
value ` 1 crore ?
(a) Company has an option to issue single credit note against multiple
invoices.
(b) Company has to mandatorily issue separate credit note against each
invoice.
(c) The Company cannot issue credit note in any subsequent period after
the supply is made.
(d) The Company can only issue a commercial credit note and GST
adjustment cannot be made.
4. In case returned goods are sold by the Company to customers other than the
related parties, the value of supply of such goods under GST shall be
_________.
(a) equivalent to original value of supply only.
(b) equivalent to original value of supply plus the cost incurred on making
the goods reusable
(c) 110% of original value of supply plus the cost incurred on making the
goods reusable.
(d) transaction value subject to the conditions mentioned in Section 15(2) of
the CGST Act, 2017.
5. Which of the following option(s) is correct in relation to the invoice of ` 1 lakh
issued by the customer for the expenses relating to returned goods?
(a) The Company shall be eligible to avail full input tax credit.
(b) The Company shall not be allowed to avail input tax credit.
(c) The Company shall not be allowed to avail input tax credit in excess of
50% of the tax amount charged on such invoice.
(d) The Company shall be allowed to claim input tax credit only if it has not
issued any credit note to the customer against such returned goods.

246
6. While moving the goods from Maharashtra unit to Gujarat unit by the
Company, goods shall be accompanied by ____________.
(a) Original invoice issued in January, 2024
(b) Invoice issued by the returning customer to the Gujarat unit of the
Company
(c) Invoice by Maharashtra unit to the Gujarat unit of the Company
(d) Delivery challan issued by the Customer to the Company.
(6 x 2 Marks = 12 Marks)
7. Mr. Jambulal of Himachal Pradesh starts a new business and makes following
supplies in the first month-
(i) Intra-State supply of taxable goods amounting to ` 17 lakh
(ii) Supply of exempted goods amounting to ` 1 lakh
(iii) Inter-State supply of taxable goods amounting to ` 1 lakh
Whether he is required to obtain registration?
(a) Mr. Jambulal is liable to obtain registration as the threshold limit of ` 10
lakh is crossed.
(b) Mr. Jambulal is not liable to obtain registration as he makes exempted
supplies.
(c) Mr. Jambulal is liable to obtain registration as he makes the inter-State
supply of goods.
(d) Mr. Jambulal is not liable to obtain registration as the threshold limit of
` 20 lakh is not crossed. (2 Marks)
8. Simmo Singh, a resident of Punjab, is having a residential property in
Amritsar, Punjab which has been given on rent to a family for ` 72 lakh per
annum for residence purposes. Determine whether Simmo Singh is liable to
pay GST on such rent.
(a) Yes, as services by way of renting is taxable supply under GST.
(b) No, service by way of renting of residential property is exempt.
(c) No, service by way of renting of residential property does not constitute
supply.
(d) Simmo Singh, being individual, is not liable to pay GST. (1 Mark)

247
 Division B - Descriptive Questions
Question No. 1 is compulsory.
Attempt any two questions out of remaining three questions.
Total Marks:35 Marks
1. (a) Mr. Nandan lal, registered under GST, is engaged in supplying services
(as discussed in the table below) in Hyderabad. He has furnished the
following information with respect to the services provided/ received by
him, during the month of February:
S. No. Particulars Amount (`)
(i) Carnatic music performance given by 1,40,000
Mr. Nandan lal to promote a brand of
readymade garments
(ii) Outdoor catering services availed for a 50,000
marketing event organised for his
prospective customers
(iii) Services of transportation of students 1,00,000
provided to HSMG College providing
education as part of a curriculum for
obtaining a recognised qualification
(iv) Legal services availed for official purpose 1,75,000
from an advocate located in Chennai (Inter-
State transaction)
(v) Services provided to IFMP Bank as a 2,00,000
business correspondent with respect to
accounts in a branch of the bank located in
urban area
(vi) Recovery agent’s services provided to a car 15,000
dealer
(vii) General insurance taken on a car (seating 40,000
capacity 5) used for official purposes
Note:
(i) Rates of CGST, SGST and IGST are 9%, 9% and 18% respectively.
(ii) All inward and outward supplies are exclusive of taxes, wherever
applicable.
(iii) All the conditions necessary for availing the ITC have been fulfilled.
(iv) The turnover of Mr. Nandan lal was ` 2.5 crore in the previous
financial year.
(v) All the transactions mentioned above are intra-State unless
otherwise specified.
Compute the net GST payable in cash, by Mr. Nandan lal for the month
of February. (10 Marks)

248
 (b) LSP Ltd., a registered supplier, sold a machine to Balwant Ltd. It
provides the following information in this regard: -
S. Particulars Amount
No. (`)
(i) Price of the machine [excluding taxes and other 20,000
charges mentioned at S. Nos. (ii) and (iii)]
(ii) Third party inspection charges 6,000
[Such charges were payable by LSP Ltd. but the
same have been directly paid by Balwant Ltd. to
the inspection agency. These charges were not
recorded in the invoice issued by LSP Ltd.]
(iii) Freight charges for delivery of the machine 1,000
[LSP Ltd. has agreed to deliver the goods at
Balwant Ltd.’s premises]
(iv) Subsidy received from the State Government on 5,000
sale of machine under Skill Development
Programme
[Subsidy is directly linked to the price]
(v) Discount of 2% is offered to Balwant Ltd. on the
price mentioned at S. No. (i) above and recorded in
the invoice
Note: Price of the machine is net of the subsidy received.
Determine the value of taxable supply made by LSP Ltd. to Balwant Ltd.
(5 Marks)
2. (a) State the person liable to pay GST in the following independent services
provided:
(i) Sapna Builders, registered in Haryana, rented out 20 residential
units owned by it in Jain Society to Anant Technologies, an IT
based company registered in the State of Haryana, for
accommodation of its employees.
(ii) M/s. Verma Consultants, a partnership firm registered in Delhi as a
regular tax payer, paid sponsorship fees of ` 1,50,000 at a seminar
organized by a private NGO (a partnership firm) in Delhi. (4 Marks)
(b) “Little Smiles”, a photography firm, has commenced providing
photoshoot services in Delhi from the beginning of current financial year
2024-25. It has provided the following details of turnover for the various
quarters till December, 2024 :-
S. Quarter Amount
No. (` in lakh)
1 April,2024-June,2024 20
2 July,2024-September,2024 30
3 October,2024-December,2024 40

249
 You may assume the applicable tax rate as 18%. Little Smiles wishes
to pay tax at a lower rate and opts for the composition scheme. You are
required to advise whether it can do so and calculate the amount of tax
payable for each quarter? (6 Marks)
3. (a) Mr. Sohan, a trader registered under GST in Delhi is engaged in
wholesale business of toys for kids. Mr. Roshan registered under GST
in Patiala, a regular return filer supplies toys in bulk to Mr. Sohan for
selling to end consumers.
Mr. Sohan paying tax in regular scheme in Delhi, has not filed GSTR-3B
for last 2 months. Mr. Roshan wants to generate e-way bill for toys
amounting to ` 5,00,000 to be supplied to Mr. Sohan. Also Mr. Mohan
from Jammu approached Mr. Sohan for purchasing toys amounting to
` 75,000 for the purpose of return gift on his son’s first birthday party.
Sohan wants to generate an e-way bill in respect of an outward supply
of goods to Mr. Mohan.
Examine with reference to the provisions under GST law, whether
Mr. Roshan and Mr. Sohan can generate e-way bill? (5 Marks)
(b) Mr. Raj of Rajasthan intends to start business of supply of building
material to various construction sites in Rajasthan. He has taken
voluntary registration under GST in the month of April. However, he has
not commenced the business till December due to lack of working
capital. The proper officer suo-motu cancelled the registration of
Mr. Raj. You are required to examine whether the action taken by proper
officer is valid in law?
Mr. Raj has applied for revocation of cancellation of registration after 40
days from the date of service of the order of cancellation of registration.
Department contends that application for revocation of cancellation of
registration can only be made within 30 days from the date of service of
the order of cancellation of registration. You are required to comment
upon the validity of contentions raised by Department. (5 Marks)
4. (a) Discuss briefly the place of supply of goods purchased over the counter
in one State and transported to another State by the buyer. (5 Marks)
Or
(a) What would be the place of supply of services provided by an event
management company for organizing a sporting event for a Sports
Federation which is held in multiple States? (5 Marks)
(b) Discuss whether the amount available in the electronic credit ledger can
be used for making payment of any tax under the GST Laws?
(5 Marks)

250
 MODEL TEST PAPER 3
SECTION B – GOODS AND SERVICES TAX (50 MARKS)
QUESTIONS
(i) Working Notes should form part of the answers. However, in answers to
Questions in Division A, working notes are not required.
(ii) Wherever necessary, suitable assumptions may be made by the candidates,
and disclosed by way of notes.
(iii) All questions should be answered on the basis of the provisions of the CGST
Act, 2017 and the IGST Act, 2017 as amended by the
Finance (No. 2) Act, 2024 including significant notifications and circulars
issued and other legislative amendments made, which have become effective
up to 31.10.2024.
Division A - Multiple Choice Questions (MCQs)
Write the most appropriate answer to each of the following multiple-choice
questions by choosing one of the four options given. All questions are
compulsory.
Total Marks: 15 Marks
Himadri started providing a bouquet of goods and services in the month of April of
the current financial year under the regular scheme in the State of Telangana and
obtained voluntary registration under GST before starting the business.
In the month of April, she availed the services of construction of a godown for the
business from her brother-in-law who was financially dependent on him. She also
availed professional consultancy services in April for her business from her son
who is a well settled Chartered Accountant in Telangana. Himadri did not pay any
consideration for both these services as both of them were her relative/ family
member respectively.
In April, she supplied 1,000 packages to Natraj Traders each consisting of a pen
holder, a pen and a pencil box at a single price of ` 150. Rates of GST for pen
holder, pen and pencil box are 5%, 12% and 18% respectively.
She received following payments during the month of May:
- earned ` 1,60,000 by providing services as business facilitator to YYZ Bank
with respect to accounts in its urban area branch
- earned ` 50,000 by providing services by way of renting of residential dwelling
for use as a boutique to Supriya, an unregistered person.
- received ` 70,000 for supply of manpower for cleanliness of roads, public
places, architect services, etc., not involving any supply of goods, to
Municipality.
Himadri made supply of taxable Product A during June, details of which are as
follows-
- Basic price of Product A before TCS under Income-tax Act, 1961– ` 45,000

251
- Tax collected at source under Income-tax Act, 1961 – ` 2,500
- She received a subsidy of ` 55,000 from Habitat Foundation Pvt. Ltd. for
usage of green energy and the subsidy was linked to the units of green energy
and not the aforesaid product.
Himadri provides the following information regarding receipt of inward supplies
during July-
- purchased buses (seating capacity of 24 persons) for transportation of her
employees from their residence to office and back. Depreciation is claimed on
the GST component under the Income tax Act, 1961.
- purchased a truck having GST component of ` 1,50,000 for transportation of
finished goods. No depreciation claimed on the GST component under the
Income tax Act, 1961.
- availed outdoor catering services for a marketing event organised for her
prospective customers.
All the amounts given above are exclusive of taxes, wherever applicable. Further,
all the supplies referred above are intra-State supplies unless specified otherwise.
Conditions necessary for claiming input tax credit (ITC) have been fulfilled subject
to the information given above. The opening balance of input tax credit for the
relevant tax period of Himadri is Nil.
Based on the facts of the case scenario given above, choose the most appropriate
answer to Q. Nos. 1 to 6 below:-
1. Supply of package made by Himadri to Natraj Traders is a ______________
and is taxable under GST @ __________.
(a) composite supply; 12%
(b) mixed supply; 18%
(c) composite supply; 18%
(d) mixed supply; 12%
2. Out of payments received by Himadri in month of May, value of exempt supply
is _____ .
(a) ` 50,000
(b) ` 70,000
(c) ` 1,20,000
(d) ` 1,60,000
3. Compute the value of supply under section 15 of the CGST Act, 2017 made
by Himadri in the month of June.
(a) ` 45,000
(b) ` 47,500
(c) ` 48,500
252
 (d) ` 51,000
4. Compute the amount of input tax credit that can be claimed by Himadri in July.
(a) ` 30,000
(b) ` 37,000
(c) ` 1,50,000
(d) ` 1,57,000
5. In respect of services availed by Himadri in April, which of the following is a
correct statement?
(a) Godown construction service availed from her brother-in-law free of cost
is considered as a deemed supply.
(b) Professional service availed from her son free of cost is considered as a
deemed supply.
(c) Neither of the two services availed by her is a deemed supply.
(d) Both services availed by her are deemed supply.
6. Out of payments received by Himadri in month of May, the value of supply on
which tax payable by the recipient under reverse charge is _________.
(a) ` 50,000
(b) ` 70,000
(c) ` 1,20,000
(d) ` 1,60,000 (6 x 2 Marks = 12 Marks)
7. Suvidha Enterprises issued invoices pertaining to two independent outward
supplies, where in one invoice value of supply was understated by ` 75,000
and in another invoice, value was overstated by ` 45,000. Which of the
following is correct in respect of document to be issued by the firm for
understatement and overstatement of invoice value?
(i) Debit note is to be issued for ` 75,000.
(ii) Credit note is to be issued for ` 75,000.
(iii) Debit note is to be issued for ` 45,000.
(iv) Credit note is to be issued for ` 45,000.
(a) (i) & (iii)
(b) (ii) & (iii)
(c) (i) & (iv)
(d) (ii) & (iv) (2 Marks)

253
8. Riya & Co., a partnership firm, is engaged in retail trade since 1st April. The
firm became liable for registration on 1st October. However, it applied for
registration on 10th October and was granted certificate of registration on 5th
November.
Determine the effective date of registration of Riya & Co.?
(a) 1st April
(b) 1st October
(c) 10th October
(d) 5th November (1 Mark)

PART II - Descriptive Questions (35 Marks)

Question No. 1 is compulsory.
Attempt any two questions out of remaining three questions.
1. (a) M/s. ABC & Co., a chartered accountancy firm, has its office in
Bengaluru. It is registered under GST in the State of Karnataka. In the
month of April, it supplied statutory audit services to Dhruv
Manufacturers of Karnataka for ` 1,20,000. Further, it charged
` 1,60,000 for the ITR filing services provided to the recipients located
within Karnataka in said month. It also received ` 1,80,000 for internal
audit services provided to a client registered in Mumbai, Maharashtra.
All the amounts are exclusive of GST.
M/s. ABC & Co. has also provided following information regarding the
expenses incurred in the month of April for the purpose of providing the
taxable services:
Sr. Particulars CGST SGST
No. (`) (`)
1. Membership fee of a club (located in 2,000 2,000
Bengaluru) paid for a senior partner of the
firm
2. Rent paid to landlord, who is registered in 3,850 3,850
State of Karnataka, for office located in
Karnataka (Refer Note below)
3. Professional fee paid to 18,000 18,000
Mr. Jamnaprasad, a practicing Chartered
Accountant, for professional services
availed
[TDS of ` 20,000 is deducted under
section 194J of the Income-tax Act, 1961]
4. Air conditioner purchased for office 3,000 3,000
purpose
Note - Landlord did not upload his GSTR-1 within the prescribed time
resulting in the GST amount not being reflected in GSTR-2B of M/s. ABC
& Co.
254
 Other suppliers have duly uploaded their GSTR-1 within the prescribed
time and GST amount is reflected in GSTR-2B of M/s. ABC & Co.
Compute the net GST payable in cash by M/s. ABC & Co. for the month
of April.
Rates of CGST, SGST and IGST are 9%, 9% and 18% respectively
assuming that all the remaining conditions of utilisation of ITC are
fulfilled. (10 Marks)
(b) Guru Enterprises (Delhi), a registered taxpayer, made a taxable supply
to Y Ltd. (Delhi) for a price of ` 10,00,000 (excluding any tax or
discounts). It received a price linked subsidy of ` 1,10,000 from Jiva
Enterprises Pvt Ltd. The price of ` 10,00,000 is after consideration of
such subsidy amount. Further, after delivery of the goods to Y Ltd., Guru
Enterprises arranged post-delivery inspection of goods and charged
` 10,000 for the same.
In respect of above supply, Guru Enterprises had procured some raw
material from X Ltd., for which it owed ` 25,000. The said amount was
directly paid by Y Ltd. to X Ltd. and was not included in the price of goods
of ` 10,00,000 mentioned above.
The payment of consideration for above supply was delayed by Y Ltd.
Hence, an interest amount of ` 20,000 (in lumpsum) was also charged
by Guru Enterprises.
The applicable tax rates are - CGST - 6%, SGST - 6% and IGST - 12%.
You are required to determine value of taxable supply as well as the
applicable tax liability for the above supply transaction. (5 Marks)
2. (a) Keshav Ltd., a registered company of Chennai, Tamil Nadu has provided
following education related services for the month of October:
Particulars Amount (`)
Services of transportation of students, faculty and staff 2,50,000
from home to college and back to Galgotian College, (a
private college) providing degree courses in BBA, MBA,
B.Com., M.Com.
Online monthly magazine containing articles and 1,00,000
updates in law to students of Pariksha Law College
offering degree courses in LLB and LLM
Housekeeping services to Career Coaching Institute 50,000
Security services to Happy Higher Secondary School for 3,25,000
security in school premises
Services of providing breakfast, lunch and dinner to 5,80,000
students of Ayushmann Medical College offering degree
courses recognized by law in medical field
All the above amounts are exclusive of GST.
Compute the value of taxable supplies of Keshav Ltd. for the month of
October with necessary explanations. (6 Marks)
255
 (b) Champak Ltd. avails legal services from a firm of advocates. The firm
issues invoice for the services to Champak Ltd. on 17th Feb. However,
Champak Ltd. was not happy with the services provided by the firm as
its legal case was not handled by the firm in a professional manner and
it resulted in the company losing the case. The company delayed the
payment to the firm and finally made the payment on 3rd November.
Determine the time of supply of the legal services provided by the firm
of advocates to Champak Ltd. (4 Marks)
3. (a) Answer the following questions:
(i) Mr. Jagmag is a registered dealer in Kerala paying tax under
composition levy from 1st April. However, he opts to pay tax under
regular scheme from 1st December. Is he liable to file GSTR-4 for
the said financial year during which he opted out of composition
scheme? (3 Marks)
(ii) Mrs. Gargi, a registered dealer in Rajasthan, did not file GSTR-3B
for the month of June, but she wants to file GSTR-3B for the month
of July. Is it possible? Answer with reference to section 39 of the
CGST Act, 2017. (2 Marks)
(b) Can a chartered accountant become a GST practitioner (GSTP)?
Discuss. (5 Marks)
4. (a) What would be the place of supply of services provided by an event
management company for organizing an event which is held in multiple
States? (5 Marks)
OR
(a) Services provided by an entity registered under section 12AB of the
Income-tax Act, 1961 are exempt from GST if such services are provided
by way of charitable activities. Elaborate the term ‘charitable activities’.
(5 Marks)
(b) (i) List the details of outward supplies which can be furnished using
Invoice Furnishing Facility (IFF). (2 Marks)
(ii) Which are the commodities which have been kept outside the
purview of GST? Examine the status of taxation of such
commodities after introduction of GST. (3 Marks)

256
 MODEL TEST PAPER 4
SECTION B – GOODS AND SERVICES TAX (50 MARKS)
QUESTIONS
(i) Working Notes should form part of the answers. However, in answers to
Questions in Division A, working notes are not required.
(ii) Wherever necessary, suitable assumptions may be made by the candidates,
and disclosed by way of notes.
(iii) All questions should be answered on the basis of the provisions of the CGST
Act, 2017 and the IGST Act, 2017 as amended by the
Finance (No. 2) Act, 2024 including significant notifications and circulars
issued and other legislative amendments made, which have become effective
up to 31.10.2024.
Division A - Multiple Choice Questions (MCQs)
Write the most appropriate answer to each of the following multiple-choice
questions by choosing one of the four options given. All questions are
compulsory.
Total Marks: 15 Marks
M/s. Maahi & Co., a LLP registered dealer under GST, is engaged in various types
of business activities.
It provided GTA services to Government Department, registered under GST for
providing various services. Maahi & Co. did not exercise the option to pay GST.
The firm provided services of Direct Selling Agency (DSA Services) to a Banking
Company located in Mumbai.
The firm provided free gift to each of its employees valuing ` 50,000 once in a
financial year.
M/s Maahi & Co let out its warehouse to Mr. Shankar, who in turn let out to an
agriculturist for warehousing of agricultural produce. The firm also undertakes
catering service to “Vishwas” Anganwadi. The said Anganwadi has received
fundings from Government.
The firm purchased following goods during the month of July:-
(a) Capital goods amounting to ` 45,000 purchased on which depreciation has
been taken on full value including GST paid thereon.
(b) Raw materials purchased amounting to ` 55,000 for which invoice is missing
but delivery challan is available.
Further, for the month of July, the GST liability of the firm was ` 20,000 IGST;
` 10,000 CGST; ` 10,000 SGST. The following credits were available in the said
month-
IGST: ` 8,000
CGST: ` 12,000
SGST: ` 5,000

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All the amounts given above are exclusive of taxes, wherever applicable. All the
supply referred above is intra-State unless specified otherwise. Conditions for
availing ITC are fulfilled subject to the information given above.
Based on the facts of the case scenario given above, choose the most appropriate
answer to Q. Nos. 1 to 6 below:-
1. Choose the correct statement(s).
(i) For GTA services, Government is liable to pay GST under reverse
charge
(ii) For DSA services, Banking Company is liable to pay GST under reverse
charge
(iii) For GTA services, Maahi & Co is liable to pay GST under forward charge
(iv) For DSA services, Maahi & Co is liable to pay GST under forward charge
(a) i & ii
(b) iii & iv
(c) i & iv
(d) ii & iii
2. Which of the following options is correct in respect of GTA services provided
to Government Department?
(a) GTA service is taxable @ 12% without restriction of availing input tax
credit.
(b) GTA service is taxable @ 12%, but input tax credit cannot be availed for
the same.
(c) GTA service is taxable @ 5% without restriction of availing input tax
credit.
(d) GTA service is taxable @ 5%, but input tax credit cannot be availed for
the same.
3. Gift of ` 50,000 in value provided by Maahi & Co to each of its employee will
be:
(a) Supply of goods
(b) Supply of services
(c) Exempt supply
(d) Not a supply
4. Which of the following statements is correct:-
(i) Letting out of warehouse to Shankar is exempt
(ii) Catering service to “Vishesh” Anganwadi is exempt
(iii) Letting out of warehouse to Shankar is not exempt
(iv) Catering service to “Vishesh” Anganwadi is not exempt

258
 (a) i & ii
(b) iii & iv
(c) i & iv
(d) ii & iii
5. M/s Maahi & Co is eligible to claim input tax credit of _________
(a) ` 45,000
(b) ` 55,000
(c) ` 1,00,000
(d) Nil
6. Compute the GST liability of the firm for the month of July to be paid in cash,
if rule 86B of the CGST Rules, 2017 is not applicable?
(a) IGST: ` 10,000; CGST: Nil, SGST: ` 5000
(b) IGST: ` 12,000; CGST: Nil; SGST: ` 5000
(c) IGST: Nil; CGST: ` 10,000, SGST: ` 5000
(d) IGST: 5,000; CGST: Nil, SGST: 10,000 (6 x 2 Marks = 12 Marks)
7. Kids Bazaar Pvt. Ltd., registered in Maharashtra sells kids clothing via an E-
commerce operator Champ.com. Mr. Dhruv placed an order of 10 sets of
Ethnic wear in different colours each costing ` 5,000 (GST @18% not
included) on 20th October 2024. However, he returned 2 sets back after 2 days
in accordance with the exchange policy of Champ.com. Determine the value
of supply on which Champ.com should collect TCS from Kids Bazaar Pvt. Ltd.
(a) ` 40,000
(b) ` 59,000
(c) ` 50,000
(d) ` 47,200 (2 Marks)
8. Miss Gyati, a jeweller registered under GST in Mumbai, wants to sell her
jewellery in a Trade Expo held in Delhi. Which of the following statements is
false in his case?
(a) She needs to get registration in Delhi as casual taxable person.
(b) She needs to pay advance tax on estimated tax liability.
(c) She needs to mandatorily have a place of business in Delhi.
(d) She needs to file GSTR-1/ IFF and GSTR-3B for Delhi GSTIN for the
month or quarter, as the case may be, when she gets registered in Delhi.
(1 Mark)

259
 Division B - Descriptive Questions
Question No. 1 is compulsory.
Attempt any two questions out of remaining three questions.
Total Marks:35 Marks
1. (a) Vishwanath Ltd., a registered supplier in Karnataka has provided the
following details for supply of one machine·:
Particulars Amount in
(`)
(1) List price of machine supplied [exclusive of items 80,000
given below from (2) to (4)]
(2) Tax levied by Local Authority on sale of such 6,000
machine
(3) Discount of 2% on the list price of machine was
provided (recorded in the invoice of machine)
(4) Packing expenses for safe transportation charged 4,000
separately in the invoice
Vishwanath Ltd. received ` 5,000 as price linked subsidy from a NGO on
sale of each such machine, The Price of ` 80,000 of the machine is after
considering such subsidy.
During the month of February, Vishwanath Ltd. supplied three machines
to Intra-State customers and one machine to Inter-State customer.
Vishwanath Ltd. purchased inputs (intra-State) for ` 1,20,000 exclusive
of GST for supplying the above four machines during the month.
The Balance of ITC at the beginning of February was:
CGST SGST IGST
` 18,000 ` 4,000 ` 26,000
Note:
(i) Rate of CGST, SGST and IGST to be 9%,9% and 18% respectively
for both inward and outward supplies.
(ii) All the amounts given above are exclusive of GST.
(iii) All the conditions necessary for availing the ITC have been fulfilled.
Compute the minimum net GST payable in cash by Vishwanath Ltd. for
the month of February. (10 Marks)
(b) Veda Ltd. procured the following goods in the month of August, 2024.
Inward Supplies GST (`)
(1) Goods used in constructing an additional floor of 96,200
office building. The cost of construction of
additional floor has been capitalized.

260
 (2) Trucks used for transportation of inputs in the 11,000
factory
(3) Inputs used in trial runs 8,350
(4) Confectionery items for consumption of employees 4,325
working in the factory
(5) Cement used for making foundation and structural 9,550
support to plant and machinery
Note: Depreciation has not been claimed on tax component in case of
trucks.
Compute the amount of ITC available with Veda Ltd. for the month of
August, 2024 by giving necessary explanations. Assume that all the
other conditions necessary for availing ITC have been fulfilled. (5 Marks)
2. (a) Determine the place of supply in the following independent cases:-
(i) Harpreet (New Delhi) boards the New Delhi-Kota train at New
Delhi. He sells the goods taken on board by him (at New Delhi), in
the train, at Jaipur during the journey.
(ii) LP Refineries (Mumbai, Maharashtra) gives a contract to Bhansali
Ltd. (Ranchi, Jharkhand) to supply a machine which is required to
be assembled in a power plant in its refinery located in Kutch,
Gujarat. (5 Marks)
(b) Green Agro Services, a registered person provides the following
information relating to its activities during the month of October, 2024:
Gross Receipts from (`)
Services relating to rearing of goats 3,75,000
Services by way of artificial insemination of horses 5,00,000
Processing of sugarcane into jaggery 7,00,000
Milling of paddy into rice 8,00,000
Services by way of warehousing of agricultural produce 2,25,000
All the above receipts are exclusive of GST.
Compute the value of taxable supplies under GST laws for the month of
October, 2024. (5 Marks)
3. (a) Sheen Ltd. a registered supplier wishes to transport cargo by road
between two cities situated at a distance of 372 kilometres. Calculate the
validity period of e-way bill under rule 138(10) of the CGST Rules, 2017
for transport of the said cargo, if it is over dimensional cargo or
otherwise. (5 Marks)
(b) Apex Cinemas, a registered person engaged in making supply of
services by way of admission to exhibition of cinematograph films in
multiplex screens was issuing consolidated tax invoice for supplies at
the close of each day in terms of section 31(3)(b) of the CGST Act, 2017
read with fourth proviso to rule 46 of the CGST Rules, 2017.

261
 During the month of September, 2024, the Department raised objection
for this practice and asked to issue separate tax invoices for each ticket.
Advise Apex Cinemas for the procedure to be followed in this regard.
(5 Marks)
4. (a) Who are not eligible to opt for composition scheme for goods under GST
laws? (5 Marks)
Or
(a) Under the GST law, taxes on taxable services supplied by the Central
Government or the State Government to a business entity in India are
payable by recipient of services".
State the exceptions of the above statement. (5 Marks)
(b) Who can be registered as Goods and Service Tax Practitioners under
Section 48 of the CGST Act, 2017? (5 Marks)

262
 MODEL TEST PAPER 5
SECTION B – GOODS AND SERVICES TAX (50 MARKS)
QUESTIONS
(i) Working Notes should form part of the answers. However, in answers to
Questions in Division A, working notes are not required.
(ii) Wherever necessary, suitable assumptions may be made by the candidates,
and disclosed by way of notes.
(iii) All questions should be answered on the basis of the provisions of the CGST
Act, 2017 and the IGST Act, 2017 as amended by the
Finance (No. 2) Act, 2024 including significant notifications and circulars
issued and other legislative amendments made, which have become effective
up to 31.10.2024.
Division A - Multiple Choice Questions (MCQs)
Write the most appropriate answer to each of the following multiple-choice
questions by choosing one of the four options given. All questions are
compulsory.
Total Marks: 15 Marks
Case Scenario 1
FUTURE Insurance Ltd. is an insurance company providing life and general
insurance services across India. The company has been carrying on its business
for the past three years with the approval of IRDA.
FUTURE Insurance Ltd. secure its business through various insurance agents
spread across India. Those agents include individuals, firm, LLP and private limited
company also. However, all of them are licensed under the Insurance Act.
The company availed services of renting of motor vehicles for its employees in PAN
India through ‘RR Travels Private Limited’, where cost of fuel is included in the
consideration charged. The service provider charged 5% GST and informed the
company that it is claiming ITC only in respect of the same line of business.
FUTURE Insurance Ltd. provided the following details of insurance business for the
month of May-
Sl. Nature of receipt Amount in `
No.
i. Premium received on Pradhan Mantri Jan Dhan Yojana 5,00,000
ii. Premium received on Aam Aadmi Bima Yojana 3,00,000
iii. Premium received on Life micro-insurance product having a 4,00,000
sum assured of ` 2.50 lakh
iv. Premium received on reinsurance of Group Personal 1,00,000
Accident Policy for Self-Employed Women
v. Premium received on Fire and Special perils policy of 7,00,000
various business units
vi. Premium received on Money-back policies issued 12,00,000
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FUTURE Insurance Ltd. received the following supplies in the month of May
and the details of GST paid on such supplies are as follows-
i GST paid on purchase of car for use of Managing Director –
` 5,00,000
ii GST paid on bus (seating capacity for 14 persons) purchased by the
company for transportation of its employees from their residence to office
and back – ` 3,00,000
iii GST of ` 80,000 was paid on general insurance taken from Amity
Insurance Ltd. for motor vehicles for transportation of persons with
seating capacit 1 persons incl ding the driver which were used in
transportation of staff of the company.
All the amounts given above are exclusive of taxes wherever applicable. All
the supplies referred above are intra-State unless specified otherwise.
Aggregate turnover of the company is not less than ` 10 crores for the past
three years. Conditions necessary for availment of ITC are fulfilled subject to
the information given.
Values given in the question, wherever required, are in accordance with the
relevant CGST Rules, 2017.
Based on the facts of the case scenario given above, choose the most
appropriate answer to Q. Nos. 1 to 3 below:
1. Determine the services on which the company is liable to pay tax under
reverse charge?
(a) Service availed from insurance agents
(b) Service availed from RR Travels Private Limited
(c) None of the services availed attracts RCM
(d) Both (a) & (b)
2. Compute the total value of taxable supply made by FUTURE Insurance
Ltd. for the month of May?
(a) ` 4,00,000
(b) ` 12,00,000
(c) ` 23,00,000
(d) ` 32,00,000
3. Determine the amount of ITC that can be claimed by FUTURE Insurance
Ltd?
(a) ` 80,000
(b) ` 3,00,000
(c) ` 3,80,000
(d) ` 8,80,000 (3 x 2 Marks = 6 Marks)

264
Case Scenario 2
Madurai Impex Ltd. (‘company’) is engaged in supplying sports goods. The
company did not opt for registration under GST. The proper officer under GST,
based on enquiry, finds that the company is liable for registration and he registers
the firm on temporary basis on 15th June, 2024.
Further, in the month of February 2025, the company also generated an e-way bill
for inter-State transport of goods. However, immediately on generation of the e-
way bill, the buyer cancelled the order before it was dispatched from the factory for
delivery.
In the month of March 2025, since the company was incurring heavy losses, it
applied for cancellation of GST registration on 15th March 2025. The order for
cancellation was made on 30th March 2025, effecting cancelling the registration
with effect from 15th March 2025.
On the basis of the facts given above, choose the most appropriate answer to Q.4
to Q.6 below:
4. After the grant of temporary registration, Madurai Impex Ltd. needs to apply
for registration within __________ from the date of grant of temporary
registration, if no extension of period is to be granted for such temporary
registration.
(a) 30 days
(b) 90 days
(c) 7 days
(d) 15 days
5. The Company needs to file its Final return by __________.
(a) 30th April, 2025
(b) 30th August, 2025
(c) 15th June, 2025
(d) 30th June, 2025
6. Which of the following statements is correct in respect of e-way bill generated
for goods in the month of February for which order was cancelled?
(a) Once generated, E-way bill cannot be cancelled.
(b) E-way bill can be cancelled within 24 hours of generation
(c) E-way bill can be cancelled within 48 hours of generation
(d) E-way bill can be cancelled within 72 hours of generation
(3 x 2 Marks= 6 Marks)
7. ABC Insurance Ltd. received a proposal for pandemic insurance for cricket
tournament organised by Lion’s Club. Sum assured for said insurance was
` 20 Crores with a premium of ` 5 lakh. The company issued the said policy
on 1st July. The invoice for the same was issued on 5th August. Premium was
received on 14th August.
265
 Determine the time of supply of service provided to Lion’s Club?
(a) 1st July
(b) 16th August
(c) 05th August
(d) 14th August (2 Marks)
8. Mr. Naresh, a supplier of readymade garments issued an invoice to a
customer and erroneously charged a higher value by ` 42,000. Such an
invoice was issued on 28th October. Which document is required to be issued
by the company in respect of the invoice issued on 28th October?
(a) Debit note
(b) Credit note
(c) Bill of supply
(d) Revised Tax invoice (1 Mark)

Division B - Descriptive Questions

Question No. 1 is compulsory.
Attempt any two questions out of remaining three questions.
Total Marks:35 Marks
1. (a) Miss Shreya, proprietor of M/s. Happy Enterprise, a registered supplier
of taxable goods and services in the state of West Bengal, pays GST
under regular scheme. It is not eligible for any threshold exemption. It
provided the following information for the month of December:
S. Particulars Amount
No. (`)
OUTWARD SUPPLY:
i. Intra-state supply of goods to M/s. Reliable & Sons 7,00,000
ii. Intra-state transfer of goods to its branch office in the 1,00,000
state of West Bengal. Both places are under the
same GSTIN.
iii. Permanent transfer of old computers to orphanage 80,000
home without consideration. Input tax credit was not
availed on the same.
iv. Advance received for Future supply of management 40,000
consultancy service to Mr. Shubam (Intra-state
supply)
INWARD SUPPLY: (Intra-state)
i. Purchase of taxable goods from registered 8,00,000
suppliers.
ii. Availed Works Contract service for repair of office 30,000
building. Amount of repair was debited in the profit &
loss account.
266
 iii. Availed legal service form an advocate to represent 50,000
the matter in the Court relating to collection of
disputed proceed from customers.
Notes:
(i) Rate of CGST, SGST and IGST on all supplies are as below:
Particulars CGST SGST IGST
Goods 2.5% 2.5% 5%
Supply of services 9% 9% 18%

(ii) Both inward and outward supplies given above are exclusive of
taxes.
(iii) All the conditions necessary for availing the ITC have been fulfilled.
(iv) The aggregate turnover of M/s Happy Enterprise in the preceding
financial year exceeds the threshold limit for registration.
(v) Working note should form part of the answer.
Compute the net minimum GST payable in cash by M/s. Happy
Enterprise for the month of December. (10 Marks)
(b) Renuka Sales, a registered supplier, receives 100 invoices (for inward
supply of goods/ services) involving GST of ` 10 lakh, from various
suppliers during the month of January. Out of 100 invoices, details of 80
invoices involving GST of ` 6 lakh have been furnished by the suppliers
in their respective GSTR-1s filed on the prescribed due date therefor and
such details have also been duly communicated to the recipients of such
invoices in Form GSTR-2B.
Compute the ITC that can be claimed by Renuka Sales in its GSTR-3B
for the month of January to be filed by 20th February assuming that GST
of ` 10 lakh is otherwise eligible for ITC.
Make suitable assumptions, wherever necessary. (5 Marks)
2. (a) Comment on the taxability or otherwise of the following transactions
under GST law. Also state the correct legal provisions for the same.
S. Description of Services provided
No.
(i) Service provided by a private transport operator to Vintage
Girls Higher Secondary School by way of transportation of
students to and from the school.
(ii) Services provided by way of vehicle parking to general public
in a shopping complex.
(iii) Food supplied by the canteen run by a hospital to the in-
patients as advised by the doctors.
267
 (iv) An RWA in a housing society, registered under GST, collects
the maintenance charges of ` 6,500 per month per member.
(4 Marks)
(b) State the person liable to pay GST in the following independent case:
(i) Legal Fees is received by Abhishek, an advocate, from M/s. Navya
Trading Company, engaged in making taxable supplies and located
in Maharashtra, having turnover of ` 50 lakh in preceding financial
year.
(ii) Padam Srivastav, an independent director, appointed in
accordance with the provisions of the Companies Act, 2013, of One
Fourth Pvt. Ltd., has received sitting fee amounting to ` 1 lakh from
One Fourth Pvt. Ltd. for attending the Board meetings. (6 Marks)
3. (a) Right Oils, an unregistered entity located in U.P. is engaged in supply of
machine oil and high-speed diesel. During the month of April, it supplied
machine oil in U.P. amounting to ` 15,00,000. Also, it supplied high
speed diesel in U.P. amounting to ` 10,00,000. Further, it supplied
machine oil in Punjab from its branch located in Punjab amounting to
` 10,00,000.
Note: All the amounts mentioned above are excluding GST.
(i) Determine whether Right Oils is liable for registration.
(ii) What will be your answer if, Right Oils supplies the high speed
diesel in U.P. in the capacity of an agent of Center Oils Ltd., (non-
registered), where invoices to customers are issued in name of
Right oils? Would your answer be different in case if Center Oils
Ltd. is registered entity? (5 Marks)
(b) Determine whether the suppliers in the following cases are eligible for
composition levy, under section 10(1) & 10(2) of the CGST Act, 2017,
provided their turnover in preceding year does not exceed ` 1.5 crore:
(i) Shyam Enterprises is engaged only in trading of pan masala in
Rajasthan and is registered in the same State.
(ii) Sahaj Manufacturers has registered offices in Punjab and Haryana and
sells goods manufactured by it in the neighbouring States. (5 Marks)
4. (a) An unregistered person Mr. Pappan from Faridabad travels by Air India
flight from Pune to Delhi and gets his travel insurance done in Pune.
What is the place of supply of insurance services? (5 Marks)
Or
(a) GST is payable on advance received for supply of goods and services
taxable under forward charge.
Do you agree with the statement? Support your answer with legal
provisions. (5 Marks)
(b) “All taxpayers are required to file GSTR-1 only after the end of the tax
period.” Examine the validity of the statement. (5 Marks)

268
 MODEL TEST PAPER 6
SECTION B – GOODS AND SERVICES TAX (50 MARKS)
QUESTIONS
(i) Working Notes should form part of the answers. However, in answers to
Questions in Division A, working notes are not required.
(ii) Wherever necessary, suitable assumptions may be made by the candidates,
and disclosed by way of notes.
(iii) All questions should be answered on the basis of the provisions of the CGST
Act, 2017 and the IGST Act, 2017 as amended by the
Finance (No. 2) Act, 2024 including significant notifications and circulars
issued and other legislative amendments made, which have become effective
up to 31.10.2024.
Division A - Multiple Choice Questions (MCQs)
Write the most appropriate answer to each of the following multiple-choice
questions by choosing one of the four options given. All questions are
compulsory.
Total Marks: 15 Marks
Case Scenario 1
Anushka, registered under GST in the State of Madhya Pradesh, is engaged in
supplying multiple taxable goods and services. She has undertaken the following
activities/transactions in the month of October in the current financial year:
(i) Donated some money to Netrajyoti Charitable Trust, Madhya Pradesh, in the
memory of her late mother. The Netrajyoti Charitable Trust constructed a
room in the school run by it from such donation and wrote “Donated by Miss.
Anushka in the memory of her mother” on the door of the room so constructed.
(ii) Organized a seminar in Indore which was sponsored by WE-WIN Cricket
Academy, an LLP. Anushka received a sponsorship fee of `1,50,000.
(iii) Ashoka Public School intended to distribute gift packages consisting of
fountain pen, calculator and tape dispenser to its students on the occasion of
Children’s Day. Therefore, it entered into a contract with Anushka on 28th
October for supply of 2,000 packages at a single price of ` 250. Rates of GST
for fountain pen, calculator and tape dispenser are 5%, 12% and 18%
respectively.
(iv) Received the following payments during the month of October:
- earned ` 160,000 by performing at a western Indian cinematic concert in
Indore
- earned ` 50,000 for renting of space for use as a Textile Emporium
- received ` 70,000 for supply of farm labour
(v) Supplied machinery with a basic price of ` 45,000 (before TCS under Income
Tax Act, 1961). Tax collected at source under Income-tax Act, 1961 on said
machinery is ` 2,500. Further, a subsidy of `50,000 is received from Prakarti

269
 Foundation Pvt. Ltd for usage of green energy and the subsidy was linked to
energy saved during the month.
Anushka needs to transport one consignment to the transporter and then to the
consignee. The distance, within the same State, between her godown and the
transporter is 20 kms and from the place of transporter to consignee is 99 kms,
respectively.
All the amounts given above are exclusive of GST, wherever applicable.
Based on the facts of the case scenario given above, choose the most appropriate
answer to Q. Nos. 1 to 6 below:-
1. Donation made by Anushka to Netrajyoti Charitable Trust is _______.
(a) exempted from GST by way of a notification
(b) not a supply at all
(c) liable to GST under forward charge
(d) liable to GST under reverse charge
2. Which of the following statements is correct with respect to the sponsorship
fee received by Anushka?
(a) Tax on sponsorship services is payable by Anushka under forward
charge.
(b) Tax on sponsorship services is payable by WE-WIN Cricket Academy
under reverse charge.
(c) Sponsorship services are exempt from GST since services provided to
a sports academy are exempt.
(d) Tax on sponsorship services is payable by Anushka under reverse
charge.
3. Determine the nature of supply and the applicable rate of GST for the
packages supplied by Anushka to Ashoka Public School.
(a) composite supply & applicable rate of GST is 12%
(b) mixed supply & applicable rate of GST is 18%
(c) composite supply & applicable rate of GST is 18%
(d) mixed supply & applicable rate of GST is 12%
4. Out of all the payments received by Anushka in the month of October, value
of exempt supply amounts to _____.
(a) ` 4,30,000
(b) ` 70,000
(c) ` 1,20,000

270
 (d) ` 2,20,000
5. The value of supply of machinery supplied by Anushka is________.
(a) ` 45,000
(b) ` 47,500
(c) ` 48,500
(d) ` 51,000
6. Which of the following statements is true in respect of furnishing of details of
conveyance in Part B of e-way bill?
(a) Part B need not be filed in respect of transport of consignment from
Godown of Anushka to transporter location.
(b) Part B need not be filed in respect of transport of consignment from
transporter location to consignee’s location.
(c) Information in Part-B is neither required in transport of consignment from
Godown of Anushka to transporter location nor from transporter location
to consignee’s location.
(d) Information in Part-B is mandatory in transport of consignment from
Godown of Anushka to transporter location and from transporter location
to consignee’s location. (6 x 2 Marks = 12 Marks)
7. While filing return for the month of November, a firm - Vedika & Co. - registered
under GST generated E-Challan on 5th December for making payment of GST
through RTGS of their bank. Determine the validity of E-Challan generated
by Vedika & Co. for payment of taxes for the month of November?
(a) 5th December
(b) 15th December
(c) 20th December
(d) 31st December (1 Mark)
8. Vikas Nigam Limited (a Public Sector Undertaking) has placed an order to
Bharti Steels registered in Bokaro, Orissa for supply of 70 Iron shields each
costing ` 12000 (exclusive of GST). However, the supply will take place in 3
lots containing 10 shields, 20 shields, 40 shields on different days. Determine
whether tax is required to be deducted under GST law by Vikas Nigam Limited
on the above order?
(a) No TDS will be deducted
(b) TDS to be deducted on the third lot of 40 shields only as value exceeds
Rs. 2,50,000
(c) TDS to be deducted on entire order of 70 shields
(d) TDS to be deducted on supply of 2nd order of 20 shields (2 Marks)

271
 Division B - Descriptive Questions
Question No. 1 is compulsory.
Attempt any two questions out of remaining three questions.
Total Marks:35 Marks
1. (a) Aashima Limited, a registered dealer in Patna (Bihar), is engaged in
various types of supplies. The company provided the following details for
the month of January 2025:
Sl. Particulars Amount
No. in `
(i) Outward supply of goods made during the month to As given
various non-related persons: in
Particulars Market Transaction particulars
value Value (`) column
a. in the State of 3,00,000 4,00,000
Bihar (Intra-State)
b. to other States 2,00,000 1,00,000
(Inter-State)
(ii) Services by way of warehousing of potato chips 5,00,000
(Inter-State transaction)
(iii) Stock transfer without consideration to its branch at Nil
Gaya (Bihar). Branch has separate GSTN for
convenience of accounting and billing.
Value under section 15 of the CGST Act, 2017 -
` 20,000 (Intra -State)
(iv) Intra-State inward supply of various services for 6,50,000
use in the course or furtherance of business (30
invoices)
Additional Information:
(a) All the amounts given above are exclusive of taxes.
(b) During the course of arranging and filing documents, the
accountant of Aashima Limited observed that an invoice for
` 30,000 (excluding tax) dated 02.12.2024 was omitted to be
recorded in the books of accounts and no payment was made
against the same till the end of January 2025. This invoice was
issued by Mr. Suhaas of Patna, from whom Aashima Limited had
taken cars on rental basis. Invoice included cost of fuel also. (Intra-
State transaction).
(c) Rate of GST applicable on various supplies are as follows:
Nature of supply CGST SGST IGST
Car rental service 2.5% 2.5% 5%
All other inward and outward supplies 9% 9% 18%

272
 (d) No opening balance of input tax credit exists in the beginning of the
month.
(e) Out of the 30 invoices of inward supply received, 6 invoices with
taxable value amounting to ` 1,50,000 were e-invoices in which
Invoice Reference Number (IRN) was not mentioned. However, all
the invoices were duly reflected in GSTR 2B for the month of
January 2025, since the suppliers had filed their GSTR-1.
(f) Subject to the information given above, conditions necessary for
claiming ITC were complied with.
(g) Aashima Ltd. is not engaged in renting of cars business.
You are required to calculate the amount of net GST liability payable in
cash by Aashima Limited for the month of January 2025. Brief notes for
treatment given for each item should form part of your answer.
(10 Marks)
(b) Shri Narayan Pvt. Ltd., a registered supplier, furnishes the following
information relating to goods sold by it to Shri Ram Pvt. Ltd.-
S. Particulars Amount
No. (`)
(i) Price of the goods [excluding taxes and other 1,00,000
charges mentioned at S. Nos. (iii), (v) and (vi)]
(ii) Municipal tax 2,000
(iii) Inspection charges 15,000
(iv) Subsidy received from Shri Shyam Trust 50,000
[Subsidy is directly linked to the goods supplied]
(v) Late fees for delayed payment inclusive of GST 1,000
[Shri Ram Pvt. Ltd. paid the late fees. However,
these charges were ultimately waived by Shri
Narayan Pvt. Ltd. and the amount was refunded to
Shri Ram Pvt. Ltd. during the same month]
(vi) Weighment charges 2,000
[Such charges were paid by Shri Ram Pvt. Ltd. to
Radhe Pvt. Ltd. on behalf of Shri Narayan Pvt. Ltd.]

Note: Price of the goods is net of the subsidy received.

Determine the value of taxable supply made by Shri Narayan Pvt. Ltd. to
Shri Ram Pvt. Ltd. (5 Marks)

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2. (a) Determine the time of supply from the given information in each of the
following independent cases:
(i)
Particulars Date
Supplier invoices goods taxable on reverse charge May 4
basis to Saroj & Co. (30 days from the date of
issuance of invoice elapse on June 3)
Saroj & Co receives the goods May 12
Saroj & Co makes the payment May 30

(ii)
Particulars Date
Supplier invoices goods taxable on reverse charge May 4
basis to Durable & Co. (30 days from the date of
issuance of invoice elapse on June 3)
Durable & Co receives the goods, which were held June 12
up in transit
Payment made for the goods July 3

(4 Marks)
(b) Examine whether the following activities would amount to supply under
section 7 read with Schedule I:
(i) Rimjhim Manufacturers have a factory in Delhi and a depot in
Mumbai. Both these establishments are registered in respective
States. Finished goods are sent from factory in Delhi to the Mumbai
depot without consideration so that the same can be sold from the
depot.
(ii) Mohan is an architect in Chennai. His brother who is settled in
London is a well-known lawyer. Mohan has taken legal advice from
him free of cost with regard to his family dispute. (6 Marks)
3. (a) World Fashions, a registered supplier of designer outfits in Delhi,
decides to exhibit its products in a Fashion Show being organised at
Hotel Green India, Delhi on 4th January. For the occasion, it gets the
service by way of makeover of its models from Glamour Beauty Services
Ltd., Mayur Vihar, on 4th January, for which a consideration of ` 5,00,000
(excluding GST) has been charged. Glamour Beauty Services Ltd.
issued a duly signed tax invoice on 10th February showing the lumpsum
amount of ` 5,90,000 inclusive of CGST and SGST @ 9% each for the
services provided. Answer the following questions:
(i) Examine whether the tax invoice has been issued within the time
limit prescribed under law.
(ii) Tax consultant of World Fashions objected to the invoice raised
suggesting that the amount of tax charged in respect of the taxable
274
 supply should be shown separately in the invoice raised by
Glamour Beauty Services Ltd. However, Glamour Beauty Services
Ltd. contended that there is no mandatory requirement of showing
tax component separately in the invoice. You are required to
examine the validity of the objection raised by tax consultant of
World Fashions. (5 Marks)
(b) M/s Balaji Electronics, a registered dealer, is supplying all types of
electronic appliances in the State of Karnataka. Its aggregate turnover
in the preceding financial year by way of supply of appliances is ` 120
lakh.
The firm also expects to provide repair and maintenance service of such
appliances from the current financial year.
With reference to the provisions of the CGST Act, 2017, examine:
(i) Whether the firm can opt for the composition scheme, under section
10(1) and 10(2), for the current financial year, as the turnover may
include supply of both goods and services?
(ii) If yes, up to what amount, the services can be supplied?
(5 Marks)
4. (a) What is the place of supply for mobile connection? Can it be the location
of supplier? (5 Marks)
Or
(a) What would be the place of supply of services provided by an event
management company for organizing a sporting event for a Sports
Federation which is held in multiple States? (5 Marks)
(b) What are the documents and devices to be carried by person-in-charge
of conveyance under rule 138A of CGST Rules, 2017? Also explain the
meaning of consignment value of goods. (5 Marks)

275
 MODEL TEST PAPER 7
SECTION B – GOODS AND SERVICES TAX (50 MARKS)
QUESTIONS
(i) Working Notes should form part of the answers. However, in answers to
Questions in Division A, working notes are not required.
(ii) Wherever necessary, suitable assumptions may be made by the candidates,
and disclosed by way of notes.
(iii) All questions should be answered on the basis of the provisions of the CGST
Act, 2017 and the IGST Act, 2017 as amended by the
Finance (No. 2) Act, 2024 including significant notifications and circulars
issued and other legislative amendments made, which have become effective
up to 31.10.2024.
Division A - Multiple Choice Questions (MCQs)
Write the most appropriate answer to each of the following multiple-choice
questions by choosing one of the four options given. All questions are
compulsory.
Total Marks: 15 Marks
Case Scenario 1
Poorva Logistics, a Goods Transport Agency, is registered under GST. It did not
exercise the option to pay GST itself on the services supplied by it in the preceding
financial year. It provided goods transport services to the following persons in
February of preceding financial year-
(a) Kunal Traders, an unregistered partnership firm
(b) Mr. Amar, a casual taxable person, who is not registered under GST
(c) Small Traders Co-Operative Society registered under Societies Registration
Act
In a particular consignment in March of preceding financial year, Poorva Logistics
transported the following-
(a) Defence Equipments
(b) Railway Equipments
(c) Organic Manure
Poorva Logistics exercises the option to itself pay GST on services supplied by it
@ 12% from April, of the current financial year. It provided goods transport services
to Bama Steels Pvt. Ltd. on 1st April and issued an invoice dated 5th May. Payment
was received on 6th May.
Based on the facts of the case scenario given above, choose the most appropriate
answer to Q. Nos. 1 to 3 below:
1. Which of the following persons are liable to pay GST under reverse charge in
respect of the GTA services provided by Poorva Logistics in February of the
preceding financial year?

276
 (i) Kunal Traders
(ii) Mr. Amar
(iii) Small Traders Co-operative society
(a) i & ii
(b) ii & iii
(c) i & iii
(d) i, ii & iii
2. Transportation of _________ by Poorva Logistics is exempt from GST.
(i) Defence Equipments
(ii) Railway Equipments
(iii) Organic Manure
(a) i
(b) i & ii
(c) i & iii
(d) i , ii & iii
3. What will be the time of supply in respect of the services provided by Poorva
Logistics to Bama Steels Pvt. Ltd.?
(a) 6 th May
(b) 5 th May
(c) 30 th May
(d) 1 st April (3 x 2 Marks = 6 Marks)
Case Scenario 2
Ms. Chanchala, a doctor by profession, is a registered person under GST as a
monthly return filer, having in-patient facility in her hospital wherein room charges
are capped at ‘ 3000 per day.
Ms. Chanchala provided treatment of various diseases in her hospital and apart
from that she also provided the following services in her hospital-
(a) Plastic surgery to enhance the beauty of the face
(b) Ambulance service for transportation of patients
(c) Renting of space to run medical store in hospital premises
She is also a consultant in other hospitals and received ` 40,00,000 as consultancy
fee from the other hospitals.
Further, she also provides canteen facility and received ` 55,000 from in-patients
for supply of food as per advise of nutritionist, ` 35,000 from patients who are not
admitted and ` 25,000 from visitors for the same facility.

277
She filed GSTR-3B for the month of June with some errors. She filed the Annual
return for the said financial year on 31st October of the next financial year, whereas
due date for the said Annual return was 31st December of the next financial year.
All the amounts given above are exclusive of taxes, wherever applicable. All the
supplies referred above are intra-State unless specified otherwise.
Based on the facts of the case scenario given above, choose the most appropriate
answer to Q. Nos. 4 to 6 below:
4. Compute the taxable value of supply of canteen service provided by
Ms. Chanchala?
(a) ` 25,000
(b) ` 35,000
(c) ` 60,000
(d) ` 80,000
5. Maximum time permissible for rectification of error committed in monthly
return of June is ________
(a) 30 th November of the next year
(b) 31 st October of the next year
(c) 20 th October of the next year
(d) 31 st December of the next year
6. Determine which of the following services provided by Ms. Chanchala and her
hospital is exempt from GST?
(i) Plastic surgery to enhance the beauty of the face
(ii) Ambulance service for transportation of patients
(iii) Renting of space to run medical store in hospital premises
(iv) Consultancy service by Ms. Chanchala in other hospitals
(a) (i), (ii) & (iv)
(b) (i), (ii)
(c) (ii) & (iv)
(d) (i) & (iii)
(3 x 2 Marks = 6 Marks)
7. Leno Ltd., registered under GST has the balance of Rs. 90,000 in its electronic
credit ledger. It has the balance of Rs. 85,000 in its electronic cash ledger.
The liability under GST law at the end of tax period is-Penalty Rs. 20,000 and
output tax-Rs. 55,000. Which of the following statement(s) is correct in relation
to utilisation of e-ledger balance?
(i) Entire liability can be set off by using the balance of electronic credit
ledger.
(ii) Entire liability can be set off by using the balance of electronic cash
ledger.
278
 (iii) Electronic credit ledger balance can be used only for making payment
of output tax.
(iv) Electronic cash ledger balance can be used only for making payment
of penalty.
(a) (i) only
(b) (ii) only
(c) (ii) and (iii)
(d) (i) and (iv) (2 Marks)
8. Mint Ltd, registered under GST is engaged in providing warehousing service
of rice. During the month of May, Mr. Ghanshyam from Fazilka undertook the
warehousing service from Mint Ltd. Mint Ltd. charged Rs. 15,000 as
consideration for the said service but it did not issue any document to Mr.
Ghanshyam. Which is the most appropriate answer in the given case?
(a) Mint Ltd. is not required to issue any document.
(b) Mint Ltd. is required to issue tax invoice in the given case.
(c) Mint Ltd. is required to issue bill of supply in the given case.
(d) Mint Ltd. is required to issue payment voucher in the given case.
(1 Mark)

Division B - Descriptive Questions

Question No. 1 is compulsory.
Attempt any two questions out of remaining three questions.
1. (a) Evershine Pvt. Ltd., a GST registered supplier located in Jaipur, Rajasthan
is engaged in taxable supply of packaging goods and consultancy services.
It provides following details of various activities undertaken during the
month of September, 2024:
(A) Details of Outward Supplies:
(1) Supply of goods of ` 18,00,000 to Vaidehi Enterprises, a
registered person of Udaipur, Rajasthan. Further, received
` 50,000 from Vaidehi Enterprises towards freight charges (as
agreed to deliver the goods at Vaidehi Enterprises' premises)
which was not included in above value of supply.
(2) Supply of goods worth ` 35,00,000 to Calc. Exim, a registered
person of Prayagraj, Uttar Pradesh. Further, the amount of
` 60,000 charged separately (not included above) from Calc.
Exim on account of municipal taxes levied in relation to such
outward supply.
(3) Supply of services to Sunshine Ltd., a registered person in
Jodhpur, Rajasthan before discount worth ` 6,00,000. Further,
discount of ` 30,000 which has been given at the time of
279
 supply of service and duly recorded in the invoice.
(4) It delivered the goods worth ` 2,00,000 to Jeevan Solutions,
a registered person located at Bikaner, Rajasthan on the
direction of Raghu Enterprise, a registered person of Mumbai,
Maharashtra and tax invoice was issued by Evershine Pvt.
Ltd. to Raghu Enterprise of Mumbai, Maharashtra.
(B) Details of Inward Supplies:
(1) Purchased raw material goods worth ` 20,00,000 from PQR
Ltd; a GST registered dealer, located at Kanpur, Uttar
Pradesh. Goods worth ` 1,00,000 out of total purchases were
not received during the month.
(2) Purchased machinery for manufacturing process worth
` 2,00,000 from MPQ Pvt. Ltd., a GST registered dealer,
located at Bengaluru, Karnataka. Company has claimed
depreciation under Income- tax Act 1961 on full value of the
machine, including the GST component.
(3) Purchased truck worth ` 15,00,000 from GST registered
dealer, located at Ajmer, Rajasthan for transportation of its
goods. GST rate on truck is: CGST 14%, SGST 14%, IGST
28%. No depreciation has been claimed on said truck under
the Income-tax Act, 1961.
(4) Purchased car (having seating capacity of 7 persons) costing
to ` 10,00,000 excluding GST from Mihir Automobiles Pvt.
Ltd., a GST registered dealer, located at Ajmer, Rajasthan for
use of its director for official purpose. GST rate on car: CGST
14%, SGST 14%, IGST 28%
(5) Purchased goods worth ` 5,00,000 from DEF Buildwell Pvt.
Ltd., a registered person of Jaipur, Rajasthan for construction
of an additional floor of factory building, of Evershine Pvt. Ltd.
The amount has been capitalized in the books of Evershine
Pvt. Ltd..
Opening balance of Input tax credit as on the beginning of
September 2024-CGST ` 20,000, SGST ` 50,000 and IGST
` 75,000.
Rate of GST applicable on both inward and outward supply of
goods & services: CGST 9%, SGST 9% and IGST @18%,
except where otherwise provided.
Notes:
(i) All the figures mentioned above are exclusive of taxes.
(ii) Subject to the information given above, conditions necessary for
claiming ITC were complied with.
(iii) All inward supplies are used for taxable goods only.
(iv) Brief and suitable notes should form part of your answer.
280
 Calculate the amount of net minimum GST payable in cash by
Evershine Pvt. Ltd. for the month of September, 2024 (10 Marks)
(b) Mr. Ravindra, a registered person in Bhopal, Madhya Pradesh has
provided the following information regarding outward transactions
made during the month of January:
(1) He was appointed by recognized sports body as a chief selector of
hockey team and received ` 5,00,000 as remuneration.
(2) Services of pure labour contract was provided for construction of
independent residential unit for ` 1,80,000.
(3) Income received from warehousing of sugarcane ` 75,000.
(4) Provided pure services to Municipal Corporation of Bhopal for slum
improvement and upgradation for ` 6,50,000.
(5) He has charged consideration of ` 1,25,000 against western music
dance performance in an event.
You are required to compute the taxable value of supply on which GST
is to be paid by Mr. Ravindra for the month of January. All the amount
stated above are exclusive of GST, wherever applicable.
Suitable Notes should form part of answer. (5 Marks)
2. (a) As per the CGST Act 2017, Vishnu Limited was not mandatorily required to
get registered, however it opted for voluntary registration and applied for
registration on 12thFebruary 2024. Registration certificate has been granted
by the Department on 24th February 2024, Vishnu Limited is not engaged
in making inter-State outward taxable supplies. The CGST and SGST
liability for the month of February, 2024 is ` 31,000 each. Vishnu Limited
provides the following information of goods held in stock on 23rd February
2024:
Sr. Particulars Amount
No. (`)
1. Capital goods procured on 5th February 2024, (Rate of 2,00,000
CGST and SGST @ 6% each) being intra State
supply.
2. Inputs contained in finished goods stock held were 3,00,000
procured on 13th February 2023
(Rate of IGST @18%) being inter-State supply.
3. Value of Inputs received on 10th October, 2023 2,50,000
contained in semi–finished goods held in stock
(Rate of CGST and SGST @ 6% each) being intra-
State supply.
4. Inputs procured on 1st February 2024 lying in stock of 1,50,000
semi -finished goods

281
 (Rate of CGST and SGST @ 7.5 % each) being intra-
State supply.
5. Inputs procured on 8th February 2024 lying in stock of 60,000
finished goods.
(Rate of IGST @ 18%) being inter-State supply.
The amounts mentioned above are exclusive of GST. You are
required to determine the eligible ITC available and amount of net
minimum GST to be paid in cash by Vishnu Limited for the month of
February 2024. (5 Marks)
(b) Examine the following independent cases and determine the place of
supply:
(1) Mr. Joy, an unregistered person of Kolkata, West Bengal sends a
courier through Kolkata, West Bengal based Mohan Courier
Agency to his sister in Mumbai, Maharashtra.
(2) Mr. Nitin, an unregistered person, resides at Rewa, Madhya
Pradesh books a two way air journey ticket from Prayagraj, Uttar
Pradesh to Jaipur, Rajasthan on 6 September and back. He leaves
Prayagraj on 11 September in a morning flight and land in Jaipur
the same day. He leaves Jaipur on 15 September in a late night
flight and lands in Prayagraj the next day.
(3) Rimjhim Pvt. Ltd, located at Lucknow, Uttar Pradesh, purchases a
manufacturing machine from Manav Steel Industries Ltd., located
at Jaipur, Rajasthan, for being installed in its factory located at
Haridwar, Uttarakhand. (5 Marks)
3. (a) GSTR 3B for the month of January 2024 has been filed by M/s Avisha
Limited, a registered person, within the due date prescribed by the CGST
Act 2017 which is on February 20th, 2024. It came to the notice of the Co.
that tax due for the month of January, 2024 has been paid short by
` 16,000. The short fall of ` 16,000 has been paid through cash ledger and
credit ledger at the time of filing GSTR 3B for the month of February 2024
on March 20th, 2024 in the following manner:
Particulars Cash Ledger Credit Ledger
Shortfall ` 12,000 ` 4,000
Assume that electronic cash ledger and credit ledger carry sufficient
balance for the above short fall.
(i) You are required to calculate the amount of interest payable if any
under section 50 of the CGST Act 2017 and rule 88B of the CGST
rules 2017.
(ii) Give the effect if GSTR3B for the month of January 2024 had been
filed belatedly on March 20, 2024 and all other conditions remaining
same.
Calculation should be rounded off to nearest rupee. As 2024 is leap
year, give effect of same. (5 Marks)
282
 (b) Who is liable to collect TCS (collection of tax at source) under Section
52 of the CGST Act, 2017. Briefly explain the provisions relating to
registration, filing of return and deposit of TCS to Government as per
the provisions of section 52 of the CGST Act, 2017 and rule 12 of the
CGST Rules, 2017. (5 Marks)
4. (a) Describe the conditions to be satisfied for availing deduction of post
supply discounts from the value of supply as per the provisions of
section 15(3) of the CGST Act 2017. (5 Marks)
OR
(a) Examine the existence of "consideration" for donation received by
charitable institutions from individual donors, without quid pro quo an
important feature as defined in section 2(31) of the CGST Act, 2017.
(5 Marks)
(b) Mohan Enterprise is a registered person having principal place of
business in Gandhinagar, Gujarat. They received legal services of
advocate -Sameer, a registered person from Ahmedabad, Gujarat.
Shekhar, an unregistered person provided services of labour to Mohan
Enterprise. Explain the provisions relating to issue of invoice by
recipient Mohan Enterprise if he is liable to pay tax under reverse
charge under Section 9(3) or 9(4) of the CGST Act, 2017. (5 Marks)

283
 MODEL TEST PAPER 8
SECTION B – GOODS AND SERVICES TAX (50 MARKS)
QUESTIONS
(i) Working Notes should form part of the answers. However, in answers to
Questions in Division A, working notes are not required.
(ii) Wherever necessary, suitable assumptions may be made by the candidates,
and disclosed by way of notes.
(iii) All questions should be answered on the basis of the provisions of the CGST
Act, 2017 and the IGST Act, 2017 as amended by the
Finance (No. 2) Act, 2024 including significant notifications and circulars
issued and other legislative amendments made, which have become effective
up to 31.10.2024.
Division A - Multiple Choice Questions (MCQs)
Write the most appropriate answer to each of the following multiple-choice
questions by choosing one of the four options given. All questions are
compulsory.
Total Marks: 15 Marks
Case Scenario 1
M/s. Veena & Co. of Jabalpur was registered under GST under composition
scheme. Outward Supply of the firm for the month of July 2024 was ` 10 lakh, out
of which ` 2 lakh was supply of services. In the preceding financial year, the firm
was doing trading of taxable goods only. Turnover of the concern for the previous
financial year was ` 100 lakh.
The firm imported the following services during August, 2024:
(a) Architect services from Mr. Vinod, a partner of the firm, who resides in France
for ` 1,00,000. The said service was paid but not used for the furtherance of
the business.
(b) Management consultancy services from Mr. Lal, a renowned lawyer in
Sweden, who was an ex-employee of the firm. The value of the said service
was ` 3,00,000. Even though it was used in the furtherance of the business,
no consideration was paid by the firm.
Aggregate Turnover of the firm crossed the limit of ` 150 lakh on 25.09.2024 from
which date the firm was liable to pay tax under regular scheme.
All the amounts given above are exclusive of taxes wherever applicable. All the
supply referred above is intra-State unless specified otherwise.
From the information given above, choose the most appropriate answer for the 1-3
questions:
1. Tax liability of Veena & Co. for the month of July 2024 is
`____________each under CGST and SGST.
(A) 5,000
(B) 9,000
284
 (C) 10,000
(D) 14,000 (2 Marks)
2. Import of services by Veena & Co. that will be treated as supply is
` ________.
(A) Nil
(B) ` 1,00,000
(C) ` 3,00,000
(D) ` 4,00,000 (2 Marks)
3. Veena & Co. will be eligible to claim ITC held on Stock and Capital goods
as on _____________.
(A) 01-09-2024
(B) 24-09-2024
(C) 25-09-2024
(D) 30-09-2024 (2 Marks)
Case Scenario 2
Pawan was engaged in providing various services within the State of Rajasthan
since May 2024. His aggregate turnover crossed the threshold limit on 04.07.2024.
He applied for registration under GST on 02.08.2024. He got his GST registration
on 10.08.2024.
After taking registration, Pawan started a business across India including supply of
goods also. He dispatched goods pan India based on orders he got for the goods
dealt by him.
He received an order from Delhi for which he supplied taxable goods valuing
` 45,000. Applicable rate of IGST was 12%. He also supplied certain exempted
goods valuing ` 4,000. He made one invoice for both taxable as well as exempted
supply made to Delhi.
He asked his tax consultant for the requirement of generation of e-way bill for this
order. Tax consultant informed him that the requirement of e-way bill is based on
consignment value of goods supplied.
Even being a micro enterprise, Pawan did not receive timely payment from his
customers as a result of which he ran into severe cash crunch and eventually could
not make on-time payment to his suppliers. As a result, he decided to shut down
his business and got placed in a software company as a senior programmer
executive.
While shutting down his business, he informed his tax consultant to cancel the GST
rregistration. Tax consultant surrendered his registration online in GST Portal on
25.10.2024 and his application for cancellation was approved by the Proper Officer
on 31.10.2024.
All the amounts given above are exclusive of taxes wherever applicable.
From the information given above, choose the most appropriate answer for the 4-6
questions:
285
4. Effective date of registration of Pawan is ____________.
(A) 04.07.2024
(B) 02.08.2024
(C) 03.08.2024
(D) 10.08.2024 (2 Marks)
5.. Consignment value of goods supplied to Delhi by Pawan is `___________.
(A) 45,000
(B) 49,000
(C) 50,400
(D) 54,400 (2 Marks)
6. Due date by which Pawan is supposed to file Final return under GST is
____________.
(A) 25.11.2024
(B) 30.11.2024
(C) 25.01.2025
(D) 31.01.2025 (2 Marks)
7. Smita Limited made an outward supply of garments at an agreed price of
` 5,00,000. The company charged ‘Go Green Cess’ levied by Local municipal
corporation amounting to ` 10,000 for this supply. As the customer made
payment within 3 days from the date of delivery, Smita Limited provide a
discount of ` 5,000 separately as a customer friendly measure, even though
no prior agreement was made on discount. Value of Supply made by Smita
Limited u/s 15 is ` ______________
(A) 5,05,000
(B) 5,10,000
(C) 5,00,000
(d) 5,15,000 (2 Marks)
8. ‘Truth is God’, a religious trust u/s 12AA of the Income-tax Act, 1961, provides
service by way of renting of premises within the precincts of a religious place
which is exempt upto ` ___________.
(A) ` 999 per day
(B) ` 1,000 per day
(C) ` 9,999 per day
(D) ` 10,000 per day (1 Mark)

286
 Division B - Descriptive Questions
Question No. 1 is compulsory.
Attempt any two questions out of remaining three questions.

Question 1
1. (a) DEF Pvt. Ltd., a registered supplier of goods and services in Pune,
Maharashtra, has furnished the following details for the month of
January, 2025. The turnover of DEF Pvt. Ltd. was ` 3.2 crores in last
financial year.
Sr. Particulars Amount (`)
No.
1. Intra State outward supply of taxable goods 5,00,000
2. DEF Pvt. Ltd. had provided service of booking of 20,000
flight tickets for employee of H Enterprise (service fee
(registered in Delhi) in the economy class from charged)
Bagdogra (West Bengal) to Pune Maharashtra.
3. DEF Pvt. had purchased goods worth ` 5,00,000 25,000
from R Ltd. (registered in Gujarat) on 15.03.2024.
Now R Ltd. issued debit note on 15.01.2025 for
post delivery service to DEF Pvt. Ltd. as per part
of terms of sales.
4. DEF Pvt. Ltd. had sold one of its unit in Pune as a 10,00,000
going concern (with all goods and unexecuted
orders) to H Ltd. (registered in New Delhi)
5. DEF Pvt. Ltd. had provided service to Mr. Y 5,00,000
(registered in Punjab) to organise business
exhibition in Dubai.
6. Inter-State outward supply of service 10,00,000
7. Amount towards receipt of intra State services 6,00,000
8. Purchase of confectionery items which are to be 1,00,000
used to supply free of cost to customers in a
customer meet organised by DEF Pvt. Ltd.
Opening balance of Input Tax credit at the beginning of Jan 2025.
CGST ` 25,000
SGST ` 25,000
IGST ` 30,000
Additional Information:
(1) Rates of CGST, SGST and IGST are 9%, 9% and 18% respectively
unless otherwise mentioned.
(2) Both inward and outward supplies are exclusive of taxes, wherever
applicable.
(3) All the conditions necessary for availing the ITC have been fulfilled.
287
 From the information given above, compute the output tax liability and
input tax credit available to DEF Pvt. Ltd., for the month of January,
2025. Make suitable assumptions wherever required. (10 Marks)
(b) ABC Infra, is a partnership firm registered under GST. It furnishes the
following details about services provided during the month of
February:
Particulars Amount
(exclusive
of GST)
(i) Consideration received from neighbouring 5,50,000
Housing Cooperative Society as ABC Infra agrees
to install effluent plant for treatment of wastewater
even though is no legal requirement to do so.
(ii) Consideration received from distribution of passes 2,42,500
for cricket match organized as firm’s annual event.
Total 500 passes have been distributed.
(iii) Services given of booking air tickets in economy 1,20,000
class for flight between Mumbai to Manipur. (service fee
charged)
(iv) Services given for construction of buildings to 8,20,000
State Government in relation to function entrusted
to Municipality under article 243W of the
Constitution. Construction material used of
` 2,79,375 is included in the given figure.
All supplies mentioned above are intra-State supplies. GST rates for
CGST, SGST, IGST are 9%, 9%, 18% respectively. Compute the GST
payable by the ABC Infra for the month of February. (5 Marks)
2. (a) M/s. T is a registered dealer of Andhra Pradesh trading in different types
of machinery and its related different types of services. Their aggregate
turnover for the preceding financial year 2023-24 for sale of machinery
was ` 1.32 crores, it was first year so they had not started for providing
service related to machinery. From FY 2024-25 they are planning to
provide repair and maintenance service of ` 6.25 lakh for which they
have to purchase some raw material of ` 5 lakh from the other State (till
date they are purchasing within State only).
From the information given above, examine whether M/s. T can opt
for composition scheme under Section 10(1), 10(2A) or 10(2) of the
CGST Act, 2017 for FY 2024-25? (5 Marks)
(b) (i) Garima having its permanent residence in Bhavnagar, Gujarat
purchased car from Kiara Motors of Jaipur, Rajasthan to take the
advantage of lower registration charges and road tax. Garima took
the delivery of the car from Jaipur and returned with car to her
residence in Bhavnagar, Gujarat. Address of Garima recorded in
the invoice issued by Kiara Motors mentions only the name of the
288
 State i.e. Gujarat.
Garima is an unregistered person whereas Kiara Motors is a
registered person under GST. Determine the place of supply for
supply made by Kiara Motors to Garima. (2 Marks)
(ii) Aakar Advertisement Agency, a registered person in Nagpur,
Maharashtra, wants to display the products of its client's at most
prominent places in different States. It took on rights to use the
space on hoardings mounted on fixed surface attached to earth,
situated in Udaipur, Rajasthan and in Gwalior, Madhya Pradesh
from G.N. Enterprise registered in State of Chhattisgarh. Aakar
Advertisement Agency has an exclusive right to use the space and
also to manage the advertisements on the hoardings.
What will be the place of supply of services provided by the G.N.
Enterprise to the Aakar Advertisement Agency? (3 Marks)
3. (a) Mohan, a registered person in Salem, Tamil Nadu, makes intra-State
supply of taxable goods amounting to ` 13,57,000 (inclusive of GST) to
a Public Sector Undertaking (PSU). Consideration for same is received
in 5 equal instalments from the PSU.
Tax rates applicable: CGST 9%, SGST 9%, IGST 18%
What will be your view with respect to applicability of TDS provisions
as per section 51 of the CGST Act, 2017 regarding above transaction?
What is the period by which TDS is required to be deposited to the
Government account? (5 Marks)
(b) Every registered person executing works contract shall keep separate
accounts for works contract under CGST Rules, 2017.
List the details to be maintained. (5 Marks)
4. (a) Describe the provisions relating to import of services by a registered
person as contained in the section 7(1)(b), 7(1)(c) and Schedule 1 of the
CGST Act, 2017. (5 Marks)
(b) (i) List out category of persons who are exempted from the E-invoicing
provisions. (2 Marks)
(ii) No act or proceedings of the Goods and Services Tax Council shall
be invalid merely by certain reasons. What are they? (3 Marks)
OR
(b) Commissioner has notified some specified persons to maintain
additional accounts or documents as mentioned in rule 56 of the CGST
Rules 2017, Agent as defined under Section 2(5) of the CGST Act,
2017 is one of them.
List the additional accounts or documents to be kept by agent.
(5 Marks)

289
ANSWERS

290
 ANSWERS OF MODEL TEST PAPER 1
INTERMEDIATE COURSE: GROUP - I
PAPER – 3: TAXATION
SECTION – A: INCOME TAX LAW
Division A – Multiple Choice Questions
MCQ Sub- Most Appropriate MCQ Most Appropriate
No. part Answer No. Answer
1. (i) (d) 3. (c)
(ii) (a) 4. (c)
(iii) (a)
2. (i) (c)
(ii) (d)
(iii) (d)
Division B – Descriptive Questions
1. Computation of total income of Mr. Amit as per section 115BAC
for A.Y. 2025-26
Particulars ₹
Net profit as per profit and loss account 50,85,000
Less: Income-tax refund credited in the profit and loss
account, out of which interest on such refund is only
taxable, which is to be considered separately under the
head “Income from other sources” 30,000
50,55,000
Add: Expenses either not allowable or to be considered
separately but charged in the profit & loss account
- Salary paid to brother disallowed to the extent 5,000
considered unreasonable [Section 40A(2)]
- Advertisement in the souvenir of political party not 2,500
allowable as per section 37(2B) (See Note 1)
- Payment made to political party by cheque (See 1,00,000
Note 2)
- Penalty levied by the Goods and Services tax 5,300
department for delayed filing of returns not allowable
as being paid for infraction of law (See Note 3)
- Depreciation as per books 1,07,250
- 30% of interest paid on loan paid to Mr. Mohit, a
resident, without deduction of tax at source not 24,000
allowable as per section 40(a)(ia)
52,99,050

478
Less: Depreciation allowable as per Income-tax 65,000
Act, 1961
Depreciation on building [₹ 20 lakhs x 2,00,000 2,65,000
10%]
Profits and gains from business or profession 50,34,050
Income from Other Sources
Interest on income-tax refund 4,570
Gross Total Income 50,38,620
Less: Deduction under section 80GGC [Contribution to Nil
Political Party] [Not allowable]
Total Income 50,38,620
Notes –
(1) The amount of ₹ 2,500 paid for advertisement in the souvenir issued by
a political party attracts disallowance under section 37(2B).
(2) Payment to political party is not an expenditure incurred wholly and
exclusively for business purpose and hence not allowance under
section 37(1). Since the amount has been debited to profit and loss
account, the same has to be added back for computing business
income.
(3) The interest of ₹ 12,750 paid on the delayed deposit of goods and
services tax is for breach of contract and hence, is allowable as
deduction. However, penalty of ₹ 5,300 for delay in filing of returns is
not allowable since it is for breach of law.
(4) Deduction under section 35AD is not allowable as per section
115BAC(2). However, normal depreciation u/s 32 is allowable.
Computation of tax liability as per section 115BAC
Particulars ₹ ₹
Tax on total income of ₹ 50,38,620
Upto ₹ 3,00,000 Nil
₹ 3,00,001 – ₹ 7,00,000 [@5% of ₹ 4 lakhs] 20,000
₹ 7,00,001 – ₹ 10,00,000 [@10% of ₹ 3 lakhs] 30,000
₹ 10,00,001 – ₹ 12,00,000 [@15% of ₹ 2 lakhs] 30,000
₹ 12,00,001 – ₹ 15,00,000 [@20% of ₹ 3 lakhs] 60,000
₹ 15,00,001 – ₹ 50,38,620 [@30% of 10,61,586
₹ 35,38,620]
12,01,586
Add: Surcharge @10% [Since, the total
income exceeds ₹ 50 lakhs but does not
exceed ₹ 1 crore] 1,20,159
13,21,745

479
 Less: Marginal relief (See computation 93,125
below)
12,28,620
Add: Health and education cess@4% 49,145
Total tax liability 12,77,765
Total tax liability (Rounded off) 12,77,770
Computation of marginal relief
Particulars ₹
(A) Tax payable including surcharge on total income of 13,21,745
₹ 50,38,620 as per section 115BAC
(B) Tax payable on total income of ₹ 50 lakhs as per 11,90,000
section 115BAC
(C) Excess tax payable (A-B) 1,31,745
(D) Marginal relief (₹1,31,745 – ₹ 38,620, being the amount
of income in excess of ₹ 50 lakhs) 93,125
Note - An individual paying tax u/s 115BAC is not liable to alternate
minimum tax u/s 115JC.
Computation of total income of Mr. Amit for A.Y. 2025-26 under normal
provisions of the Act
Particulars ₹ ₹
Gross Total Income as per default tax regime 50,38,620
under section 115BAC
Add: Depreciation on building [₹ 20 lakhs x 10%] 2,00,000
52,38,620
Less: Warehousing charges 22,50,000
Gross Total Income excluding profits and 29,88,620
gains from specified business under section
35AD
Profits and gains from specified business
under section 35AD
Warehousing charges 22,50,000
Less: Deduction under section 35AD (See Note 1) 20,00,000 2,50,000
Gross Total Income as per normal provisions 32,38,620
of the Act
Less: Deduction under section 80GGC for 1,00,000
contribution to Political Party (See Note 2)
Total Income as per regular provisions of the 31,38,620
Act

480
Notes –
(1) Deduction @100% of the capital expenditure is available under section
35AD in respect of specified business of setting up and operating a
warehouse facility for storage of agricultural produce which
commences operation on or after 1.04.2009.
(2) Payment to political party qualifies for deduction under section 80GGC
since the payment is made by way of a cheque.
Computation of tax liability of Mr. Amit for A.Y. 2025-26 under the
regular provisions of the Act
Particulars ₹ ₹
Tax on total income of ₹ 31,38,620
Upto ₹ 2,50,000 Nil
₹ 2,50,001 – ₹ 5,00,000 [@5% of ₹ 2.50 lakh] 12,500
₹ 5,00,001 – ₹ 10,00,000 [@20% of ₹ 5,00,000] 1,00,000
₹ 10,00,001- ₹ 31,38,620 [@30% of ₹ 21,38,620] 6,41,586 7,54,086
Add: Health and education cess@4% 30,163
Total tax liability 7,84,249
Total tax liability (rounded off) 7,84,250

Computation of adjusted total income and AMT of Mr. Amit for

A.Y. 2025-26
Particulars ₹ ₹
Total Income (computed above as per regular 31,38,620
provisions of income tax)
Add: Deduction under section 35AD 20,00,000
Less: Depreciation under section 32 on building (2,00,000) 18,00,000
[₹ 20 lakhs x 10%]
Adjusted Total Income 49,38,620
Alternative Minimum [email protected]% 9,13,645
Add: Health and education cess@4% 36,546
Total tax liability 9,50,191
Total tax liability (rounded off) 9,50,190
Since the regular income-tax payable is less than the alternate minimum tax
payable, the adjusted total income shall be deemed to be the total income
and tax is leviable @18.5% thereof plus cess@4%. Therefore, liability as per
section 115JC is ₹ 9,50,190.
Since the tax liability of Mr. Amit under section 115JC is lower than the tax
liability as computed u/s 115BAC, it would be beneficial for him to opt out of
the default tax regime under section 115BAC for A.Y. 2025-26 and pays tax

481
 under regular provisions of the Act. Moreover, benefit of alternate minimum
tax credit is also available to the extent of tax paid in excess of regular tax.
AMT credit to be carried forward under section 115JEE
Particulars ₹
Tax liability under section 115JC 9,50,190
Less: Tax liability under the regular provisions of the 7,84,250
Income-tax Act, 1961
1,65,940
2. (a) As per section 6(1), an Indian citizen or a person of Indian origin who,
being outside India, comes on a visit to India would be resident in India
if he or she stays in India for a period of 182 days or more during the
relevant previous year in case such person has total income, other than
the income from foreign sources, not exceeding ₹ 15 lakhs. However, if
such person has total income, other than the income from foreign
sources, exceeding ₹ 15 lakhs, he would also be a resident if he has
been in India for at least 120 days during the relevant previous year
and has been in India during the 4 years immediately preceding the
previous year for a total period of 365 days or more. In such a case, he
would be resident but not ordinarily resident in India.
Income from foreign sources means income which accrues or arises
outside India (except income derived from a business controlled in or a
profession set up in India) and which is not deemed to accrue or arise
in India.
In this case, total income, other than the income from foreign sources,
of Mr. Akash for P.Y. 2024-25 would be
Particulars Amount (₹)
Salary from ABC Inc., California received in California -
(Computed) (Not included in total income, since it is
income from foreign source)
Dividend from Indian companies (Included in total 5,00,000
income, since it is deemed to accrue or arise in India)
Agricultural income from land situated in Nepal (Not -
included in total income, since it is accrued or arisen
outside India and received outside India)
Rent received/receivable from house 5,50,000
property in Delhi (Included in total income,
since it is deemed to accrue or arise in India)
Less: 30% of ₹ 5.50 lakhs 1,65,000 3,85,000
Profits from a profession in California, which was set up in 6,00,000
India, received there
Total income, other than the income from foreign 14,85,000
sources

482
 Since Mr. Akash is an Indian citizen who comes on a visit to India only
for 121 days in the P.Y. 2024-25 and his total income, other than
income from foreign sources does not exceed ₹ 15 lakhs, he would be
non-resident for the A.Y. 2025-26.
A non-resident is chargeable to tax in respect of income received or
deemed to receive in India and income which accrues or arises or is
deemed to accrue or arise to him in India. Accordingly, his total income
would be as follow –
Particulars Amount (₹)
Salary from ABC Inc., California received in -
California (Computed) (Not taxable, since it neither
accrues or arises in India nor is it received in India)
Dividend from Indian companies (Taxable, since 5,00,000
deemed to accrue or arise in India)
Agricultural income from land situated in Nepal (Not -
taxable, since it neither accrues or arises in India
nor is it received in India)
Rent received/receivable from house 5,50,000
property in Delhi (Taxable, since it is
deemed to accrue or arise in India)
Less: 30% of ₹ 5.50 lakhs 1,65,000 3,85,000
Profits from a profession in California, which was -
set up in India, received there
Gross Total Income/ Total income 8,85,000
(b) TDS implications
(i) Section 194-I, which governs the deduction of tax at source
@10% on payment of rent, exceeding ₹ 2,40,000 p.a., is
applicable to all persons except individuals and HUF, whose
turnover/gross receipts do not exceed ₹ 1 crore in case of
business or ₹ 50 lakhs in case of profession during the financial
year immediately preceding the financial year in which such rent
is credited or paid.
In the present case, State Bank of India has to deduct at source
@ 10% on rental payment to Mr. Kunal.
Tax deducted at source = ₹ 72,000 (₹ 7,20,000 x 10%)
Section 196, however, provides exemption in respect of payments
made to Government from application of the provisions of tax
deduction at source.
Therefore, no tax is required to be deducted at source by State
Bank of India from rental payments to the Government.
(ii) As per section 194C, no tax is required to be deducted at source
on payment to transporter if the following conditions are satisfied:

483
 (1) He owns ten or less goods carriages at any time during the
previous year.
(2) He is engaged in the business of plying, hiring or leasing
goods carriages;
(3) He furnishes a declaration to this effect along with his PAN.
In the present case, since Mr. Deepak has not furnished his PAN,
tax is required to be deducted at source @ 20% under section
206AA on ₹ 2,50,000, since the same exceeds the threshold limit
of ₹ 1,00,000.
Tax deducted at source = ₹ 50,000 (₹ 2,50,000 x 20%)
3. (a) Computation of Income under the head “Salaries” in the hands of
Mr. Sahil for the A.Y. 2025-26
Particulars ₹
Basic Salary [₹ 55,000 x 12] 6,60,000
Dearness allowance [10% of basic salary] 66,000
Bonus 60,000
Fixed Medical Allowance [Taxable] 50,000
Reimbursement of Medical expenditure incurred for his 6,500
father [Fully taxable]
Facility of laptop [Facility of laptop is an exempt Nil
perquisite, whether used for official or personal purpose
or both]
Reimbursement of salary of domestic servant [₹ 8,000 x 96,000
12] [Fully taxable, since perquisite includes any sum paid
by the employer in respect of any obligation which would
have been payable by the employee]
Value of equity shares allotted [700 equity shares x 77,000
₹ 110 (₹ 280, being the fair market value – ₹ 170, being
the amount recovered)]
Professional tax paid by the employer [Perquisite
includes any sum paid by the employer in respect of any
obligation which would have been payable by the
employee] 1,400
Gross Salary 10,16,900
Less: Deduction under section 16
Professional tax paid [Not allowed] -
Standard Deduction (Lower of ₹ 75,000 or amount 75,000
of salary)
Taxable Salary 9,41,900

484
 (b) Computation of income from house property of Mr. Kushal for
A.Y. 2025-26
Particulars ₹ ₹
1. Income from let-out property in New
York [See Note 1 below]
1Gross Annual Value ($ 5,000 p.m. x 12 48,60,000
months x ₹ 81)
Less: Municipal taxes paid during the year
[$ 2,000 ($ 1,250 + $ 750) x ₹ 81]2 1,62,000
Net Annual Value (NAV) 46,98,000
Less: Deductions under section 24
(a) 30% of NAV 14,09,400
(b) Interest on housing loan - 14,09,400
32,88,600
2. Income from self-occupied property
in Ahmedabad
Annual Value [Nil, since the property is NIL
self-occupied]
[No deduction is allowable in respect of
municipal taxes paid in respect of self-
occupied property]
Less: Deduction in respect of interest on 2,00,000
housing loan [See Note 2 below]
(2,00,000)
Income from house property 30,88,600
[₹ 32,88,600 – ₹ 2,00,000]
Notes:
(1) Since Mr. Kushal is a resident but not ordinarily resident in India
for A.Y. 2025-26, income which is, inter alia, received in India
shall be taxable in India, even if such income has accrued or
arisen outside India by virtue of the provisions of section 5(1).
Accordingly, rent received from house property in New York would
be taxable in India since such income is received by him in India.
(2) Interest on housing loan for construction of
self-occupied property allowable as deduction
under section 24
Interest for the current year (₹ 30,00,000 x 10%) ₹ 3,00,000

1 In the absence of information related to municipal value, fair rent and standard rent, the rent
receivable has been taken as the GAV
2 Both property tax and sewerage tax qualify for deduction from gross annual value

485
 Pre-construction interest
For the period 01.09.2019 to 31.03.2021
(₹ 30,00,000 x 10% x 19/12) = ₹ 4,75,000
₹ 4,75,000 allowed in 5 equal installments ₹ 95,000
(₹ 4,75,000/5)
₹ 3,95,000
In case of self-occupied property, interest
deduction to be restricted to ₹ 2,00,000

4. (a) Computation of Total Income of Mr. Vishal for A.Y. 2025-26

Particulars Amount Amount
(₹) (₹)
Income from house property
House in Delhi [Since Mr. Vishal receives
direct or indirect benefit from income arising
to his brother’s daughter, Ms. Deepika, from
the transfer of house to her without
consideration, such income is to be included
in the total income of Mr. Vishal, even
though the transfer may not be revocable
during lifetime of Ms. Deepika]
Gross Annual Value 3 5,50,000
Less: Municipal taxes -
Net Annual Value 5,50,000
Less: Deductions from Net Annual Value
(a) 30% of Net Annual Value 1,65,000
(b) Interest on loan -
3,85,000
Capital Gains
Long term capital gain from sale of property 15,000
Less: Short-term capital loss can be set-off 15,000 -
against both short-term capital gains and
long-term capital gains. Short term capital
loss of ₹ 16,000 set off against long-term
capital gains to the extent of ₹15,000.
Balance short term capital loss of ₹ 1,000 to
be carry forward to A.Y.2026-27
Income from other sources
Dividend on preference shares [Taxable in 4,50,000

3 Rent receivable has been taken as the gross annual value in the absence of other information.

486
 the hands of Mr. Vishal as per section 60,
since he transferred the income, i.e.,
dividend, without transferring the asset, i.e.,
preference shares]
Interest from saving bank account 1,75,000
Cash gift [Taxable as per section 56(2)(x), 75,000
since sum of money exceeding ₹ 50,000 is
received from his niece, who is not a relative]
Income from betting [No loss is allowed to be 25,000
set off against such income]
Income from card games [No loss is allowed 46,000 7,71,000
to be set off against such income]
Gross Total Income 11,56,000
Less: Deduction under Chapter VI-A
Deduction under section 80TTA [Interest
from savings bank account] 10,000 10,000
Total Income 11,46,000
Losses to be carried forward to A.Y. 2026-27
Particulars Amount (₹)
Short term capital loss [₹ 16,000 – ₹ 15,000] 1,000
Loss on maintenance of race horses [Loss incurred 14,600
on maintenance of race horses cannot be set-off
against income from any source other than the activity
of owning and maintaining race horses.

(b) First alternative

As per section 139(3), an assessee is required to file a return of loss
within the due date specified u/s 139(1) for filing return of income.
As per section 80, certain losses which have not been determined in
pursuance of a return filed under section 139(3) on or before the due
date specified under section 139(1) cannot be carried forward and set-
off. Thus, the assessee has to file a return of loss under section 139(3)
within the time allowed u/s 139(1) in order to carry forward and set off
of following losses:
- loss under the head “Capital Gains”,
- loss from activity of owning and maintaining race horses.
- business loss,
- speculation business loss and

487
 - loss from specified business (in case assessee opts out of the
default tax regime).
However, following can be carried forward for set-off even if the return
of loss has not been filed before the due date:
- Loss under the head “Income from house property” (in case
assessee opts out of the default tax regime) and
- Unabsorbed depreciation
(b) Second alternative
Transaction Is quoting of PAN mandatory
in related documents?
1. Sale of scooter for ₹ 70,000 No, quoting of PAN is not
mandatory on sale of scooter.
2. Payment of life insurance Yes, since the amount paid
premium of ₹ 67,000 to exceeds ₹ 50,000.
insurance company
3. Purchase of plot for ₹ 9 lakhs Though the amount of
while the stamp duty of the consideration does not exceed
same is ₹ 11 lakhs ₹ 10 lakhs, Mr. Vishnu has to
quote PAN since stamp duty of
plot exceeds ₹ 10 lakhs.
4. Applied to PNB for issue of Yes, quoting of PAN is
credit card mandatory on making an
application to a banking
company for issue of credit
card.

488
 ANSWERS OF MODEL TEST PAPER 2
INTERMEDIATE COURSE: GROUP - I
PAPER – 3: TAXATION
SECTION – A: INCOME TAX LAW
Division A – Multiple Choice Questions
MCQ Sub-part Most Appropriate MCQ Most Appropriate
No. Answer No. Answer
1. (i) (b) 2. (b)
(ii) (d) 3. (c)
(iii) (b)
(iv) (a)
(v) (a)
(vi) (a)
Division B – Descriptive Questions
1. Computation of total income of Mr. Sunil for A.Y. 2025-26 under default
tax regime under section 115BAC
Particulars ₹ ₹ ₹
I Income from house property
Let out portion [First floor]
Gross Annual Value [Rent received 2,95,000
is taken as GAV, in the absence of
other information]
Less: Municipal taxes paid by him in
the P.Y. 2024-25 pertaining to let 12,500
out portion [₹ 25,000/2]
Net Annual Value (NAV) 2,82,500
Less: Deduction u/s 24
(a) 30% of ₹ 2,82,500 84,750
(b) Interest on housing loan 75,000 1,59,750
[₹ 1,50,000/2]
1,22,750
Self-occupied portion [Ground
Floor]
Annual Value Nil
[No deduction is allowable in
respect of municipal taxes paid]
Less: Interest on housing loan [Not Nil
allowable under section 115BAC]
Nil
Income from house property 1,22,750
489
II Profits and gains of business or
profession
Income from SEZ unit 40,00,000
III Capital Gains
Long-term capital gains on sale
of land (since held for more than
24 months)
Full Value of Consideration [Actual 15,00,000
consideration of ₹ 15 lakhs, since
stamp duty value of ₹ 16 lakhs does
not exceed 110% of actual
consideration of ₹ 15 lakhs]
Less: Cost of acquisition
[₹ 4,00,000] (As transfer is on or 4,00,000
after 23.07.2024, the indexation 11,00,000
benefit would not be available)
Cost of acquisition
Higher of -
- Actual cost ₹ 2.80 lakhs + ₹ 0.12
lakhs = ₹ 2.92 lakhs and
- Fair Market Value (FMV) as on
1.4.2001 = ₹ 4.8 lakhs but cannot
exceed stamp duty value of ₹ 4
lakhs.
IV Income from Other Sources
Interest on savings bank deposits 30,000
Interest on fixed deposits 40,000 70,000
Gross Total Income 52,92,750
Less: Deduction under Chapter
VI-A
Deduction under section 80JJAA 7,12,800
30% of the employee cost of the
new employees employed during
the P.Y. 2024-25 for 240 days or
more during the P.Y. 2024-25
allowable as deduction [30% of
₹ 23,76,000 (12 x 18,000 x 11)]
As per section 115BAC, no
deduction under section 10AA or
under Chapter VI-A is allowable
except u/s 80JJAA
Total Income 45,79,950

490
 Computation of tax liability of Mr. Sunil under section 115BAC
Particulars ₹ ₹
Tax on total income of ₹ 45,79,950
Tax on LTCG on sale of vacant land
As the asset is a long term capital asset, being
land acquired before 23.07.2024 and transferred
on or after 23.07.2024 by a resident individual, the
tax shall be computed @20% with indexation
benefit or @12.5% without indexation benefit,
whichever is more beneficial to the assessee.
Tax @20% with indexation
Sale consideration = 15,00,000
Cost of acquisition = 4,00,000 x 363/100 = 14,52,000
Gain = 48,000
Tax @20% = 48,000 x 20% = 9,600
Tax @12.5% without indexation
Tax @12.5% = 11,00,000 x 12.5% = 1,37,500
Tax on LTCG on sale of vacant land @20% with 9,600
indexation
Tax on remaining total income of ₹ 34,79,950
Upto ₹ 3,00,000 Nil
₹ 3,00,001 – ₹ 7,00,000 [@5% of ₹ 4 lakhs] 20,000
₹ 7,00,001 – ₹ 10,00,000 [@10% of ₹ 3 lakhs] 30,000
₹ 10,00,001 – ₹ 12,00,000 [@15% of ₹ 2 lakhs] 30,000
₹ 12,00,001 – ₹ 15,00,000 [@20% of ₹ 3 lakhs] 60,000
₹ 15,00,001 – ₹ 34,79,950 [@30% of ₹ 19,79,950] 5,93,985
7,33,985
7,43,585
Add: Health and education cess@4% 29,743
Total tax liability 7,73,328
Tax liability (Rounded off) 7,73,330
Note - An individual paying tax u/s 115BAC is not liable to alternate
minimum tax u/s 115JC.
2. (a) Under section 6(1), an individual is said to be resident in India in any
previous year, if he satisfies any one of the following conditions:
(i) He has been in India during the previous year for a total period of
182 days or more, or
(ii) He has been in India during the 4 years immediately preceding
the previous year for a total period of 365 days or more and has
been in India for at least 60 days in the previous year.

491
 If an individual satisfies any one of the conditions mentioned above, he
is a resident. If both the above conditions are not satisfied, the
individual is a non-resident.
Therefore, the residential status of Mrs. Sia D’Souza, an American, for
A.Y.2025-26 has to be determined on the basis of her stay in India
during the previous year relevant to A.Y. 2025-26 i.e. P.Y.2024-25 and
in the preceding four assessment years.
Her stay in India during the previous year 2024-25 and in the preceding
four years are as under:
P.Y. 2024-25
01.04.2024 to 16.08.2024 - 138 days
23.03.2025 to 31.03.2025 - 9 days
Total 147 days
Four preceding previous years
P.Y.2023-24 [1.4.2023 to 31.3.2024] - 14 days
P.Y.2022-23 [1.4.2022 to 31.3.2023] - Nil
P.Y.2021-22 [1.4.2021 to 31.3.2022] - Nil
P.Y.2020-21 [1.4.2020 to 31.3.2021] - Nil
Total 14 days
The total stay of Mrs. Sia D’Souza during the previous year in India
was less than 182 days and during the four years preceding this year
was for 14 days. Therefore, due to non-fulfillment of any of the two
conditions for a resident, she would be treated as non-resident for the
Assessment Year 2025-26.
Computation of total income of Mrs. Sia D’Souza for the
A.Y. 2025-26
Particulars ₹ ₹
Income from house property
Flat located in Mumbai let-out from 01.06.2024
to 31.03.2025 @ ₹ 26,000 p.m.
Gross Annual Value [26,000 x 10]1 2,60,000
Less: Municipal taxes Nil
Net Annual Value (NAV) 2,60,000
Less: Deduction under section 24
30% of NAV 78,000
Interest on loan [fully allowable as 2,05,000 2,83,000 (23,000)
deduction, since property is let-out]

1 Actual rent received has been taken as the gross annual the value in absence of other information
(i.e. Municipal value, fair rental value and standard rent) in the question.
492
 Income from other sources
- Gold chain worth ₹ 1,50,000 received from
parents of husband would be exempt, Nil
since parents of husband fall within the
definition of relatives and gifts from a
relative are not chargeable to tax.
- Gift received from friends of her husband
aggregating to ₹ 1,65,000 is taxable under
section 56(2)(x) since the amount of cash
gifts of ₹ 1,65,000 exceeds ₹ 50,000. 1,65,000 1,65,000
Gross Total income/ Total Income 1,42,000
(b) TDS implications
(i) Tax @ 5% till ₹ 7 lakhs and 20% thereafter, is required to be
collected u/s 206C(1G) by the seller of an overseas tour
programme package, from Mr. Harish, being the buyer of an
overseas tour package, even if payment is made by account
payee cheque.
Accordingly, tax has to be collected@5% on ₹ 7 lakh and 20% on
₹ 3 lakhs.
TCS = ₹ 95,000
(ii) Mr. Aditya has to deduct tax at source@5% u/s 194M, although
his turnover for the P.Y. 2023-24 does not exceed ₹ 1 crore and
he is not liable to deduct tax at source under section 194C, since
the payment to contractor, Mr. Naresh, exceeds ₹ 50 lakhs.
Accordingly, tax has to be deducted @5% on ₹ 55 lakhs.
TDS = ₹ 2,75,000
3. (a) Computation of gross total income of Ms. Priyanka for the
A.Y. 2025-26 under normal provisions of the Act
Particulars ₹ ₹
(a) Income from salaries (See Working 5,71,000
Note below)
(b) Income from Other Sources
(i) Interest on fixed deposit with a 7,000
company
(ii) Income from specified mutual fund 3,000
(iii) Interest on Fixed Deposit received
by minor daughter (₹ 4,000 - 2,500 12,500
₹ 1500)
Gross total income 5,83,500

493
 Working Note:
Computation of salary income of Ms. Priyanka for the
A.Y. 2025-26
Particulars ₹
Salary [₹ 40,000 x 12] 4,80,000
Medical facility [in the hospital maintained by the _
company is exempt]
Rent free accommodation
10% of salary = 4,80,000 x 10% 48,000
Valuation of perquisite of interest on loan
[Rule 3(7)(i)] – 9.5% is taxable which is to be reduced by 24,500
actual rate of interest charged i.e. [9.5% - 6% = 3.5%]
Use of dining table for 1 month
[₹ 60,000 x 10/100 x 1/12] 500
Perquisite on sale of dining table
Cost 60,000
Less: Depreciation on straight line 12,000
method @ 10% for 2 years
Written Down Value 48,000
Less: Amount paid by the assessee 30,000 18,000
Purchases through credit card 10,000
Perquisite on sale of car
Original cost of car 2,50,000
Less: Depreciation from 16.7.2022 to 50,000
15.7.2023 @ 20%
Value as on 14.07.2024- being the date of 2,00,000
sale to employee
Less: Amount received from the assessee 1,60,000
on 14.07.2024 40,000
Gross salary 6,21,000
Less: Standard deduction upto ₹ 50,000 50,000
Income from Salaries 5,71,000
(b) (i) Computation of book profit of the firm under section 40(b)
Particulars Amount Amount
(₹) (₹)
Net Profit (before deduction of depreciation, 7,50,000
salary and interest)
Less: Depreciation under section 32 2,50,000
Interest @ 12% p.a. [being the maximum 72,000 3,22,000
allowable as per section 40(b)] (₹ 6,00,000 ×
12%)
Book profit 4,28,000

494
 “Book profit” means the net profit as per the profit and loss account for
the relevant previous year computed in the manner laid down in
Chapter IV-D as increased by the aggregate amount of the
remuneration paid or payable to the partners of the firm if the same has
been already deducted while computing the net profit. Hence, brought
forward loss of ₹ 50,000 of P.Y.2023-24 is not allowed to be set off for
computation of “book profit”.
(ii) Salary actually paid to working partners = ₹ 25,000 × 2 × 12 =
₹ 6,00,000.
As per the provisions of section 40(b)(v), the maximum allowable
working partners’ salary for the A.Y. 2025-26 in this case would be:
Particulars ₹
On the first ₹ 6,00,000 of book profit [(₹ 3,00,000 or 90% of 3,85,200
₹ 4,28,000) whichever is more]
Maximum allowable working partners’ salary 3,85,200
Hence, allowable working partner’s salary for the A.Y. 2025-26 as per
the provisions of section 40(b) is ` 3,85,200.
4. (a) Computation of Taxable Income of Mr. Roshan for the A.Y. 2025-26
under normal provisions of the Act
Particulars ₹ ₹
Salaries
Shamita’s salary (₹ 25,000 x 12) 3,00,000
[See Note 1]
Less: Standard deduction under section 50,000
16(ia) upto ₹ 50,000
2,50,000
Less: Loss from house property set off
against salary income as per section 2,00,000 50,000
71(3A) [See Note 2]
Capital Gains
Short term capital gain 1,50,000
Less: Loss from tea business (₹ 1,06,000 42,400 1,07,600
x 40%) [See Note 3 & 4]
Income from Other Sources
Dividend income 11,00,000
Taxable Income 12,57,600
The following losses can be carried forward for subsequent
assessment years:
(i) Loss from house property to be carried forward and ₹ 50,000
set-off against income from house property
(ii) Long-term capital loss of A.Y. 2022-23 can be ₹ 86,000
495
 carried forward and set-off against long-term capital
gains
(iii) Loss from speculative business to be carried ₹ 50,000
forward and set-off against income from speculative
business
Notes:
(1) As per section 64(1)(ii), all the income which arises directly or
indirectly, to the spouse of any individual by way of salary,
commission, fees or any other form of remuneration from a
concern in which such individual has a substantial interest shall
be included in the total income of such individual. However, where
spouse possesses technical or professional qualification and the
income is solely attributable to the application of such knowledge
and experience, clubbing provisions will not apply. Since,
Mrs. Shamita is not adequately qualified for the post and
Mr. Roshan has substantial interest in Ray Ltd by holding 21% of
the shares of the Ray Ltd., the salary income of Mrs. Shamita to
be included in Mr. Roshan’s income.
(2) As per section 71(3A), loss from house property can be set off
against any other head of income to the extent of ₹ 2,00,000 only.
(3) 60% of the losses from tea business is treated as agricultural
income and therefore exempt under section 10(1). Loss from an
exempt source cannot be set off against profits from a taxable
source.
(4) As per section 71(2A), business loss cannot be set off against
salary income. Hence, 40% of the losses from tea business i.e.,
₹ 42,400 can be set off against short term capital gains or
dividend income.
(5) Loss from card games can neither be set off against any other
income, nor can it be carried forward.
(6) Loss of ₹ 50,000 from speculative business can be set-off only
against the income from the speculative business. Hence, such
loss has to be carried forward.
(7) As per section 74(1), brought forward long-term capital loss can
be set-off only against long-term capital gain. Such loss can be
carried forward for eight assessment years immediately
succeeding the assessment year for which the loss was first
computed. Since, 8 assessment years has not expired, such loss
can be carried forward to A.Y. 2026-27 for set-off against long-
term capital gains.

496
(b) First alternative
(i) A HUF whose total income without giving effect to, inter alia,
section 54EC, exceeds the basic exemption limit, is required to
file a return of its income on or before the due date under section
139(1). In this case, since the total income without giving effect to
exemption under section 54EC is ₹ 12 lakhs, exceeds the basic
exemption limit, the HUF is required to file its return of income for
A.Y. 2025-26 on or before the due date under section 139(1).
(ii) If an individual has incurred expenditure exceeding ₹ 1 lakh
towards consumption of electricity during the previous year, he
would be required to file a return of income, even if his total
income does not exceed the basic exemption limit. Since
Mr. Samarth has incurred expenditure of ₹ 1,20,000 in the
P.Y.2024-25 towards consumption of electricity, he has to file his
return of income for A.Y. 2025-26 on or before the due date under
section 139(1).
(b) Second alternative
Every person who is eligible to obtain Aadhaar Number is required to
mandatorily quote Aadhaar Number:
(a) in the application form for allotment of Permanent Account
Number (PAN)
(b) in the return of income
The provisions of section 139AA relating to quoting of Aadhaar Number
would, however, not apply to an individual who does not possess the
Aadhaar number or Enrolment ID and is:
(i) residing in the States of Assam, Jammu & Kashmir and
Meghalaya;
(ii) a non-resident as per Income-tax Act, 1961;
(iii) of the age of 80 years or more at any time during the previous
year;
(iv) not a citizen of India.

497
 ANSWERS OF MODEL TEST PAPER 3
INTERMEDIATE COURSE: GROUP - I
PAPER – 3: TAXATION
SECTION – A: INCOME TAX LAW
Division A – Multiple Choice Questions
MCQ No. Sub-part Most Appropriate MCQ No. Most Appropriate
Answer Answer
1. (i) (a) 3. (a)
(ii) (d) 4. (c)
(iii) (b)
2. (i) (b)
(ii) (c)
(iii) (b)
Division B – Descriptive Questions
1. Computation of total income of Mr. Ayush for A.Y. 2025-26 under the
regular provisions of the Act
Particulars ₹ ₹ ₹
I Income from business or
profession
Net profit as per profit and loss 82,45,000
account
Add: Items of expenditure not
allowable while computing
business income
(i) Interest on loan taken for 1,75,000
purchase of plant & machinery
[Interest from the date on
which capital was borrowed till
the date on which asset was
first put to use, not allowable
as deduction under section
36(1)(iii). Accordingly, interest
of ₹ 1,75,000 [₹ 50,00,000 x
10.5% x 4/12] has to be added
back, since the same is
debited to the profit and loss
account]
(ii) Purchase of goods at a price 5,00,000
higher than the fair market
value
[The difference between the
purchase price (₹ 40 lakhs)
and the fair market value
498
 (₹ 35 lakhs) has to be added
back as per section 40A(2)
since the purchase is from a
related party, i.e., his brother
and at a price higher than the
fair market value] 6,75,000
89,20,000
Less: Items of income to be
treated separately under the
respective head of income
(i) Income-tax refund including 15,550
interest on refund of ₹ 4,550
(ii) Dividend from Indian 15,00,000
companies
(iii) Short term capital gains on 10,00,000
transfer of listed equity shares 25,15,550
64,04,450
Less: Depreciation on interest
on loan capitalised to plant and
machinery
₹ 1,75,000, being the amount of
interest on loan taken for purchase
of plant and machinery from the date
on which capital was borrowed till
the date on which asset was first put
to use, shall be capitalized
Normal depreciation @15% x 50% 13,125
on such interest
Additional depreciation @20% x 17,500 30,625
50% on such interest
[Since plant & machinery was put
to use for less than 180 days in
P.Y. 2024-25, it is eligible for 50%
of the rate of depreciation]
63,73,825
II Capital Gains
Short term capital gains on transfer 10,00,000
of listed equity shares
III Income from Other Sources
Interest on income-tax refund 4,550
Dividend from Indian companies 15,00,000 15,04,550
Gross Total Income 88,78,375
Less: Deductions under Chapter
VI-A
- Deduction under section 80C 40,000
Life insurance premium for married
daughter [Allowable as deduction
499
 though she is not dependent, since
child of an individual whether
dependent or not falls within the
meaning of term “Person”.
Accordingly, whole of the amount
of ₹ 40,000 is allowable as it does
not exceed 10% of the
₹ 5,00,000, being the sum assured]
- Deduction under section 80D 25,000 65,000
Health insurance premium for self,
spouse and children [Allowable as
deduction, since it is paid
otherwise than by way of cash.
However, it is to be restricted to
₹ 25,000
Total Income 88,13,375
Total Income (Rounded off) 88,13,380
Computation of tax payable by Mr. Ayush for A.Y. 2025-26
under the regular provisions of the Act
Particulars ₹ ₹
Tax on total income of ₹ 88,13,380
Tax on short term capital gains on transfer of 1,50,000
listed equity shares @15% u/s 111A [₹ 10,00,000
x 15%]
Tax on other Income of ₹ 78,13,380
Upto ₹ 2,50,000 Nil
₹ 2,50,001 – ₹ 5,00,000 [@5% of ₹ 2.50 lakh] 12,500
₹ 5,00,001 – ₹ 10,00,000 [@20% of ₹ 5,00,000] 1,00,000
₹ 10,00,001- ₹ 78,13,380 [@30% of ₹ 68,13,380] 20,44,014 21,56,514
23,06,514
Add: Surcharge @10%, since total income
exceeds ₹ 50,00,000 but does not exceed ₹ 1 2,30,651
crore
25,37,165
Add: Health and education cess@4% 1,01,487
Total tax liability 26,38,652
Less: TDS u/s 194N @ 2% on ₹ 50 lakhs, being 1,00,000
the cash withdrawals exceeding ₹ 1 crore
Less: Advance tax paid 17,50,000 18,50,000
Tax payable 7,88,652
Tax payable (Rounded off) 7,88,650

500
2. (a) Miss Geeta is said to be resident if she satisfies any one of the
following basic conditions:
(i) Has been in India during the previous year for a total period of
182 days or more
(or)
(ii) Has been in India during the 4 years immediately preceding the
previous year for a total period of 365 days or more and has been
in India for at least 60 days during the previous year.
Miss Geeta’s stay in India during the P.Y.2024-25 is 142 days
[30+31+30+31+20] which is less than 182 days. However, her stay in
India during the P.Y.2024-25 exceeds 60 days. Since, she left India for
the first time, her stay in India during the four previous years prior to
P.Y.2024-25 would be more than 365 days. Hence, she is a resident
for P.Y.2024-25.
Further, Miss Geeta would be “Resident and ordinarily resident” in
India in during the previous year 2024-25, since her stay in India in the
last seven previous years prior to P.Y.2024-25 is more than 729 days
and she must be resident in the preceding ten years.
Computation of business income and agricultural income of Miss
Geeta for A.Y. 2025-26

Particulars Income Business Agricultural

Income Income
₹ ₹
(i) Income from sale of
centrifuged latex
processed from rubber
plants grown in
Kanyakumari (Apportioned
between business and
agricultural income in the
ratio of 35:65 as per Rule
7A of Income-tax Rules,
1962) 1,50,000 52,500 97,500
(ii) Income from sale of coffee
grown, cured, roasted and
grounded in Colombo and
received in Chennai [See
Note 1 below] 5,00,000 5,00,000 -
(iii) Income from sale of tea
grown and manufactured
in West Bengal
(Apportioned between
business and agricultural
income in the ratio of
501
 40:60 as per Rule 8 of the
Income-tax Rules, 1962) 12,00,000 4,80,000 7,20,000
(iv) Income from sapling and
seedling grown in a
nursery at Cochin. Basic
operations were not
carried out on land [See 2,00,000 - 2,00,000
Note 2 below]
20,50,000 10,32,500 10,17,500

Notes:
(1) Since Ms. Geeta is resident and ordinarily resident in India for
A.Y. 2025-26, her global income is taxable in India. Entire income
from sale of coffee grown, cured, roasted and grounded in
Colombo is taxable as business income since such income is
earned from sale of coffee grown, cured, roasted and grounded
outside India i.e., in Colombo.
(2) As per Explanation 3 to section 2(1A), income derived from
sapling or seedlings grown in a nursery would be deemed to be
agricultural income, whether or not the basic operations were
carried out on land. Hence, income of ₹ 2,00,000 from sapling and
seedling grown in a nursery at Cochin is agricultural income.
(b) TDS implications
(i) On pre-mature withdrawal from EPF
No tax is deductible under section 192A even though the
employee, Mr. Vikas, has not completed 5 years of continuous
service, since termination of employment is on account of his ill-
health. Hence, Rule 8 of Part A of the Fourth Schedule is
applicable in this case.
(ii) On payment of service fee to bank
Even though service fee is included in the definition of “interest”
under section 2(28A), no tax is deductible at source under section
194A, since the service fee is paid to a banking company, i.e.,
Indian Bank.
3. (a) Computation of Gross Total Income of Mr. Jain and Mrs. Jain for
A.Y. 2025-26
Particulars Mr. Jain Mrs. Jain
₹ ₹ ₹ ₹
Salary 12,50,000 -
Less: Standard
deduction under 50,000 12,00,000
section 16(ia)

502
 Interest on Fixed - 14,00,000
Deposit earned by Mrs.
Jain
Total income (before 12,00,000 14,00,000
including remuneration
from firm and minor’s
income)
Remuneration from 2,50,000
firm (assumed that the
same is fully deductible
in the hands of the
firm)
Remuneration of
₹ 2,50,000 received by
Mr. Jain has to be
included in the total
income of Mrs. Jain,
since both of them
have substantial
interest in the concern
2,50,000 5,00,000
(i.e., each having 25%
share in the firm, in the
present case), and her
total income of ₹14
lakh exceeds the total
income of her spouse
excluding this income
(i.e., ₹ 12 lakh). It is
assumed that such
remuneration is fully
deductible in the hands
of the firm.
Total Income (before 12,00,000 19,00,000
including minor’s
income)
Income of three minor
children to be included
in Mrs. Jain’s income1,
since her total income -
before including
minor’s income is
higher than that of her
husband.
- Neeta 15,000
- Meeta 10,000
- Seeta 2,000
27,000

1 It is assumed that the income of the minor children are not on account of their skills.
503
 Less: Exemption of
₹ 1,500 u/s 10(32) in 4,500 22,500
respect of the income
each child so included.
Gross Total Income 12,00,000 19,22,500
(b) Computation of Total Income of Mr. Ram for A.Y. 2025-26
Particulars Amount Amount
₹ ₹
Salaries
Basic Salary 3,80,000
Dearness Allowance 1,20,000
Employer contribution to NPS = 20% of 76,000
₹ 3,80,000
5,76,000
Less: Standard deduction
[₹ 50,000 or ₹ 5,76,000, whichever is 50,000
lower] 5,26,000
Profits and gains of business or
profession
Where the amount gifted by Mr. Ram (₹ 6
lakh, in this case) is invested by Mrs. Ram
in a business as her capital, proportionate
share of profit or loss, as the case may be,
computed by taking into account the value (78,000)
of the investment as on 1.4.2024 to the
total investment in the business (₹ 10 lakh)
would be included in the income of
Mr. Ram [loss of ₹ 1,30,000 x 6/10]
Income from other sources
All income of the minor son would be 70,000
included in the income of the parent
Mr. Ram, since his income is higher than
the income of Mrs. Ram (loss of ₹ 52,000,
based on the information given in the
question). Accordingly, ₹ 70,000, being
amount of gift received by minor son
during the P.Y. 2024-25, would be
included in the income of Mr. Ram as the
amount of gift exceeds ₹ 50,000.
Less: Exemption in respect of income of
minor child included in Mr. Ram’s income 1,500
68,500
Less: Business loss of ₹ 78,000 set-off to 68,500
the extent of

504
 (Balance business loss of ₹ 9,500 to be
carried forward to the next year, since the
same cannot be set-off against salary income)
Nil
Gross Total Income 5,26,000
Less: Deductions under Chapter VI-A
Under section 80C – deposit in Sukanya 70,000
Samridhi Account
Under section 80CCC – Contribution to 40,000
LIC Annuity Plan
Under section 80CCD(1) – Employee
contribution to NPS (₹ 76,000 – ₹ 50,000
deduction claimed u/s 80CCD(1B)], since
it is lower than ₹ 42,800, being 10% of 26,000
salary (₹ 3,80,000 + ₹ 48,000)
Allowable in full, since less than 1,36,000
₹ 1,50,000, being the maximum
permissible deduction u/s 80C, 80CCC &
80CCD(1)
Under section 80CCD(1B) – Employee 50,000
contribution to NPS
Under section 80CCD(2) – Employer 59,920
contribution to NPS restricted to 14% of
basic salary + DA forming part of pay,
since employer is Central Government
= 14% x (₹ 3,80,000 + ₹ 48,000)
Under section 80E – Interest paid on loan
taken for higher education 15,000 2,60,920
Total Income 2,65,080
4. (a) First alternative
For the purpose of computation of long-term capital gains chargeable
to tax under section 112A, the cost of acquisition in relation to the long -
term capital asset, being an equity share in a company or a unit of an
equity oriented fund or a unit of a business trust acquired before 1 st
February, 2018 shall be the higher of
(a) cost of acquisition of such asset, i.e., actual cost; and
(b) lower of
(i) the fair market value of such asset as on 31.1.2018; and
(ii) the full value of consideration received or accruing as a
result of the transfer of the capital asset.
(i) The fair market value of listed equity shares as on 31.1.2018 is
the highest price quoted on the recognized stock exchange as on
that date.

505
 Accordingly, long-term capital gain on transfer of STT paid listed
equity shares by Mr. Shagun would be determined as follows:
The FMV of shares of A Ltd. would be ₹ 700, being the highest
price quoted on National Stock Exchange on 31.1.2018. The cost
of acquisition of each equity share in A Ltd. would be ₹ 700, being
higher of actual cost i.e., ₹ 400 and ₹ 700 [being the lower of FMV
of ₹ 700 as on 31.1.2018 (i.e., the highest trading price) and
actual sale consideration of ₹ 1,200]. Thus, the long-term capital
gain would be ₹ 1,50,000 i.e., (₹ 1,200 – ₹ 700) x 300 shares. The
long-term capital gain of ₹ 25,000 (i.e., the amount in excess of
₹ 1,25,000) would be subject to tax@10% under section 112A
(plus cess@4%), without benefit of indexation. The tax on capital
gain @10.4% would be ₹ 2,600 (₹ 25,000 x 10.4%)
(ii) In the case of units listed on recognised stock exchange on the
date of transfer, the FMV as on 31.1.2018 would be the highest
trading price on recognised stock exchange as on 31.1.2018 (if
units are listed on that date), else, it would be the net asset value
as on 31.1.2018 (where units are unlisted on that date).
Accordingly, the FMV of units of Fund A as on 31.1.2018 would be
₹ 750 (being the highest trading price on 31.1.2018, since the
units of Fund A are listed on that date).
The cost of acquisition of a unit of Fund A would be ₹ 750, being
higher of actual cost i.e., ₹ 550 and ₹ 750 (being the lower of FMV
of ₹ 750 as on 31.1.2018 and actual sale consideration of ₹ 900).
Thus, the long-term capital gains on sale of units of Fund A would
be ₹ 30,000 (₹ 900 – ₹ 750) x 200 units.
Since the long term capital gains on sale of units of Fund A is
₹ 30,000, which is less than ₹ 1,25,000, the said sum is not
chargeable to tax under section 112A.
(a) Second alternative
Computation of deduction allowable under section 35

Particulars Amount Section % of Amount of

(₹ in lakhs) deductio deduction
n (₹ in lakhs)
Payment for
scientific research
AB University, an 15 35(1)(ii) Nil Nil
approved University
Siya College 17 - Nil Nil
IIT Bangalore (under 12 35(2AA) Nil Nil
an approved
programme for
scientific research)

506
 In-house research
Capital expenditure – 25 35(1)(iv) 100% 25
Purchase of r.w. 35(2)
Machinery
Deduction allowable under section 35 25

Deduction under section 35(1)(ii) and 35(2AA) is not allowable under

default tax regime under section 115BAC.
(b) Computation of income under the head “Salaries” of Mr. Sailesh
for the A.Y.2025-26
Particulars ₹ ₹
Basic Salary [₹ 70,000 x 12 months] 8,40,000
Dearness allowance [40% of ₹8,40,000] 3,36,000
Entertainment allowance 10,000
Interest on housing loan given at 49,291
concessional rate, would be perquisite,
since the amount of loan exceeds
₹ 20,000, For computation, the lending
rate of SBI on 1.4.2024 @8% has to be
considered. Thus, perquisite value would
be determined @ 3.5% (8% - 4.5%) [See
Working Note]
Health insurance premium paid by the Nil
employer [tax free perquisite]
Gift voucher on the occasion of his 10,000
marriage anniversary [As per Rule
3(7)(iv), the value of any gift or voucher or
token in lieu of gift received by the
employee or by member of his household
exceeding ₹ 5,000 in aggregate during
the previous year is fully taxable] (See
note below)
Allotment of sweat equity shares
Fair market value of 800 sweat equity 5,60,000
shares @ ₹ 700 each
Less: Amount recovered @ ₹ 450 each 3,60,000 2,00,000
Use of furniture by employee
10% p.a. of the actual cost of ₹ 1,10,000 11,000
Use of Laptop
Facility of use of laptop is not a taxable Nil
perquisite

507
Transfer of asset to employee
Value of furniture transferred to 1,10,000
Mr. Sailesh
Less: Normal wear and tear @10% for
each completed year of usage on SLM
basis [1,10,000 x 10% x 4 years (from 44,000 66,000
September 2020 to September 2024)]
Gross Salary 15,22,291
Less: Standard deduction u/s 16 [Actual
salary or ₹ 50,000, whichever is less] 50,000
Net Salary 14,72,291
Working Note:
Computation of perquisite value of loan given at concessional rate
For computation, the lending rate of SBI on 1.4.2024 @8% has to be
considered. Thus, perquisite value would be determined @ 3.5% (8% -
4.5%)
Month Maximum outstanding Perquisite value
balance as on last date at 3.5% for the
of month (₹) month (₹)
April, 2024 15,00,000 4,375
May, 2024 15,00,000 4,375
June, 2024 14,50,000 4,229
July, 2024 14,50,000 4,229
August, 2024 14,50,000 4,229
September, 2024 14,00,000 4,083
October, 2024 14,00,000 4,083
November, 2024 14,00,000 4,083
December, 2024 13,50,000 3,937.50
January, 2025 13,50,000 3,937.50
February, 2025 13,50,000 3,937.50
March, 2025 13,00,000 3,792
Total value of this perquisite 49,290.50
Note: An alternate view possible is that only the sum in excess of ₹ 5,000
is taxable. In such a case, the value of perquisite would be ₹ 5,000 and
gross salary and net salary would be ₹ 15,17,291 and ₹ 14,67,291,
respectively.

508
 ANSWERS OF MODEL TEST PAPER 4
INTERMEDIATE COURSE: GROUP - I
PAPER – 3: TAXATION
SECTION – A: INCOME TAX LAW
Division A – Multiple Choice Questions
MCQ No. Sub-part Most Appropriate MCQ Most Appropriate
Answer No. Answer
1. (i) (b) 3. (a)
(ii) (d) 4. (d)
(iii) (a)
2. (i) (a)
(ii) (c)
(iii) (a)
Division B – Descriptive Questions
1. Computation of Total Income of Ms. Farah for the A.Y.2025-26
under default tax regime under section 115BAC
Particulars ₹ ₹ ₹
Income from house property
Gross Annual Value 1 90,000
Less: Municipal taxes paid 9,000
Net Annual Value (NAV) 81,000
Less: Deduction under section 24(a) –
30% of NAV = 30% of ₹ 81,000 24,300 56,700
Profits and gains of business or
profession
Net profit as per Profit and loss 25,91,000
account
Add: Expenses debited but not
allowable
(i) Purchase of car [Amount paid for 3,00,000
purchase of car is not allowable
since it is a capital expenditure]
(ii) Municipal tax paid in respect of 9,000
house property [allowable as
deduction under the head “Income
from house property”]
(iii) Payment made to tax consultant 50,000
in cash [disallowed under section

1 Rent received has been taken as the Gross Annual Value in the absence of other information
relating to Municipal Value, Fair Rent and Standard Rent.
509
 40A(3), since such cash payment
exceeds ₹ 10,000]
(iv) Travel expenditure on foreign -
professional tour [Since it is
incurred in connection with
professional work, the same is
allowable as deduction. As it has
already been debited to profit and
loss account, no further
adjustment is required]
(v) Repair and maintenance of car 17,500
[Repairs and maintenance paid in
advance for the period 1.4.2025 to
30.9.2025 i.e. for 6 months 3,76,500
amounting to ₹ 17,500 is not
allowable as deduction, since Ms.
Farah is following the accrual
system of accounting]
29,67,500
Less: Income credited but not taxable
under this head:
(i) Dividend from an Indian company 11,00,000
(taxable under the head “Income
from Other Sources")
(ii) Interest on deposit certificates 25,000
issued under gold monetization
scheme, 2015 (taxability or
otherwise to be considered under
the head “Income from Other
Sources")
(iii) Honorarium for valuation of 50,000
answer papers
(iv) Rent received in respect of house 90,000 12,65,000
property
17,02,500
Less: Depreciation on car @15% 45,000
16,57,500
Income from Other Sources
Dividend from an Indian company 11,00,000
Interest on deposit certificates issued -
under gold monetization scheme,
2015 [Exempt under section 10(15)]
Honorarium for valuation of answer 50,000 11,50,000
papers
Gross Total Income 28,64,200
510
Less: Deduction under Chapter VI-A
[Deduction under section 80D would
not be allowable] -
Total Income 28,64,200
Computation of tax payable under default tax regime under section
115BAC
Particulars ₹
Tax on total income of ₹ 28,64,200
Upto ₹ 3,00,000 Nil
₹ 3,00,001 – ₹ 7,00,000 [i.e., ₹ 4,00,000@5%] 20,000
₹ 7,00,001 – ₹ 10,00,000 [i.e., ₹ 3,00,000@10%] 30,000
₹ 10,00,001 –₹12,00,000 [i.e.,₹ 2,00,000@15%] 30,000
₹ 12,00,001 – ₹ 15,00,000 [i.e., ₹ 3,00,000@20%] 60,000
₹ 15,00,001 – ₹ 28,64,200 [i.e., ₹ 13,64,200 4,09,260
@30%]
5,49,260
Add: Health and Education cess@4% 21,970
Tax Liability 5,71,230
Less: Advance Tax paid 1,00,000
Less: Tax deducted at source on dividend income from an Indian
company under section 194 [₹ 11,00,000 x 10%] 1,10,000
Tax payable 3,61,230
Computation of total income and tax payable by Ms. Farah
for the A.Y.2025-26 under regular provisions of the Act
Particulars ₹
Gross Total Income 28,64,200
[Income under the “Income from house property” “Profits and
gains from business or profession” and “Income from other
sources” would remain the same under regular provisions of the
Act]
Less: Deductions under Chapter VI-A
Section 80D
Medical insurance premium paid online for 47,000
parents, being senior citizens
Payment made in cash of ₹ 8,500 for preventive 5,000 52,000
health check-up for self and spouse restricted to
Total Income 28,12,200

511
 Tax on total income of ₹ 28,12,200
Upto ₹ 2,50,000 Nil
₹ 2,50,001 – ₹ 5,00,000 [i.e., ₹ 2,50,000@5%] 12,500
₹ 5,00,001 – ₹ 10,00,000 [i.e., ₹ 5,00,000@20%] 1,00,000
₹ 10,00,001 – ₹ 28,12,200 [i.e., ₹ 18,12,200 5,43,660
@30%]
6,56,160
Add: Health and Education cess@4% 26,246
Tax Liability 6,82,406
Less: Advance Tax paid 1,00,000
Less: Tax deducted at source on dividend income from an
Indian company under section 194 [₹ 11,00,000 x 10%] 1,10,000
Tax payable 4,72,406
Tax payable (Rounded off) 4,72,410
Note – Since the tax payable under default tax regime under section 115BAC
is lower than the tax payable under the regular provisions of the Act, it would
be beneficial for Ms. Farah to pay tax under default tax regime under section
115BAC for A.Y. 2025-26.
2. (a) An Indian citizen, who leaves India in any previous year, inter alia, for
purposes of employment outside India, would be resident in India during
the relevant previous year if he stayed in India during that previous year
for 182 days or more.
(i) Since Sagar is leaving India for the purpose of employment outside
India, he will be treated as resident only if the period of his stay
during the previous year amounts to 182 days or more. Therefore,
Sagar should leave India on or before 28 th September, 2024, in
which case, his stay in India during the previous year would be less
than 182 days and he would become non-resident for the purpose
of taxability in India. In such a case, only the income which accrues
or arises in India or which is deemed to accrue or arise in India or
received or deemed to be received in India shall be taxable.
The income earned by him in New York would not be chargeable
to tax in India for A.Y. 2025-26, if he leaves India on or before
28th September, 2024.
(ii) If any part of Sagar’s salary will be credited directly to his bank
account in Delhi then, that part of his salary would be considered
as income received in India during the previous year under section
5 and would be chargeable to tax under Income-tax Act, 1961, even
if he is a non-resident. Therefore, Sagar should receive his entire
salary in New York and then remit the required amount to his bank
account in Delhi in which case, the salary earned by him in New
York would not be subject to tax in India.

512
 (b) TDS implications
(i) Since the sale consideration or stamp duty value of residential
house exceeds ₹ 50 lakhs, Mr. Deepak is required to deduct tax at
source@1% of ₹ 65 lakhs, being higher of sale consideration of
₹ 60 lakh and stamp duty value of ₹ 65 lakhs under section 194-IA.
TDS provisions under section 194-IA are not attracted in respect of
transfer of rural agricultural land, even if the consideration exceeds
₹ 50 lakh.
Tax deducted at source = ` 65 lakhs x 1% = ` 65,000
(ii) Every person, being a seller, who receives any amount as
consideration for sale of a motor vehicle of the value exceeding
₹ 10 lakhs, is required to collect tax at source @1% of the sale
consideration from the buyer.
TCS provisions will, however, not apply on sale of motor vehicles
by manufacturers to dealers/distributors. Hence, XYZ Ltd., the
manufacturer-seller need not collect tax at source on sale of cars
to the dealer, ABC & Co., even if the value of each car exceeds
₹ 10 lakhs.
However, TCS provisions would be attracted when ABC & Co., sells
cars to individual buyers, since the value of each car exceeds ₹ 10
lakhs. ABC & Co. has to collect tax@1% of the consideration on
sale of each car to an individual buyer.
3. (a) Computation of income from house property of Mr. Kamal for
A.Y. 2025-26
Particulars ₹ ₹
1. Income from let-out property in
Dubai [See Note 1 below]
2Gross Annual Value (DHS 20,000 p.m. x 52,80,000
12 months x ₹ 22)
Less: Municipal taxes paid during the year
[DHS 4,000 (DHS 2,500 + DHS 1,500) x 88,000
₹ 22]3
Net Annual Value (NAV) 51,92,000
Less: Deductions under section 24
(a) 30% of NAV 15,57,600
(b) Interest on housing loan - 15,57,600
36,34,400

2 In the absence of information related to municipal value, fair rent and standard rent, the rent
receivable has been taken as the GAV
3 Both property tax and sewerage tax qualify for deduction from gross annual value

513
 2. Income from self-occupied property
in Mumbai
Annual Value [Nil, since the property is NIL
self-occupied]
[No deduction is allowable in respect of
municipal taxes paid in respect of self-
occupied property]
Less: Deduction in respect of interest on
housing loan [See Note 2 below] _1,64,000
(1,64,000)
Income from house property 34,70,400
[₹ 36,34,400 – ₹ 1,64,000]
Notes:
(1) Since Mr. Kamal is a resident but not ordinarily resident in India for
A.Y. 2025-26, income which is, inter alia, received in India shall be
taxable in India, even if such income has accrued or arisen outside
India. Accordingly, rent received from house property in Dubai
would be taxable in India since such income is received by him in
India. Income from property in Mumbai would accrue or arise in
India and consequently, interest deduction in respect of such
property would be allowable while computing Mr. Kamal’s income
from house property because of self-occupied property.
(2) Interest on housing loan for construction of self-occupied
property allowable as deduction under section 24
Interest for the current year (₹ 10,00,000 x 12%) ₹ 1,20,000
Pre-construction interest
For the period 01.06.2021 to 31.03.2023
(₹ 10,00,000 x 12% x 22/12) = ₹ 2,20,000
₹ 2,20,000 allowed in 5 equal installments
(₹ 2,20,000/5) ₹ 44,000
₹ 1,64,000
(b) Computation of income chargeable under the head “Capital Gains”
for A.Y. 2025-26
Particulars ₹
Capital Gains on sale of residential house
Actual sale consideration ₹ 80 lakhs
Value adopted by Stamp Valuation Authority ₹ 90 lakhs
Full value of sale consideration [Higher of the above] 90,00,000
[As per section 50C, where the actual sale consideration
is less than the value adopted by the Stamp Valuation
Authority for the purpose of charging stamp duty, and
such stamp duty value exceeds 110% of the actual sale
consideration, then, the value adopted by the Stamp
514
 Valuation Authority shall be taken to be the full value of
consideration.
In a case where the date of agreement is different from
the date of registration, stamp duty value on the date of
agreement can be considered provided the whole or part
of the consideration is paid by way of account payee
cheque/bank draft or by way of ECS through bank
account on or before the date of agreement. In this case,
since 20% of ₹ 80 lakhs is paid through account payee
bank draft on the date of agreement, stamp duty value
on the date of agreement can be adopted as the full
value of consideration]
Less: Cost of acquisition of residential house 20,00,000
Long-term capital gains [Since the residential house 70,00,000
property was held by Mr. Ashish for more than 24 months
immediately preceding the date of its transfer]
Less: Exemption under section 54 15,00,000
The capital gain arising on transfer of a long-term
residential property shall not be chargeable to tax to the
extent such capital gain is invested in the purchase of
one residential house property in India within one year
before or two years after the date of transfer of original
asset.
Long term capital gains chargeable to tax 55,00,000
4. (a) Gross Total Income of Mr. Mohit for A.Y. 2025-26
Particulars ₹ ₹
Salaries
Income from salary 6,50,000
Less: Loss from house property of 2,00,000
₹ 2,60,000, restricted to 4,50,000
Income from house property
Income from House I 55,000
Less: Loss from House II (self- 1,25,000
occupied)
Loss from House III 1,90,000 3,15,000
(2,60,000)
Set-off of loss from house property against 2,00,000
salary income, restricted to
Loss to be carried forward to A.Y. 2026-27 (60,000)
Profits and gains of business or
profession
Profit from cloth business 1,70,000

515
 Less: Loss from leather business 68,000
1,02,000
Capital Gains
Short term capital loss in equity-oriented -
funds on which STT is paid ₹ 35,000 to be
carried forward to A.Y. 2026-27 since such
loss can be set-off only against capital gains
and not against income under any other
head
Income from other sources
Income from owning and maintenance of 9,000
race bulls
Loss of ₹ 7,500 from the activity of owning
and maintenance of race horses cannot be Nil
set-off against any source other than income
from the activity of owning and maintaining
race horses. Hence, such loss has to be
carried forward to A.Y. 2026-27.
Income from crossword puzzles 12,000
Dividend from foreign company 8,500 29,500
Gross Total Income 5,81,500
Losses to be carried forward to A.Y.2026-27:
Particulars ₹
Loss from house property 60,000
[to be carried forward for set-off against income from house
property]
Short-term capital loss in equity oriented funds on which 35,000
STT was paid
[to be carried forward for set-off against capital gains, long-
term or short-term]
Loss from owning and maintaining race horses 7,500
[to be carried forward for set-off against income from the
activity of owning and maintaining race horses]
Note: Loss from house property can also be set-off to the extent of
₹ 1,02,000 from profits and gains from business or profession and
balance i.e., ₹ 98,000 against Income under the head “Salaries”.
(b) First alternative
If a person, who has been allotted PAN as on 1st July, 2017 and is
required to intimate his Aadhaar number, has failed to intimate the same
on or before 31st March, 2022, the PAN of such person would become

516
 inoperative and he would be liable for payment of fee in accordance with
section 234H read with Rule 114(5A) i.e., ` 1,000.
A person, whose PAN has become inoperative, would be liable for
following further consequences for the period commencing from the date
notified by the CBDT i.e., from 1.7.2023 till the date it becomes
operative–
(i) no refund of any amount of tax or part thereof, due under the
provisions of the Act;
(ii) interest would not be payable on such refund for the period,
beginning with the date notified by the CBDT and ending with the
date on which it becomes operative;
(iii) where tax is deductible at source in case of such person, such tax
shall be deducted at higher rate, in accordance with provisions of
section 206AA;
(iv) where tax is collectible at source in case of such person, such tax
shall be collected at higher rate, in accordance with provisions of
section 206CC.
(b) Second alternative
(i) Fee for default in furnishing return of income u/s 234F
Where a person who is required to furnish a return of income under
section 139, fails to do so within the prescribed time limit under
section 139(1), he shall pay, by way of fee, a sum of ₹ 5,000.
However, if the total income of the person does not exceed ₹ 5
lakhs, the fees payable shall not exceed ₹ 1,000

(ii) Persons to whom provisions of section 139AA relating to

quoting of Aadhar Number does not apply
The provisions of section 139AA relating to quoting of Aadhar
Number would not apply to an individual who does not possess the
Aadhar number or Enrolment ID and is:
(i) residing in the States of Assam, Jammu & Kashmir and
Meghalaya;
(ii) a non-resident as per Income-tax Act, 1961;
(iii) of the age of 80 years or more at any time during the previous
year;
(iv) not a citizen of India.

517
 ANSWERS OF MODEL TEST PAPER 5
INTERMEDIATE COURSE: GROUP - I
PAPER – 3: TAXATION
SECTION – A: INCOME TAX LAW
Division A – Multiple Choice Questions
MCQ No. Sub-part Most Appropriate MCQ Most Appropriate
Answer No. Answer
1. (i) (b) 3. (d)
(ii) (b) 4. (d)
(iii) (a)
2. (i) (d)
(ii) (b)
(iii) (b)
Division B – Descriptive Questions
1. Computation of total income of Mr. Amit for A.Y. 2025-26
Particulars ₹ ₹ ₹
I Income from house property
Let out portion [First floor]
Gross Annual Value [Rent 2,28,000
received is taken as GAV, in
the absence of other
information]
Less: Municipal taxes paid by 30,000
him in the P.Y. 2024-25
pertaining to let out portion
[₹ 60,000/2]
Net Annual Value (NAV) 1,98,000
Less: Deduction u/s 24
(a) 30% of ₹ 1,98,000 59,400
1,38,600
Self-occupied portion
[Ground Floor]
Annual Value Nil
[No deduction is allowable in 1,38,600
respect of municipal taxes
paid]
II Profits and gains of business
or profession
Income from SEZ unit 20,00,000

518
III Capital Gains
On transfer of 60,000 shares
(2,00,000 x 30%)
Sales consideration [60,000 x 36,00,000
₹ 60 per share]
Less: Cost of acquisition 24,00,000
[60,000 x 40]
Long-term capital gains u/s 12,00,000
112A (since shares are held for
a period of more than 12
months before transfer)
IV Income from Other Sources
Royalty from artistic book 2,88,000
Less: Expenses incurred for 40,000
earning royalty
2,48,000
Interest on savings bank 30,000
deposits
2,78,000
Gross Total Income 36,16,600
Less: Deduction u/s 10AA -
[Not available, since he
commenced operation in
P.Y. 2021-22]
Less: Deduction under
Chapter VI-A
Deduction under section 80C
Tuition fee paid for maximum 28,000
of two children is allowable
(₹ 14,000 x 2)
Insurance premium paid on life 39,000
insurance policy of son
allowable, even though not
dependent on Mr. Amit
Insurance premium paid on life - 67,000
insurance policy of father not
allowable, even though father
is dependent on Mr. Amit
Deduction under section 1,90,000
80QQB
Royalty [₹ 2,88,000 x 15/18 =
₹ 2,40,000, restricted to
amount brought into India in
convertible foreign exchange
519
 ₹ 2,30,000 minus ₹ 40,000
expenses already allowed as
deduction while computing
royalty income]
Deduction under section 10,000
80TTA
Interest on savings bank
account, restricted to ₹ 10,000
2,67,000
Total Income 33,49,600
Computation of tax liability of Mr. Amit for A.Y.2025-26 under
the normal provisions of the Act
Particulars ₹ ₹
Tax on total income of ₹ 33,49,600
Tax on LTCG of ₹ 10,75,000, being the sum
exceeding ₹ 1.25 lakh @10% u/s 112A 1,07,500
Tax on remaining total income of ₹ 21,49,600
Upto ₹ 2,50,000 Nil
₹ 2,50,001 – ₹ 5,00,000[@5% of ₹ 2.50 lakh] 12,500
₹ 5,00,001 – ₹ 10,00,000 [@20% of ₹ 5,00,000] 1,00,000
₹ 10,00,001 – ₹ 21,49,600 [@30% of ₹ 11,49,600] 3,44,880 4,57,380
5,64,880
Add: Health and education cess@4% 22,595
Total tax liability 5,87,475
Tax liability (rounded off) 5,87,480
Computation of adjusted total income and AMT of Mr. Amit for
A.Y. 2025-26
Particulars ₹
Computation of adjusted total income
Total income as per the normal provisions of the Act 33,49,600
Add: Deduction u/s 80QQB 1,90,000
Adjusted Total Income 35,39,600
Alternative Minimum [email protected]% 6,54,826
Add: Health and education cess@4% 26,193
AMT liability 6,81,019
AMT liability (Rounded off) 6,81,020
Since the regular income-tax payable is less than the alternate minimum
tax payable, the adjusted total income shall be deemed to be the total
income and tax is leviable @18.5% thereof plus cess@4%. Therefore,
liability as per section 115JC is ₹ 6,81,020.
520
 AMT credit to be carried forward under section 115JEE
Particulars ₹
Tax liability under section 115JC 6,81,020
Less: Tax liability under the regular provisions of the 5,87,480
Income-tax Act, 1961
93,540
2. (a) An Indian citizen or a person of Indian origin who, being outside India,
comes on a visit to India (and whose total income, other than from
foreign sources, does not exceed ₹ 15,00,000) would be resident in
India only if he or she stays in India for a period of 182 days or more
during the previous year. Even if his total income, other than from
foreign sources, exceeds ₹ 15,00,000, he would be resident in India if
stays in India for 120 days or more during the relevant previous year
and 365 days or more during the 4 previous years immediately
preceding the relevant previous year.
Since Mrs. Riya is a person of Indian origin who comes on a visit to
India only for 60 days in the P.Y.2024-25, she is non-resident for the
A.Y. 2025-26.
A non-resident is chargeable to tax in respect of income received or
deemed to be received in India and income which accrues or arises or
is deemed to accrue or arise to her in India. Accordingly, her total
income and tax liability would be determined in the following manner:
Computation of total income and tax liability of Mrs. Riya for
A.Y. 2025-26
Particulars Amt (₹)
Salaries
Pension received from Russian Government [Not taxable, Nil
since it neither accrues or arises in India nor it is received
in India]
Income from House Property
Annual Value [Rental Income from house 90,000
property in New Delhi is taxable, since it is
deemed to accrue or arise in India, as it accrues
or arises from a property situated in India]
Less: Deduction u/s 24(a) @ 30% 27,000 63,000
Capital Gains
Long-term capital gains on sale of land at New Delhi 3,00,000
[Taxable, since it is deemed to accrue or arise in India as
it is arising from transfer of land situated in India]
Short-term capital gains on sale of shares of Indian listed 60,000
companies in respect of which STT was paid [Taxable,
since it is deemed to accrue or arise in India, as such
521
 income arises on transfer of shares of Indian listed
companies]
Gross Total Income 4,23,000
Less: Deduction under Chapter VI-A
Deduction under section 80C [Not available under default Nil
tax regime]
Total Income 4,23,000
(b) Determination of Advance Tax Liability of Mr. Sameer
Particulars ₹
Estimated tax liability for the financial year 2024-25 80,000
Less: Tax deducted at source 12,000
Tax payable 68,000
Due Date of Amount payable ₹
installment
On or before Not less than 15% of
15th June, 2024 advance tax liability 10,200
On or before Not less than 45% of 20,400
15th September, advance tax liability (₹ 30,600, being 45% of
2024 less amount paid in ₹ 68,000 - ₹ 10,200)
earlier installment
On or before Not less than 75% of 20,400
15th December, advance tax liability (51,000, being 75% of
2024 less amount paid in ₹ 68,000 - ₹ 30,600)
earlier installment(s)
On or before Whole of the advance 17,000
15th March, tax liability less (68,000, being 100% of
2025 amount paid in earlier ₹ 68,000 - ₹ 51,000)
installment(s)
3. (a) (i) Computation of depreciation for A.Y.2025-26
Particulars ₹
W.D.V. of the block as on 1.4.2024 7,70,000
Add: Purchase of second hand plant during the
year [in December, 2024] 6,10,000
13,80,000
Less: Sale consideration of old machinery during 10,00,000
the year [in July, 2024]
W.D.V of the block as on 31.03.2025 3,80,000
Depreciation @ 15% but restricted to 50% 28,500
thereon. ₹ 3,80,000 X 7.5%
[Since the value of the block as on 31.3.2025
represents part of actual cost of second hand
plant purchased in December, 2024, which has
522
 been put to use for less than 180 days,
depreciation is restricted to 50% of the prescribed
percentage of 15% i.e. depreciation is restricted
to 7½%. Therefore, the depreciation allowable for
the year is ₹ 28,500 being 7½% of ₹ 3,80,000]
(ii) In the given case, no capital gains would arise, since the block of
asset continues to exist, and some of the assets are sold for a
price which is lesser than the written down value of the block as
increased by the actual cost of asset purchased during the year
(iii) Computation of deduction allowable under section 35
Particulars Amount Section % of Amount of
(₹ in weighted deduction
lakhs) deduction (₹ in lakhs)
Payment for
scientific
research
UV University, 15 35(1)(ii) 100% 15
an approved
University
Satyawati 17 - NIL NIL
College [Since it
is not
mentioned as
an approved
University]
(b) Computation of income chargeable under the head “Capital
Gains” for A.Y.2025-26
Particulars ₹ ₹
(in lakhs) (in lakhs)
Capital Gains on sale of residential
building
Actual sale consideration ₹ 600 lakhs
Value adopted by Stamp Valuation
Authority ₹ 670 lakhs
Full Value of Consideration 670.00
[In case the actual sale consideration
declared by the assessee is less than the
value adopted by the Stamp Valuation
Authority for the purpose of charging
stamp duty, then, the value adopted by
the Stamp Valuation Authority shall be
taken to be the full value of consideration
as per section 50C.

523
In a case where the date of agreement is
different from the date of registration,
stamp duty value on the date of
agreement can be considered provided
the whole or part of the consideration is
paid by way of account payee
cheque/bank draft or by way of ECS
through bank account on or before the
date of agreement.
However, where the stamp duty value
does not exceed 110% of the sale
consideration received or accruing as a
result of the transfer, the consideration so
received or accruing shall be deemed to
be the full value of the consideration. In
this case, since advance of ₹ 20 lakh is
paid by cash, stamp duty value of ₹ 620
lakhs on the date of agreement cannot be
adopted as the full value of consideration
and stamp duty value on the date of
registration would be considered.
However, since stamp duty value on the
date of registration exceeds 110% of the
actual consideration, stamp duty value on
the date of registration would be the full
value of consideration]
Less: Brokerage@1% of sale 6.00
consideration (1% of ₹ 600 lakhs)
Net Sale consideration 664.00
Less: Cost of acquisition
- Cost of vacant land, ₹ 80 lakhs,
plus registration and other
expenses i.e., ₹ 8 lakhs, being 88
10% of cost of land
- Construction cost of residential 100 188.00
building
Long-term capital gains before 476.00
exemption
Less: Exemption under section 54EC 50.00
Amount deposited in capital gains
bonds of NHAI within six months
from the date of transfer (i.e., on or
before 09.08.2025) would qualify for
exemption, to the maximum extent of
₹ 50 lakhs.
Therefore, in the present case,
exemption can be availed only to the
extent of ₹ 50 lakh out of ₹ 60 lakhs,
524
 even if the both the investments are
made on or before 09.08.2025 (i.e.,
within six months from the date of
transfer).
Long Term Capital Gains [Since it was 426.00
held for more than 24 months]

4. (a) Computation of tax liability of Mr. Vijay Prasad for A.Y.2025-26

Particulars ₹ ₹
Salary
Income by way of salary (computed) 2,75,000
Profits and gains from business and
profession
Business Income- Retail business 1,20,000
Less: Set-off of business loss of ₹ 1,00,000
from wholesale business 1,00,000
20,000
Less: Set-off of brought forward business loss
of ₹ 1,35,000 of A.Y.2022-23 allowable to the
extent of ₹ 20,000 by virtue of section 72(1) 20,000 Nil
[Balance brought forward business loss of
₹ 1,15,000 (i.e., ₹ 1,35,000 – ₹ 20,000) to be
carry forward to A.Y. 2026-27 for set-off
against business income of that year]
Capital Gains
Long-term capital gain on sale of building 2,00,000
Less: Set-off of short term capital loss 1,85,000 15,000
Income from Other Sources
Lottery winnings 45,000
Income of minor daughter from special talent -
[Not included in Vijay Prasad’s income since it
is earned from special talent]
Gross Total Income 3,35,000
Less: Deduction under section 80C
Contribution to provident fund and NSC 150,000
₹ 1,50,000
Total Income 1,85,000
Tax on ₹ 1,85,000
Tax on lottery income of ₹ 45,000 @30% 13,500
[Unexhausted basic exemption limit can not be
reduced from lottery income]
Tax on LTCG of ₹ 15,000 @20% [Unexhausted 3,000
basic exemption limit can not be reduced from
525
 LTCG as Mr. Vijay is a non resident]
Tax on other income of ₹ 1,25,000 (since it -
does not exceed basic exemption limit)
16,500
Add: Health and education cess @4% 660
Tax liability 17,160
(b) [First Alternative]
Consequences for non-filing return of income within the due date
under section 139(1)
Interest under section 234A
Interest under section 234A@1% per month or part of the month for the
period commencing from the date immediately following the due date
under section 139(1) till the date of furnishing of return of income is
payable, where the return of income is furnished after the due date.
However, no interest u/s 234A shall be charged on self-assessment tax
paid by the assessee on or before the due date of filing of return.
Fee under section 234F
Late fee of ₹ 5,000 would be payable under section 234F, if the return
of income is not filed before the due date specified in section 139(1).
However, such fee cannot exceed ₹ 1,000, if the total income does not
exceed ₹ 5,00,000.
Carry forward and set-off of certain losses not permissible
Following losses would not be allowed to be carried forward, where a
return of income is not furnished within the time allowed under section
139(1):
- business loss, speculation business loss, loss from specified
business (in case assessee opts out of default tax regime),
- loss under the head “Capital Gains”; and
- loss from the activity of owning and maintaining race horses.
(b) [Second Alternative]
Transaction Is quoting of PAN mandatory in
related documents?
1. Payment of life insurance No, since the amount paid does not
premium of ₹ 40,000 in the exceed ₹ 50,000 in the F.Y.2024-25.
F.Y.2024-25 by account
payee cheque to LIC for
insuring life of self and
spouse
2. Payment of ₹ 1,10,000 to Yes, since the amount paid exceeds
RBI for acquiring its bonds ₹ 50,000

526
3. Applied to SBI for issue of Yes, quoting of PAN is mandatory on
credit card. making an application to a banking
company for issue of credit card.
4. Payment of ₹ 1,00,000 by No, since the amount was paid by
account payee cheque to account payee cheque and not in
travel agent for travel to cash, quoting of PAN is not
Dubai for 3 days to visit mandatory even though the
payment exceeds ₹ 50,000

527
 ANSWERS OF MODEL TEST PAPER 6
INTERMEDIATE COURSE: GROUP-I
PAPER – 3: TAXATION
SECTION – A: INCOME TAX LAW
Division A – Multiple Choice Questions
MCQ Sub-part Most Appropriate MCQ Most Appropriate
No. Answer No. Answer
1. (i) (c) 3. (a)
(ii) (c) 4. (c)
(iii) (c)
2. (i) (b)
(ii) (c)
(iii) (a)

B – Descriptive Questions
1. Computation of total income of Mr. Ashok for the A.Y.2025-26
Particulars ₹ ₹
Income from house property
Arrears of rent 1,35,000
(Taxable under section 25A even if Mr. Ashok is not
the owner of the house property in the P.Y.2024-25)
Less: Deduction@30% 40,500 94,500
Profits and gains of business or profession
Income from wholesale business
Net profit as per books 6,60,000
Add: Amount debited to P & L A/c, not allowable as
deduction
- Depreciation as per books 34,000
- Disallowance of municipal taxes paid for the second
half-year under section 43B, since the same was
paid after the due date of filing of return of income 3,500
(₹ 7,000/2)
- Disallowance under section 40A(3) in respect of
salary paid in cash since the same exceeds 22,000
₹ 10,000
- 20% of car expenses for personal use 8,000
7,27,500
Less: Depreciation allowable (Note 1) 1,96,800
5,30,700

528
Income from firm
Share of profit from the firm is exempt -
under section 10(2A)
Interest on capital from partnership firm 1,20,000
(Note 2)
Salary as working partner fully taxable 1,00,000 2,20,000 7,50,700
Income from other sources
Interest on bank fixed deposit (Gross) [₹ 49,500 x 55,000
100/90]
Interest on saving bank account 13,300
Interest on income-tax refund 1,400 69,700
Gross total income 9,14,900
Less: Deduction under Chapter VIA (Note 3) 2,65,000
Total Income 6,49,900
Computation of tax liability of Mr. Ashok for the A.Y.2025-26
Particulars ₹
Upto ₹ 3,00,000 Nil
₹ 3,00,001 – ₹ 5,00,000 [i.e., ₹ 2,00,000@5%] 10,000
₹ 5,00,001 – ₹ 6,49,900 [i.e., ₹ 1,49,900@20%] 29,980
39,980
Add: Health and Education cess@4% 1,599
Tax liability 41,579
Tax liability (Rounded off) 41,580
Notes:
(1) Depreciation allowable under the Income-tax Rules, 1962
Opening Rate Depreciation
WDV/
Actual cost
Block 1 Computers 2,40,000 40% 96,000
Computer 1,50,000 40% 60,000
printer
Block 2 Motor Car 6,80,000 15% 51,000 40,800
[50% of 15%
is allowable,
since it is put
to use for
less than
180 days]

Less: 20% disallowance for 10,200

personal use
1,96,800

529
 (2) Only to the extent the interest is allowed as deduction in the hands of
the firm, the same is includible as business income in the hands of the
partner. Since interest is paid in accordance with partnership deed,
maximum interest allowable as deduction in the hands of the firm is
12% p.a. Therefore, interest @12% p.a. amounting to ₹ 1,20,000 would
be treated as the business income of Mr. Ashok.
(3) Deduction under Chapter VI-A
Particulars ₹ ₹
Under section 80C
LIP for independent son 60,000
PPF paid in wife’s name 70,000
1,30,000
Under section 80D
Health insurance premium taken for himself is 35,000
fully allowable as deduction, since he is a
senior citizen
Under section 80G
Contribution towards PM National Relief Fund 50,000
eligible for 100% deduction without any
qualifying limit
Under section 80TTB
Interest on deposits in case of senior citizen, 50,000
restricted to
Total deduction 2,65,000
2. (a) Mr. Sudesh is a non-resident for the A.Y.2025-26, since he was not
present in India at any time during the previous year 2024-25.
As per section 5(2), a non-resident is chargeable to tax in India only in
respect of following incomes:
(i) Income received or deemed to be received in India; and
(ii) Income accruing or arising or income deemed to accrue or arise
in India.
Computation of Total Income of Mr. Sudesh for A.Y. 2025-26
(As per default regime)
Particulars ₹
Salaries
Salary from Government of India 9,25,000
(Income chargeable under the head ‘Salaries’ payable by
the Government to a citizen of India for services rendered
outside India is deemed to accrue or arise in India under
section 9(1)(iii). Hence, such income is taxable in the hands
of Mr. Sudesh, a citizen of India, even though he is a non-
resident and rendering services outside India)
530
 Foreign Allowance from Government of India
[Any allowances or perquisites paid or allowed as such
outside India by the Government to a citizen of India for
rendering service outside India is exempt under section Nil
10(7)].
Gross Salary 9,25,000
Less: Standard Deduction under section 16(ia) of ₹ 75,000,
being lower of gross salary or ₹ 75,000 75,000
8,50,000
Income from House Property
Rent from a house situated at UK, received in UK Nil
(Income from property situated outside India would not be
taxable in India in the hands of a non-resident, since it
neither accrues or arises in India nor is it deemed to accrue
or arise in India nor is it received in India)
Gross Total Income/ Total Income 8,50,000
(b) Mr. Sumit has furnished his return of income under default tax regime
for A.Y.2025-26 on 22.10.2025, i.e., after the due date specified under
section 139(1) i.e., 31st July 2025. Hence, the return is a belated return
under section 139(4).
As per section 80 read with section 139(3), specified losses, which
have not been determined in pursuance of a return of loss filed within
the time specified in section 139(1), cannot be carried forward to the
subsequent year for set-off against income of that year. The specified
losses include, inter alia, business loss but does not include loss from
house property and unabsorbed depreciation.
Accordingly, business loss of ₹ 10,80,000 of Mr. Sumit for A.Y. 2025-26,
not determined in pursuance of a return of loss filed within the time
specified in section 139(1), cannot be carried forward to A.Y. 2026-27.
The loss of ₹ 2,50,000 from let out house property cannot be carried
forward since Mr. Sumit is paying tax under default tax regime.
However, unabsorbed depreciation of ₹ 2,00,000 pertaining to
A.Y.2025-26, can be carried forward to A.Y.2026-27 for set-off, even
though Mr. Sumit has filed the return of loss for A.Y.2025-26 belatedly.
(c) (i) HFC Bank is not required to deduct tax at source under section
194A, since the aggregate interest on fixed deposit with the two
branches of the bank ₹ 49,000 does not exceed the threshold limit
of ₹ 50,000, applicable in case of senior citizen. Since HFC Bank
has adopted core banking solution (CBS), the aggregate interest
paid by both branches has to be considered.
(ii) TDS provisions under section 194C are not attracted in this case,
since Mr. Chetan is a pensioner. However, Mr. Chetan has to
deduct tax at source@2% u/s 194M, since the payment to
contractor, Mr. Gopi, exceeds ₹ 50 lakhs.
531
3. (a) Computation of taxable income of Mr. Yogesh for A.Y. 2025-26
Particulars Amount Amount
(₹) (₹)
Income from house property (A)
Unit - 1 [50% of floor area - Let out]
Gross Annual Value, higher of
- Expected rent ₹ 1,39,000 [Higher of
Municipal Value of ₹ 1,44,000 p.a. and
Fair Rent of ₹ 1,49,000 p.a., but restricted
to Standard Rent of ₹ 1,39,000 p.a.]
- Actual rent ₹ 1,80,000 i.e., [₹ 20,000 x 10]
less unrealized rent of January, 2025
₹ 20,000
Gross Annual Value 1,80,000
Less: Municipal taxes [50% of ₹ 30,000] 15,000
Net Annual Value 1,65,000
Less: Deductions from Net Annual Value
(a) 30% of Net Annual Value 49,500
(b) Interest on loan [50% of ₹ 90,000] 45,000 70,500
Unit – 3 [25% of floor area – Self occupied]
Net Annual Value -
Less: Interest on loan [Not allowed as Mr. - -
Yogesh is paying tax under section 115BAC.]
70,500
Profits and gains from business or
profession (B)
Business Income [without deducting 2,40,000
expenditure of Unit – 2, 25% floor area used
for business purposes]
Less: Expenditure in respect of Unit -2
- Municipal taxes [25% of 7,500
₹ 30,000]
- Repairs [25% of ₹ 7,000] 1,750
- Interest on loan [25% of 22,500
₹ 90,000]
- Ground rent [25% of ₹ 6,000] 1,500
- Fire Insurance premium 15,000 48,250 1,91,750
[25% of ₹ 60,000]
Taxable Income (A+B) 2,62,250
Note: Alternatively, if as per income-tax returns, unrealised rent is
deducted from GAV, then GAV would be ₹ 2,00,000, being higher of
unexpected rent of ₹ 1,39,000 and actual rent of ₹ 2,00,000.
Thereafter, unrealized rent of ₹ 20,000 and municipal taxes of ₹ 15,000
532
 would be deducted from GAV of ₹ 2,00,000 to arrive at the NAV of
₹ 1,65,000
(b)
I Tax consequences in the hands of Mr. Soham
As per section 43CA, where the consideration received or
accruing is less than the stamp duty value of an asset (other
than capital asset), being land or building or both and such
stamp duty value exceeds 110% of the consideration received or
accruing, then the stamp duty value shall be deemed to be the
full value of the consideration.
However, where the date of agreement is different from the date
of registration, stamp duty value on the date of agreement can
be considered provided whole or part of the considered is
received by way of account payee cheque/ bank draft/ ECS or
through any other prescribed modes on or before the date of
agreement.
In this case, since ₹ 25 lakhs is received by cash on the date of
agreement, stamp duty value on the date of registration is to be
considered. Since such stamp duty value ( ₹ 1.75 crores) exceed
110% of the consideration received ( ₹ 1.50 crores), business
income would be computed in the hands of Mr. Soham, for
A.Y.2025-26, taking sale consideration of ₹ 1,75,00,000 as the
full value of consideration arising on transfer.
II Tax consequences in the hands of Mr. Aman
In case, immovable property is received for inadequate
consideration, the difference between the stamp duty value and
actual consideration would be taxable under section 56(2)(x) in
the hands of the recipient, if such difference exceeds the higher
of ₹ 50,000 and 10% of actual sales consideration.
Where the date of agreement is different from the date of
registration, stamp duty value on the date of agreement can be
considered provided whole or part of the considered is received
by way of account payee cheque/ bank draft/ ECS or through
any other prescribed modes on or before the date of agreement.
In this case, since ₹ 25 lakhs is received by cash on the date of
agreement, stamp duty value on the date of registration is to be
considered. Accordingly, ₹ 25,00,000 would be taxable in the
hands of Mr. Aman under the head “Income from Other Sources”
in A.Y.2025-26 since the difference of ₹ 25,00,000 exceed
₹ 15,00,000, being the higher of ₹ 50,000 and ₹ 15,00,000 (10%
of consideration).

533
4. (a) Computation of Total Income of Mr. Mohan for A.Y. 2025-26
Particulars Amount Amount
(₹) (₹)
Income from house property
House in Delhi [Since Mr. Mohan receives
direct or indirect benefit from income arising
to his brother’s daughter, Ms. Veena, from
the transfer of house to her without
consideration, such income is to be included
in the total income of Mr. Mohan as per
proviso to section 62(1), even though the
transfer may not be revocable during lifetime
of Ms. Veena]
Gross Annual Value 1 6,50,000
Less: Municipal taxes -
Net Annual Value 6,50,000
Less: Deductions from Net Annual Value
(a) 30% of Net Annual Value 1,95,000
(b) Interest on loan -
4,55,000
Profits and gains from business or
profession
Share of profit from firm [Exempt u/s 10(2A)] -
Exempt income cannot be clubbed
Capital Gains
Long term capital gain from sale of property 15,000
Less: Short-term capital loss can be set-off 15,000 -
against both short-term capital gains and
long-term capital gains2. Short term capital
loss of ₹ 16,000 set off against long-term
capital gains to the extent of ₹ 15,0003.
Income from other sources
Dividend on preference shares [Taxable in 10,00,000
the hands of Mr. Mohan as per section 60,
since he transferred the income, i.e.,
dividend, without transferring the asset, i.e.,
preference shares]
Interest from saving bank account 2,00,000
Cash gift [Taxable as per section 56(2)(x), 75,000
since sum of money exceeding ₹ 50,000 is

1 Rent receivable has been taken as the gross annual value in the absence of other information
2 as per section 74(1)
3 as per section 74(1)

534
 received from his niece, who is not a relative]
Income from betting [No loss is allowed to be 34,000
set off against such income]
Income from card games [No loss is allowed 46,000 13,55,000
to be set off against such income]
Gross Total Income 18,10,000
Less: Deduction under Chapter VI-A
Deduction under section 80TTA [Not
allowable under default tax regime] Nil Nil
Total Income 18,10,000
Losses to be carried forward to A.Y. 2026-27
Particulars Amount (₹)
Short term capital loss [₹ 16,000 – ₹ 15,000] 1,000
Loss on maintenance of race horses [Loss incurred on 14,600
maintenance of race horses cannot be set-off against
income from any source other than the activity of owning
and maintaining race horses. Hence, such loss has to be
carried forward to A.Y.2026-27]

(b) First Alternative

As per sixth proviso to section 139(1), every person, being an
individual whose total income without giving effect to the provisions of,
inter alia, section 54EC and Chapter VI-A exceeds the basic exemption
limit, is compulsorily required to furnish return of income on or before
the due date.
Therefore, in the present case, Mr. Prince, a senior citizen is required
to file return of income, since his total income of ₹ 3,90,000 before
giving effect to the exemption under section 54EC and deduction of
₹ 1,50,000 under Chapter VI-A, exceeds the basic exemption limit of
₹ 3,00,000 applicable in his case.
(b) Second Alternative
(i) True: Section 139A(2) provides that the Assessing Officer may,
having regard to the nature of transactions as may be prescribed,
also allot a PAN to any other person, whether any tax is payable
by him or not, in the manner and in accordance with the
procedure as may be prescribed.
(ii) False: Section 140(b) provides that where the Karta of a HUF is
absent from India, the return of income can be verified by any
other adult member of the family; such member can be a male or
female member.

535
 ANSWERS OF MODEL TEST PAPER 7
INTERMEDIATE COURSE: GROUP-I
PAPER – 3: TAXATION
SECTION – A: INCOME TAX LAW
Division A – Multiple Choice Questions
MCQ Sub-part Most Appropriate MCQ Most Appropriate
No. Answer No. Answer
1. (i) (c) 3. (a)
(ii) (d) 4. (b)
(iii) (a)
2. (i) (b)
(ii) (b)
(iii) (b)

Division B – Descriptive Questions

1. Computation of total income and tax liability of Mr. Sahil for
A.Y. 2025-26
Particulars ` `
I Income from house property
Annual value of self-occupied property Nil
Less: Deduction under section 24(b)
Interest on housing loan of ` 2,60,000 2,00,000
restricted to ` 2,00,000
(2,00,000)
II Profits and gains of business or
profession
Net Profit 94,92,000
Add: Expenses debited to Profit and
loss A/c but not allowable as
deduction or to be considered under
other head
- Commission paid to brother 10,000
[Commission paid to a related
person/relative to the extent it is
excessive to market rate is disallowed
under section 40A(2)]
- Cash payment to a Transport Carrier Nil
[Not disallowed under section 40A(3)
since the limit for one time cash
payment is ` 35,000 in respect of
payment to transport operators]
536
 - Interest to bank on term loan [Interest 2,80,000
paid to bank after the due date of filing
of return under section 139(1) is
disallowed as per section 43B]
- Contribution to Prime Minister’s Relief 10,000
Fund [Not allowable since the same is
not incurred wholly and exclusively for
business purpose]
- SGST Penalty paid [SGST penalty 49,000
paid is not compensatory in nature
and therefore, not allowable]
- Loss on sale of shares 1,40,000
- Depreciation as per books of account 14,00,000
1,13,81,000
Less: Incomes credited to profit and
loss account but not taxable as
business income
- Dividend from Domestic Companies 1,05,000
- Winnings from lotteries 73,500
- Profit on sale of shares 3,15,000
1,08,87,500
Less: Depreciation allowable as per
Income-tax Rules,1962
- On Plant & Machinery [@15% on
` 98,00,000, being opening WDV of
` 84 lakhs and additions put to use for
more than 180 days of ` 14 lakhs +
@7.5% on ` 14,00,000, being additions
put to use for less than 180 days] 15,75,000
Business Income 93,12,500
Less: Set off of loss from house property 2,00,000
as per section 71(3A)
91,12,500
III Capital Gains
Long term capital gains taxable u/s 112A 3,15,000
[Since shares are held for 2 years and
STT has been paid]
Less: Set off of short term capital loss as 1,40,000 1,75,000
per section 70(2)
IV Income from Other Sources
Dividend from Domestic Companies 1,05,000
Winning from lotteries (` 31,500 + 1,05,000
` 73,500)
2,10,000
Gross Total Income 94,97,500
537
 Less: Deduction under Chapter VI-A
Deduction under section 80C
Principal repayment of housing loan 50,000
Deduction under section 80EE
Interest on housing loan of ` 60,000 60,000
[` 2,60,000 – ` 2,00,000, allowed u/s
24(b)] allowable under section 80EEA
Deduction under section 80G
Contribution to Prime Minister’s Relief 10,000 1,20,000
Fund
Total Income 93,77,500
Tax Liability
Tax on LTCG of ` 50,000 exceeding 6,250
` 1.25 lakhs] u/s 112A @12.5%
Tax on winning from lotteries of 31,500
` 1,05,000 @30%
Tax on balance income of ` 90,97,500 at
slab rate
Upto ` 2,50,000 Nil
From ` 2,50,001 to ` 5,00,000 @5% 12,500
From ` 5,00,001 to ` 10,00,000 @20% 1,00,000
From ` 10,00,001 to ` 90,97,500 @30% 24,29,250 25,41,750
25,79,500
Add: Surcharge @10% since total income
exceeds ` 50 lakhs but does not exceed
` 1 crore 2,57,950
28,37,450
Add: Health and education cess @4% 1,13,498
Tax Liability 29,50,948
Tax liability (Rounded off) 29,50,950
2. (a) Computation of total income of Mr. Tilak for the A.Y. 2025-26
(if he is Resident and Ordinarily Resident - ROR)
Particulars `
(i) FTS for services rendered in Malaysia 50,000
Global income is taxable in case of a ROR.
(ii) Profit from business in England controlled from 3,00,000
Bombay
Global income is taxable in case of a ROR.
(iii) Past untaxed profits earned in Singapore and Nil
brought to India in current year

538
(iv) Capital gain on sale of land in India but received in 2,00,000
Malaysia
Deemed to accrue or arises in India, since the property is
situated in India.
(v) Income from agricultural land in Nepal, received 18,000
there
Global income is taxable in case of a ROR
(vi) Interest on saving bank deposit in SBI
Taxable since it is deemed to accrue or arises in India. 12,000
Gross Total Income 5,80,000
Less: Deduction under Chapter VI-A
Deduction under section 80C - For repayment of 50,000
housing loan
Deduction under section 80TTA - Interest on savings
bank account subject to a maximum of ` 10,000 10,000
Total Income 5,20,000
Computation of total income of Mr. Tilak for the A.Y. 2025-26
(if he is Resident but Not Ordinarily Resident - RNOR)
Particulars `
(a) FTS for services rendered in Malaysia to a non- Nil
resident
In case of RNOR, FTS would not be taxable in India
since neither services are utilised for business in
India nor FTS received in India.
(b) Profit from business in England controlled from 3,00,000
Bombay
In case of RNOR, whole profits of ` 3,00,000 from
business in England is taxable since business is
controlled from India.
(c) Past untaxed profits earned in Singapore and Nil
brought to India in current year
(d) Capital gain on sale of land in India but received 2,00,000
in Malaysia
Deemed to accrue or arises in India, since the property
is situated in India.
(e) Income from agricultural land in Nepal, received Nil
there
In case of RNOR, it would not be taxable in India,
since neither it is deemed to accrue or arise in India
nor received in India.
(f) Interest on saving bank deposit in SBI
Taxable since it is deemed to accrue or arises in 12,000
India.

539
 Gross Total Income 5,12,000
Less: Deduction under Chapter VI-A
Deduction under section 80C - For repayment of 50,000
housing loan
Deduction under section 80TTA - Interest on
savings bank account subject to a maximum of 10,000
` 10,000
Total Income 4,52,000
(b) (i) ABC Limited is required to deduct tax at source under section 194-
I @10% on rent of ` 75,000 per month exclusive of GST
component, since the aggregate rent of ` 9,00,000 during the
financial year exceeds the threshold limit of ` 2,40,000.
Tax has to be deducted at the time of payment or credit, whichever
is earlier.
(ii) XYZ Pvt. Ltd. is not required to collect tax at source on sale of car
of ` 4,00,000 to Mrs. Anju since its value does not exceed ` 10
lakhs.
However, it is required to collect tax at source u/s 206C(1F) @1%
on the total sale consideration of ` 12 lakhs since the value of this
car exceeds ` 10 lakhs.
Tax has to be collected at the time of receipt of ` 12 lakhs.
3. (a) (i) In the present case, the amount of advance of ` 2,00,000 received
by Mr. Ravi from closely held manufacturing company would be
deemed as dividend to the extent of accumulated profit of
` 1,00,000, since Mr. Ravi holds 22% shareholding in the company
which is not less than 10% of the voting power in the company.
Accordingly, deemed dividend of ` 1,00,000 would be taxable in the
hands of Mr. Ravi under the head “Income from Other Sources” for
the A.Y. 2025-26.
(ii) Computation of deduction allowable u/s 35 for the
A.Y. 2025-26
Particulars `
(i) Revenue expenditure on scientific research 1,00,000
allowable as deduction u/s 35(1)(i), assuming
such expenditure is related to his business.
(ii) Capital expenditure allowable as deduction 3,00,000
u/s 35(1)(iv), assuming such expenditure is
incurred for his business.
(iii) Contribution to notified approved research 1,50,000
association for scientific research – 100% of
the amount paid is allowed as deduction u/s
35(1)(ii).
540
 (iv) Amount paid to H Ltd., an Indian company 2,50,000
approved by the prescribed authority - 100%
of the amount paid is allowed as deduction u/s
35(1)(iia)
(v) Expenditure towards purchase of land – not Nil
allowed as deduction
(vi) Revenue expenditure towards salary of 2,00,000
research staff incurred in the F.Y. 2023-24 –
allowed as deduction u/s 35(1)(i) in the
P.Y. 2024-25 as it was expended within the 3
years immediately preceding the
commencement of business
Total deduction allowable 10,00,000
(b) Computation of Taxable Capital Gains for A.Y.2025-26
Particulars `
Full Value of Consideration 85,00,000
Less: Expenditure in connection with transfer 50,000
Net Sales Consideration 84,50,000
Less: Indexed cost of acquisition [` 13,00,000 47,19,000
(higher of actual cost to the previous owner of ` 10
lakhs and Fair market value as on 1.4.2001 of ` 13
lakhs) x 363/100]
Less: Indexed cost of improvements [` 10 lakhs x 16,50,000
363/220]
20,81,000
Less: Exemption u/s 54 – in respect of residential
house purchased on 20.12.2024 12,00,000
Taxable Long Term Capital Gains 8,81,000
Note – The above answer is on the basis of the view expressed by
Bombay High Court in CIT v. Manjula J. Shah 16 Taxman 42, wherein it
was held that Indexed cost of acquisition in case of gifted asset has to
be computed with reference to the year in which the previous owner first
held the asset and not the year in which the assessee became the owner
of the asset.
Alternative answer is possible on basis of the plain reading of the
provisions of section 48 wherein the indexed cost of acquisition would
be determined by taking the Cost Inflation Index (CII) for the year in
which the asset is first held by the assessee i.e. F.Y.2009-10. In such a
case, the Indexed cost of acquisition would ` 31,88,514 (` 13,00,000 x
363/148) and taxable long term capital gains would be ` 24,11,486.

541
4. (a) Computation of total income of Mr. Joshi for the A.Y.2025-26
Particulars `
Income from house property 2,00,000
Less: Set-off of brought forward loss from 2,00,000 Nil
house property of A.Y. 2022-23 is allowed,
since 8 years period not yet lapsed
Profits and gains from business or
profession
Income from proprietary business 3,00,000
Less: Set off of brought forward business Nil
loss of A.Y. 2014-15 not allowable as 8
years’ time has already lapsed in the
A.Y. 2022-23
Less: Set off of unabsorbed depreciation of 1,00,000 2,00,000
A.Y. 2014-15
[Note – Unabsorbed depreciation can be
set-off against short-term capital gains]
Capital Gains
Short-term capital gain on sale of land 2,00,000
Less: Set-off of short-term capital loss on 75,000 1,25,000
sale of listed equity shares
Brought forward long-term capital loss is not
allowed to be carried forward and set-off,
since return of income for the A.Y. 2019-20
was filed after the due date of filing return of
income.
Income from Other Sources
Interest on fixed deposit not includible in the Nil
hands of Mr. Joshi since his son is major
Gross Total Income 3,25,000
Less: Deduction under Chapter VI-A Nil
Total Income 3,25,000

Items eligible for carried forward

(i) Loss from speculation business of ` 40,000 can be set-off against
income from speculation business only. Hence, such loss would
be carried forward to subsequent assessment year.
(ii) Loss from owning and maintenance of race horses ` 50,000, can
be set-off against income from income from owning and
maintenance of race horses only. Thus, such loss would be
carried forward to subsequent assessment year.
(iii) Brought forward loss from house property can be set off only
against income of house property. Hence, remaining loss of
542
 ` 50,000 has to be carried forward to subsequent assessment
year.
(b) [First Alternative]
(i) In this case, Mr. Aneesh is not required to file return of income,
since his total income does not exceed ` 3,00,000, being the basic
exemption limit as per the default tax regime u/s 115BAC,
assuming Mr. Aneesh has not claimed any deduction u/s
54/54D/54EC or 54F and deduction allowable under Chapter VI-A.
(ii) In the present case, since Smt. Patel, a senior citizen has a TDS
credit of ` 55,000, which exceeds the threshold limit of ` 50,000,
she is required to file her return of income even if her total income
does not exceed the basic exemption limit.
(iii) In this case, since Mr. Ajit’s gross receipts from the profession of
architect was ` 12,00,000 for the P.Y. 2024-25, which is in excess
of ` 10 lakhs, hence, he is required to file his return of income
though his total income is ` 2,25,000 which does not exceed the
basic exemption limit.
(b) [Second Alternative]
The CBDT has, vide Notification No. 37/2022 dated 21.4.2022, inserted
Rule 12AB to provide that a person, other than a company or a firm, who
is not required to furnish a return under section 139(1), and who fulfils
any of the following conditions during the previous year has to file their
return of income on or before the due date in the prescribed form and
manner –
(i) if his total sales, turnover or gross receipts, as the case may be, in
the business > ` 60 lakhs during the previous year; or
(ii) if his total gross receipts in profession > ` 10 lakhs during the
previous year; or
(iii) if the aggregate of TDS and TCS during the previous year, in the
case of the person, is ` 25,000 or more; or
However, a resident individual who is of the age of 60 years or
more, at any time during the relevant previous year (or senior
citizen) would be required to file return of income only, if the
aggregate of TDS and TCS during the previous year, in his case, is
` 50,000 or more
(iv) the deposit in one or more savings bank account of the person, in
aggregate, is ` 50 lakhs or more during the previous year.

543
 ANSWERS OF MODEL TEST PAPER 8
INTERMEDIATE COURSE: GROUP-I

PAPER – 3: TAXATION

SECTION – A: INCOME TAX LAW

Division A – Multiple Choice Questions

MCQ Sub-part Most Appropriate MCQ Most Appropriate
No. Answer No. Answer
1. (i) (c) 3. (c)
(ii) (b) 4. (d)
(iii) (b)
2. (i) (c)
(ii) (c)
(iii) (a)

Division B – Descriptive Questions

1. Computation of total income and tax liability of Mr. Raman for
A.Y. 2025-26 under default tax regime
Particulars ` `
I Income from house property
Gross Annual Value of first floor (Rent 4,20,000
received has been taken as gross annual value
in the absence of other information) [` 35,000
x 12]
Less: Municipal taxes (paid by tenant, Nil
Mr. Aman, hence not deductible)
Net Annual Value 4,20,000
Less: Deduction @30% of NAV 1,26,000
2,94,000
II Profits and gains of business or profession
Net Profit 9,25,000
Add: Expenses debited to Profit and loss
A/c but not allowable as deduction or to be
considered under other heads of income
- Interest on delay in deposit of GST Nil
[Interest on delay in deposit in GST is
compensatory in nature and hence,
allowable as expenditure]
- Fee for technical services to non-resident 3,88,000
[100% disallowed under section 40(a)(i)
since the TDS was not deducted]
544
- Fire insurance premium [Fire insurance 33,000
premium for ground floor which is occupied
for business purpose is allowed since Mr.
Raman is following mercantile system of
accounting. Remaining half for let out
portion is disallowed] [` 66,000/2]
- Contribution to scientific research 75,000
association approved u/s 35 [Not allowable
under section 35(1)(ii) as per default tax
regime]
- Municipal taxes for ground floor [Allowable Nil
since the ground floor is occupied for
business purpose]
- Sum payable for purchase of raw material 49,000
from M/s Paul Industries, a micro
enterprise [Not allowable as per section
43B(h) since payment was made to a micro
enterprise on 5.4.2025 which is beyond the
time limit specified u/s 15 of the MSMED
Act, 2006 i.e., within 15 days from
10.3.2025]
- Sum payable for purchase of raw material Nil
from M/s Kal Industries, a small enterprise
[Allowable as per section 43B(h) since
payment was made to a small enterprise
on 5.4.2025 i.e., within 15 days from
31.3.2025.
However, since the payment is made in
cash on 5.4.2025, ` 1,34,000 for purchase
of raw material would be the deemed
income of P.Y. 2025-26 as per section
40A(3A)]
14,70,000
Less: Incomes credited to profit and loss
account but not taxable as business
income
- Rent received for let out portion 4,20,000
- Gain on sale of land 4,00,000
6,50,000
Less: Depreciation
- On trademark [` 2,00,000 x 25% x 25,000
50%, since trademark is put to use for
less than 180 days]
- On Car [` 5,40,000 x 15%] 81,000

545
 - On new Plant & machinery 37,500
[` 2,50,000 x 15%]
- On Building [` 8,00,000 x 10%] 80,000
Additional depreciation
- On new Plant & machinery [Not Nil
allowable under default tax regime]
Income from Business 4,26,500
III Capital Gains
Full value of consideration 44,00,000
Less: Cost of acquisition 40,00,000
Short term capital gains on land [Since land is 4,00,000
held for less than 24 months]
Gross Total Income 11,20,500
Less: Deduction under Chapter VI-A [Not Nil
allowable under default tax regime]
Total Income 11,20,500
Tax Liability
Up to ` 3,00,000 Nil
From ` 3,00,001 to ` 7,00,000 @5% 20,000
From ` 7,00,001 to ` 10,00,000 @10% 30,000
From ` 10,00,001 to ` 11,20,500 @15% 18,075
68,075
Add: Health and education cess @4% 2,723
Tax Liability 70,798
Tax Liability (Rounded off) 70,800
Computation of total income and tax liability of Mr. Raman for
A.Y. 2025-26 under normal provisions of the Act
Particulars ` `
Gross Total Income as per default tax 11,20,500
regime
Less: Additional depreciation on new Plant & 50,000
machinery [` 2,50,000 x 20%]
Less: Contribution to scientific research 75,000
association approved u/s 35
Gross Total Income as per normal 9,95,500
provisions of the Act

546
 Less: Deduction under Chapter VI-A
Deduction under section 80C
Tuition fees to a college for daughter’s 25,000
education
Deduction under section 80D
Preventive health check-up for self and parents 5,000
restricted to
Deduction under section 80GGC
Donation to a registered political party since the 20,000
payment is made otherwise than by cash
50,000
Total Income as per normal provisions of 9,45,500
the Act
Tax Liability
Up to ` 3,00,000 Nil
From ` 3,00,001 to ` 5,00,000 @5% 10,000
From ` 5,00,001 to ` 9,45,500 @20% 89,100
99,100
Add: Health and education cess @4% 3,964
Tax Liability 1,03,064
Tax Liability (Rounded off) 1,03,060
2. (a) Residential Status of Mr. Madan
Mr. Madan, an Indian citizen who left India on 1 st September 2024 for
the purpose of employment to USA, would be non-resident in India, since
he stayed in India for 169 days (30+31+30+31+31+1+15) only during the
P.Y. 2024-25 which is less than 182 days.
Residential Status of HUF
Since Mr. Madan is managing the HUF for part of the year from India,
control and management of its affairs is situated partly in India.
Hence, the HUF would be resident in India for the P.Y. 2024-25.
A HUF is said to be “Resident and ordinarily resident” in India during the
previous year 2024-25, if Karta (Mr. Madan, in this case) satisfies both
the following conditions:
- He is a resident in at least 2 out of 10 previous years preceding the
relevant previous year; and
- His stay in India in the last 7 years preceding the relevant previous
year is 730 days or more.
Mr. Madan has satisfied both the above conditions as he had never gone
out of India except for 99 days and 201 days in the P.Y. 2023-24 and
P.Y. 2022-23, respectively, the HUF would be ROR in India.

547
 Computation of Gross Total Income of Mr. Madan
for the A.Y. 2025-26
Amount
in `
Income under the head “Salaries”
Salary earned in India: [` 65,500 x 5 + ` 65,500 x15/31] 3,59,194
Salary paid in USA: [Not taxable as Mr. Madan is a non- Nil
resident and such income does not accrue or arise or
received in India]
Less: Standard Deduction 50,000
3,09,194
Income from other sources
Difference between the consideration of ` 18 lakhs and 5,00,000
stamp duty value of ` 23 lakhs of the residential
property acquired [Taxable, since the difference of ` 5
lakhs exceed ` 1,80,000, being the higher of 10% of the
consideration and ` 50,000]
Sculpture received as gift from Rajeev, his friend in Nil
India [Not taxable as the value does not exceed
` 50,000]
Gross Total Income 8,09,914
(b) (i) M/s PQR & Co. is required to deduct tax at source under section
194J @10% on the professional fees paid to Mr. Amit of ` 30,500
and ` 60,000 on 1st June 2024 and 30th January 2025, respectively,
since M/s PQR & Co. turnover/gross receipts exceeds the
prescribed threshold limit of ` 1 crore during the P.Y. 2023-24.
For non-deduction of tax at source, interest @1% would be leviable
under section 201(1A)(i) for every month or part of the month on
the amount of tax from the date on which such tax was deductible
to the date such tax was paid by the payee i.e., 2.5.2025.
Interest @1% on ` 3,050 (10% of ` 30,500) from June 2024 to May
2025 = ` 366 and on ` 6,000 (10% of ` 60,000) from January, 2025
to May 2025 = ` 300 is payable by M/s PQR & Co.
(ii) M/s. Fastest Ltd. is not required to collect tax at source u/s
206C(1F) on sale of cars of ` 150 lakhs to M/s. Race LLP, since
such sale is to a distributor and sale price of each car does not
exceed ` 10 lakhs.
M/s. Race LLP is also not required to deduct tax at source u/s
194Q, since its turnover, being a buyer in the P.Y. 2023-24 does
not exceed ` 10 crores.
However, M/s Fastest Ltd. is required to collect tax at source u/s
206C(1H) @0.1% on the sale consideration exceeding ` 50 lakhs
548
 i.e. on ` 100 lakhs since turnover of M/s Fastest Ltd. exceeds ` 10
crores and TCS u/s 206C(1F) and TDS u/s 194Q is not applicable.
3. (a) Computation of taxable salary of Mr. Radhey for A.Y.2025-26
Particulars `
Basic Pay [` 35,000 x 10 + ` 40,000 x 2] 4,30,000
Dearness Allowance [` 4,30,000 x 30%] 1,29,000
Value of Rent-free accommodation
Value of Rent-free accommodation {10% of 49,966
` 4,99,660 i.e., [` 4,30,000, basic salary) +
` 69,660 (` 1,29,000 x 54%, DA)}
Add: Value of furniture [` 1,50,000 × 10% p.a.] 15,000 64,966
Facility of use of electricity [Electricity and water bills paid 48,000
by the employer would be taxable as perquisite] [` 4,000
x 12]
Refresher course for upgrading skills [Tax free perquisite] Nil
Value of medical treatment [Exempt, since medical Nil
treatment for wife is in notified hospital]
Gross Salary 6,71,966
Less: Deduction under section 16 - Standard deduction 75,000
Taxable Salary 5,96,966
(b) Computation of Capital Gains of Mr. Raj for A.Y.2025-26
Particulars `
Capital gain on sale of urban agricultural land
Actual sale consideration 75,00,000
Stamp duty value as on date of 85,00,000
agreement i.e., on 15.7.2024 [Since part
consideration is received through IMPS
on the date of agreement]
Full Value of Consideration [Stamp duty value on the 85,00,000
date of agreement since it exceeds 110% of the actual
sale consideration]
Less: Expenditure in connection with transfer [1% of 75,000
sale consideration i.e., ` 75 lakhs]
Net Sales Consideration 84,25,000
Less: Cost of acquisition 10,85,000
73,40,000
Less: Exemption u/s 54B – In respect of rural 40,00,000
agricultural land purchased on 1.1.2025. Mr. Raj is
eligible to claim exemption u/s 54B since he has used

549
 the urban agricultural land for agricultural purposes for
more than 2 years preceding the date of its transfer.
Long term capital gain 33,40,000
4. (a) Computation of total income of Mr. Suraj, Mrs. Megha and minor
son Dev for A.Y. 2025-26
Particulars Mr. Suraj Mrs. Megha Dev [Under
[Under [Under normal
default normal provisions]
tax provisions]
regime] ` `
`
Income from house
property
Annual Value [As per section 4,20,000
27, Mrs. Megha is the
deemed owner of the house
property transferred to minor
son, Dev without
consideration though such
property is acquired from her
“Stridhan”] [` 35,000 x12]
Less: Deduction @30% of 1,26,000
NAV
2,94,000
Brought forward loss from -
House A [Not allowed to be
set-off against income from
other heads]
Current year loss of -
Mr. Suraj from House – B [Not
allowed to be set-off against
income from other heads since
Mr. Suraj is paying tax under
default tax regime]
Profits and gains from
business or profession
Salary from partnership firm 6,15,000
Less: As per section 70, set
off of current year loss from 6,15,000
business of ` 8,10,000 to the
extent of [Current year loss
from business of his wife is
allowed to be set off in the
hands of Mr. Suraj since
550
 funds for business is gifted
by him]
Income from Other -
Sources
Interest on enhanced 2,00,000
compensation [Taxable in
the year it is received]
Less: Deduction @50% 1,00,000
1,00,000
Gift from grandfather’s sister 1,25,000
[Taxable under section
56(2)(x), since grandfather’s
sister is not a relative and the
amount of gift exceeds
` 50,000]
Dividend on shares (gross) 50,000
Maturity proceeds from LIC -
[Exempt under section
10(10D) since the annual
premium payable does not
exceed 10% of sum assured]
2,75,000
Less: Set off of remaining
business loss of ` 1,95,000 1,95,000
80,000
Gift of house property from Nil
Mrs. Megha to Dev [Exempt
since the gift is from a
relative i.e., from his mother]
Gross total income 80,000 2,94,000 -

(b) First Alternative

(i) The due date of filing return of income of Vegetable Ltd for the
A.Y.2024-25 is 31st October, 2024 since it is a company.
However, it filed its return of income on 15.12.2024, which is a
belated return.
If any omission is discovered even in a belated return, the same
can also be revised up to 31.12.2024 being the date 3 months prior
to the end of the relevant assessment year i.e. 31.03.2025 or
completion of assessment, whichever is earlier.
However, it cannot file a revised return on 02.01.2025 since it is
beyond 31.12.2024. Hence, the action of accountant of Vegetable
Ltd is not valid.
551
 (ii) Since Mr. Mahendra is a resident individual, not being a company
or a person whose accounts are required to be audited under
section 44AB for the P.Y. 2024-25, and therefore he can file his
return of income for A.Y. 2025-26 through a Tax Return Preparer.
(b) Second Alternative
An updated return can be furnished for the previous year relevant to the
assessment year at any time within 24 months from the end of the
relevant assessment year.
Accordingly, the following are the suggestions to Rani with respect to
updated return on 16.5.2025 for A.Y. 2022-23, A.Y. 2023-24 and
A.Y. 2024-25:
A.Y. 2022-23: Since the period of 24 months from the end of A.Y.
2022-23 expired on 31.3.2025 updated return cannot be furnished on
16.5.2025 for A.Y. 2022-23.
A.Y. 2023-24: For A.Y. 2023-24, updated return can be furnished up to
31.3.2026. Thus, updated return can be furnished on 16.5.2025.
Since updated return would be furnished after the expiry of 12 months
but before 24 months from the end of 31.3.2024, additional income tax
would be payable @50% of aggregate of tax (after taking into
consideration tax deducted at source) and interest payable.
In this case, since the refund of ` 4,40,000 (` 5,60,000, being tax liability
- ` 10,00,000, being TDS deducted) would arise, updated return cannot
be furnished for A.Y. 2023-24.
A.Y. 2024-25: - For A.Y. 2024-25, updated return can be furnished up to
31.3.2027. Thus, updated return can be furnished on 16.5.2025.
Since updated return would be furnished before the expiry of 12 months
from the end of 31.3.2025, additional income tax would be payable
@25% of aggregate of tax (after taking into consideration tax deducted
at source and self-assessment tax paid) and interest payable.
Accordingly, Rani is required to pay additional income-tax of ` 1,05,000
i.e., 25% of ` 4,20,000 [` 3,30,000 (` 6,30,000 – ` 2,00,000 – ` 1,00,000)
+ ` 90,000] in addition to tax payable of ` 3,30,000, interest payable of
` 90,000 and late fees of ` 5,000.

552
 ANSWERS OF MODEL TEST PAPER 1
SECTION B – GOODS AND SERVICES TAX (50 MARKS)
SUGGESTED ANSWERS
Division A - Multiple Choice Questions
Question Answer
No.
1 (b) Invoice shall be issued before or at the time of removal of
smartphones to distributors.
2 (b) ITC of ` 18 lakh can be claimed and value of asset on which
depreciation can be claimed under the provisions of Income-
Tax Act, 1961 shall be ` 1 crore.
3 (a) The demerged entity shall be treated as related party of the
Company.
4 (d) 72 months from due date of furnishing annual return for the
relevant financial year
5 (a) 45 days
6 (c) The restriction of 180 days for payment of consideration is not
applicable in the present case.
7 (b) 2 days
8 (c) Both (a) and (b)
Division B - Descriptive Questions
1. (a) Computation of GST payable on outward supplies
S. Particulars CGST SGST IGST
No. @ 9% (`) @ 9% (`) @ 18% (`)
(i) Intra-State supply of goods for 36,000 36,000 Nil
` 4,00,000 [Note-1]
(ii) Services rendered by way of 9,000 9,000 Nil
labour contracts for repairing
a single residential unit
otherwise than as a part of
residential complex [Note-2]
(iii) Services provided by way of Nil Nil 1,800
training in recreational
activities relating to sports
[Note-3]
(iv) Inter-State security services Nil Nil 2,700
provided to Bharat higher
secondary school for their
annual day function to be held
in Kaman Auditorium.[Note-4]
Total GST payable 45,000 45,000 4,500

553
Notes
1. A registered person (excluding composition supplier and
registered persons making supply of specified actionable claims)
has to pay GST on the outward supply of goods at the time of
supply as specified in section 12 of the CGST Act, 2017, i.e. date
of issue of invoice or the last date on which invoice ought to have
been issued. Thus, liability to pay tax on the advance received in
January will also arise in the month of February, when the invoice
for the supply is issued.
2. Services by way of pure labour contracts of construction, erection,
commissioning, or installation of original works pertaining to a
single residential unit otherwise than as a part of a residential
complex are exempt. Labour contracts for repairing are thus,
taxable.
3. Services by way of training in sports is exempt under GST, only if
provided by charitable entities registered under section 12AA or
section 12AB of the Income-tax Act,1961. Thus, in the given case,
said service is taxable.
4. Security services provided to Bharat higher secondary School for
Annual Day function organised outside the school campus will be
taxable as only the security services performed within the
premises of the higher secondary school are exempt.
Computation of total ITC
Particulars CGST SGST IGST
@ 9% @ 9% @ 18%
(`) (`) (`)
Opening ITC 57,000 Nil 50,000
Add: Purchase of goods from a Nil Nil Nil
composition dealer
[ITC is not available in case of supply
of goods where tax has been paid
under composition scheme]
Add: Membership of a club [Blocked Nil Nil Nil
credit]
Add: Goods transport services Nil Nil 24,000
received from GTA
[Input tax credit is available for the
services received from GTA as the
same are used in the course or
furtherance of business.]
Add: Inputs to be received in 4 lots, Nil Nil Nil
out of which 2nd lot was received
during the month [In case of goods
received in lots, ITC can be taken
only upon receipt of the last lot]
Total ITC 57,000 Nil 74,000
554
 Computation of minimum GST payable from electronic
cash ledger
Particulars CGST SGST IGST
@ 9% @ 9% @ 18%
(`) (`) (`)
GST payable 45,000 45,000 4,500
Less: ITC [First ITC of IGST should be (24,500) (45,000 (4,500)
utilized in full - first against IGST IGST ) IGST
liability and then against CGST and (3) IGST (1)
SGST liabilities in a manner to (2)
minimize cash outflow]
Less: ITC of CGST to be used against (20,500)
CGST CGST
Minimum GST payable in cash Nil Nil Nil
Note: Since sufficient balance of ITC of CGST is available for paying
CGST liability and cross utilization of ITC of CGST and SGST is not
allowed, ITC of IGST has first been used to pay SGST (after paying IGST
liability) and then CGST to minimize cash outflow.
(b) Computation of GST liability
S. Particulars Mridul Kalu
No. Traders Motors Ltd.
(`) (`)
(i) Price of goods 10,000 30,000
(ii) Add: Packing charges (Note-1) 500
(iii) Add: Commission (Note-1) 500
(iv) Add: Weighment charges (Note-1) - 2,000
(v) Less: Discount for prompt payment
(Note-2) - 1,000
Value of taxable supply 11,000 31,000
IGST payable @ 18% (Note-3) 1,980
CGST payable @ 9% (Note-4) 2,790
SGST payable @ 9% (Note-4) 2,790
Notes:
1. Incidental expenses, including commission and packing, charged
by supplier to recipient of supply is includible in the value of supply.
Weighment charges are also incidental expenses, hence includible
in the value of supply [Section 15 of the CGST Act, 2017].
2. Since discount is known at the time of supply, it is deductible from
the value in terms of section 15 of the CGST Act, 2017.
3. Section 10 of the IGST Act, 2017 provides that where the supply
involves movement of goods, the place of supply of such goods
555
 shall be the location of the goods at the time at which the movement
of goods terminates for delivery to the recipient. Thus, place of
supply is Gujarat.
Further, where the location of the supplier and the place of supply
are in two different States, supply of goods shall be treated as a
supply of goods in the course of inter-State trade or commerce.
Since supply made to Mridul Traders is an inter-State supply, IGST
is payable.
2. (a)
S. No. Particulars Taxability
(i) Supply of manpower for cleanliness of roads not Exempt
involving any supply of goods.
[Pure services provided to Government are
exempt.]
(ii) Service provided by Fair Price Shops by way of Exempt
sale of sugar under Public Distribution System
[Service provided by Fair Price Shops to
Government by way of sale of sugar under Public
Distribution System against consideration in the
form of commission is exempt.]
(iii) Service of maintenance of street lights in a Taxable
Municipal area involving replacement of defunct
lights and other spares constituting 35% of the
supply of service.
[Composite supply of goods and services to
Government in which the value of supply of goods
constitutes not more than 25% of the value of the
said composite supply is exempt. Since, in this
case value of supply of goods constitutes 35% of
the supply of composite service, same is taxable.]
(iv) Service of brochure distribution provided under a Taxable
training programme.
[Services provided to the Government under any
training programme for which 75% or more of the
total expenditure is borne by the Government is
exempt. Since in the given case, 70% of the total
expenditure is borne by the Government, it is
taxable.]
(b) (i) As per Para I of Schedule III of the CGST Act,2017 services by an
employee to the employer in the course of or in relation to his
employment are non-supplies, i.e. they are neither supply of goods
nor supply of services. Services provided by the independent
directors who are not employees of the said company to such
company, in lieu of remuneration as the consideration for the said
services, are clearly outside the scope of Schedule III of the CGST
556
 Act and are therefore taxable. Further, such remuneration paid to
the directors is taxable in hands of the company, on reverse charge
basis.
Thus, GST is applicable in this case and Star Company Private
Limited is liable to pay GST.
(ii) The part of director’s remuneration which is declared as salaries in
the books of a company and subjected to TDS under section 192
of the Income-tax Act (IT Act), is not taxable being consideration
for services by an employee to the employer in the course of or in
relation to his employment in terms of Schedule III of the CGST
Act,2017.
Further, the part of employee director’s remuneration which is
declared separately other than salaries in the company’s accounts
and subjected to TDS under section 194J of the IT Act as fees for
professional or technical services are treated as consideration for
providing services which are outside the scope of Schedule III and
is therefore, taxable. The recipient of the said services i.e. the
company, is liable to discharge the applicable GST on it on reverse
charge basis.
In lieu of the above provisions, ` 60,000 declared as salaries in the
books of Star Company Private Limited and subjected to TDS under
section 192 of the Income-Tax Act (IT Act), is not taxable being
consideration for services by an employee to the employer in the
course of or in relation to his employment in terms of Schedule III
of the CGST Act,2017.
Further, ` 65,000 declared separately other than salaries in the Star
Company Private Limited’s accounts and subjected to TDS under
section 194J of the IT Act as professional services is treated as
consideration for providing services which is outside the scope of
Schedule III of the CGST Act,2017 and is therefore, taxable. The
recipient of the said services i.e. the Star Company Private Limited,
is liable to discharge the applicable GST on it on reverse charge
basis.
3. (a) As per section 22 of the CGST Act, 2017 read with Notification No.
10/2019 CT dated 07.03.2019, a supplier is liable to get registered in the
State/Union territory from where he makes a taxable supply of goods
and/or services, if his aggregate turnover in a financial year exceeds the
threshold limit. The threshold limit for a person making exclusive intra-
State taxable supplies of goods is as under:-
(a) ` 10 lakh for the Special Category States of Mizoram, Tripura,
Manipur and Nagaland.
(b) ` 20 lakh for the States, namely, States of Arunachal Pradesh,
Meghalaya, Puducherry, Sikkim, Telangana and Uttarakhand.
(c) ` 40 lakh for rest of India except persons engaged in making
supplies of fly ash bricks/blocks, building bricks, bricks of fossil
meals, earthen/roofing tiles, ice cream and other edible ice,
557
 whether or not containing cocoa, Pan masala and Tobacco and
manufactured tobacco substitutes.
In the light of the afore-mentioned provisions, the answer to the
independent cases is as under:
(i) The benefit of enhanced threshold limit of registration of ` 40 lakh
is not applicable for Om Sai brothers even though it is exclusively
engaged in intra-State taxable supply of goods in Delhi as it is
engaged in making supplies of building bricks. Thus, the applicable
threshold limit for registration for Om Sai Builders in the given case
is ` 20 lakh. Thus, it is liable to get registered under GST as it’s
turnover is more than the threshold limit.
(ii) Hukum Chand could have been eligible for enhanced threshold limit
of turnover for registration, i.e. ` 40 lakh as he is exclusively
engaged in intra-State supply of goods. However, since Hukum
Chand is engaged in supplying footwear from a Special Category
State i.e. Nagaland, the threshold limit gets reduced to ` 10 lakh.
Thus, Hukum Chand is liable to get registered under GST as his
turnover exceeds ` 10 lakh. Further, he is required to obtain
registration in both Himachal Pradesh and Nagaland as he is
making taxable supplies from both the States.
(b) A supplier who has opted for composition scheme is not required to
maintain records relating to;
(i) Stock of goods: Accounts of stock in respect of goods received
and supplied by him, and such accounts shall contain particulars of
the opening balance, receipt, supply, goods lost stolen, destroyed,
written off or disposed of by way of gift or free sample and the
balance of stock including raw materials, finished goods, scrap and
wastage thereof.
(ii) Details of tax: Account, containing the details of tax payable
(including tax payable under reverse charge), tax collected and
paid, input tax, input tax credit claimed, together with a register of
tax invoice, credit notes, debit notes, delivery challan issued or
received during any tax period.
Thus, Mr. Mehta is not required to maintain above mentioned records.
4. (a) In case of an event, if the recipient of service is registered, the place of
supply of services for organizing the event is the location of such person.
However, if the recipient is not registered, the place of supply is the place
where event is held.
Since the event is being held in multiple states and a consolidated
amount is charged for such services, the place of supply will be deemed
to be in each State in proportion to the value for services determined in
terms of the contract or agreement entered into in this regard.
In the absence of a contract or agreement between the supplier and
recipient of services, the proportionate value of services made in each
State (where the event is held) will be computed in accordance with IGST
Rules by the application of generally accepted accounting principles.
558
 Or
(a) It has been clarified vide a circular that securities are considered neither
as goods nor as services in terms of definition of goods and the definition
of services. Further, securities include 'shares' as per definition of
securities.
This implies that the securities held by the holding company in the
subsidiary company are neither goods nor services. Further, purchase
or sale of shares or securities, in itself is neither a supply of goods nor a
supply of services. For a transaction/activity to be treated as supply of
services, there must be a supply as defined under section 7 of the CGST
Act, 2017. It cannot be said that a service is being provided by the
holding company to the subsidiary company, solely on the basis that
there is a specific SAC entry in the scheme of classification of services,
unless there is a supply of services by the holding company to the
subsidiary company in accordance with section 7 of the CGST Act, 2017.
Therefore, the activity of holding of shares of subsidiary company by the
holding company per se cannot be treated as a supply of services by a
holding company to the said subsidiary company and cannot be taxed
under GST.
(b) In GST since the returns are built from details of individual transactions,
there is no requirement for having a revised return. Any need to revise
a return may arise due to the need to change a set of invoices or debit/
credit notes. Instead of revising the return already submitted, the system
allows amendment in the details of those individual details of those
transactions (invoices or debit/credit notes) that are required to be
amended. They can be amended in any of the future GSTR-1 in the
tables specifically provided for the purposes of amending previously
declared details.
Omission or incorrect particulars discovered in the returns filed under
section 39 of the CGST Act, 2017 can be rectified in the return to be filed
for the month during which such omission or incorrect particulars are
noticed. Any tax payable as a result of such error or omission will be
required to be paid along with interest. The rectification of
errors/omissions is carried out by entering appropriate particulars in
“Amendment Tables” contained in GSTR-1. However, no such
rectification of any omission or incorrect particulars is allowed after
30th November following the end of the financial year to which such
details pertain, or the actual date of furnishing of relevant annual return,
whichever is earlier.

559
 ANSWERS OF MODEL TEST PAPER 2
SECTION B – GOODS AND SERVICES TAX (50 MARKS)
SUGGESTED ANSWERS
Division A - Multiple Choice Questions
Question Answer
No.
1 (b) The tax is payable at the time of supply of goods
2 (b) ` 5 crores
3 (a) Company has an option to issue single credit note against
multiple invoices.
4 (d) transaction value subject to the conditions mentioned in
Section 15(2) of the CGST Act, 2017.
5 (a) The Company shall be eligible to avail full input tax credit.
6 (c) Invoice by Maharashtra unit to the Gujarat unit of the
Company
7 (c) Mr. Jambulal is liable to obtain registration as he makes the
inter-State supply of goods.
8 (b) No, service by way of renting of residential property is
exempt.
Division B - Descriptive Questions
1. (a) Computation of GST payable
Particulars Value of CGST SGST IGST
supply @ 9% @ 9% @ 18%
(`) (`) (`) (`)
GST payable under forward
charge
Carnatic music performance 1,40,000 12,600 12,600 Nil
given to promote a brand of
readymade garments
[Carnatic music performance by
Mr. Nandan lal is not exempt
from GST even though the
consideration charged does not
exceed ` 1,50,000 since said
performance has been made by
him as a brand ambassador.]
Services of transportation of 1,00,000 9,000 9,000 Nil
students provided to HSMG
College
[Services of transportation of
students provided to an
educational institution other
560
than an institution providing
pre-school education or
education up to higher
secondary school, are not
exempt.]
Services provided to IFMP 2,00,000 18,000 18,000 Nil
Bank as a business
correspondent.
[Services provided by a
business correspondent to a
banking company are not
exempt when such services are
provided with respect to
accounts in its urban area
branch.]
Services provided as a 15,000 1,350 1,350 Nil
recovery agent
[Tax is payable under forward
charge since recovery agent’s
services are being provided to a
person other than banking
company/financial institution/
non-banking financial
company.]
Total GST payable under 40,950 40,950 Nil
forward charge (A)
GST payable under reverse
charge
Legal services availed from an 1,75,000 Nil Nil 31,500
advocate.
[Legal services received by a
business entity with aggregate
turnover in the preceding
financial year exceeding
threshold limit for registration
(` 20 lakh) are not exempt and
tax on the same is payable
under reverse charge.]
Total GST payable under Nil Nil 31,500
reverse charge (B)
Total GST payable [(A)+(B)] 40,950 40,950 31,500

561
 Computation of total ITC available
Particulars Value of CGST SGST IGST
supply @ 9% @ 9% @ 18%
(`) (`) (`) (`)
Outdoor catering services 50,000 Nil Nil Nil
availed
[ITC on outdoor catering
services is blocked except
when such services are (i)
used by the taxpayer who is in
the same line of business or
(ii) provided by the employer
to its employees under a
statutory obligation.]
Legal services availed 1,75,000 Nil Nil 31,500
[ITC is available as said
services are used in course or
furtherance of business.]
General insurance taken on a 40,000 Nil Nil Nil
car (seating capacity 5) used
for official purposes
[ITC on motor vehicles for
transportation of persons with
seating capacity ≤ 13 persons
(including the driver) is
blocked except when the
same are used for (i) making
further taxable supply of such
motor vehicles (ii) making
taxable supply of
transportation of passengers
(iii) making taxable supply of
imparting training on driving
such motor vehicles. Further,
ITC is not allowed on services
of general insurance relating
to such ineligible motor
vehicles.]
Total ITC available Nil Nil 31,500
Computation of net GST payable in cash
Particulars CGST SGST IGST
@ 9% @ 9% @ 18%
(`) (`) (`)
GST payable under forward charge 40,950 40,950 Nil

562
 Less: ITC of IGST 1 [Refer Note] (15,750) (15,750) -
IGST IGST
25,200 25,200 Nil
Add: GST payable under reverse Nil Nil 31,500
charge in cash
[Tax payable under reverse charge,
being not an output tax, cannot be set
off against ITC and thus, will have to be
paid in cash.]
Net GST payable in cash 25,200 25,200 31,500
Note: ITC of IGST can be utilised towards payment of CGST and SGST
in any proportion and in any order.
(b) Computation of value of taxable supply made by M/s. LSP to
Balwant Ltd.
Particulars Amount
(`)
Price of the machine 20,000
[Since the price linked subsidy is received from the State
Government, the same is not includible in the value of
supply]
Third party inspection charges 6,000
[Any amount that the supplier is liable to pay in relation
to the supply but has been incurred by the recipient and
not included in the price actually paid or payable for the
goods, is includible in the value of supply]
Freight charges for delivery of the machine 1,000
[Since arranging freight is the liability of supplier, it is a
case of composite supply and thus, freight charges are
added in the value of principal supply.]
Total 27,000
Less: Discount @ 2% on ` 20,000 being price charged 400
to Balwant Ltd.
[Discount given before or at the time of supply if duly
recorded in the invoice is deductible from the value of
supply]
Value of taxable supply 26,600
2. (a) (i) Services provided by way of renting of residential dwelling for use
as residence except where the residential dwelling is rented to a
registered person is exempt from GST. Further, tax on service
provided by way of renting of residential dwelling to a registered
1 Since IGST credit can be set off against CGST and SGST liability in any order and in any proportion,
the same can be set off against CGST and/or SGST liabilities in different ways as well. In all such
cases, net CGST and net SGST payable from Electronic Cash Ledger will differ though the total amount
of net GST payable ( ` 81,900) in cash will remain the same.
563
 person is payable by the recipient under reverse charge.
Therefore, in the given case, Anant Technologies is liable to pay
GST on the residential dwellings taken on rent by it from Sapna
Builders, under reverse charge mechanism.
(ii) In case of services provided by any person by way of sponsorship
to any body corporate or partnership firm, GST is liable to be paid
under reverse charge by such body corporate or partnership firm
located in the taxable territory.
Since in the given case, sponsorship services are being provided
by the private NGO to a partnership firm – M/s. Verma Consultants,
GST is payable by Verma Consultants on said services under
reverse charge.
(b) Section 10(2A) of the CGST Act, 2017 provides the turnover limit of ` 50
lakh in the preceding financial year for becoming eligible for composition
levy for services. Little Smiles has started the supply of services in the
current financial year (FY), thus, it’s aggregate turnover in the preceding
FY is Nil. Consequently, in the current FY, Little Smiles is eligible for
composition scheme for services. A registered person opting for
composition levy for services shall pay tax @ 3% [Effective rate 6%
(CGST+ SGST/UTGST)] of the turnover of supplies of goods and
services in the State.
Further, Little Smiles becomes eligible for the registration when the
aggregate turnover exceeds ` 20 lakh (the threshold limit of obtaining
registration). While registering under GST, Little Smiles can opt for
composition scheme for services.
The option of a registered person to avail composition scheme for
services shall lapse with effect from the day on which his aggregate
turnover during a financial year exceeds the threshold limit of ` 50 lakh.
However, for the purposes of determining the tax payable under
composition scheme, the expression “turnover in State” shall not include
the value of supplies from the first day of April of a FY up to the date
when such person becomes liable for registration under the CGST Act.
Thus, for determining the turnover of the State for payment of tax under
composition scheme for services, turnover of April,2024 – June,2024
quarter [` 20 lakh] shall be excluded. On next ` 30 lakh [turnover of
July, 2024 – September, 2024 quarter], it shall pay tax @ 6% [3% CGST
and 3% SGST].
For the purposes of computing aggregate turnover of a registered person
for determining his eligibility to pay tax under this section, aggregate
turnover includes value of supplies from the 1st April of a FY up to the
date of his becoming liable for registration.
Thus, while computing aggregate turnover for determining Little Smiles’s
eligibility to pay tax under composition scheme, value of supplies from
the first day of April of a financial year up to the date when it becomes

564
 liable for registration under this Act (i.e. turnover of April,2024 –
June,2024 quarter), are included.
By the end of July, 2024 – September, 2024 quarter, the aggregate
turnover reaches ` 50 lakh. Consequently, the option to avail
composition scheme for services shall lapse by the end of July, 2024 –
September, 2024 quarter and thereafter, it is required to pay tax at the
normal rate of 18%.
Considering the above provisions, the tax payable for each quarter is as
under:-
S. Quarter GST rate Turnover GST payable
No. [CGST + (` in lakh) (` in lakh)
SGST]
1 April, 2024 – June, - 20 -
2024
2 July, 2024 – 6% 30 1.8
September, 2024
3 October, 2024 – 18% 40 7.2
December, 2024
3. (a) A user will not be able to generate e-way bill for a GSTIN if the said
GSTIN is not eligible for e-way bill generation.
The blocking of GSTIN for e-way bill generation is only for the defaulting
supplier GSTIN and not for the defaulting Recipient or Transporter
GSTIN.
A person paying tax under regular scheme who has not furnished the
returns for a consecutive period of 2 tax periods is considered as a
defaulting person.
Suspended GSTIN cannot generate e-way bill as supplier. However, the
suspended GSTIN can get the e-way bill generated as recipient or as
transporter.
In other words, e-way bill generation facility is blocked only in respect of
any outward movement of goods of the registered person who is not
eligible for e-way bill generation. E-way bills can be generated in respect
of inward supplies of said registered person.
Thus, applying the above provisions, there will be no restriction in
generating e-way Bill by Mr. Roshan as Mr. Roshan who is making
outward movement of goods is a regular return filer.
E-way bill generation is blocked in case of movement of goods made by
Mr. Sohan to Mr. Mohan as it’s an outward movement of goods of
Mr. Sohan who has not filed GSTR-3B for past 2 months.
(b) The proper officer may cancel the registration of a person from such
date, including any retrospective date, as he may deem fit, where,-
(a) a registered person has contravened the prescribed provisions; or
(b) a person paying tax under composition scheme has not furnished
565
 returns for a financial year beyond 3 months from due date of
furnishing return; or
(c) any registered person, other than a person specified in clause (b),
has not furnished returns for a prescribed period; or
(d) any person who has taken voluntary registration has not
commenced business within six months from the date of
registration; or
(e) registration has been obtained by means of fraud, wilful
misstatement, or suppression of facts:
Thus, in view of the above-mentioned provisions, suo-motu cancellation
of registration of Mr. Raj by proper officer is valid in law since Mr. Raj, a
voluntarily registered person, has not commenced his business within 6
months from the date of registration.
Further, where the registration of a person is cancelled suo-motu by the
proper officer, such registered person may, subject to the provisions of
rule 10B, apply for revocation of the cancellation of registration to such
proper officer, within 90 days from the date of service of the order of
cancellation of registration.
However, the said period of 90 days may, on sufficient cause being
shown and for reasons to be recorded in writing, be extended by the
Commissioner or an officer authorised by him in this behalf, not below
the rank of Additional Commissioner or Joint Commissioner, as the case
may be, for a further period not exceeding 180 days.
Thus, considering the above provisions, the contention of Department is
not valid in law as he has applied for revocation within the time limit of
90 days.
4. (a) There are cases where an unregistered person purchases goods over
the counter (OTC) in one State and thereafter, transports the goods to
another State (generally, the State where he resides). For instance,
migrant workers, tourists, etc. who come to a State for work, tourism,
etc. and purchase goods in that State to take it to their respective State.
Similarly, in automobile sector, the residents of a State may travel to
another State to purchase vehicle from that State to take advantage of
lower registration charges and road tax, which vary from State to State
and thereafter, take the vehicle to their State.
Where the supply of goods is made to a person other than a registered
person, the place of supply shall be the location as per the address of
the said person recorded in the invoice issued in respect of the said
supply and the location of the supplier where the address of the said
person is not recorded in the invoice.
For this purpose, recording of the name of the State of the said person
in the invoice shall be deemed to be the recording of the address of the
said person.

566
 Or
(a) In case of an event, if the recipient of service is registered, the place of
supply of services for organizing the event is the location of such person.
However, if the recipient is not registered, the place of supply is the place
where event is held.
Since the event is being held in multiple states and a consolidated
amount is charged for such services, the place of supply will be deemed
to be in each State in proportion to the value for services determined in
terms of the contract or agreement entered into in this regard.
In the absence of a contract or agreement between the supplier and
recipient of services, the proportionate value of services made in each
State (where the event is held) will be computed by the application of
generally accepted accounting principles.
(b) The amount available in the electronic credit ledger may be used for
making any payment towards output tax under the CGST Act or the IGST
Act, subject to the provisions relating to the order of utilisation of ITC.
Further, output tax in relation to a taxable person is defined as the tax
chargeable on taxable supply of goods or services or both but excludes
tax payable on reverse charge mechanism.
Accordingly, it is clarified that any payment towards output tax, whether
self-assessed in the return or payable as a consequence of any
proceeding instituted under the provisions of GST laws, can be made by
utilization of the amount available in the electronic credit ledger of a
registered person.
It is further reiterated that as output tax does not include tax payable
under reverse charge mechanism, implying thereby that the electronic
credit ledger cannot be used for making payment of any tax which is
payable under reverse charge mechanism.

567
 ANSWERS OF MODEL TEST PAPER 3
SECTION B – GOODS AND SERVICES TAX
Division A – Multiple Choice Questions (MCQs)
Question Answer
No.
1. (b) mixed supply; 18%
2. (b) ` 70,000
3. (a) ` 45,000
4. (c) ` 1,50,000
5. (b) Professional service availed from her son free of cost is
considered as a deemed supply.
6. (d) ` 1,60,000
7. (c) (i) & (iv)
8. (b) 1st October

Division B - Descriptive Questions

1. (a) Computation of net GST payable by ABC & Co. for the month of
April
Particulars Value of CGST SGST IGST
supply (`) (`) (`)
Intra-State statutory 1,20,000 10,800 10,800
audit services
Intra-State ITR filing 1,60,000 14,400 14,400
services
Inter-State internal audit
services since place of
supply is location of
recipient, i.e. Mumbai,
Maharashtra 1,80,000 - - 32,400
Total output tax liability 25,200 25,200 32,400
Less: ITC [Refer Working (21,000) (21,000)
Note]
[CGST credit is set off
against CGST liability
and SGST credit is set off
against SGST liability
since CGST credit
cannot be utilized
towards payment of
SGST liability and vice
versa.]
Net GST payable 4,200 4,200 32,400

568
 Working Note:
Computation of ITC that can be availed
Particulars CGST (`) SGST (`)
Computation of eligible ITC
Membership fee paid Nil Nil
[ITC on membership of a club is blocked
except when such services are provided by
an employer to its employees under a
statutory obligation.]
Office rent paid to landlord Nil Nil
[No ITC since the supplier did not upload the
details of invoice in his GSTR-1 and said
details are not being reflected in GSTR-2B of
the recipient.]
Professional fee paid 18,000 18,000
[ITC on services used in the
course/furtherance of the business is allowed.]
Air conditioner for office purpose 3,000 3,000
[ITC on goods used in the course/furtherance
of the business is allowed.]
Total eligible ITC 21,000 21,000
(b) Computation of value of taxable supply and tax liability
Particulars Amount (`)
Price of goods (exclusive of tax and discounts) 10,00,000
Add: Subsidy received from Jiva Enterprises Pvt. Ltd. 1,10,000
[Subsidy provided by non-Government bodies and which
is directly linked to the price, is includible.]
Add: Post-delivery inspection charges -
[Anything done by the supplier in respect of the supply of
goods after the delivery of goods is not includible in value.]
Add: Amount directly paid by Y Ltd. to X Ltd. 25,000
[Liability of the supplier, in relation to the supply being
valued, if discharged by the recipient of supply and not
included in the price, is includible in the value.]
Add: Interest 17,857
[Interest for delayed payment of consideration is includible
in the value. Since interest is received in lumpsum, amount
is inclusive of GST [` 20,000 x 100/112] (rounded off).]
Value of taxable supply 11,52,857
CGST @ 6% (rounded off) 69,171
SGST @ 6% (rounded off) 69,171

569
2. (a) Computation of value of taxable supplies of Keshav Ltd.
Particulars Amount
(`)
Services of transportation of students, faculty and staff to 2,50,000
Galgotian College
[Not exempt, since transportation services provided to an
educational institution are exempt only if such institution
provides pre-school education or education up to higher
secondary school or equivalent.]
Online monthly magazine to students of Pariksha Law
College Nil
[Services of supply of online educational journals provided to
an educational institution providing qualification recognized
by law are exempt.]
Housekeeping services to Career Coaching Institute 50,000
[Not exempt since such services are provided to a non-
educational institute.]
Security services to Happy Higher Secondary School Nil
[Security services provided to an educational institution
providing education up to higher secondary school are
exempt since such services are performed in the premises of
educational institution.]
Services of providing breakfast, lunch and dinner to students 5,80,000
of Ayushmann Medical College
[Not exempt, since catering services provided to an
educational institution are exempt only if such institution
provides pre-school education or education up to higher
secondary school or equivalent.]
Value of taxable supplies 8,80,000
(b) Tax on services supplied by a firm of advocates by way of legal services
to any business entity is payable under reverse charge by such firm of
advocates. Time of supply of services that are taxable under reverse
charge is earliest of the following two dates in terms of section 13(3) of
the CGST Act, 2017:
• Date of payment [3rd November]
• 61st day from the date of issue of invoice [19th April]
The date of payment comes subsequent to the 61st day from the issue
of invoice by the supplier of service. Therefore, the 61st day from the
date of supplier’s invoice has to be taken as the time of supply. This
fixes 19th April as the time of supply.
3. (a) (i) Where a taxpayer opts to withdraw from the composition scheme,
he has to file GSTR-4 for the period for which he has paid tax under
the composition scheme. Such return is required to be furnished
till 30th day of April following the end of the financial year during
570
 which such withdrawal falls. Therefore, in the given case,
Mr. Jagmag is liable to file GSTR-4 for the said F.Y. during which
he opted out of composition scheme by 30th April of next F.Y.
(ii) A registered person is not allowed to furnish a return for a tax period
if the return for any of the previous tax periods has not been
furnished by him. Therefore, in the given case, Mrs. Gargi cannot
file GSTR-3B for July, if she has not filed GSTR-3B for the
preceding month, i.e., June.
(b) A chartered accountant can become a GST practitioner (GSTP).
However, holding a certificate of practice as a chartered accountant and
having GST registration does not imply that such chartered accountant
is a GST practitioner as well. For becoming a GSTP, even a chartered
accountant in practice has to follow the enrolment process of GSTP as
provided under the GST law and only upon approval of such enrolment
can a chartered accountant represent himself as a GSTP.
4. (a) In case of an event, if the recipient of service is registered, the place of
supply of services for organizing the event is the location of such person.
However, if the recipient is not registered, the place of supply is the place
where event is held.
Since the event is being held in multiple states and a consolidated
amount is charged for such services, the place of supply will be deemed
to be in each State in proportion to the value for services determined in
terms of the contract or agreement entered into in this regard.
In the absence of a contract or agreement between the supplier and
recipient of services, the proportionate value of services made in each
State (where the event is held) will be computed in accordance with
relevant provisions of GST law by the application of generally accepted
accounting principles.
Alternative answer
(a) The term ‘charitable activities’ mean activities relating to-
(i) public health by way of-
(A) care or counseling of
(I) terminally Ill persons or persons with severe physical or
mental disability;
(II) persons afflicted with HIV or AIDS;
(III) persons addicted to a dependence-forming substance
such as narcotics drugs or alcohol; or
(B) public awareness of preventive health, family planning or
prevention of HIV infection;
(ii) advancement of religion, spirituality or yoga;
(iii) advancement of educational programmes/skill development
relating to,-

571
 (A) abandoned, orphaned or homeless children;
(B) physically or mentally abused and traumatized persons;
(C) prisoners; or
(D) persons over the age of 65 years residing in a rural area;
(iv) preservation of environment including watershed, forests & wildlife.
(b) (i) Details of outward supplies which can be furnished using IFF are
as follows:
(a) invoice wise details of inter-State and intra-State supplies
made to the registered persons;
(b) debit and credit notes, if any, issued during the month for such
invoices issued previously.
(ii) Constitution defines the Goods and Services tax (GST) as a tax on
supply of goods or services or both, except supply of alcoholic
liquor for human consumption. Therefore, alcohol for human
consumption is kept out of GST by way of definition of GST in the
Constitution.
Five petroleum products viz. petroleum crude, motor spirit (petrol),
high speed diesel, natural gas and aviation turbine fuel have
temporarily been kept out of the purview of GST; GST Council shall
decide the date from which they shall be included in GST. The
erstwhile taxation system (CST/VAT & central excise) still
continues in respect of the said commodities.

572
 ANSWERS OF MODEL TEST PAPER 4
SECTION B – GOODS AND SERVICES TAX (50 MARKS)
Division A - Multiple Choice Questions

Question Answer
No.
1 (c) i & iv
2 (d) GTA service is taxable @ 5%, but input tax credit cannot be
availed for the same.
3 (d) Not a supply
4 (d) ii & iii
5 (d) Nil
6 (a) IGST: ` 10,000; CGST: Nil, SGST: ` 5000
7 (a) ` 40,000
8 (c) She needs to mandatorily have a place of business in Delhi.

Division B - Descriptive Questions

1. (a) Computation of value of taxable supply
Particulars Amount
(`)
List price of the machine 80,000
Add: Tax levied by Local Authority on the sale of machine 6,000
[Tax other than GST, if charged separately, are includible in
the value in terms of section 15 of the CGST Act, 2017.]
Add: Packing expenses for safe transportation 4,000
[Includible in the value as per section 15 of the CGST Act,
2017.]
Add: Price-linked subsidy received from a NGO on sale of 5,000
each machine
[Subsidy received from a non-Government body and which
is directly linked to the price, the same is included in the
value in terms of section 15 of the CGST Act, 2017.]
Total 95,000
Less: Discount @ 2% on ` 80,000 1,600
[Since discount is known at the time of supply and
recorded in invoice, it is deductible from the value in terms
of section 15 of the CGST Act, 2017.]
Value of taxable supply 93,400

573
 Computation of minimum net GST payable in cash by
Vishwanath Ltd.
Particulars CGST (`) SGST (`) IGST (`)
Sale of machine 25,218 25,218 16,812
[Intra-State sales = ` 93,400 × 3
machines = ` 2,80,200 [2,80,200 [2,80,200 [93,400
Inter-State sales = ` 93,400 × 1 × 9%] × 9%] × 18%]
machine = ` 93,400]
Total output tax 25,218 25,218 16,812
Less: Set off of IGST against IGST (9,188) (16,812)
and SGST
[IGST credit first be utilized
towards payment of IGST,
remaining amount can be utilized
towards CGST and SGST in any
order and in any proportion]
Less: Set off of CGST against (25,218) (14,800)
CGST and SGST against SGST
[CGST credit cannot be utilized
towards payment of SGST and vice
versa.]
Minimum net GST payable in cash Nil 1,230
Working Note:
Computation of total ITC available
Particulars CGST (`) SGST (`) IGST (`)
Opening balance of ITC 18,000 4,000 26,000
Add: Inputs purchased 10,800 10,800
during the month [` 1,20,000 ×9%] [` 1,20,000 ×9%]
Total ITC available 28,800 14,800 26,000
(b) Computation of amount of ITC available for the month of
August, 2024
S. Particulars GST (`)
No.
(1) Goods used in construction of additional floor of office Nil
building
[ITC on goods received by a taxable person for
construction of an immovable property on his own
account is blocked even if the same is used in the
course or furtherance of business.]
(2) Trucks used for transportation of inputs in the factory 11,000
[ITC on motor vehicles used for transportation of goods
is not blocked.]
574
 (3) Inputs used in trial runs 8,350
[Being used in trial runs, inputs are used in the course
or furtherance of business and hence ITC thereon is
allowed.]
(4) Confectionary items for consumption of employees Nil
working in the factory
[ITC on food or beverages is blocked unless the same
is used in same line of business or as an element of the
taxable composite or mixed supply. Further, ITC on
goods and/or service used for personal consumption is
blocked.]
(5) Cement used for making foundation and structural 9,550
support to plant and machinery
[ITC on goods used for construction of plant and
machinery is not blocked. Plant and machinery
includes foundation and structural supports through
which the same is fixed to earth.]
Total eligible ITC 28,900
2. (a) (i) The place of supply of goods supplied on a board a conveyance
like aircraft, train, vessel, motor vehicle is the location where such
goods have been taken on board.
Place of supply of goods supplied on board a conveyance is
determined under this provision even if the supply has been made
by any of the passenger on board the conveyance and not by the
carrier of the conveyance.
Thus, in the given case, the place of supply of goods is the
location at which the goods are taken on board, i.e. New Delhi
and not Jaipur where they have been sold.
(ii) If the supply involves goods which are to be installed or
assembled at site, the place of supply is the place of such
installation or assembly.
This is a case of composite supply of goods wherein two supplies
are involved, supply of goods and ancillary supply of
installation/assembling service. The principal supply is supply of
goods which are being installed.
Thus, the place of supply is the site of assembly of machine, i.e.
Kutch even though LP refineries is located in Maharashtra.
(b) Computation of value of taxable supplies
Particulars Amount
(`)
Services relating to rearing of goats Nil
[Exempt since services relating to rearing of all life
forms of animals, except horses, for food etc. are
exempt.]
575
 Services by way of artificial insemination of horses 5,00,000
[Not exempt since services of artificial insemination are
exempt only of livestock other than horses.]
Processing of sugarcane into jaggery 7,00,000
[Not exempt, since processes which alter the essential
characteristics of agricultural produce are not exempt
and processing of sugarcane into jaggery changes the
essential characteristics of sugarcane.]
Milling of paddy into rice 8,00,000
[Not exempt, since this process, being carried out after
cultivation is over, is not an intermediate production
process in relation to cultivation of plants and it also
changes the essential characteristics of paddy.]
Services by way of warehousing of agricultural produce Nil
[Specifically exempt from GST.]
Value of taxable supplies 20,00,000
3. (a) The validity period of e-way bill under rule 138(10) of the CGST Rules,
2017 for transport of cargo by road between two cities situated at a
distance of 372 km is as under:
(i) If it is over dimensional cargo: the validity period of the e-way bill
is one day from relevant date upto 20 km and one additional day for
every 20 km or part thereof thereafter.
Thus, validity period in given case:
= 1 day + 18 days
= 19 days
(ii) If it is a cargo other than over dimensional cargo: the validity
period of the e-way bill is one day from relevant date upto 200 km
and one additional day for every 200 km or part thereof thereafter.
Thus, validity period in given case:
= 1 day + 1 day
= 2 days
(b) The procedure to be followed by Apex Cinemas, a registered person
engaged in making supply of services by way of admission to exhibition
of cinematograph films in multiplex screens, is as under:-
The option to issue consolidated tax invoice is not available to a supplier
engaged in making supply of services by way of admission to exhibition
of cinematograph films in multiplex screens. Thus, Apex Cinemas
cannot issue consolidated tax invoice for supplies made by it at the close
of each day.
Apex Cinemas is required to issue an electronic ticket.

576
 The said electronic ticket shall be deemed to be a tax invoice, even if
such ticket does not contain the details of the recipient of service but
contains the other information as prescribed to be mentioned.
4. (a) The registered person who is not eligible for composition scheme for
goods under GST law are as under:
(i) Supplier engaged in making any supply of goods or services which
are not leviable to tax.
(ii) Supplier engaged in making any inter-State outward supplies of
goods or services.
(iii) Person supplying any services through an electronic commerce
operator who is required to collect tax at source (under section 52).
(iv) Manufacturer of ice cream, panmasala, tobacco, aerated waters,
fly ash bricks; fly ash aggregate, fly ash blocks, bricks of fossil
meals or similar siliceous earths, building bricks, earthen or roofing
tiles.
(v) Supplier who is either a casual taxable person or a non-resident
taxable person
(vi) Supplier of services exceeding an amount which is higher of 10%
of the turnover in a State/U.T. in the preceding financial year or ` 5
lakh.
Note: Any 5 points may be mentioned.
Or
(a) Tax on following services supplied by the Central Government or State
Government to a business entity in India is payable by the supplier
of services:
(1) services of renting of immovable property provided to an
unregistered business entity.
(2) services by the Department of Posts and the Ministry of Railways
(Indian Railways)
(3) services in relation to an aircraft or a vessel, inside or outside the
precincts of a port or an airport.
(4) services of transport of goods or passengers.
(b) Following persons can be registered as Goods and Service Tax
Practitioners:
Any person who, (i) is a citizen of India; (ii) is a person of sound mind;
(iii) is not adjudicated as insolvent; (iv) has not been convicted by a
competent court;
and satisfies any of the following conditions, namely that he:
1. is a retired officer of Commercial Tax Department of any State
Govt./CBIC who, during service under Government had worked in a
post not lower than the rank of a Group-B gazetted officer for a period
years or
577
2. is enrolled as a Sales Tax Practitioner or Tax Return Preparer under
the erstwhile indirect tax laws for a period of not less than 5 years, or
3. acquired any of the prescribed qualifications
4. has passed Graduate/postgraduate degree or its equivalent
examination having a degree in specified disciplines, from any Indian
University or a degree examination of any Foreign University
recognised by any Indian University as equivalent to degree
examination
5. has passed any other notified examination
6. has passed final examination of ICAI/ ICSI/ Institute of Cost
Accountants of India
Note: Any 5 points may be mentioned.

578
 ANSWERS OF MODEL TEST PAPER 5
SECTION B – GOODS AND SERVICES TAX (50 MARKS)
SUGGESTED ANSWERS
Division A - Multiple Choice Questions
Question Answer
No.
1. (a) Service availed from Insurance Agents
2. (c) ` 23,00,000
3. (c) ` 3,80,000
4. (b) 90 days
5. (d) 30th June, 2024
6. (b) E-way bill can be cancelled within 24 hours of generation
7. (c) 5th August
8. (b) Credit Note

Division B - Descriptive Questions

1. (a) Computation of minimum net GST payable in cash by M/s Happy
Enterprise for the month of December
Particulars Value CGST SGST IGST
(`) (`) (`) (`)
GST payable under forward charge
Intra-State supply of 7,00,000 17,500 17,500
goods to M/s Natural & [7,00,000 [7,00,000
Sons × 2.5%] × 2.5%]
Intra-State branch 1,00,000 -- --
transfer

[Such transfer is not a

supply as the branch has
the same GSTIN as that
of the head office and
thus, is not a distinct
person.]
Permanent transfer of 80,000 --
old computers to
orphanage home without
consideration.
[Permanent transfer or
disposal of business
assets was not treated
as supply even if made
without consideration in
terms of Schedule–I of
the CGST Act, 2017, as
579
ITC was not availed on
the same.]
Advance received for 40,000 3,600 3,600
future intra-State supply [40,000 [40,000
of management × 9%] × 9%]
consultancy service
(In case of supply of
service, tax is payable at
the time of receipt of
advance amount too)
Total output tax 21,100 21,100
Less: ITC utilized 27,200 27,200
Net GST payable [A] Nil Nil
Legal services availed 50,000 4,500 4,500
[B] [50,000 [50,000
× 9%] × 9%]
[Tax on legal services
availed by a business
entity from an advocate
is payable under reverse
charge.
Further, tax payable
under reverse charge
cannot be set off against
ITC and thus, reverse
charge has to be paid in
cash since the tax
payable under reverse
charge is not an output
tax.]
Minimum net GST 4,500 4,500
payable in cash
[A] + [B]
Working Note:
Computation of ITC available
Particulars Value CGST (`) SGST (`) IGST
(`) (`)
Intra-State purchase of 8,00,000 20,000 20,000
taxable goods [8,00,000 × [8,00,000 ×
2.5%] 2.5%]
[ITC of goods used in
the course/ furtherance
of business is
available.]
Works contract service 30,000 2,700 2,700
for repair of office [30,000 × [30,000 ×
[ITC is available since 9%] 9%]
the repair amount is
580
 debited in the profit &
loss account and not
capitalized in the books
of account.]
Legal services availed 50,000 4,500 4,500
[50,000 × [50,000 ×
[ITC of services used in 9%] 9%]
the course/ furtherance
of business is available
Total 27,200 27,200
(b) ITC to be claimed by Renuka Sales in its GSTR-3B for the month of
January to be filed by 20th February will be computed as under-
Invoices Amount of ITC Amount of ITC
involved in the that can be
invoices (`) availed (`)
80 invoices furnished in GSTR-1 6 lakh 6 lakh
[Refer Note 1]
20 invoices not furnished in 4 lakh Nil
GSTR-1 [Refer Note 2]
Total 10 lakh 6 lakh

Notes:
(1) 100% ITC can be availed on invoices furnished by the suppliers in
their GSTR-1.
(2) Input tax credit in respect of any supply of goods or services or both
is available to a registered person only, inter alia, if the details of
the invoice/debit note in respect of said supply has been furnished
by the supplier in the statement of outward supplies (GSTR-1) and
such details have been communicated to the recipient of such
invoice/debit note in the manner specified under section 37 of the
CGST Act, 2017. Thus, in respect of 20 invoices not furnished in
GSTR-1s, no ITC is available.
2. (a)
S. Particulars Taxability
No.
(i) Service provided by a private transport operator to Exempt
Vintage Girls Higher Secondary School by way of
transportation of students to and from the school.
[Services provided TO an educational institution by
way of transportation of students are exempted from
GST]
(ii) Services provided by way of vehicle parking to Taxable
general public in a shopping complex.

581
 [Services provided by way of vehicle parking to
general public are not exempted from GST.
Therefore, it would be taxable.]
(iii) Food supplied by the canteen run by a hospital to the Exempt
in-patients as advised by the doctors.
[Services by way of health care services by a clinical
establishment, an authorised medical practitioner or
para-medics are exempt from GST. Food supplied to
the in-patients by a canteen run by the hospital, as
advised by the doctor/nutritionists, is a part of
composite supply of healthcare and not separately
taxable. Thus, said services are exempt from GST.]
(iv) An RWA in a housing society, registered under GST, Exempt
collects the maintenance charges of ` 6,500 per
month per member.
[Supply of service by a RWA (unincorporated body or
a non-profit entity registered under any law) to its own
members by way of reimbursement of charges or
share of contribution up to an amount of ` 7500 per
month
per member for providing services and goods for the
common use of its members in a housing society/a
residential complex are exempt from GST. Hence, in
the given case, services provided by the RWA are
exempt from GST since the maintenance charges
collected per month per member do not exceed `
7500.]
(b) (i) If services provided by an individual advocate including a senior
advocate or firm of advocates by way of legal services, directly or
indirectly, then GST is payable on reverse charge basis.
Accordingly, in this case, GST on legal services supplied by an
advocate [Mr. Abhishek] to any business entity [M/s. Navya Trading
Company] located in the taxable territory is payable on reverse
charge basis.
Therefore, in the given case, person liable to pay GST is the
recipient of services, i.e., M/s. Navya Trading Company.
(ii) The part of director’s remuneration which is declared as salaries in
the books of a company and subjected to TDS under section 192
of the Income-tax Act (IT Act), is not taxable being consideration
for services by an employee to the employer in the course of or in
relation to his employment in terms of Schedule III of the CGST
Act,2017.
Further, the part of employee director’s remuneration which is
declared separately other than salaries in the company’s accounts
and subjected to TDS under section 194J of the IT Act as fees for
professional or technical services are treated as consideration for
582
 providing services which are outside the scope of Schedule III and
is therefore, taxable. The recipient of the said services i.e. the
company, is liable to discharge the applicable GST on it on reverse
charge basis.
In lieu of the above provisions, Rs. 1 Lakh sitting fees paid to
Padam Srivastav, an independent director, declared separately
other than salaries in the company’s accounts and subjected to
TDS under section 194J of the IT Act as fees for professional or
technical services, which is outside the scope of Schedule III and
is therefore, taxable.
Therefore, recipient of the said services i.e. One 4th Private
Limited, is liable to discharge the applicable GST on it on reverse
charge basis.
3. (a) (i) A supplier is liable to be registered in the State/Union territory from
where he makes a taxable supply of goods and/or services, if his
aggregate turnover in a financial year exceeds the threshold limit.
The threshold limit for a person making exclusive intra-State
taxable supplies of goods is as under:-
(a) ` 10 lakh for the Special Category States of Mizoram, Tripura,
Manipur and Nagaland.
(b) ` 20 lakh for the States, namely, States of Arunachal Pradesh,
Meghalaya, Puducherry, Sikkim, Telangana and Uttarakhand.
(c) ` 40 lakh for rest of India except persons engaged in making
supplies of ice cream and other edible ice, whether or not
containing cocoa, pan masala and tobacco and manufactured
tobacco substitutes, fly ash bricks; fly ash aggregates; fly ash
blocks, bricks of fossil meals or similar siliceous earths,
building bricks, earthen or roofing tiles.
The threshold limit for a person making exclusive taxable supply of
services or supply of both goods and services is as under:-
(a) ` 10 lakh for the Special Category States of Mizoram, Tripura,
Manipur and Nagaland.
(b) ` 20 lakh for the rest of India.
Aggregate turnover includes the aggregate value of:
1. all taxable supplies,
2. all exempt supplies,
3. exports of goods and/or services and
4. all inter-State supplies of persons having the same PAN.
The above aggregate turnover is computed on all India basis.
Further, the aggregate turnover excludes central tax, State tax,
Union territory tax, integrated tax and cess. Moreover, the value of

583
 inward supplies on which tax is payable under reverse charge is
not taken into account for calculation of ‘aggregate turnover’.
CGST is not leviable on five petroleum products i.e. petroleum
crude, motor spirit (petrol), high speed diesel, natural gas and
aviation turbine fuel. Exempt supply includes non-taxable supply.
Thus, supply of high speed diesel in U.P., being a non-taxable
supply, is an exempt supply and is, therefore, includible while
computing the aggregate turnover.
In the backdrop of the above-mentioned discussion, the aggregate
turnover of Right Oils for the month of April is computed as under:
S. Particulars Amount
No. (in `)
(i) Supply of machine oils in U.P. 15,00,000
(ii) Add: Supply of high speed diesel in U.P. 10,00,000
(iii) Add: Supply of machine oil made by Right 10,00,000
Oils from its branch located in Punjab
Aggregate Turnover 35,00,000
Right Oils is making exclusive supply of goods and hence the
threshold limit for registration would be ` 40,00,000. Since the
aggregate turnover does not exceed ` 40,00,000, Right Oils is not
liable to be registered till April. However, if in remaining months of
the financial year, its turnover exceeds the said limit, then it would
be liable to be registered.
(ii) In case Right Oils makes the supply in capacity of an agent of
Center Oils Ltd.:
Section 24 of the CGST Act, 2017 provides that an agent who is
engaged in making taxable supplying of goods on behalf of other
taxable persons, shall be liable to obtain registration irrespective of
the threshold turnover limit. However, in the present case, if Right
Oils supply high speed diesel on behalf of Center Oil Ltd. in U.P.
as its agent where invoices to customers are issued in name of
Right Oils, it shall still not be liable to obtain registration in U.P.
since section 24 comes into play only when agent or in other
capacity is making taxable supply of goods on behalf of taxable
persons (principal) whereas in the given case, Right Oils is
supplying non-taxable goods on behalf of Center Oils Ltd., who is
non-registered.
In case if Center Oils Ltd. is registered entity, then also the answer
would remain unchanged as attraction of section 24 of the CGST
Act, 2017, inter-alia, requires that there should be taxable supply
by agent and here, Right Oils is supplying non-taxable goods on
behalf of Center Oils Ltd.
(b) (i) A supplier engaged in the manufacture of notified goods during the
preceding financial year is not eligible for composition scheme
584
 under section 10(1) and 10(2) of the CGST Act, 2017. Ice cream
and other edible ice, whether or not containing cocoa, Pan masala,
Tobacco and manufactured tobacco substitutes, aerated waters, fly
ash bricks, fly ash aggregate, fly ash blocks, bricks of fossil meals
or similar siliceous earths, building bricks, earthen or roofing tiles
are notified under this category. However, in the given case, since
Shyam Enterprises is engaged in trading of pan masala and not
manufacture and his turnover does not exceed ` 1.5 crore, he is
eligible for composition scheme subject to fulfilment of specified
conditions.
(ii) Since supplier of inter-State outward supplies of goods or services
is not eligible for composition levy, Sahaj Manufacturers is not
eligible for composition levy.
4. (a) section 12 of IGST Act, 2017 deals with the provisions of place of supply
of services, where location of supplier of service and the location of the
recipient of service is in India.
In accordance with sub-section (13) of section 12 of IGST Act, 2017, The
place of supply of insurance services shall:-
(a) to a registered person, be the location of such person;
(b) to a person other than a registered person, be the location of the
recipient of services on the records of the supplier of services.
So, in the given case, when insurance service is provided to an
unregistered person, Mr. Pappan, the location of the recipient of services
on the records of the supplier of insurance services is the place of
supply. So, Faridabad is the place of supply.
Or
(a) The statement is not correct. While GST is payable on advance received
for supply of services taxable under forward charge, the same is not
payable in case of advance received for supply of goods taxable under
forward charge.
As per section 13 of the CGST Act, 2017, the time of supply of services
taxable under forward charge is –
 Date of issue of invoice or date of receipt of payment, whichever is
earlier, if the same is issued within 30 days from the date of supply
of service;
OR
 Date of provision of service or date of receipt of payment,
whichever is earlier, if the invoice is not issued within 30 days from
the date of supply of service.
Thus, in case of services, if the supplier receives any payment before
the provision of service or before the issuance of invoice for such
service, the time of supply gets fixed at that point in time and the liability

585
 to pay tax on such payment arises. However, the tax can be paid by the
due date prescribed with reference to such time of supply.
As regards time of supply of goods taxable under forward charge is
concerned, Notification No. 66/2017 CT dated 15.11.2017 provides that
a registered person (excluding composition supplier and registered
persons making supply of specified actionable claims) should pay GST
on the outward supply of goods at the time of supply as specified in
section 12(2)(a) of the CGST Act, 2017, i.e. date of issue of invoice or
the last date on which invoice ought to have been issued in terms of
section 31 of the CGST Act, 2017. Therefore, in case of goods, tax is
not payable on receipt of advance payment.
(b) In accordance with section 37(1) of CGST Act, 2017, GSTR-1 for a
particular tax period is filed on or before the 10th day of the immediately
succeeding tax period. In other words, GSTR-1 of a month/quarter can
be filed any time between 1st and 10th day of the succeeding
month/quarter. The due date of filing GSTR-1 may be extended by the
Commissioner/ Commissioner of State GST/ Commissioner of UTGST
for a class of taxable persons by way of a notification.
So, the statement is partially valid.
A taxpayer cannot file Form GSTR-1 before the end of the current tax
period. However, following are the exceptions to this rule:
a. Casual taxpayers, after the closure of their business.
b. Cancellation of GSTIN of a normal taxpayer.
A taxpayer who has applied for cancellation of registration will be allowed
to file Form GSTR-1 after confirming receipt of the application.

586
 ANSWERS OF MODEL TEST PAPER 6
SECTION B – GOODS AND SERVICES TAX (50 MARKS)
SUGGESTED ANSWERS
Division A - Multiple Choice Questions
Question Answer
No.
1. (b) not a supply at all
2. (b) Tax on sponsorship services is payable by WE-WIN
Cricket Academy under reverse charge.
3. (b) mixed supply & applicable rate of GST is 18%
4. (b) ` 70,000
5. (a) ` 45,000
6. (a) Part B need not be filed in respect of transport of
consignment from Godown of Anushka to transporter
location.
7. (c) 20th December
8. (c) TDS to be deducted on entire order of 70 shields

Division B - Descriptive Questions

1. (a) Computation of net GST payable in cash by Aashima Ltd. for the
month of January 2024
Particulars CGST (`) SGST (`) IGST (`)
Outward intra-State supply 36,000 36,000
of goods made in the State [4,00,000 × [4,00,000 ×
of Bihar 9%] 9%]
[Value of supply is the
transaction value of the
goods.]
Outward supply of goods 18,000
made to other States [1,00,000
[Value of supply is the × 18%]
transaction value of the
goods.]
Services by way of 90,000
warehousing of potato [5,00,000
chips [Taxable since × 18%]
services by way of
warehousing of only
cereals, pulses, fruits &
vegetables are exempt.]
Intra-State stock transfer 1,800 1,800
to Gaya Branch with [20,000 × [20,000 ×
separate registration 9%] 9%]
587
 [Supply of goods between
distinct persons in course
or furtherance of business
qualifies as supply even if
made without
consideration.]
Total output tax 37,800 37800 1,08,000
Less: Input Tax Credit (37,800) (7,200)
[Refer Working Note (CGST) (CGST)
below]
(37,800) (7,200)
[CGST credit should be
(SGST) (SGST)
utilized for payment of
CGST and IGST in that
order. Similarly, SGST
credit should be utilized for
payment of SGST and
IGST in that order. ITC of
CGST cannot be utilized
for payment of SGST and
vice versa.]
Net GST payable in cash Nil Nil 93,600
Working Note:
Computation of ITC available
Particulars CGST SGST (`) IGST (`)
(`)
Intra-State inward supply of 45,000 45,000 --
services [5,00,000 [5,00,000
[` 6,50,000 – `1,50,000] × 9%] × 9%]
[ITC cannot be claimed on the e-
invoices without IRN since an e-
invoice without IRN is not treated
as valid document for claiming
ITC.]
Cars taken on rental basis from -- -- --
Mr. Suhaas
[Tax on renting of motor car
services wherein cost of fuel is
included in consideration
provided by a non-body
corporate to a body corporate
and invoice is issued charging
CGST/SGST @ 2.5% is payable
under reverse charge.
Time of supply of such services
is 1st February being earlier of
date of payment, or date
588
 immediately following 60 days
since issue of invoice by the
supplier. Since the time of
supply of renting of motor car
services in the given case does
not fall in January, tax liability on
the same does not arise in said
month.
Further, ITC on renting of motor
car services received is blocked
since the recipient - Aashima
Ltd. is not in the same line of
business.]
Total ITC available 45,000 45,000 --
(b) Computation of value of taxable supply made by Shri Narayan Pvt.
Ltd. to Shri Ram Pvt. Ltd.
Particulars Amount (`)
Price of the goods 1,00,000
Municipal tax 2,000
[Includible in the value as per section 15(2)(a) of the
CGST Act, 2017]
Inspection charges 15,000
[Any amount charged for anything done by the supplier
in respect of the supply of goods at the time of/before
delivery of goods is includible in the value as per
section 15(2)(c) of the CGST Act, 2017]
Subsidy received from Shri Shyam Trust 50,000
[Since the subsidy is received from a non-Government
body and directly linked to the supply, the same is
includible in the value in terms of section 15(2)(e) of
the CGST Act, 2017]
Late fees for delayed payment Nil
[Not includible since the same is waived off]
Weighment charges paid to Radhe Pvt. Ltd. on behalf 2,000
of Shri Narayan Pvt. Ltd.
[Any amount that the supplier is liable to pay in relation
to the supply but has been incurred by the recipient
and not included in the price actually paid or payable
for the goods, is includible in the value of supply in
terms of section 15(2)(b) of the CGST Act, 2017]
Value of taxable supply 1,69,000

589
2. (a) Determination of time of supply:
Particulars

(i) May 12 will be the time of supply, being the earliest of the three
stipulated dates namely, receipt of goods, date of payment and
date immediately following 30 days of issuance of invoice [Section
12(3) of the CGST Act, 2017].
(ii) June 4, 31st day from the date of supplier’s invoice, will be the
time of supply, being the earliest of the three stipulated dates
namely, receipt of goods, date of payment and date immediately
following 30 days of issuance of invoice [Section 12(3) of the
CGST Act, 2017].

(b) (i) Schedule I read with section 7(1)(c) of the CGST Act, 2017, inter
alia, stipulates that supply of goods or services or both between
related persons or between distinct persons as specified in section
25 of the CGST Act, 2017, is supply even without consideration
provided it is made in the course or furtherance of business.
Further, a person who has obtained more than one registration,
whether in one State/Union territory or more than one State/Union
territory shall, in respect of each such registration, be treated as
distinct persons [Section 25(4) of the CGST Act, 2017].
In view of the same, factory and depot of Rimjhim, Manufacturers
are distinct persons. Therefore, supply of goods from Delhi factory
of Rimjhim Manufacturers to Mumbai Depot without consideration,
but in course/furtherance of business, is supply under section 7 of
the CGST Act, 2017 read with Schedule I.
(ii) Schedule I read with section 7(1)(c) of the CGST Act, 2017, inter
alia, stipulates that import of services by a taxable person from a
related person located outside India, without consideration is
treated as supply if it is provided in the course or furtherance of
business. Explanation to section 15 of the CGST Act, 2017, inter
alia, provides that persons shall be deemed to be “related
persons” if they are members of the same family. Further, as
per section 2(49) of the CGST Act, 2017, family means, —
(a) the spouse and children of the person, and

(b) the parents, grand-parents, brothers and sisters of the person if

they are wholly or mainly dependent on the said person.
In the given case, Mohan has received free of cost legal services
from his brother. However, in view of section 2(49)(ii) of the CGST
Act, 2017 above, Mohan and his brother cannot be considered to
be related as Mohan’s brother is a well-known lawyer and so, not
wholly/mainly dependent on Mohan. Further, Mohan has taken
legal advice from him in personal matter and not in course or
furtherance of business. Consequently, services provided by

590
 Mohan’s brother to him would not be treated as supply under
section 7 of the CGST Act, 2017 read with Schedule I.
3. (a) (i) As per section 31 of the CGST Act, 2017 read with the CGST Rules,
in case of taxable supply of services, invoices should be issued
before or after the provision of service, but within a period of 30
days [45 days in case of insurer/ banking company or financial
institutions including NBFCs] from the date of supply of service.
In view of said provisions, in the present case, the tax invoice
should have been issued in the prescribed time limit of 30 days
from the date of supply of service i.e. upto 3rd February. However,
the invoice has been issued on 10th February.
(ii) Section 31 of the CGST Act, 2017 read with the CGST Rules, inter
alia, provides that tax invoice in addition to other mandatory details
shall also contain the amount of tax charged in respect of taxable
goods or services (central tax, State tax, integrated tax, Union
territory tax or cess). Further, where any supply is made for a
consideration, every person who is liable to pay tax for such supply
shall prominently indicate in all documents relating to assessment,
tax invoice and other like documents, the amount of tax charged in
respect of taxable goods or services which shall form part of the
price at which such supply is made.
The objection raised by the tax consultant of World Fashions
suggesting that the amount of tax charged in respect of the taxable
supply of makeover services should be shown separately in the
invoice raised by Glamour Beauty Services Ltd., is valid in law.
(b) (i) The registered person, whose aggregate turnover in the preceding
financial year does not exceed ` 1.5 crore, may opt to pay tax under
composition levy, under section 10(1) and 10(2) of the CGST Act,
2017.
The scheme can be availed by an intra-State supplier of goods and
supplier of restaurant service.
However, the composition scheme permits supply of marginal
services (other than restaurant services) for a specified value along
with the supply of goods and restaurant service, as the case may
be.
Thus, M/s Balaji Electronics can opt for composition scheme for the
current financial year as its aggregate turnover is less than ` 1.5
crore in the preceding financial year and it is not engaged in inter-
State outward supplies.
(ii) The registered person opting for composition scheme, under
section 10(1) and 10(2) of the CGST Act, 2017, can also supply
services (other than restaurant services) for a value up to 10% of
the turnover in the preceding year or ` 5 lakh, whichever is higher,
in the current financial year.
Thus, M/s Balaji Electronics can supply repair and maintenance
591
 services up to a value of ` 12 lakh [10% of ` 120 lakh or ` 5 lakh,
whichever is higher] in the current financial year.
4. (a) The location of supplier of mobile services cannot be the place of supply
as the mobile companies are providing services in multiple states and
many of these services are inter-state. The consumption principle will
be broken if the location of supplier is taken as place of supply and all
the revenue may go to a few states where the suppliers are located.
The place of supply for mobile connection would depend on whether the
connection is on postpaid or prepaid basis. In case of postpaid
connections, the place of supply is the location of billing address of the
recipient of services on the record of supplier of services.
In case of pre-paid connections, if the service is supplied:-
(i) through a selling agent or a re-seller or a distributor of SIM card or
re-charge voucher, the place of supply is the place address of the
selling agent or re-seller or distributor as per the record of the
supplier at the time of supply; or
(ii) by any person to the final subscriber, the place of supply is the
location where such prepayment is received or such vouchers are
sold;
(iii) in other cases, the place of supply is the address of the recipient
as per the records of the supplier of services and where such
address is not available, the place of supply shall be location of the
supplier of services.
However, if the recharge is done through internet/e-payment, the
location of recipient of service on record of the supplier will be taken as
the place of supply.
Or
(a) In case of an event, if the recipient of service is registered, the place of
supply of services for organizing the event is the location of such person.
However, if the recipient is not registered, the place of supply is the place
where event is held.
Since the event is being held in multiple states and a consolidated
amount is charged for such services, the place of supply will be deemed
to be in each State in proportion to the value for services determined in
terms of the contract or agreement entered into in this regard.
In the absence of a contract or agreement between the supplier and
recipient of services, the proportionate value of services made in each
State (where the event is held) will be computed in accordance with rule
5 of the IGST Rules by the application of generally accepted accounting
principles.

592
(b) The person-in-charge of a conveyance has to carry -
(a) the invoice or bill of supply or delivery challan, as the case may be;
and
(b) a copy of the e-way bill in physical form or the e-way bill number in
electronic form or mapped to a Radio Frequency Identification
Device embedded on to the conveyance [except in case of
movement of goods by rail or by air or vessel] in such manner as
may be notified by the Commissioner
Consignment value of goods shall be the value:
determined in accordance with the provisions of section 15 of the
CGST Act, 2017,
declared in an invoice, a bill of supply or a delivery challan, as the
case may be, issued in respect of the said consignment and
also includes the Central tax, State or Union territory tax, integrated
tax and cess charged, if any, in the document and
shall exclude the value of exempt supply of goods where the
invoice is issued in respect of both exempt and taxable supply of
goods.

593
 ANSWERS OF MODEL TEST PAPER 7
SECTION B – GOODS AND SERVICES TAX (50 MARKS)
ANSWERS
Division A - Multiple Choice Questions
Question Answer
No.
1. (c) i & iii
2. (c) i & iii
3. (d) 1st April
4. (c) ` 60,000
5. (b) 31st October of the next year
6. (c) (ii) & (iv)
7. (c) (ii) and (iii)
8. (c) Mint Ltd. is required to issue bill of supply in
the given case.

Division B - Descriptive Questions

1. (a) Computation of minimum net GST payable in cash by Evershine Pvt.
Ltd. for the month of September 2024
Particulars Value of CGST @ SGST @ IGST @
supply 9% (`) 9% (`) 18% (`)
(`)
Output tax payable
Intra-State Place of 18,50,000 1,66,500 1,66,500 Nil
supply of goods supply is
to Vaidehi location
Enterprises where
[Since movement
arranging of goods
freight is the terminates
liability of
supplier, it is a
composite
supply and
thus, freight
charges are
added to the
value of
principal
supply.]
Inter-State 35,60,000 Nil Nil 6,40,800
supply to Calc.
Exim

594
[Municipal tax
is includible in
value since it is
a tax levied
under a law
other than GST
law and is
charged
separately.]
Intra-State supply to 5,70,000 51,300 51,300 Nil
Sunshine Ltd.
[Place of supply is location of
recipient. Discount given at
the time of supply is
deductible from the value
since duly recorded in the
invoice.]
Inter-State supply to Raghu 2,00,000 Nil Nil 36,000
Enterprise
[Place of supply in case of
bill to ship model is principal
place of business of a third
person at whose instructions
the goods are delivered by
supplier to recipient. Thus, it
is considered as Inter State
supply.]
Total output tax 2,17,800 2,17,800 6,76,800
Less: ITC available [Refer Nil Nil (4,17,000)
note below]
[IGST credit to be utilized
first towards payment of
IGST.]
CGST credit utilized for (2,17,800) Nil (12,200)
payment of CGST and IGST
in that order
SGST credit utilized for Nil (2,17,800) (42,200)
payment of SGST and IGST
in that order
Minimum net GST payable Nil Nil 2,05,400
in cash

Working Note:
Computation of ITC available
Particulars Value CGST SGST IGST
(`) (`) (`) (`)
Opening balance 20,000 50,000 75,000

595
Inter-State 19,00,000 Nil Nil 3,42,000
purchase of Place of [19,00,000
raw material supply is × 18%]
[ITC is not location
available on where
goods worth movement
` 1,00,000 of goods
since not terminates.
received during
the month.]
Purchase of 2,00,000 Nil Nil Nil
machinery
[ITC is not
available since
depreciation
has been
claimed on the
GST
component.]
Intra-State 15,00,000 2,10,000 2,10,000 Nil
purchase of [15,00,000 [15,00,000
truck × 14%] × 14%]
[ITC on motor
vehicles used
for
transportation
of goods is
available.]
Purchase of car 10,00,000 Nil Nil Nil
[ITC on motor
vehicles for
transportation
of persons with
seating
capacity up to
13 persons
(including
driver), is
blocked, except
when used for
specified
purposes.]
Purchase of 5,00,000 Nil Nil Nil
goods for
construction of
an additional
floor
[ITC on goods
used in
construction of
immovable
property (other
596
 than plant or
machinery) on
one’s own
account is
blocked if
capitalized in
the books.]
Total 2,30,000 2,60,000 4,17,000
Note – In above answer, where location of supplier and place of supply are in
two different States, it is an inter-State supply and where location of supplier
and place of supply are in same State, it is an intra-State supply.

(b) Computation of taxable value of supply on which GST is to be

paid by Mr. Ravindra
Particulars Amount
(`)
Remuneration received as a chief selector of hockey 5,00,000
team.
[Taxable since services provided to a recognised sports
body by an individual only as a player, referee, umpire,
coach or team manager are exempt.]
Service of pure labour contract for construction of NIL
independent residential unit
[Services of pure labour contracts of construction of
original works pertaining to a single residential unit
otherwise than as a part of a residential complex are
exempt.]
Rental income from warehousing of sugarcane NIL
[Warehousing of sugarcane being an agricultural produce is
exempt.]
Pure Services to Municipal Corporation of Bhopal for slum NIL
improvement and upgradation
[Services provided to a Local Authority by way of slum
improvement and upgradation are exempt.]
Consideration received against western music dance 1,25,000
performance in an event
[Taxable, since the amount received for western music
dance performance but the exemption is available for
performance in folk or classical art forms of music or dance.
if the consideration charged for such performance is not
more than ` 1,50,000.]
Value of taxable supply on which GST is to be paid by 6,25,000
Mr. Ravindra

597
2. (a) Computation of minimum net GST to be paid in cash by Vishnu
Limited for the month of February 2024
Particulars CGST (`) SGST (`)
Output tax liability for the month 31,000 31,000
Less: Input tax credit (ITC) [Refer 5,400 (IGST) 5,400 (IGST)
note below]
25,600 (CGST) 25,600 (SGST)
IGST credit is utilized first for
payment of CGST and SGST
liability in equal proportion. CGST
credit is utilized for payment of
CGST liability and SGST credit is
utilized for payment of SGST
liability.
Net GST payable (in cash) Nil Nil
Note: Person taking voluntary registration can avail ITC on inputs
contained in semi-finished or finished goods held in stock on the day
immediately preceding the date of grant of registration, i.e. on
23.02.2024, only within 1 year from date of issue of tax invoice by
supplier.
Computation of eligible ITC available
Particulars CGST SGST IGST
(`) (`) (`)
Capital goods Nil Nil Nil
[Person taking voluntary registration
cannot avail ITC on capital goods held
on the day immediately preceding the
date of grant of registration.]
Inputs procured on 13th February 2023 Nil Nil Nil
Inputs procured on 10th October 2023 15,000 15,000 Nil
Inputs procured on 1st February 2024 11,250 11,250 Nil
Inputs procured on 8th February 2024 Nil Nil 10,800
Total ITC 26,250 26,250 10,800
Note: In the above answer, minimum net GST to be paid in cash has been
computed by setting off the IGST liability in equal proportion so as to
minimize the amount of CGST and SGST payable in cash. Resultantly, Net
GST payable (in cash) is Nil each under CGST and SGST.
However, since IGST credit can be set off against CGST and SGST liability
in any order and in any proportion, the same can be set off against CGST
and/or SGST liabilities in other possible ways as well.
(b) (1) The place of supply of services by way of transportation of goods by
courier provided to an unregistered person is the location at which
such goods are handed over for their transportation.
598
 Therefore, the place of supply, in the given case is Kolkata, West
Bengal.
(2) The place of supply of passenger transportation service to an
unregistered person is place where the passenger embarks on the
conveyance for a continuous journey wherein the return journey is
treated as a separate journey, even if the tickets for onward and
return journey is issued at the same time.
Therefore, the place of supply for the outward and return journey
are the locations where Mr. Nitin embarked on the conveyance
for the continuous journey, i.e. Prayagraj, Uttar Pradesh for
outward journey and Jaipur, Rajasthan, for return journey.
(3) If the supply involves goods which are to be installed at site, the
place of supply is the place of such installation.
Therefore, the place of supply, in the given case is Haridwar,
Uttarakhand.
3. (a) Interest is payable in case of delayed payment of tax @ 18% per annum
from the date following the due date of payment to the actual date of
payment of tax.
Above interest is payable on the net tax liability paid in cash only if
return in Form GSTR-3B for a tax period has been filed after the due
date to furnish such return. Otherwise, interest is payable on gross tax
liability.
(i) Since Avisha Limited has furnished Form GSTR-3B for the month
within the prescribed due date, interest is payable on the gross tax
liability deposited with a delay of 29 days [21.02.2024 - 20.03.2024
(both inclusive)] as under:
= ` 16,000 x 18% x 29/366 = ` 228 (rounded off)
(ii) If Avisha Limited has filed Form GSTR-3B for the month after the
due date, i.e. on 20.03.2024, interest is payable on the net tax
liability paid through Electronic Cash Ledger only, for a delay of 29
days, as under:
= ` 12,000 x 18% x 29/366 = ` 171 (rounded off)
(b) Every Electronic Commerce Operator (ECO), not being an agent, is
liable to collect tax at source (TCS).
Such ECO is required to submit a registration application in prescribed
form through the common portal. The proper officer shall, after due
verification, grant registration within 3 working days from the date of
the application. On a request or upon an enquiry or pursuant to any
other proceeding under GST law, if the proper officer is satisfied that
a person is no longer liable to collect the tax at source, he may cancel
his registration.
Such ECO shall furnish a monthly statement in prescribed form
containing the details of the outward supplies of goods and/ or
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 services effected through it, including supplies returned through it and
the amount collected by it as TCS during the month within 10 days
after the end of each month in which tax has been collected at source.
They also required to file annual statement 1 on or before
31 st December following the end of the financial year.
The TCS amount collected by the ECO has to be deposited by 10 th of
the month succeeding the month in which TCS has been collected.
4. (a) Conditions to be satisfied for availing deduction of post supply discounts
from the value of supply as per the provisions of section 15(3) of the CGST
Act, 2017 are as follows:
(i) Discount is in terms of an agreement entered into
(ii) at or before the time of supply.
(iii) Discount can be specifically linked to relevant invoices.
(iv) Input tax credit as is attributable to the discount on the basis of
document issued by supplier is reversed by the recipient of the
supply.
(a) Alternative
Donations received by the charitable institutions from individual
donors are treated as consideration only if there exists, quid pro quo,
i.e., there is an obligation on part of recipient of the donation or gift to
do anything.
If the name of the donor is displayed in charitable institution’s
premises as an expression of gratitude and public recognition of his
act of philanthropy and is not aimed at advertising or promotion of his
business, there is no supply for the payment in the form of donation.
(b) A registered person shall issue an invoice in respect of goods and/or
services received by him provided:
(i) he is liable to pay tax under reverse charge [under section 9(3) or
9(4) of the CGST Act, 2017] on such supplies, and
(ii) supplies are received from the supplier who is not registered on the
date of receipt of goods and/or services.
In the given case, tax on services received from advocate Sameer by
Mohan Enterprise is payable under reverse charge.
However, Mohan Enterprises is not required to issue an invoice with
respect to said supply as supplier Sameer is registered.
Further, tax on labour services received from unregistered person-
Shekhar is not payable under reverse charge.
Therefore, Mohan Enterprises is not required to issue an invoice with
respect to said supply.

1 It may be noted that the annual statement (Form GSTR-9B) is yet to be notified.
600
 ANSWERS OF MODEL TEST PAPER 8
SECTION B – GOODS AND SERVICES TAX (50 MARKS)
SUGGESTED ANSWERS
Division A - Multiple Choice Questions
Question Answer
No.
1. (A) 5,000
2. (B) ` 1,00,000
3. (B) 24-09-2024
4. (A) 04.07.2024
5. (C) 50,400
6. (D) 31.01.2025
7. (B) ` 5,10,000
8. (C) ` 9,999 per day

Division B - Descriptive Questions

1. (a) (i) Computation of output tax liability of DEF Pvt. Ltd. for January,
2025
Particulars Value CGST SGST IGST
@ 9% @ 9% @ 18%
(`) (`) (`) (`)
Output tax
payable
Intra-State supply 5,00,000 45,000 45,000
of taxable goods
Service of booking 20,000 3,600
of flight tickets
[Taxable since
service of booking
of air tickets is
being provided
here. Only the
service of
transportation of
passengers in
economy class
embarking from
Bagdogra is
exempt.
Further, the place
of supply of
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 services made to a
registered person is
the location of such
person, viz. Delhi in
given case. Thus,
same is inter-State
supply.]
Selling of Pune unit 10,00,000 - - -
as going concern to
H Ltd.
[Services by way of
transfer of a going
concern is exempt.]
Service in relation 5,00,000 - - --
to business
exhibition in Dubai
[Services by an
organiser to any
person in respect of
a business
exhibition held
outside India is
exempt.]
Inter-State supply 10,00,000 - - 1,80,000
of service
Total output tax 45,000 45,000 1,83,600
liability
(ii) Computation of input tax credit available to DEF Pvt. Ltd. for
January, 2025
Particulars Value CGST SGST @ IGST @
@ 9% 9% 18%
(`) (`) (`) (`)
Opening balance 25,000 25,000 30,000
Issue of debit note 25,000 4,500
for post delivery
service [ITC on debit
notes issued in a
financial year can be
availed any time till
30th November of the
succeeding financial
year or the date of
filing of the relevant
annual return,
whichever is earlier,
irrespective of the

602
 date of original
invoice/ supply.
Further, place of
supply being Pune in
given case, same is
inter-State supply.]
Receipt of intra- 6,00,00 54,000 54,000
State services 0
[ITC on services
used in the course or
furtherance of
business is allowed.]
Purchase of 1,00,00 - - --
confectionery items 0
[ITC on food or
beverages is
specifically
disallowed unless
the same is used for
making outward
taxable supply of the
same category or as
an element of the
taxable composite or
mixed supply.]
Total 79,000 79,000 34,500
(b) Computation of GST payable by the ABC Infra for February
Particulars CGST @ SGST @
9% (`) 9% (`)
(i) Consideration for agreeing to install 49,500 49,500
effluent plant
[Taxable since it is a supply of service
of agreeing to the obligation to do an
act.]
(ii) Distribution of 500 passes of cricket - -
match
[Exempt since consideration for
services by way of right to admission
to unrecognised sporting event is not
more than ` 500 per person 1]
(iii) Booking air tickets in economy class 10,800 10,800
[Taxable since service of booking of
air tickets is being provided here. Only

1 Consideration charged is ` 485 per person (` 2,42,500/500).

603
 the service of transportation of
passengers in economy class
terminating in Manipur is exempt.]
(iv) Service of construction of buildings 73,800 73,800
provided to State Government
[Taxable since value of supply of
goods constitutes more than 25% of
the value of the composite supply of
goods and services.]
Total GST payable by ABC Infra 1,34,100 1,34,100
2. (a) A registered person is eligible to opt for composition scheme for goods
in the current financial year (FY) provided his aggregate turnover does
not exceed ` 1.50 crore [other than in specified Special Category States]
in the preceding FY.
Since aggregate turnover of M/s. T in the preceding FY does not
exceed ` 1.5 crore, he is eligible for composition scheme for goods
under section 10(1) and 10(2) of the CGST Act, 2017 in the current
FY.
As per section 10(2A) of the CGST Act, 2017, a registered person who
is eligible to pay tax under section 10(1) and (2) is not eligible for
opting for composition under section 10(2A) of the CGST Act, 2017.
As per section 10(2A) of the CGST Act, 2017, person engaged in the
supply of service is eligible for composition scheme for payment of tax
@ 3% CGST and 3% SGST provided his aggregate turnover does not
exceed ` 50 lakh in the preceding FY.
Since turnover of previous year is ` 1.32 crore and firm is not dealing
in the service only, M/s T cannot opt for composition scheme under
section 10(2A) of the CGST Act, 2017 for FY 2024-25.
A person who opts to pay tax under composition scheme under section
10(1) and 10(2) of the CGST Act, 2017 is also permitted to supply
services [other than restaurant services] upto a value not exceeding:
(a) 10% of the turnover in a State/U.T. in the preceding financial year,
or
(b) ` 5 lakh,
whichever is higher.
Thus, M/s T is permitted to supply services upto a value of ` 13,20,000
i.e. 10% of ` 1.32 crores, in current FY.
Further, there is no restriction on composition supplier to receive inter-
State inward supplies of goods or services.
Thus, it can be concluded that M/s T can opt for composition scheme
of goods under section 10(1) of the CGST Act, 2017 for FY 2024-25.

604
 (b) (i) Where the supply of goods is made to an unregistered person, the
place of supply is the location as per the address of the
unregistered person recorded in the invoice.
Further, recording of the name of the State of the unregistered
person in the invoice is deemed to be the recording of the address
of the unregistered person.
Thus, place of supply is Bhavnagar, Gujarat.
(ii) The hoarding/structure erected on the land should be considered
as immovable structure/fixture as it has been embedded in earth.
Therefore, the place of supply of service provided by way of supply
of sale of space on hoarding/ structure for advertising or for grant
of rights to use the hoarding/ structure for advertising is the location
where such hoarding/ structure is located.
The place of supply of any service provided by way of supply/sale
of space on an immovable property or grant of rights to use an
immovable property is the location at which the immovable property
is located, i.e. the location where such hoarding/ structure is
located.
Thus, for hoarding located in Udaipur, place of supply is Udaipur,
Rajasthan and for hoarding located in Gwalior, place of supply is
Gwalior, Madhya Pradesh.
3. (a) In case of intra-State supply of goods by a supplier to a PSU, TDS @
1% each under CGST and SGST is liable to be deducted by PSU only
when the total value of supply under a contract exceeds ` 2,50,000
(exclusive of tax & cess), from the payment made or credited to the
supplier.
Accordingly, in the given case, since the value of supply under the
contract excluding taxes and cesses is ` 11,50,000 (` 13,57,000 ×
100/118),
TDS @ 1% on payment of each of the instalment of ` 2,30,000
(` 11,50,000/5), i.e. ` 2,300 each under CGST and SGST is to be
deducted even though the individual payment is less than ` 2,50,000.
The amount of TDS deducted shall be paid to the Government by the
deductor within 10 days after the end of the month in which such
deduction is made or by 10 th of the succeeding month.
(b) Every registered person executing works contract shall keep separate
accounts for works contract showing -
• the names and addresses of the persons on whose behalf the
works contract is executed;
• description, value and quantity (wherever applicable) of
goods/services received for the execution of works contract;

605
 • description, value and quantity (wherever applicable) of
goods/services utilized in the execution of works contract;
• the details of payment received in respect of each works contract;
and
• the names and addresses of suppliers from whom he received
goods or services.
4. (a) As per the provisions of section 7(1)(b), 7(1)(c) and Schedule I of the
CGST Act, 2017, import of services for a consideration shall be
considered as supply, whether or not in the course or furtherance of
business
Import of services by a person from a related person or from any of
his other establishments outside India, in the course or furtherance of
business shall be treated as supply even if made without
consideration.
(b) (i) Following entities are exempt from the mandatory requirement of
e-invoicing even if their turnover exceeds ` 5 crore in any preceding
financial year from 2017-18 onwards:
• Special Economic Zone units
• Insurer
• Banking company or financial institution including NBFC
• GTA supplying services in relation to transportation of goods
by road in a goods carriage
• Supplier of passenger transportation service
• Person supplying services by way of admission to exhibition
of cinematograph films in multiplex screens
• A Government Department
• A local authority
Note: Any two points may be mentioned.
(ii) No act or proceedings of the Goods and Services Tax Council shall
be invalid merely by reason of—
(a) any vacancy in, or any defect in, the constitution of the
Council; or
(b) any defect in the appointment of a person as a Member of the
Council; or
(c) any procedural irregularity of the Council not affecting the
merits of the case.

606
(b) Alternative
Additional accounts/documents to be kept by agent are as follows:
(a) particulars of authorisation received by him from each principal to
receive/supply goods/services on behalf of such principal
separately;
(b) particulars including description, value and quantity (wherever
applicable) of goods/services received on behalf of every principal;
(c) particulars including description, value and quantity (wherever
applicable) of goods/services supplied on behalf of every principal;
(d) details of accounts furnished to every principal; and
(e) tax paid on receipts/ supply of goods/services effected on behalf of
every principal.

607