Page 1 of 18 Solution of mock test Taxation for Nov 2012 Exam
Answer : 1.(a)
Computation of total income of Mr. Amit for the Assessment Year 2012-13
Particulars
`
Income from Salary
Basic Salary ( ` 35,000 12)
CCA (` 1,500 12)
HRA (` 7,000 12)
Less: Exempt under section 10(13A) [See Note
1 below]
Education Allowance (600´12´3)
Less: Exempt under section 10(14) (100122)
Income from Salary
Profits and gains from business or profession
Income from the business of letting on hire, a heavy vehicle under section
44AE (5,0008) [See Note 2 below]
Income from Other Sources
Interest from company deposits
Bank interest
Less: Deduction under section 57
` 2,00,000 @ 10% for 6 months – towards loan
interest
Gross Total Income
Less: Deduction under Chapter VI-A
`
4,20,000
18,000
84,000
54,000
21,600
2,400
19,200
4,87,200
40,000
22,000
8,000
30,000
10,000
20,000
5,47,200
Under section 80C [See Note 4 below]
Under section 80CCC
1,23,000
18,000
1,41,000
restricted to
Total Income
Computation of tax payable for the A.Y.2012-13
Particulars
Tax on ` 4,47,200
Add: Education cess@2% and SHEC@1%
Tax Payable
30,000
`
26,720
802
27,522
Notes:
(1) HRA is exempt to the extent of the least of the following under section 10(13A)
(1) 50% of salary (as the city is Delhi ) i.e. 50% of ` 4,20,000 = ` 2,10,000
(2) Excess of rent paid over 10% of salary = ` 96,000 – ` 42,000 = ` 54,000
(3) Actual HRA received = 7,000 × 12 = ` 84,000
Least of the above i.e.` 54,000 is exempt under section 10(13A)
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1,00,000
4,47,200
Page 2 of 18 Solution of mock test Taxation for Nov 2012 Exam
(2) In the case of a person owning not more than 10 vehicles at any time during the previous year, estimated income
from each heavy vehicle will be deemed to be ` 5,000/- for every month or part of the month during which the heavy
vehicle is owned by the assessee during the previous year [Section 44AE].
Presumptive income = ` 5,000 × 8 = 40,000
If, however, the assessee declares a higher amount, such amount will be considered as income. In the instant case,
since the assessee declares a lower amount, it cannot be considered, since no books of account are maintained.
Also, interest is not deductible, since under section 44AE, all deductions under sections 30 to 38 are deemed to have
been allowed.
(3) Brought forward loss from speculation business can be set off only against income from speculation business
and not against other business income.
(4) Deduction under section 80C:
Investment in notified equity linked saving
scheme of UTI
Investment in PPF
Life insurance premium on own life
restricted to 20% of sum assured
Tuition fees paid for two of his children
(Most favourable to Ram)
15,000
64,000
10,000
34,000
1,23,000
(5) Contribution to pension fund of LIC ` 18,000 is deductible under section 80CCC.
(6) Total deduction under sections 80C, 80CCC and 80CCD(1) is limited to ` 1,00,000 as per section 80CCE.
Answer
In the case of X Ltd. point of taxation will be on accrual basis with effect from April 1, 2011. Service tax liability may
be calculated for April 2011 (or subsequent months) in the format given below –
Rs.
Step 1 – Amount received during April 2011 for service rendered before April 1, 2011
xxx
Step 2 – Add: Value of invoice issued in the month of April 2011
xxx
Step 3 – Add: Advance received in the month of April 2011
xxx
Step 4 – Less: Advance which is received during April 2011 or before April 2011) adjusted
against invoices issued during April 2011
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Page 3 of 18 Solution of mock test Taxation for Nov 2012 Exam
Value of taxable services for April 2011 (Step 1 + Step 2 + Step 3 – Step 4)
Service tax liability for April 2011 shall be as follows –
Different activities during April 2011
Value before
service tax
Rs.
Service tax
[10.3% of
(2)] Rs
(1)
Step 1 – Amount received during April 2011 for
services rendered up to March 31, 2011 (up to
March 31, 2011service tax was chargeable on
receipt basis)
(2)
(3)
Value
inclusive of
service tax
[(2) + (3)] Rs.
(4)
Amount received during April 2011 for service
rendered during January 2011 (Rs. 6,59,594 is
inclusive of service tax)
5,98,000
61,594
6,59,594
Amount received during April 2011 for services
rendered during March 2011 (Rs. 4,84,100 is
inclusive of service tax)
4,38,894
45,206
4,84,100
17,40,000
1,79,220
19,19,220
15,87,000
1,63,461
17,50,461
90,662
9,338
1,00,000
4,53,309
40,01,247
46,691
4,12,128
5,00,000
44,13,375
Amount received during April 2011 for services
rendered during March 2011 9Rs. 19,19,220 is
inclusive of service tax)
Step 2 – Add: Value of invoice issued in the
month of April 2011 (Rs. 10,72,000 + Rs.
5,15,000 = Rs. 15,87,000)
Step 3 – Add : Advance received during April
2011 (service not rendered)
Step 4 – Less : Advance received on March 1,
2011 and adjusted against invoices issued
during April 2011
Total
Note – Value (inclusive of service tax) should be posted in Column 4. In such a case, Column 2 = [Column
4 x 100 /110.3]. Column 3 will be 10.3% of Column 2
Answer 1 ( c )
Goods
Purchases
`
X
1,00,000
`
Input VAT
credit
`
-
Sales
(Turnover)
Output VAT
`
1,60,000
-
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Page 4 of 18 Solution of mock test Taxation for Nov 2012 Exam
Y(Refer Note)
Z
2,00,000
2,00,000
5,00,000
25,000
8,000
33,000
2,40,000
3,00,000
7,00,000
30,000
12,000
42,000
Computation of the taxable turnover, Input VAT, Output VAT and Net VAT payable:Total turnover
Less: Exempt Turnover
Taxable turnover
Opening balance of Input VAT credit
Add: Input VAT credit for April, 2012
7,00,000
1,60,000
5,40,000
Total Input VAT credit available
Less: Output VAT payable on taxable turnover
Net VAT payable
Note: Goods Y purchase value (including VAT)
Less: VAT included in above
2,25,000 × 12.5
112.5
Purchase price excluding VAT
Add: Profit on above @ 20%
Selling price before VAT
VAT @ 12.5% on selling price
6,000
33,000
39,000
42,000
3,000
2,25,000
25,000
2,00,000
40,000
2,40,000
30,000
Answer : 2 (a) (i)
As per section 64(1A), in computing the total income of an individual, all such income accruing or arising to a minor
child shall be included. However, income of a minor child suffering from disability specified under section 80U would
not be included in the income of the parent but would be taxable in the hands of the minor child. Therefore, in this
case, the income of daughter suffering from disability specified under section 80U should not be clubbed with the
income of Mr. Sharma.
Under section 10(32), income of each minor child includible in the hands of the parent under section 64(1A) would be
exempt to the extent of the actual income or ` 1,500, whichever is lower. The remaining income would be included in
the hands of the parent.
Computation of income earned by minor children to be clubbed with the income of Mr. Sharma
Particulars
`
(i) Income of one daughter
9,000
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Page 5 of 18 Solution of mock test Taxation for Nov 2012 Exam
Less: Income exempt
under section 10 (32)
Total (A)
(ii Income of two sons (` 6,200 + ` 4,300)
Less: Income exempt
under section 10(32)
(` 1,500 + ` 1,500)
Total (B)
Total Income to be
clubbed as per
section 64(1A) (A+B)
1,500
7,500
10,500
3,000
7,500
15,000
Note It has been assumed that:
(1) All the four children are minor children;
(2) The income does not accrue or arise to the minor children on account of any manual work done by them or
activity involving application of their skill, talent or specialized knowledge and experience;
(3) The income of Mr. Sharma, before including the minor children’s income, is greater than the income of Mrs.
Sharma, due to which the income of the minor children would be included in his hands; and
(4) This is the first year in which clubbing provisions are attracted.
Answer 2 (a) (ii)
Revised return - return of income can be revised under section 139(5). A return which is submitted belatedly, after
the due date of submission of return, cannot be revised – Kumar Jagdish Chandra Sinha v. CIT [1996] 86 Taxman
122 (SC). Return of loss can be revised, if original return was submitted on or before the due date. An assessee can
file revised return can be filed under section 139[5] for correcting any omission or wrong statement made in the first
revised return. However, it should be submitted within the statutory time, i.e., within one year from the end of the
assessment year or before completion of the assessment, whichever is earlier. The period of limitation for completion
of assessment prescribed under section 153(1) will run from the date of filing of second revised return, if the
assessee has filed two revised returns.
In case of defective return, the assessee can rectify the defect within 15 days (or within the extended period). After
such rectification, the return can be revised if the original return was submitted before due date. If the defect is not
rectified within 15 days (or within the extended period), then the return will become invalid return and such return
cannot be revised. If the return contains a defect or if the return is incomplete (but the assessing officer has not
intimated the same to the assessee), such return can be revised if the return was submitted before the due date.
Answer 2 ( a) ( iii )
(ii) Computation of Total Income of Mr. Banerjee for A/Y 2012-13.
Rs.
Income from house property
House I
House II
House III
36000
(20000)
60000
76000
Income from profits and gains
from business or profession
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Page 6 of 18 Solution of mock test Taxation for Nov 2012 Exam
Textile business
Automobile business
Speculation business
200000
(300000)
200000
100000
Income from capital gains
Long term capital gain from sale
of shares (STT paid) exempt u/s 10(38) NIL
Long term capital gain from sale
of vacant site
200000
Short term capital loss from
Sale of building
(100000)
100000
Note: STCL can be set off against both STCG and
LTCG
Income from other sources
Gift from a friend (non relative)
on 5.6.11
Gift from grandfather
Younger brother
Total Income of Mr. Banerjee
60000
100000
160000
436000
Answer : 2 (b)
As per Rule 3 of the Point of Taxation Rules, point of taxation would be determined as follows:1. Date of invoice or payment, whichever is earlier, if the invoice is issued within 30 days from the date of completion
of service.
2. Date of completion of provision of service or payment, if the invoice is not issued within 30 days.
Point of Taxation in each of the above three cases will be as under:
CASE I-The point of taxation is date of payment [25th April,2012] as date of payment [25.04.2012] falls before date of
issuance of invoice[30.04.2012] and invoice has been issued within 30 days of completion of service.[15.04.2012].
CASE II- The point of taxation is date of completion of service [15th April,2012] as date of completion of service
[15.04.2012] falls before date of payment [25.04.2012] and invoice [16.05.2012] has not been issued within 30 days
of completion of service [15.04.2012].
CASE III- The point of taxation is 20th April, 2012 as date of invoice [20.04.2012] falls before date of
payment[25.04.2012] and invoice has been issued within 30 days of completion of service [15.04.2012].
Answer : 2 ( c )
The tax paid by a registered dealer at the earlier point is called input tax. This amount will be adjusted against the tax
payable by the purchasing dealer on his sales. This credit availability is called input tax credit (ITC). It can also be
referred to as tax credit on a sale within the State or in the course of intra-State trade or commerce.
The essence of VAT is in providing set-off for the tax paid earlier, and this is given effect through the
concept of input tax credit/rebate. Thus, input tax credit in relation to any period can be set off by the
registered dealer against the amount of his output tax.
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Page 7 of 18 Solution of mock test Taxation for Nov 2012 Exam
Answer 3(a)
Computation of capital gains in the hands of Mr. Shivam for the A.Y.2012-13 Particulars
Capital Gains:
Sale price of the residential house
25,00,000
Valuation as per Stamp Valuation authority
(Value to be taken is the higher of actual sale price or valuation adopted for stamp duty purpose as per section 50C)
Deemed Sale Consideration for the purpose of Capital Gains
Less: Expenses on transfer (Brokerage @1% of ` 25,00,000)
Net Sale Consideration
Less: Indexed cost of acquisition (Note 1)
Indexed cost of improvement (Note 2)
32,00,000
25,000
31,75,000
16,87,750
7,06,500
23,94,250
7,80,750
6,00,000
1,80,750
Less: Exemption under section 54
Long-term Capital Gain
Note 1: Computation of indexed cost of acquisition
Cost of acquisition,
2,65,000
being the higher of -
(i) fair market value as on April 1, 1981 i.e. ` 2,60,000
(ii) actual cost of acquisition i.e.` 2,65,000 (` 2,40,000 + ` 25,000, being stamp duty @ 10% of ` 2,50,000)
Less: Advance taken and forfeited
Cost for the purpose of indexation
Indexed cost of acquisition (` 2,15,000 x 785/100)
50,000
2,15,000
16,87,750
Note 2: Computation of indexed cost of improvement Indexed cost of improvement
Construction of first floor in March, 1988 (i.e. ` 1,35,000 x 785/150)
7,06,500
Note 3: Since NHAI bonds were purchased after 6 months from the date of transfer of house property,
Mr. Shivam cannot avail exemption under section 54EC.
Answer 3(b)
In case of sale/purchase of foreign currency including money changing [Sub-rule (7B)]
S.No.
1.
For an amount
Upto ` 100,000
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After amendment
(With effect from 01.04.2012)
0.12 % of the gross amount
of currency exchanged
or
`
Page 8 of 18 Solution of mock test Taxation for Nov 2012 Exam
` 30 whichever is higher
2.
Exceeding ` 1,00,000 and
upto ` 10,00,000
3.
Exceeding ` 10,00,000
` 120 + 0.06 % of the gross
amount of currency
exchanged
` 660 + 0.012 % of the gross
amount of currency
exchanged
or
` 6,000 whichever is lower
Answer 3(c )
(a) False
(b) False
(c) False
(d) True
(e) False
(f) False
(g) False
(h) True
Answer 4 (a)
Computation of total income of Mr. Manik for A.Y.2012-13
Particulars
Income from salaries (See Working Note 1)
Capital gains (See Working Note 2)
Income from other sources (See Working Note 3)
Gross Total Income
Less: Deductions under Chapter VI-A (See Working Note 4)
Total Income
Working Notes:
1. Income from salaries Particulars
Salary for 5 months received from Government of India (` 10,000 x 5)
Pension for 4 months from Sep. 2011 to Dec. 2011 @ ` 6000 p.m. ( ` 6000 x 4)
Pension for 3 months (2/3 of ` 6000) from Jan 2012 to March 2012 @ ` 4,000 p.m. (`
4,000 x 3)
`
86,000
3,75,750
62,250
5,24,000
1,15,000
4,09,000
`
50,000
24,000
12,000
86,000
Note : Commuted value of pension of ` 2,40,000 received from the Central Government is fully exempt under section 10(10A).
2. Capital gains Particulars
`
Long term capital gains on sale of house plot at Kanpur on 27.11.2011
Sale consideration received is ` 10,50,000. However, since the value
12,00,000
assessed by the stamp valuation authority (i.e. ` 12,00,000) is higher than
the sale consideration, such value assessed is deemed to be the full
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Page 9 of 18 Solution of mock test Taxation for Nov 2012 Exam
value of the consideration received or accruing as a result of such
transfer as per section 50C
Less: Indexed cost of acquisition (` 1,05,000 x 785/100)
3. Income from other sources
Particulars
`
Interest on bank FDRs
Dividend of ` 8,500 on units of Mutual
Fund [exempt under section 10(35)]
Interest on maturity of NSC
Less: Interest already
shown on accrual basis in
the past returns
82,500
67,500
8,24,250
3,75,750
`
47,250
15,000
62250
4. Deductions under Chapter VI-A
Particulars
`
Under section 80C
Purchase of NSC
Life Insurance Premium paid
Total
Maximum deduction available under section 80C
Under section 80D
Medical insurance premium paid (` 16,000), restricted to ` 15,000, being the maximum allowable
deduction
`
65,000
53,000
1,18,000
1,00,000
15,000
1,15,000
Answer 4(b) In this case , it is stated that all the invoices have been issued within the time limit of Rule 4A of the
service Tax Rules , 1994. In view of provisions of Rule 3 of the Point of Taxation Rules, 2011 , the liability to pay
service tax depends upon the date of invoice or the date of receipt of payment, whichever is earlier.
Thus , in respect of the Advance received in May, 2012, the Point of taxation shall be the date of receipt of advance.
The invoice therefor shall have to be issued within 30 days from the date of receipt of advance.
In respect of the balance consideration , the date of invoice ( which falls in July, 2012 ) , being earlier in time, shall be
the point of taxation. It is assumed that the invoice has been issued within 30 days from the date of completion of
service.
In this question, the assessee has provided total services valuing Rs. 210000 , out of which services valuing Rs.
70000 are non taxable. Therefore , 2/3rd of the total value of services is the value of taxable services. Accordingly,
only the proportionate sum received towards value of taxable services will be liable to tax.
I)
Advance received in May 2012 – Due date for payment of service tax 5th or 6th June, 2012
Advance reveived towards all services in May 2012
60,000
rd
Proportionate advance received towards taxable services ( 2/3 of total advance)
40,000
Service tax on the amount of proportionate advance i.e. 40000 × 12.36%
4,944
II)
Balance billed in July 2012 – Due date for payment of service tax 5th or 6th August, 2012
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Page 10 of 18 Solution of mock test Taxation for Nov 2012 Exam
Balance billed towards all services in July 2012 ( 210000-60000 )
1,50,000
Proportionate balance towards taxable services ( 2/3rd of total balance sum )
1,00,000
Service tax on the amount of proportionate balance i.e. 100000 × 12.36 %
12,360
Note : The option provided in Rule 6(1) that the assessee may opt to pay service tax on receipt basis if
the value of services provided in the preceding year is upto Rs. 50 Lakhs is not available to a company.
Since , in this case, the assessee is a company , hence, there is no question of payment of service tax
on receipt basis.
Answer 4(c)
Computation of VAT liability –
Gross product variant
Rs.
32,000
Consumption variant
Rs.
32,000
Raw material purchased (4% of Rs. 5,00,000)
20,000
20,000
Plant and machinery (4% of Rs. 2,50,000)
VAT payable
-12,000
10,000
2,000
Vat on sale (4% of Rs. 8,00,000)
Less: Input credit
Consumption Variant is beneficial to the dealer.
Answer 5(a)
Assessee: Dr. Shuba
Previous Year: 2011-2012
Assessment Year: 2012-2013
Computation of Total Income
Particulars
1. Salaries:
Rs.
Lecturers
Rs.
5,000
Less: Deduction u/s 16
Nil
5,000
Income under the Head “Salary”
2. Income from House Property – Self Occupied, So, Annual Value u/s 22
Nil
Less: Deduction u/s 24 – Interest (6,00,000 x 10% 10% ¾)
(30,000)
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Page 11 of 18 Solution of mock test Taxation for Nov 2012 Exam
( Restricted to Rs. 30,000 )
(30,000)
Income from House Property
3. Profits and Gains of Business or Profession
Rs.
Particulars
Add
Sale of Medicine
2,50,000
Consultation Fee
50,000
Visiting Fee
Rs.
Deduct
2,00,000
Interest Paid (60,000 x ¼)
15,000
Payment fee Medical Journal
5,000
Depreciation on Surgical Equipment (50,000 x 15%)
7,500
Depreciation on Vehicle (4,00,000 x 15% x ¾)
45,000
Vehicle Expenses – For Business Purposes – ( 50,000 x ¾)
37,500
Interest paid on Loan – = 22,330 x ¾
16,748
Purchase of medicines
47,000
3,26,252
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Page 12 of 18 Solution of mock test Taxation for Nov 2012 Exam
3,24,625
Profits and Gains from Business
5,00,000
(1,73,748)
5. Income from Other Sources
Family Pension
2,80,000
Less: Exempt u/s 57 – Least of the following
33 1/3% of Gross Pension
93,333
Amount of
15,000
(15,000)
2,65,000
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Page 13 of 18 Solution of mock test Taxation for Nov 2012 Exam
Savings Bank Interest
1,000
Interest on term Deposit (1,50,000 x 9% x 9/12)
10,125
Less: Exempt u/s 10(32) – Rs. 1,500 per Child
(1,500)
8,625
Income from lottery ( 35,000*100/70 )
50,000
Gross Total Income
6,25,877
Less : Deduction under Chapter VI – A
U/s. 80C – Housing Loan Repayment (Principal Portion)
48,000
U/s 80D - Medical Insurance Premium
- Herself (Restricted)
15,000
- Mother (Being Senior Citizen Maximum deduction is Rs. 20,000)
16,000
31,000
Total Income (Before Agricultural Income) (Rounded off)
Working Notes:
1. Share Income from HUF is exempt u/s 10(2).
2. Drawings, advance tax paid are not allowable expenditures.
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(79,000)
5,46,880
Page 14 of 18 Solution of mock test Taxation for Nov 2012 Exam
Deduction of interest on loan is taken on paid basis.
Answer 5 ( b ) Section 67(1)(iii) of the Finance Act, 1994 ensures payment of service tax based on valuation even
when consideration is not ascertainable. However, these provisions apply only when there is consideration. If there is
no consideration i.e., in case of free service, section 67 cannot apply.
Thus, no service tax is payable when value of service is zero, as the charging section 66 provides that service tax is
chargeable on the value of taxable service.
Hence if the value is zero, the tax will also be zero even though the service may be taxable. However, this principle
applies only when there is really a 'free service' and not when its cost is recovered through other means.
Therefore, in the light of the aforesaid discussion, it may be inferred that, the service tax is not
payable on service rendered by Miss Radhika to Mr. Ram Kapoor as Miss Radhika has not charged
any fee from Mr. Ram Kapoor.
Answer 5 ( c )
(i) The different variants of VAT are:1. Gross product variant: Under gross product variant, deduction for taxes on all inputs is allowed, but not for tax paid
on capital goods.
2. Income variant: Under income variant, deductions for tax paid on inputs and depreciation on capital goods is
allowed.
3. Consumption variant: Under consumption variant, deduction for taxes paid on all business inputs including capital
goods is allowed.
(ii) VAT is levied at each stage of production and distribution on the value added at the respective stage. Value
added is the difference between the sales price and purchase price or the sum of wages, interest and other costs
incurred and profits.
Broadly, VAT is paid at each of the following stages of a sale transaction:Manufacturer Wholesaler Retailer Consumer
Yes, entire burden of VAT falls on the final consumer and he does not get any credit of the same.
Answer 6(a) (i) Section 35AD has been introduced with effect from Assessment Year 2010-11 as investment linked
incentive for specified business.
With the specific objective of creating rural infrastructure and environmental friendly alternate means for
transportation of bulk goods, investment linked tax incentives have been introduced for specific business
which also includes laying and operating a cross-country natural gas or crude or petroleum oil pipeline
network for distribution, including storage facilities being an integral part of such network.
(ii) 100% of the capital expenditure incurred during the previous year, wholly and exclusively for the above
business would as deduction from the business investment would not be eligible for deduction.
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Page 15 of 18 Solution of mock test Taxation for Nov 2012 Exam
(iii) Further, the expenditure incurred wholly and exclusively, for the purpose of specified business prior to the
commencement operation would be allowed as deduction during the previous year in which the assessee
commences operation of his specified business. A condition has been inserted that such amount incurred
prior to the commencement should be capitalized in the books of account of the assessee on the date of
commencement of its operation.
Accordingly, Alpha Ltd. will be entitled for deduction under 35AD for Assessment Year 2012-13 as under:
Capital expenditure incurred during the previous year 2011-12 (excluding
100 lakhs
the expenditure incurred on acquisition of land
Capital expenditure incurred prior to 1.4.2011 (i.e. prior to
40 lakhs
commencement of business) and capitalized in the books of account as
on 1.4.2011
Total deduction under section 35AD for A.Y. 2012-13
140 lakhs
(ii) Answer
The requirement to deduct tax at source in respect of fees for professional or technical services are covered
under section 194J in case the amount exceeds Rs. 30,000 in a financial year. Further, the tax shall be
deducted at source either on credit or payment, whichever is earlier. The proviso to Section 194J
contemplates independent limit of Rs. 30,000 each towards
(a) fees for professional services; and
(b) fees for technical services.
In the given case, M/s. Nidhi Textiles Ltd. has credited Rs. 19,000 towards fees for professional services
and Rs. 15,000 towards fees for technical services to the account of Mr. Suresh in its books of accounts.
As the fee for professional services or fee for technical services independently does not exceed Rs. 20,000
during the financial year, the liability to deduct tax under section 194J does not arise.
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Page 16 of 18 Solution of mock test Taxation for Nov 2012 Exam
Answer 6(b)
In the case of X Ltd. point of taxation will be accrual basis with effect from July 1, 2011. Service tax
liability may be calculated for August 2011 (or July 2011 or subsequent months) in the format given
below –
Step 1 – Amount received during August 2011 for service rendered before July 1,
2011
Rs.
xxx
xxx
Step 2 – Add: Value of invoice issued in the month of August 2011
xxx
Step 3 – Add: Advance received in the month of August 2011
Step 4 – Less: Advance (which is received during August 2011 or before August
2011) adjusted against invoice issued during August 2011
xxx
xxx
Value of taxable services for August 2011 (Step 1 + Step 2 + Step 3 – Step 4)
Service tax liability for August 2011 shall be as follows –
Different activities during August 2011
Value
before
service
tax Rs.
Service
tax
[10.3% of
(2)] Rs.
(1)
Step 1 – Amount received during August 2011 for
service rendered up to June 30, 2011 (up to June 30,
2011 service tax was chargeable on receipt basis)
(2)
(3)
Value
inclusive of
service tax
[(2) + (3)]
Rs.
(4)
3,50,000
36,050
3,86,050
Amount received during August 2011 for service
rendered during March 2011 (Rs. 3,86,050 is inclusive
of service tax)
Amount received during August 2011 for service
rendered during April, May and June 2011 (Rs.
17,04,135 is inclusive of service tax)
Step 2 – Add: Value of invoice issued in the month of
August 2011 (Rs. 7,50,000 + Rs. 2,00,000 = Rs. 9,50,000)
Step 3 – Add: Advance received during August 2011
(service not rendered)
Step 4 – Less: Advance received on May 1, 2011 and
adjusted against invoices issued during August 2011
Total
15,45,000 1,59,135
17,04,135
9,50,000
97,850
10,47,850
5,43,971
56,029
6,00,000
2,71,985 28,015
31,16,986 3,21,049
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3,00,000
34,38,035
Page 17 of 18 Solution of mock test Taxation for Nov 2012 Exam
Note- Value (inclusive of service tax) should be posted in Column 4. In such a case, Column 2 = [Column
4 x 100 / 110.3] . Column 3 will be 10.3% of Column 2
Answer 6 ( c )
Computation of the tax liability for the financial year 2011-12:Inputs purchased in the month
Output sold in the month (within the State)
Inter-State sales
Input credit (including capital goods) (` 12,500 + ` 12,500)
Output tax
CST for Inter-State sale
State VAT liability (` 8,000 – ` 25,000)
Excess credit
Central sales tax to be paid (` 2,000 – ` 17,000)
Excess credit carried forward to subsequent period
1,00,000
2,00,000
1,00,000
25,000
8,000
2,000
Nil
17,000
Nil
15,000
Answer 7 ( a )
Computation of income from house property for the A.Y. 2012-13
Particulars
Vinay
Income from house
`
property
I. Self-occupied portion (50%)
Nil
Annual value
Less: Deduction under section 24(b)
Interest on loan taken for
30,000
construction ` 90,000 (being
50% of ` 1.8 lakh) in total
restricted to maximum of `
30,000 for each co-owner
(since the property was
constructed before
01.04.1999)
(30,000)
Loss from self occupied
Nitesh
`
II. Let-out portion (50%) –
See Working Note below
Income from house
property
78,900
78,900
48,900
48,900
Nil
30,000
(30,000)
property
Working Note
Computation of income from let-out portion of house property
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Particulars
`
`
Let-out portion (50%)
Gross Annual Value
(a) Municipal value (50% of ` 8 lakh)
4,00,000
(b) Actual rent [(` 18000 x 2 x 12) – (` 18,000 x 1 x 1)] = ` 4,32,000 - `
4,14,000
18,000
- whichever is higher
4,14,000
Less: Municipal taxes 50% of ` 1,20,000 (15% of ` 8 lakh)
60,000
Net Annual Value (NAV)
3,54,000
Less: Deduction under section 24
(a) 30% of NAV
1,06,200
(b) Interest on loan taken for the house [50% of
90,000
1,96,200
` 1.8 lakh]
Income from let-out portion of house property
1,57,800
Share of each co-owner (50%)
78,900
Note: The benefit of “Nil” Annual Value under section 23(2) in respect of a self occupied property can
also be availed where the owner cannot occupy the property by reason of his employment at a different
place and he resides, at such other place, in a building not belonging to him, provided he has not derived
any other benefit from such property.
Answer 7 ( b )
The due dates for filing of half yearly
service tax return is 25th of the month
following the particular half year.
For the half year ending
Return should be filed by
30th Sept.
25th October
31st March
25th April
If the 25th of the month is a public holiday, return is to be filed on immediately succeeding working day.
An assessee can submit a revised return, in Form ST-3, in triplicate, to correct a mistake or omission,
within a period of 90 days from the date of submission of the original return.
7(c) Answer
Following are the purchases which are not eligible for input tax credit : Purchases from unregistered dealers.
 Purchases of goods from other states i.e. inter state purchases.
 Import of goods from outside the territory of India ( commonly known as high seas
purchases)
 Purchases from registered dealer who has opted for composition scheme.
 Purchases of non credible goods as may be notified by the state government .
 Purchases of goods in cases where the selling dealer’s invoice does not show the
amount of tax charged separately by such selling dealer.
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