For Any Enquiry or to join any

course in our institute feel free

to contact

Ph: 8777203495

Sky High
Institute
Important - Tax
Sem 5

Sky High Institute

For
/skyhighinstitute /skyhighinstitute_shi @skyhighinstitute6362

DIRECT TAX (40 Marks)

Group – A (15Marks)

Q1. Theory (Compulsory) – 5Marks

Q2. Theory or Practical(Option) – 5Marks

Q3. Theory or Practical (Option) – 5Marks

Group – B (10 Marks)

Q4. Practical with Option

Group – C (15 Marks)

Q5. Practical with Option [ Total Income or Firm Assessment]

INDIRECT TAX (40 Marks)

Q6. Theory (5marks)

Q7. Theory (5Marks)

Q8. Theory or Practical (Option) – 5Marks

Q9. Practical (5Marks)

Q10. Theory with Practical (Option) – 10 Marks

Q11. Practical (Custom Duty) – 10 Marks

To get admission in new batch or to enquire about any course feel free to
contact us @ 8777203495
/skyhighinstitute /skyhighinstitute_shi @skyhighinstitute6362

Income tax slabs rate for Old Tax regime -FY 2021-22

(I) Individual below 60 years, HUF & NRIs:

(1) Upto ₹ 2,50,000 Nil

(2) ₹ 2,50,000 to ₹ 5,00,000 5%

(3) ₹ 5,00,000 to ₹ 10,00,000 20 %

(4) Above ₹ 10,00,000 30%

(II) For resident senior citizen (who is of 60 years but less than 80 years )

(1) Upto ₹ 3,00,000 Nil

(2) ₹ 3,00,000 to ₹ 5,00,000 5%

(3) ₹ 5,00,000 to ₹ 10,00,000 20 %

(4) Above ₹ 10,00,000 30%

III) For resident super senior citizen (who is of 80 years during the previous year)

(1) Upto ₹ 5,00,000 Nil

(2) ₹ 5,00,000 to ₹ 10,00,000 20 %

(3) Above ₹ 10,00,000 30%

To get admission in new batch or to enquire about any course feel free to
contact us @ 8777203495
/skyhighinstitute /skyhighinstitute_shi @skyhighinstitute6362

DIRECT TAX

Q. Define PAN. Where is mentioning of PAN compulsory? (5M)

Ans: Permanent Account Number abbreviated as PAN is a unique 10-digit alphanumeric

number issued by the Income Tax Department to Indian taxpayers.

The department records all tax-related transactions and information of an individual against
his unique permanent account number. This allows the taxman to link all tax-related activities
with the department.

PAN primarily acts as a database for all individual transactions, such as the tax collected at
source (TCS)/tax deducted at source (TDS) credits, income tax payments, return on
gift/investments/wealth, etc. Simply put, the PAN enables the tax department to identify an
individual’s tax-related transaction.

Mentioning of PAN
Section 139A of the Income-tax Act, 1961, prescribes various conditions under which an
assessee is required to obtain PAN.
• Sale or purchase of a motor vehicle or vehicle
• Opening an account [other than a time-deposit referred to at Sl. No.12 and a Basic
Savings Bank Deposit Account] with a banking company or a cooperative bank to
which the Banking Regulation Act, 1949
• Opening of a demat account with a depository, participant, custodian of securities or
any other person
• Payment to a hotel or restaurant against a bill or bills at any one time in excess of 50,000
• Payment in connection with travel to any foreign country or payment for purchase of
any foreign currency at any one time above 50,000.
Q. Best Judgement Assessment. Mention any two cases when it can be made? (5M)
Ans: Best judgment assessment the assessing officer should really base the assessment on his
best judgement i.e. he must not act dishonestly or vindictively or capriciously.
There are two types of judgement assessment:
1. Compulsory best judgement assessment made by the assessing officer in cases of non-co-
operation on the part of the Assessee or when the Assessee is in default as regards supplying
information.
2. Discretionary best judgement assessment is done even in cases where the assessing officer
is not satisfied about the correctness or the completeness of the accounts of the Assessee or
where no method of accounting has been regularly and consistently employed by the
Assessee.
The Best Judgment Assessment is a procedure under the IT Act to comply with the principles
of natural justice Section 141 of the Income Tax Act, 2003 the Assessing Officer is under an
obligation to make an assessment of the total income or less to the best of his judgment in the
following cases.
1. If the person fails to make a return or required under s. 139(1) and he has not made a return
or a revised return under ss. (4) or (5) of that section.
To get admission in new batch or to enquire about any course feel free to
contact us @ 8777203495
/skyhighinstitute /skyhighinstitute_shi @skyhighinstitute6362

2. if any person fails to comply with all the terms and conditions stipulated under a notice u/s.
142 or fails to comply with the directions requiring him to get his accounts audited in terms
of section 142(2A).
3. If the Assessing officer is not satisfied about the correctness and the completion of the
accounts of the Assessee if no method of accounting has been regularly employed by the
Assessee.

Q. Regular Assessment.
Ans: Here the Assessing Officer of the Income-tax Department will conduct the assessment
to find out that the taxpayer has neither understated his income nor has overstated the
expenses.
Q. Belated return.
Ans: A belated return is a return that is filed after the due date specified in the income tax act.
The due date to file ITR for Individuals/HUF is 31st July of the assessment year (next
financial year) and for Individuals to whom audit is applicable is 30th September of the
assessment year. However, if a taxpayer fails to file an ITR within the prescribed time limit,
then section 139(4) of the Income Tax Act enables a taxpayer to file a belated return.
Q. Due Date of filling a return as per 234F for default.

Ans: Late Fees Under Section 234F for A.Y. 2022-23

Here we come with a complete list of multiple late fees as per the section for the assessment
year 2022-23. You can check the section-based late fees in the u/s 234 F income tax act along
with the eligibility of individual taxpayers. Learn all the details and late fees provisions in the
below post:

As per section 234F if any assessee who is liable to file a return u/s 139
Late Fees
fails to file a return on or before the due date specified u/s 139(1) is
U/s 234 F
liable to pay late fees u/s 234F

Liable Assessee: Any assessee who is liable to file return u/s 139 is
liable to pay late fees u/s 234F, following are the assessees that are
liable to file return u/s 139:
Analysis of
section
• An individual whose Gross Total Income exceed the Basic
234F
Exemption Limit
• Any Trust/Institution whose Income Before Application
exceeds Basic Exemption Limit
• Any Company And Firm

To get admission in new batch or to enquire about any course feel free to
contact us @ 8777203495
/skyhighinstitute /skyhighinstitute_shi @skyhighinstitute6362

Meaning of
• Non-Audit Cases: 31st July
Due Date
U/s 139(1) • Audit Cases: 31st Oct

• An individual whose Gross Total Income exceed the Basic

Exemption Limit
• Any Trust/Institution whose Income Before Application exceed
Conclusion Rs 250000 (Non-Audit Cases)
• Any Other Assessee who is liable to file return u/s 139(1)
Note: Any Company, Firm and any other assessee whose are liable for
audit are not required to pay late fees u/s 234F up to 15th Feb 2021.

• In case of an individual whose Gross Total Income exceed the

Basic Exemption Limit but does not exceed Rs 500000: Rs
Applicable 1000
amount of • In case of an individual whose Gross Total Income exceed Rs
late fees 500000: Rs 5000 if the return was filed up to 31 st December
2022 & Rs 10000 if anyone filed the ITR post 31 st December
2022.

Q. Revised Return. Can a belated return be revised.

A revised return is a return that is filed u/s 139(5) as a revision for the original return
to rectify errors and omissions made while filing the original income tax return. You can
file a Revised Return if you discover a mistake in your original ITR or if the income tax
department issues a notice for any errors made in the ITR.
Assessee may file the revised return –
• On or before 31st December of the relevant assessment year; or
• Before completion of regular assessment , whichever is earlier

Section 139(5) states that if an individual after filing their tax return discovers any omission
or wrong statement, then he/she can furnish a revised return. This revised return can be filed
before three months prior to the end of the relevant assessment year or before the completion
of the assessment, whichever is earlier.

Q. Define TDS.
Ans TDS was introduced with an aim to collect tax from the very source of income. As per
this concept, a person (deductor) who is liable to make payment of specified nature to any
other person (deductee) shall deduct tax at source and remit the same into the account of the
Central Government. The deductee from whose income tax has been deducted at source
would be entitled to get credit of the amount so deducted on the basis of Form 26AS or TDS
certificate issued by the deductor.

TDS on Salary

To get admission in new batch or to enquire about any course feel free to
contact us @ 8777203495
/skyhighinstitute /skyhighinstitute_shi @skyhighinstitute6362

TDS on salary means that tax has been deducted by the employer at the time of depositing the
salary into the employee's account. The amount deducted from the employee's account is
deposited with the government by the employer. Before an employer deducts tax at source
from an employee's salary, he/she must obtain TAN registration. The Tax Deduction and
Collection Account Number or TAN number is essentially a 10-digit alphanumeric number
that is used to track TDS deduction as well as a remittance by the Income Tax Department.

TDS from winning from Lottery, Card Games etc. u/s 194B
The person responsible for paying to any person any income by way of winnings from any
lottery or crossword puzzle, card game and other game of any sort in an amount exceeding
₹ 10,000 shall, deduct income-tax thereon at the rates in force.
Note: If such income is more than ₹ 10,000 (say ₹ 1,000), then tax shall be deducted on the
whole amount (i.e. ₹ 11,000).

– Where lottery or prize money, etc. is paid in installments, the deduction of tax is to
be made at the time of actual payment of each such installment.
– No Deduction/Expenditure is allowed from such Income. – No deduction under
section 80C or 80D or any other deduction/allowance is allowed from such income.
Rate of TDS under Section 194B
Rate of TDS is 30%.
No surcharge, Health & Education Cess (HEC) shall be added. Hence, TDS shall be
deductible at basic rates.

TDS from winning from Horse Race(194BB)

Person, who is responsible for paying to any person any income by way of winnings from any
horse race an amount exceeding ₹10,000 shall deduct income-tax at the rates in force.
Any person here means a book maker or a person to whom a license has been granted by the
Government under any law for the time being in force for horse racing in any race course or
for arranging for wagering or betting in any race course.
Rate of TDS under Section 194BB
Rate of TDS is 30%.
No surcharge, Health & Education Cess (HEC) shall be added. Hence, TDS shall be deductible at basic
rates.

What is the meaning of TAN?

• TAN stands for tax deduction and collection account number.
• It is a unique 10 digit alphanumeric number allotted by the income tax department
(ITD) of India.
• TAN number is required to be obtained by all the persons who are responsible for
deducting or collecting the tax at the source.

To get admission in new batch or to enquire about any course feel free to
contact us @ 8777203495
/skyhighinstitute /skyhighinstitute_shi @skyhighinstitute6362

• It is compulsory to quote TAN in TDS/TCS return, all TDS/TCS payment challan and
TDS/TCS certificates.
Who is required to apply for the TAN?
• Section 203A of the Income Tax Act requires all the persons who deduct or collect tax
at source to apply for the allotment of TAN. Non-furnishing of TAN at required places
can lead to a penalty of Rs 10,000.
• As per the Income Tax Act, the following persons shall be eligible for allotment of a
TAN:
• Company
• Individual (Sole Proprietorship)
• Hindu Undivided Family (HUF)
• Firm
• Association of Persons/ Body of Individuals/ Association of Persons (Trusts)/ Artificial
Juridical Person
• Central Government / State Government / Local Authorities / Statutory Bodies/
Autonomous Bodies.

Q. What is the due date for payment of Advance tax in respect of an individual
assessee?

Ans Due Date For Payment Of Advance Tax

Due Date Amount Payable

15th June 15% of advance tax liability.

15th September 45% of advance tax as reduced by the amount paid in the earlier installment.

15th December 75% of advance tax as reduced by the amount paid in the earlier installments.

15th March 100% of advance tax as reduced by the amount paid in the earlier
installments.

Note: In the case of the assessee which are filing tax return at presumptive basis under section
44AD or 44ADA or tax on higher income than specified percentage of 6%,8% or 50% as the
case may be, due date to pay the entire amount of advance tax in one instalment is 15th March
of the financial year.

Practical

1. Write the correct answer from the following statements as per provision of 139(1) of
Income Tax Act, 1961.

To get admission in new batch or to enquire about any course feel free to
contact us @ 8777203495
/skyhighinstitute /skyhighinstitute_shi @skyhighinstitute6362

▪ Mr. Rahaman, a salaried employee of Calcutta based company having Taxable

Income 4,00,000 for the Previous year 2021-22, whose due date of filing income tax
return is 30 November, 2022.
▪ Mr. Raghab, a salaried employee of Tata Motors having Taxable income 8,00,000 for
the previous year 2021-22., and fails to file Income Tax Return within Due date as per
Income Tax Act. He wants to file Belated Return. The time limit of filing Belated
return is within 31st March 2023.
▪ Mr. Ananda, a Businessman filed Belated Return for the Previous year 2021-22. He
wants to submit Revised Return on 31st March 2023, after he discovered that he failed
to claim a deduction allowable u/s 80.
▪ M/s ABG, a Kolkata based partnership firm is required to get its Accounts Audited
under Income Tax Act. The Due Date of filing Income Tax Return of the firm for the
Previous Year 2021-22 is within 31st July 2022.
▪ Ms. Ankita is the partner of a partnership firm and the accounts of the firm is required
to be audited. Due Date of filing Income Tax Return of Ms. Ankita for the Previous
Year 2021-22 is within 31st December, 2022.

Solution:

(I) Due Date of filing Income Tax Return shall be 31st July, 2022.

(il) He can file belated return upto 31-12-2022.

(iii) A belated return can be revised.

(iv) Partnership firm, whose accounts are required to be audited, is required to submit the
return of income by 31-10-2022

(v) Due date of filing return shall be 31-10-2022

2. State whether the following persons have to mandatorily furnish their return of income
for the assessment year 2022-23:

(i) Mr. Choudhury, aged 52 years whose gross total income 3,00,000 and total income after
deduction u/s 80C is 2,00,000.

(ii) M/s ROXY, a partnership firm, whose total income during the previous year 2021-22
50,000.

(iii) Smt. R. Bose aged 62 years, having gross total income 2,80,000.

(iv) Renbo India Ltd., a registered company in India, has incurred loss during the previous
year 2021-22 2,20,000.

(v) Smt. I. Shing, aged 50 years, whose total income is 2,40,000 before adjustment of
unabsorbed business loss of 1,00,000.

Solution:

(i) Yes, as his gross total income exceeds basic exemption limit
To get admission in new batch or to enquire about any course feel free to
contact us @ 8777203495
/skyhighinstitute /skyhighinstitute_shi @skyhighinstitute6362

(ii) Yes, partnership firm is required to file its return of income irrespective of its size of
turnover or income

(iii) No, as her gross total income does not exceed basic exemption limit applicable to her
(i.e., 3,00,000)

(iv) Yes, company is required to file its return of income irrespective of its size of turnover
or income

(v) An assessee is not compulsorily required to furnish return of loss. However, business loss
(among other specified losses) cannot be carried forward if the return of loss is not
submitted within the time allowed u/s 139(1).

3. The following particulars are furnished by Mr. Latif for the financial year 2021-22:

Tax payable on assessed income 2,06,700

Advance tax paid 1,68,000
Tax deducted at source 16,700
Due date of return 31/07/2022
Date of assessment order 23/12/2022

Compute the interest payable under section 234B.

Solution

Computation of interest u/s 234B

Particulars Amount
Tax and cess payable 2,06,700
Less: tax deducted at source 16,700
Assessed Tax 1,90,000
90% of above 1,71,000
Advance tax paid 1,68,000
Since advance tax paid by the firm is less than 90% of assessed
tax, sec 234B is applicable
Shortfall (assessed tax less Advance tax paid) 22,000
Period of default (From April 2022 to Dec 2022) 9 months
Interest u/s 234B (1% *22,000*9) 1,980

4. From the following information find out the amount of interest payable under section
234A.
a) Due date of filing return – 31st July, 2022
b) Date of filing return – December 15, 2022
c) Tax on assessed income – 25,000
d) Advance tax paid during the financial year 2021-22- 15,000
e) Tax deducted at source during the year 2021-22- 1,000
f) Self assessment tax paid u/s 140A – 5,000

To get admission in new batch or to enquire about any course feel free to
contact us @ 8777203495
/skyhighinstitute /skyhighinstitute_shi @skyhighinstitute6362

g) Date of payment of self assessment tax – October 10, 2022

Solution

Particulars Amount
Tax 25,000
Less: Advance tax paid 15,000
TDS 1,000 16,000
Amount on which interest is payable 9,000
Period of default (Aug 2022 to Oct 2022) 3 months
Interest u/s 234A (1%*₹ 9000*3) 270

Interest would not be payable in a case where tax has been deposited prior to due date of filing
return even if the return of income is filed after the due date of furnishing return [Dr. Prannoy
Roy -us.- CIT].

If this case is not followed then assessee is required to pay interest upto Dec. 2022 i.e., for 5
months.

5. From the following information, compute interest payable u/s 234A:

a) Due date of filing return – 31.07.2022
b) Date of filing return – 01.12.2022
c) Tax payable on assessed income of 8,00,000 – 75,000
d) Advance tax paid - 40,000
e) tax deducted at source – 15,000

Compute interest and fee payable u/s 234A and 234F

Solution

Interest Payable u/s 234A

Particulars Amount
Period of Default 5 months (Aug to
Dec)
Tax liability on assessed income 75,000
Less: Advance tax paid & tax deducted at source 55,000
Shortfall (B) 20,000
Interest u/s 234A [1% * A *B] 1,000
Fee payable u/s 234F

Since his income exceeds ₹ 5,00,000, hence fees of ₹ 5,000 is payable u/s 234F.

6. During the P.Y. 2021-22 Mr. Rajput Singh has paid advance tax of 15,200. He has
submitted his return of income tax for the said year on June 15, 2022 showing total income
of 6,40,000. During this year tax of 3,500 has been deducted at source. If assessment is
completed on Dec. 13, 2022, calculate the amount of interest payable u/s 234B.

Solution
To get admission in new batch or to enquire about any course feel free to
contact us @ 8777203495
/skyhighinstitute /skyhighinstitute_shi @skyhighinstitute6362

Particulars Amount
Assessed Income 6,40,000
Tax on above 40,500
Add: health & educational cess @4% 1,620
Tax and cess payable 42,120
Less: tax deducted at source 3,500
Assessed Tax 38,620
90% of above 34,758
Advance tax paid 15,200
Since advance tax paid by the firm is less than 90% of assessed
tax, sec 234B is applicable
Shortfall (assessed tax less Advance tax paid) 23,420
Rounded off 23,400
Period of default (From April 2022 to Dec 2022) 9 months
Interest u/s 234B (1% *22,000*9) 2,106

Advance Tax

Question: The estimated income of Mr. Gourab Ghosh (Age 51 years) during the previous
year 2021-22 is as under:

Business income - 7,99,750

Loss from self-occupied house – 16,000

Income from other sources – 27,500

As in last year, expected investment in PPF is 12,000. Tax deductible at source is

estimated to be 15,350.

Compute the advance tax and the installments payable on different dates.

Solution

Computation of Total Income of Mr. Gourab Ghosh for the previous year 2021-22

Particulars Amount
Income from house property (16,000)
Profit & Gains of Business or Profession 7,99,750
Income from Other sources 27,500
Gross Total Income 8,11,250
Less: Deduction under Chapter VIA (80C) 12,000
Total Income 7,99,250

Computation of Tax Liability of Mr. Gourab Ghosh for the previous year 2021-22

Income Tax
Tax on 7,99,250 72,350
Less: Rebate u/s 87A NIL
To get admission in new batch or to enquire about any course feel free to
contact us @ 8777203495
/skyhighinstitute /skyhighinstitute_shi @skyhighinstitute6362

72,350
Add: Health & Educational cess (4% of 72,350) 2,894
Tax and cess liability 75,244
Less: tax deducted at source 15,350
Advance tax to be paid 59,894

Advance tax to be paid on specified dates-

Date Alternative 1 Alternative 2

Working Amount Working Amount
15-06-2021 15% of 59,894 8,984 15% of 59,984 8,984
15-09-2021 30% of 59,894 17,968 [(45% of 59,894)-(8,984)] 17,968
15-12-2021 30% of 59,894 17,968 [(75% of 59,894)-(26,952)] 17,968
15-03-2022 25% of 59,894 14,974 [(100% of 59,894)-(44,920)] 14,974
Total 59,894 Total 59,894

Question: The estimated income of Shri Mukul Ghosh a resident individual (age 55
years) for the P.Y. 2021-22 are as follows:

Income from let out House Property (computed) - 42,500

Income from business - 5,45,000

Income from other sources - 1,25,500

He is entitled to a deduction u/s 80C for 51,500 and u/s 80G 7,500. Tax deductible at
source is 7,332.

Calculate the amount of advance tax payable by Sri Mukul Ghosh showing details of all
instalments along with due dates.

Solution

Computation of total income of Shri Mukul Ghosh for the previous year 2021-22

Particulars Details Amount

Income from house property 42,500
Profits and Gains of business or profession 5,45,000
Income from other sources 1,25,500
Gross Total Income 7,13,000
Less: Deduction under Chapter VIA
o Deduction u/s 80C 51,500

o Deduction u/s 80G 7,500 59,000

Total Income 6,54,000

To get admission in new batch or to enquire about any course feel free to
contact us @ 8777203495
/skyhighinstitute /skyhighinstitute_shi @skyhighinstitute6362

Computation of Tax Liability of Shri Mukul Ghosh for the previous year 2021-22

Income Tax
Tax on 6,54,000 43,300
Less: Rebate u/s 87A NIL
43,300
Add: Health & Educational cess 1,732
45,032
Less: tax deducted at source 7,332
Advance tax to be paid 37,700

Advance tax to be paid on specified dates-

Date Alternative 1 Alternative 2

Working Amount Working Amount
15-06-2021 15% of 37,700 5,655 15% of 37,700 6,655
15-09-2021 30% of 37,700 11,310 [(45% of 37,700)-(5,655)] 11,310
15-12-2021 30% of 37,700 11,310 [(75% of 37,700)- 11,310
(5,655+11,310)]
15-03-2022 25% of 37,700 9,425 [(100% of 37,700)- 9,425
(5,655+11,310+11,310)]
Total 37,700 Total 37,700

Question: Compute the amount of advance tax payable by Tamal under the IT. Act,
1961 for the financial year 2021-22 (Mention the relevant dates):

Income from Business - 4,05,000

Long term capital gain on 10-04-2021- 30,000

Income from other sources- 10,000

Tax deducted at source- 1,000

Solution

Computation of Total Income of Tamal for the previous year 2021-22

Particulars Amount
Long term capital gain 30,000
Profit & Gains of Business or Profession 4,05,000
Income from Other sources 10,000
Gross Total Income 4,45,000
Less: Deduction under Chapter VIA (80C) NIL
Total Income 4,45,000

Computation of Tax Liability of Tamal for the previous year 2021-22

Income Tax
To get admission in new batch or to enquire about any course feel free to
contact us @ 8777203495
/skyhighinstitute /skyhighinstitute_shi @skyhighinstitute6362

Long term capital gain (30,000 @20%) 6,000

Balance Income (4,45,000-30,000 = 4,15,000) 8,250
Tax liability 14,250
Less: Rebate u/s 87A 12,500
1,750
Add: Health & Educational cess (4% of 72,350) 70
Tac and cess liability 1,820
Less: tax deducted at source 1,000
Advance tax to be paid 820

Since amount of advance tax payable is less than 10,000 assessee is not liable to pay
advance tax.

Question: Find out the amount of advance tax payable by Mr. Kardata on specified dates
under the Income Tax Act, 1961 for the financial year 2021-22.

Tax Payable (including HEC) – 18,540

Tax deducted at source:

Case 1 – 13,600

Case 2 – 3,540

Solution

Computation of Advance Tax Liability of Mr. Kardata for the Previous Year 2021-22

Income Case 1 Case 2

Tax Payable (including HEC) 18,540 18,540
Less: Tax deducted at source 13,600 3,540
Total Advance Tax Payable 4,940 15,000

Advance Tax to be paid on specified dates –

Case 1: Since amount of advance tax payable is less than 10,000, assessee is not liable to
pay advance tax.

Case 2:

Date Alternative 1 Alternative 2

Working Amount Working Amount
15-06-2021 15% of 15,000 2,250 15% of 15,000 2,250
15-09-2021 30% of 15,000 4,500 [(45% of 15,000)-(2,250)] 4,500
15-12-2021 30% of 15,000 4,500 [(75% of 15,000)-(6,750)] 4,500
15-03-2022 25% of 15,000 3,750 [(100% of 15,000)-(11,250)] 3,750
Total 15,000 Total 15,000

To get admission in new batch or to enquire about any course feel free to
contact us @ 8777203495
/skyhighinstitute /skyhighinstitute_shi @skyhighinstitute6362

FIRM ASSESSEMENT

1. The profit and loss account of the firm of M/s . P and Q sharing profits and losses in
the ratio of 3:2 for the previous year ending 31st march .2022 is given below :
Particulars ₹ Particulars ₹
To cost of good sold 4,36,000 By sales 7,60,000
To Remuneration to employees 1,26,000 By interest of drawing :
P 8,000
Q 8,000
To Remuneration to partners 2,40,000 By interest (gross) 24,000
To other expenses 88,000 By long -term capital gain 1,52,000
To depreciation 10,000
To interest to partners @ 16%p.a
P 16,000
Q 16,000
To net profit 20,000
9,52,000 9,52,000

Additional Information :
(a) The firm fulfils all the condition u/s 184 and 40(b)
(b) other expenses includes the following :
(i) ₹ 24,000 paid in cash to a supplier who refused to accept payment by cheque .
(ii) Donation to recognised charitable institution ₹ 6,000 and to a recognised political
party ₹ 12,000 .
(iii) Depreciation as per IT rules ₹ 15,000 .
(c) Long – term capital gain represent gain on sale of land and computed as per provision of
IT Act.
(d) Other income of the partners – P: ₹ 88,000 ; Q: ₹ 68,800 .
You are required to compute for the assessment year 2022-23 :
(i) Total income of the firm
(ii) Tax liability of the firm
SOULTION :
Computation of Total Income of M/s . P and Q for the A.Y. 2022-23
Particulars Amount Amount
Net profit as per Profit and Loss Account 20,000
Add: Expenditure disallowed but debited in books
Remuneration to partner as per book 2,40,000
Interest to partner [₹32,000/16%*4%] 8,000
Cash payment to supplier 24,000
Donations 18,000
To get admission in new batch or to enquire about any course feel free to
contact us @ 8777203495
/skyhighinstitute /skyhighinstitute_shi @skyhighinstitute6362

Depreciation as per Profit and Loss Account 10,000 3,00,000

3,20,000
Less: Depreciation as per IT rules 15,000
Less: Long – term capital gain 1,52,000
Less : Interest 24,000 1,91,000
Book Profit 1,29,000
Less : Remuneration allowed to partner 1,50,000
Profit and Gain of Business or Profession (21,000)
Capital Gain
Long term capital gain 1,52,000
Income from other sources
Interest on Bank deposit 24,000
Gross Total Income 1,55,000
Less : Deduction
U/s 80G [50% of donation to charitable institution ] 3,000
U/s 80GGC [ donation to political party ] 12,000 15,000
Total Income 1,40,000
Tax on above [104%of {₹140,000*20%}] 29,120

# Calculation of maximum allowable remuneration being minimum of the following

a) Remuneration as per IT act

[Higher of ₹1,50,000 or 90% of book profit ] 1,50,000
b) Remuneration as per book 2,40,000

2. P and Q are partners of a firm sharing profits and losses in the ratio of 3:2. The firm
satisfies all the condition of section 184 and 40(b). The profit and losses of the firm
for the year ended march 31st,2022 show net profit of ₹19,28,000.
Debit items include the following:
(a) Interest on partners capital @20% p.a :P ₹48,000 and Q ₹40,000
(b) Partners remuneration : P ₹2,60,000 and Q ₹3,36,000
(c) Donation to an approved charitable institution ₹8,800
(d) Office expenses ₹50,000
(e) Depreciation ₹55,000
Credit items include the following:
(i) Interest on partners drawings :P ₹5,480 and Q ₹4,000
(ii) Long-term capital gain on sale of land calculated as per section 48 ₹94,280
Others information:
(1) Depreciation as per IT rule ₹60,000
(2) Office expenses include fines paid to customs authorities ₹10,000
Compute total income and tax liability of the firm for the assessment year 2022-23.
SOLUTION .
To get admission in new batch or to enquire about any course feel free to
contact us @ 8777203495
/skyhighinstitute /skyhighinstitute_shi @skyhighinstitute6362

Particular Amount Amount

Net profit as per profit and loss account 19,28,000
Add: expenditure disallowed but debited in books
Remuneration to partner as per book 5,96,000
Interest to partner 35,200
Fines to customs authorities 10,000
Donations 8,800
Depreciation as per profit and loss account 55,000 7,05,000
26,33,000
Less: Depreciation as per IT rules 60,000
Less: long- term capital gain 94,200 1,54,280
Book profit 24,78,720
Less: Remuneration allowed to partner 5,96,000
Profits and gains of business or profession 18,82,720
Add: Capital gains
Long term capital gains 94,280
Gross total income 19,77,000
Less: deduction u/s 80G[50% of donation] 4,400
Total income 19,72,600

Computation of tax liability of …… for the A.Y. 2022-23

Particular Rate On Amount
Long – term capital gain 20% 94,280 18,856
Other income 30% 18,78, 320 5,63,496
Tax liability 5,82,352
Add: health and education cess 4% 5,82,352 23,294
Final tax liability 6,05,646
Rounded off u/s 288B 6,05,650

*Calculation of interest not allowed :

Interest paid to partners ₹88,000
Interest allowable ( ₹88,000* 12% / 20% ) ₹ 52,800
Interest to partners not allowed ₹35,200

# Calculation of maximum allowable remuneration being minimum of the following

a) Remuneration as per IT act
[90% of ₹ 3,00,000 + 60% of ₹ 21,78,720 ] 15,77,232
b) Remuneration as per book
P 2,60,000
Q 3,36,000 5,96,000

To get admission in new batch or to enquire about any course feel free to
contact us @ 8777203495
/skyhighinstitute /skyhighinstitute_shi @skyhighinstitute6362

3. X,Y and Z are partners of the firm which is assessed as a firm. They share profit and
losses in the ratio of 3:2:1. The firms profit and losses account for the year ended 31st
March,2022 is given below:

₹ ₹
To salary to partners By gross profit 4,00,000
X 1,00,000
Y 60,000
Z 40,000
To interest on partners capital@15% By interest on Bank Deposit 50,000
p.a
X 30,000
Y 20,000
Z 10,000
To depreciation 32,000
To sundry business expenses 1,20,000
To net profit 38,000
4,50,000 4,50,000

Other information :
(i) Depreciation as per IT rules ₹ 40,000
(ii) Sundry business expenses include fines of ₹ 5,000 paid to customs authority.
Compute total income of the firm for the assessment year 2022-23
SOLUTION :
Computation of total income of …. For the A.Y. 2022-23
Particulars Amount Amount
Net profit as per profit and loss account 38,000
Add: expenditure disallowed but debited in books
Remuneration to partner as per book 2,00,000
Interest to partner 12,000
Fines to customs authorities 5,000
Depreciation as per profit and loss account 32,000 2,49,000
2,87,000
Less: depreciation as per IT rules 40,000
Less: interest on bank deposit 50,000 90,000
Book profit 1,97,000
Less: remuneration allowed to partner 1,77,300
Profit & gain of business or profession 19,700
Add: Income from other sources
Interest on bank deposit 50,000
Total income 69,700
*calculation of interest not allowed :
Interest paid to partner ₹ 60,000
Interest allowable ( ₹ 60,000* 12% / 15% ) ₹ 48,000
Interest ton partner not allowed ₹12,000
To get admission in new batch or to enquire about any course feel free to
contact us @ 8777203495
/skyhighinstitute /skyhighinstitute_shi @skyhighinstitute6362

# calculation of maximum allowable remuneration being minimum of the following

a) remuneration as per IT act
[ higher of 1,50,000 or 90% of book profit ] 1,77,300

b)Remuneration as per book

X 1,00,000
Y 60,000
Z 40,000 2,00,000

4. Subhajit and sutriha are partners in a firm which is assessed as a firm. They share
profits and losses equally. The firms profit and loss account for the year ended
31.03.2022 is given below:
Particular ₹ Particular ₹
To office expenses 35,000 By gross profit 2,85,000
To provision for doubtful debt 5,000 By bank interest from
fixed deposit 40000
To depreciation 30,000
To salary to partner:
Subhajit 1,00,000
Sutirtha 90,000
To interest on partners capital
@15%p.a .
Subhajit 30,000
Sutirtha 15,000
To net profit:
Subhajit 10,000
Sutirtha 10,000
Other information :
1) Office expenses include penalty paid to custom authority ₹ 10,000
2) Depreciation as per income tax rule ₹ 24,000
3) Income from other source of subhajit and sutirtha ₹ 15,000 and ₹ 10,000 respectively
You are required to compute for the A.Y. 2022-23.
a) book profit of the firm;
b) total income of the firm ; and
c) tax liability of the firm.
SOULTION.
Computation of Total Income of …. For the A.Y. 2022-23
Particulars Amount Amount
Net profit as per profit and loss account 20,000
Add: expenditure disallowed but debited in books
Remuneration to partner as per book 1,90,000

To get admission in new batch or to enquire about any course feel free to
contact us @ 8777203495
/skyhighinstitute /skyhighinstitute_shi @skyhighinstitute6362

Interest to partner [₹45,000 / 15% * 3%] 9,000

Provision for doubtful debts 5,000
Penalty paid to customs authority 10,000
Depreciation as per profit and loss account 30,000 2,44,000
2,64,000
Less: Depreciation as per IT rule 24,000
Less: Interest on bank deposit 40,000 64,000
Book profit 2,00,000
Less: Remuneration allowed to partner 1,80,000
Profit & gain of business or profession 20,000
Add: income from other sources
Interest on bank deposit 40,000
Total income 60,000
Tax on above [104%of {₹60,000*30%}] 18,720

# calculation of maximum allowable remuneration being minimum of the following

a) remuneration as per IT act
[ higher of ₹1,50,000 or 90% of book profit ] 1,80,000
b) remuneration as per books
Subhajit 1,00,000
Sutirtha 90,000 1,90,000

SUMS 5
1. A and B are partners of AB & co., a registered professional firm, sharing profit and
loss equally. Their income and expenditure account for the year ended 31-3-2019 is
given below:
Particulars Amount Particulars Amount
To Salaries 75,000 By Consultancy fees 3,30,000
To Depreciation 20,000 By Bank interest 14,000
To office expenses 58,000
To Rent 12,000
To Provision for Bad Debt 5,000
To Salary to A 54,000
To Salary to B 72,000
To commission to B 9,000
To interest on capital @20%
p.a
A 8,000
B 7,000
To share of profit
A 12,000
B 12,000
3,44,000
Additional information:
a) Office expenses include penalty to customs 5,000
b) Depreciation as per Income – Tax Rule 17,000
To get admission in new batch or to enquire about any course feel free to
contact us @ 8777203495
/skyhighinstitute /skyhighinstitute_shi @skyhighinstitute6362

Compute the total income of the firm and allocate the income for the purpose of tax
assessment of each partner.

SOLUTION:
Computation of total income of AB & Co. for the A.Y. 2022-23
Particulars Notes Amount Amount Amount
Profit & gain of business and profession
Net profit as per books of accounts 24,000
Add: expenditure disallowed but
debited to P/L a/c
Provision for bad debts 1 5,000
Salary to partners(to be treated 1,26,000
separately)
Commission to partners(to be treated
separately) 9,000
Interest on capitals in excess of 12% 2 6,000
Penalty paid to customs 3 5,000
Depreciation(excess provided) 3,000 1,54,000
1,78,000
Less: income taxable under other head
Bank interest 14,000
Book Profit 1,64,000
Less: remuneration to partner 1,35,000
Profit & gain of business and profession 29,000
Income from other sources
Bank interest 14,000
Gross Total Income 43,000
Less: deduction u/s ch .VIA NIL
Total Income 43,000
Notes:
1. Any anticipated losses is not allowed.
2. Interest upto 12% is allowed. Hence,₹6,000 [being₹(8,000+7,000)/20}*8]
3. Any payment made in violation of law is disallowed.
4. Calculation of maximum allowable remuneration being minimum of the following
a) Remuneration as per IT act
90% of ₹1,64,000 or ₹1,50,000, whichever is higher 1,50,000
b) Remuneration as per book
Salary to partner
A 54,000
B 72,000
Commission to B 9,000 1,35,000

Computation of profits and gains or business or profession of partners

To get admission in new batch or to enquire about any course feel free to
contact us @ 8777203495
 /skyhighinstitute /skyhighinstitute_shi @skyhighinstitute6362

particulars A B
Details Amount Details Amount
Share of profit from
firm NIL NIL
[Exempted u/s
10(2A)
Interest on capital 8,000*12/20 7,000*12/20
from firm 4,800 4,200
(to the extent
allowed to the firm)
Remuneration from (54,000/1,35,000)* (81,000/1,35,000)*
firm 1,35,000 54,000 1,35,000 81,000
(to the extent
allowed to the firm)
Profit and gains of
business or 58,800 85,200
profession

To get admission in new batch or to enquire about any course feel free to
contact us @ 8777203495
/skyhighinstitute /skyhighinstitute_shi @skyhighinstitute6362

COMPUTATION OF TOTAL INCOME AND TAX LIABILITY

1. For the previous year 2021-22, Mr. Swarup Sen has furnished the following
information:

₹
Income from salary (computed)
5,20,000
Income from house property 95,000
Bank Interest on fixed deposit 18,000
Long-term capital gains 30,000
Short-term capital loss 5,000

He made the following payments:

(i) LIP on own life (sum assured ₹ 2,00,000) 22,000
(ii) LIP on wife's life (sum assured ₹ 1,00,000) 10,000
(iii)Deposit in PPF – ₹18,000
(iv) Paid for Mediclaim (on own health) - ₹12,000
(v)Medical expenses on treatment of dependent (Physically handicapped brother) ₹72,000
(vi)Donation to Prime Minister's National Relief Fund ₹10,000
(vii)Donation to Ramkrishna Mission - ₹12,000
Determine his total income and tax payable for the A.Y. 2022-23.
Solution
Computation of total income of Mr. Swarup Sen for the A. Y. 2022-23
Particulars Amount Amount Amount
Income from salary 5,20,000
Income from house property 95,000
Capital Gains
Long-term capital gains 30,000
Short-term capital loss 5,000 25,000
Income from other sources
Bank interest on fixed deposit 18,000
Gross Total Income 6,58,000
Less: deductions
-u/s 80C
LIP on own life(subject to max.10% of sum 20,000
assured)
LIP on wife life 10,000
Deposit in PPF 18,000 48,000
-u/s 80D(Mediclaim) 12,000

To get admission in new batch or to enquire about any course feel free to
contact us @ 8777203495
/skyhighinstitute /skyhighinstitute_shi @skyhighinstitute6362

-u/s 80DD(medical expenses on treatment of 75,000

dependent)
-u/s 80G
Donation to prime ministers national relief 10,000
fund
Donation to ramkrishna mission(50%) 6,000 16,000 1,51,000
Total Income 5,07,000
Tax on above(Rounded off) 17,260
[104% of {(25,000*20%)} + {(2,50,000*0%) +
(2,32,000*5%)}]
#As payment is within limit.

2. Smt. A. Sen (age 36 years), a resident individual of India, furnished the following
details of her income during the Previous year 2021-22 Compute her Total Income
and tax Payable for the Assessment year 2022-23:
Particulars Amount
Business Income 2,50,000
Income from winning from lottery (net) TDS @ 30% 70,000
Salary income 8,00,000
Long term Capital gain on transfer of building 1,00,000
Life insurance premium paid (policy taken 1.1.2018 and sum 80,000
assured ₹ 5,00,000)
Investment in NSC 50,000
Payment of Tuition fees 30,000
Medical Insurance Premium paid for himself 10,000
Medical Insurance Premium paid for her father (Age 65 years) (not 19,000
dependent)
She incurred expenditure for medical treatment of her dependent 25,000
brother suffering from cerebral palsy (severe)
Donation to a recognized political party 20,000

Solution
Computation of total income of Smt A. Sen for the A.Y. 2022-23
Particular Amount Amount Amount
Salary income 8,00,000
Profits & gain of business or profession
Income from business 2,50,000
Capital gains
Long term capital gain 1,00,000
Income from other sources
Lottery income [₹70,000/70%] 1,00,000
Gross total income 12,50,000
Less: deduction
-u/s 80C
LIC(lower of 10% of sum assured and premium) 50,000
To get admission in new batch or to enquire about any course feel free to
contact us @ 8777203495
/skyhighinstitute /skyhighinstitute_shi @skyhighinstitute6362

Investment in NSC 50,000

Payment of tution fees 30,000 1,30,000
-u/s 80D (Mediclaim)[₹10,000 + ₹19,000] 29,000
-u/s 80DD 1,25,000
-u/s 80GGC 20,000 3,04,000
TOTAL INCOME 9,46,000

Computation of tax liability of Smt A. SEN for the A.Y.2022-23

particular Rate INCOME Details Amount
Long term capital gain 20% 1,00,000 20,000
Lottery income 30% 1,00,000 30,000
Other income(note)
Upto₹2,50,000
From₹2,50,000 to 5% 2,50,000 12,500
₹5,00,000
From₹5,00,000 to 20% 2,46,000 49,200 61,700
₹7,46,000
Tax liability 1,11,700
Less: rebate u/s 87A
1,11,700
Add: health and 4% of ₹1,11,700 4,468
education cess
Final tax liability 1,16,168
Rounded off u/s 288B 1,16,170

3. Sri D. Banerjee furnished the following information for the P.Y. 2021-2022:

₹
Income from Salary (Gross) 6,02,400
Professional tax deducted by employer from salary 2,400
Income from house property 1,40,000
Short term capital loss on sale of gold 15,000
Long term capital gain on sale of land 40,000
Interest on Bank Deposit 25,000
(including interest on savings bank of 8,000)
Dividend from an Indian company 10,000
Received from lottery (after TDS @30.2%) 69,800

He made the following payments:

To get admission in new batch or to enquire about any course feel free to
contact us @ 8777203495
 /skyhighinstitute /skyhighinstitute_shi @skyhighinstitute6362

(a) Life Insurance Premium on own life 25,000 (Sum assured ₹ 2,00,000 taken on
15.10.2020)
(b) Deposit in PPF ₹1,40,000
(c) Own contribution to RPF ₹ 20,000
(d) Medical Insurance Premium on own health ₹10,000 and on the health of spouse ₹ 8,000
paid by cheque
(e) Donation to P.M's National Relief Fund ₹20,000
Compute his total income and tax payable for the A.Y. 2022 - 2023.
SOULTION.
Computation of total income of D Banerjee for the A.Y. 2022-23
Particular Amount Amount Amount
Salaries
Gross salary 6,02,400
Less: deduction u/s 16(a)
- Standard deduction u/s 16(ia) 50,000
- Deduction u/s 16(iii)[professional 2,400 52,400 5,50,000
tax paid]
Income from house property 1,40,000
Capital gain
Long term capital gain 40,000
less: Short term capital loss 15,000 25,000
Income from other sources
Interest on saving bank account 8,000
Interest on other bank deposit 17,000
Dividend from Indian companies 10,000
Winning from lottery [Gross] 1,00,000 1,35,000
Gross Total Income
Less: Deduction
-u/s 80C
LIC( limit) 20,000
Deposit in PPF 1,40,000
Own contribution to RPF 20,000
Max. Limit 1,50,000
-u/s 80D (Mediclaim) 18,000
-U/S 80G[Donation] 20,000
-U/S 80TTA(interest from saving bank account) 8,000 1,96,000
Total Income 6,54,000

Computation of Tax Liability of D Banerjee fir the A.Y. 2022-23

Particulars Rate On Details Amount
Long-term capital gain 20% ₹25,000 ₹5,000
Winning from lottery 30% ₹1,00,000 ₹30,000
Other income

To get admission in new batch or to enquire about any course feel free to
contact us @ 8777203495
 /skyhighinstitute /skyhighinstitute_shi @skyhighinstitute6362

Upto ₹2,50,000 Nil

from ₹2,50,001 to ₹5,00,000 5% 2,50,000 12,500
From ₹5,00,001 to ₹5,29,000 20% 29,000 5,800 18,300
Tax Liability 53,300
Less: Rebate u/s 87A
53,300
Add: health and education cess 4% of ₹53,300 2,132
Final Tax Liability 55,432
Rounded off u/s 288B 55,430

4. Mr. Rahul Agarwała is the employee of BPL India Ltd. He furnishes the under-noted
particulars of his income for the previous year 2021-22. Compute his income from
salary for the assessment Year 2022-23

• Basic salary drawn in March, 2022 60,000 (last increment was in January, 2022,
5,000)
• Dearness Allowance @ 80% of Basic Salary (40% forming part of retirement
benefits)
• House Rent allowance 10% of Basic Salary. He resides in his own house.
• Transport allowance paid 400 p.m.
• He and his employer each contributed 14% of Salary to a Recognized Provident
Fund (RPF).
• Interest credited to this fund @ 11% is 12,100 during the year.
• His personal electric bill amounts to 20,000 p.a. out of which he paid 5,000 and
balance paid by his employer.
• He used his own car (1.8 litres) both for Private and official use. All expenses
are met by him. (Expenses related to Private use calculated at 80,000).
• He took a new life insurance policy of LIC during the year and premium was
paid by his employer 40,000.
• Profession tax was paid by his employer 2,400.
• His employer has provided him with a Laptop for official and private use
(original cost 45,000).
Solution
Computation of Taxable Salary of Mr. Rahul for the A.Y.2022-23
Particulars Details Details Amount Amount
Basic 9 months * 55,000 + 3 6,75,000
months * 60,000
Allowances:

To get admission in new batch or to enquire about any course feel free to
contact us @ 8777203495
 /skyhighinstitute /skyhighinstitute_shi @skyhighinstitute6362

Dearness allowance 6,75,000*80% 5,40,000

House rent allowance 67,500
Transport allowance 400*12 4,800 6,12,300
Perquisites u/s 17(2)
Electric Bill payment 15,000
Use of Own Car Not a perquisite -
Lic premium 40,000
Profession tax 2,400
Laptop facility Exempt 57,400
Employer’s contribution to 14% of Salary 1,24,740
RPF
Less: Exempted 12% of Salary 1,06,920 17,820
Interest on RPF In excess of 1,650 19,470
9.5%[(12,100*1.5)/11]
Gross Taxable Salary 13,64,170
Less: Deduction u/s
16(ia) Standard deduction 50,000
16(iii) Professional Tax 2,400 52,400
Taxable Salary 13,11,770
Notes:
1. Salary for the purpose of
Particulars RPF
Basic Salary 6,75,000
Dearness Allowance 2,16,000
Total 8,91,000

5. Following are the particulars of Mrs. Choudhury for the previous year 2021-22:
(a) Basic salary @ 15,000 per month.
(b) Dearness Allowance @ 60% of salary.
(c) Medical Allowance @ 600 per month (Actual expenditure 5,000). (d) House Rent
Allowance received @6,000 per month and she pays rent of 7,200 per month for her
house in Durgapur.
(e) City compensatory allowance 1,500 per month.
(f) She owns a car which she is using for official purposes. Her employer reimburses
her @3,000 per month.
(g) She is contributing 2,100 per month towards a recognized provident fund. The
employer is also contributing the same amount. Interest credited to R.P.F@ 11% 2,200,
(h) She paid 1,800 as professional tax during the year. Compute income from salary of
Mrs. Choudhury for the assessment year 2022-23.
Solution
Computation of Taxable Salary of Mrs. S Choudhury for the A.Y. 2022-23
Particulars Details Details Amount Amount
Basic 1,80,000
Allowances:
Dearness allowance 60% of Basic 1,08,000
To get admission in new batch or to enquire about any course feel free to
contact us @ 8777203495
 /skyhighinstitute /skyhighinstitute_shi @skyhighinstitute6362

Medical Allowance 7,200

City Compensatory 18,000 6,12,300
Allowance
House Rent Allowance 72,000
Less: Exempted u/s 10(13A)
Minimum of the following:
a. Actual HRA 72,000
b. 40% of (Basic + DA) 1,15,200
c. Rent paid – 10%(Basic + 57,600 57,600 14,400 1,47,600
DA)
Perquisites u/s 17(2)
Car Facility
Employer’s Contribution to 25,200 -
RPF
Less: exempted u/s 10(12) 12% of (Basic + DA) 25,200
Interest on RPF 2,200
Less: exempted Upto 9% 1,800 400 400
Gross Taxable Salary 3,27,600
Less: Deduction u/s
16(ia) Standard deduction 50,000
16(iii) Professional Tax 1,800 51,800
Taxable Salary 2,75,800

6. Mrs. Mitra attains the age of 65 years on 26.10.2021. From the following information
compute total income and tax payable by Mrs. Mitra relating to the previous year
2021-22.
i) Pension 15,000 per month
ii) Dividend from TATA Motors 14,000
iii) Dividend from ZTE Tele communications (a foreign company) 60,000.
iv) Agricultural Income from Bangladesh 56,000
v) Interest from Bank Fixed Deposit ₹80,000
vi) Winning from lottery (net) 35,000 [Tax Deducted at Source @30% ]
vii) Interest from Govt Securities 50,000
Mr. Mitra has made the following payments during the previous year:
i) Premium on Life Insurance (own life) paid 24,000 (Policy value ₹2,00,000)
ii) Mediclaim premium on son's health ₹6,000.
iii) Paid 20,000 to Rama Krishna Mission.
iv) Paid 15,000 to Prime Minister's National Relief Fund.
v) Incurred 30,000 for treatment of dependent father aged 88 years old suffering from
cancer.
Solution
Computation of taxable Income of Mrs. Mitra for the A.Y.2022-23
Particulars Amount Amount
Salaries
Pension 1,80,000
Less: standard deduction u/s 16(ia) 50,000 1,30,000
To get admission in new batch or to enquire about any course feel free to
contact us @ 8777203495
 /skyhighinstitute /skyhighinstitute_shi @skyhighinstitute6362

Income from other sources

Dividend from TATA motors 14,000
Dividend from ZTE Telecommunication [A foreign 60,000
company]
Agricultural income from Bangladesh 56,000
Interest from bank fixed deposit 80,000
Interest from Govt Securities 50,000
Winning from lottery [35,000/70%] 50,000 3,10,000
Gross Total Income 4,40,000
Less: Deduction u/s
80C [LIP paid to subject to max of 10% of sum assured] 20,000
80D [Mediclaim](Assuming son is dependent on 6,000
Mrs.Mitra)
80DDB [Expenditure on medical treatment of father] 30,000
80G Donation
- Donation to Prime Minister’s National Releif 15,000
Fund
- Donation to Rama Krishna Mission [50% of 10,000 81,000
20,000]
Total Income 3,59,000

Computation of Deduction u/s 80G

Particulars Amount
Salaries 1,30,000
Income from other sources 3,10,000
Gross total income 4,40,000
Less: other deduction 56,000
Adjusted Gross total income 3,84,000
Limit (being 10% of above) 38,400

Computation of Tax Liability of Mrs. Mitra for A.Y. 2022-23

Particulars Rate On Details Amount

Casual Income 30% 50,000 15,000

Other income
Upto 3,00,000 Nil -
Balance 9,000 5% 9,000 450 450
Tax 15,450
Less: Rebate u/s 87A 12,500
2,950
Add: Health & education cess 4% of 2,950 118
Final Tax Liability 3,068
Less TDS 15,000
To get admission in new batch or to enquire about any course feel free to
contact us @ 8777203495
/skyhighinstitute /skyhighinstitute_shi @skyhighinstitute6362

Tax Refundable 11,930

To get admission in new batch or to enquire about any course feel free to
contact us @ 8777203495
/skyhighinstitute /skyhighinstitute_shi @skyhighinstitute6362

TAX DEDUCTED AT SOURCE

1. Mr. Prabir Biswas is working in ITC Ltd. furnishes the following estimate for the PY
2021-22
Compute tax to be deducted at source per month by ITC Ltd.
Taxable Salary 14,00,000
Repayment of Interest on Loan taken for construction of self-occupied House Property
50,000
Investment in PPF 1,00,000
Solution
Computation of tax to be deducted at source by ITC ltd.
Particulars Amount
Salary Income 14,00,000
Loss from house property (50,000)
Gross total income 13,50,000
Less: Deduction u/s 80C [Investment in PPF] 1,00,000
Total Income 12,50,000
Tax on above 1,87,500
Less: Rebate u/s 87A NIL
Tax after Rebate 1,87,500
Add: Health & Educational cess @4% 7,500
Tax to be deducted at source 1,95,000

To get admission in new batch or to enquire about any course feel free to
contact us @ 8777203495
/skyhighinstitute /skyhighinstitute_shi @skyhighinstitute6362

INDIRECT TAX

Q. Mixed Supply and Composite Supply?

Ans: Composite Supply
A composite supply is two or more goods or services that are only sold as a set and cannot be
sold individually.
Every composite supply has a principal supply, which is the main product or service that the
buyer primarily wants. The rest of the supply is made up of supporting elements that add
value to the principal supply.
A composite supply is taxed at the GST rate of the principal supply.
Example 1: A gift-wrapped box of chocolates. Here, the chocolates are the principal supply,
while the box, gift wrapper, message card and gift wrapping service offered by the
salesperson are supporting elements that cannot be supplied individually without the
chocolates. This is a composite supply, and its GST rate will be same as the rate for the
chocolates.
Example 2: A dealer sells a brand-new vehicle along with registration, insurance, a tool kit
and first aid kit, and 4 free maintenance services. This is a composite supply, because vehicle
insurance, registration and free maintenance services cannot be supplied without the vehicle
(which is the principal supply).
Note: Whenever a shopkeeper ships the contents of a composite supply, the tax rate
associated with the shipping charge will be equivalent to the tax rate of the principal supply
(in case of example 1, the GST on shipping will be equal to the GST on the box of
chocolates).

Mixed supply under GST

A mixed supply is two or more independent products or services which are offered together
as a bundle but can also be sold separately.
In a mixed supply, the item or service with the highest GST rate is treated as the principal
supply (whether or not it is the main part of the bundle). The mixed supply is taxed at the
GST rate of the principal supply.
Example: A plant nursery sells cut flowers, ornamental plants, and gardening services
together as a bundle. When they’re sold separately, the plants and flowers incur GST at a
rate of 5%, and the gardening services incur GST at a rate of 18%. When they’re offered
together as a bundle, the whole bundle will incur GST at the 18% rate.
Note: Whenever a shopkeeper ships the contents of a mixed supply, the tax rate associated
with the shipping charge will be equivalent to the tax rate applied on the bundle.

To get admission in new batch or to enquire about any course feel free to
contact us @ 8777203495
/skyhighinstitute /skyhighinstitute_shi @skyhighinstitute6362

Q. Define Aggregate Turnover.

Ans: As per section 2(6) of CGST Act, 2017 ‘aggregate turnover’ means the aggregate value
of all taxable supplies (excluding the value of inward supplies on which tax is payable by a
person on reverse charge basis), exempt supplies, exports of goods or services or both and
inter-State supplies of persons having the same Permanent Account Number, to be computed
on all India basis but excludes central tax, State tax, Union territory tax, integrated tax and
cess.

To get admission in new batch or to enquire about any course feel free to
contact us @ 8777203495
 /skyhighinstitute /skyhighinstitute_shi @skyhighinstitute6362

Inclusion in Aggregate Turnover:-

Aggregate turnover includes:-
• Taxable Supply including supply to distinct person having same PAN (Table 3.1(a) of GSTR-
3B)
• Zero Rated Supply (Table 3.1(b) of GSTR-3B)
• Nil Rated Supply and exempted supply (Table 3.1(c) of GSTR-3B)
• Non GST Supply (Table 3.1(e) of GSTR-3B)
• Taxes other than GST
• Value of outward supplies of goods and services on which the recipient is required to pay tax
under reverse charge mechanism
• Goods supplied to job worker on principal to principal basis
• Goods received from job worker on principal to principal basis
• For an agent, the supplies made by him on behalf of all his principals would be included while
calculating aggregate turnover.
Q. Difference between Forward Charge & Reverse Charge?

Forward charge
Forward charge or direct charge is the mechanism where the supplier of goods/services is
liable to pay tax.

For instance, if a chartered accountant provided a service to his client, the service tax will be
payable by the chartered accountant.

Or for instance, if a car manufacturing company sold some auto parts to a trader and collected
tax from the trader, the manufacturing company remits the tax.

Under the current tax system, most transactions are covered under the forward charge
mechanism.

Reverse charge
In the case of a reverse charge, the receiver of services is liable to pay the tax. In the example
of the chartered accountant (CA), the client would be liable, not the CA. Some services to
which the reverse charge mechanism applies include goods transport agency services, legal
services, rent-a-car services, manpower supply services, import of taxable services, security
services, service portion in execution of works contract, sponsorship services, etc.

To get admission in new batch or to enquire about any course feel free to
contact us @ 8777203495
 /skyhighinstitute /skyhighinstitute_shi @skyhighinstitute6362

In India, currently, reverse charge is not applicable on goods except in a few states like
Punjab, which has a purchase tax on certain goods. Now under GST, there will be a reverse
charge on goods as well.

The purpose of applying reverse charge is twofold: to increase compliance by unorganized

sectors, such as transport, and to increase tax revenues.

Differences between forward and reverse charge

S.No. Particulars Forward charge Reverse charge
1. Liability to pay tax Supplier of goods/services Receiver of goods/services
2. GST registration Required once a supplier meets All persons who are required to
the threshold. pay tax under reverse charge
Threshold: Turnover in a have to register for
financial year exceeds Rs. 20 GST irrespective of the
lakhs (Rs. 10 lakhs for north threshold.
eastern and hill states).
3. Time of supply The time of supply shall be The time of supply shall be
of goods/services the earliest of the following dates. the earliest of the following
Goods: dates.
· The date on which the supplier Goods:
issues the invoice · The date of receipt of goods
· The last date on which the · The date on which payment is
supplier is required to issue the made. The earliest of the date
invoice with respect to the supply on which the payment is
of goods. For supply of goods accounted for in the books of
involving the movement goods, accounts of the recipient or
the invoice needs to be issued the date on which the payment
at the time of removal. In other is credited to his bank account
cases, at the time of delivery of · The date immediately
goods to the recipient after 30 days from the date of
· The date on which payment is issue of invoice by the supplier
received. The point of taxation, in Services:
this case, will be the earliest of · The date of payment entered
the date on which payment is in the books of accounts or the
accounted for in the books of date on which payment is
accounts of the recipient or the credited to the bank account
date on which payment is · In case payment is not made
credited to his bank account by the recipient to service
Services: providers within three months,
· The date on which the supplier the point of taxation will be the
issues the invoice date immediately following the
· The last date on which the expiry of three mo
supplier is required to issue the
invoice is 30 days from the date
of supply of services. In case of a
To get admission in new batch or to enquire about any course feel free to
contact us @ 8777203495
/skyhighinstitute /skyhighinstitute_shi @skyhighinstitute6362

banking company, the invoice has

to be issued within 45 days from
the date of supply of services
· The date on which payment is
received. The earliest of the date
on which the payment is
accounted for in the books of
accounts or the date on which the
payment is credited to his bank
account

To get admission in new batch or to enquire about any course feel free to
contact us @ 8777203495
/skyhighinstitute /skyhighinstitute_shi @skyhighinstitute6362

1. Mr. Susanta Chakraborty a GST registered dealer of West Bengal, furnishes the
following particulars for the month of July 2021.
Input Tax Credit balance in Electronic Credit Ledger on 01-07-2021:
₹ ₹

IGST 2,66,500
CGST 55,000
SGST 48,000
Details of outward supply –
Inter state (inclusive of GST) 24,19,000
Intra state (inclusive of GST) 40,71,000
Details of inward supply -
Inter state (exclusive of GST) 6,50,000
Intra state (exclusive of GST) 15,20,000
Rate of IGST – 18%, CGST – 9 % and SGST – 9 %.
Compute:
(a) Amount of Input Tax Credit available to Sri Chakraborty for the month of July 2021.
(b) Amount of GST payable by him
Solution
Particulars IGST CGST SGST
Opening Balance 266,500 55,000 48,000
Inter State Supply (650,000 * 18 % 117,000 - -
Intra State Supply (15,20,000 * 9%) - 136,800 136,800
ITC Available 383,500 191,800 184,800

Particulars IGST CGST SGST

Output Tax Liability – Inter State (24,19,000/118)*18 369,000 - -
Output Tax Liability – Intra State (40,71,000/118)*9 310,500 310,500
Less: ITC of IGST 369,000 14,500
Less: ITC of CGST 191,800
Less: ITC of SGST 184,800
GST PAYABLE Nil 104,200 125,700

2. A, a supplier of goods, pays GST under regular scheme. He has made the following
outward/inward taxable supplies in a tax period :
Interstate supply of goods ₹ 10,00,000
Intrastate supply of goods ₹ 2,00,000
Intrastate purchase of goods ₹ 5,00,000
Mr. A has the following ITC’s with him at the beginning of the tax period :
CGST ₹20,000
SGST ₹ 20,000
IGST ₹ 25,000
Note :
(1) Rate of CGST, SGST & IGST is 9 %, 9 % and 18 % respectively.
(2) Both inward and outward supplies are exclusive of taxes, wherever applicable.
Compute the NET GST payable by Mr. A during the tax period. Make suitable assumptions as required

Question:
To get admission in new batch or to enquire about any course feel free to
contact us @ 8777203495
/skyhighinstitute /skyhighinstitute_shi @skyhighinstitute6362

From the following details pertaining to Ashwathama, a registered dealer engaged in

purchase and sale of goods, ascertain the GST liability (SGST/CGST/IGST) for the
month of September, 2021:
Particulars Amount ( ₹)
Sale price charged to customers within State (excluding GST) 12,50,000
Commission charged to buyers 12,000
Packing and forwarding expenses incidental to sale 18,000
Weighment charges, shown separately in invoices 9,500
Prompt payment discount, indicated in invoice 1%,
CGST 9%
SGST 9%
Solution:

Determination of GST Liability of Ashwathama for the month of September, 2021

Particulars Amount (
₹)
Sale price charged to customers within State (excluding GST) 12,50,000
Add: Commission charged to buyers 12,000
Add: Packing and forwarding expenses incidental to sale 18,000
Add: Weighment charges, shown separately in invoices 9,500
12,89,500
Less : Prompt payment discount, indicated in invoice 12,500
Value of taxable supply 12,77,000
SGST @ 9 % 1,14,930
CGST @ 9 % 1,14,930
Total GST Payable (SGST + CGST) 2,29,860

Question :
From the following information compute the value of taxable supply:
₹
List price of Goods 1,00,000
Cost of Primary Packing (included in selling price) 1,000
Cost of packing at buyers request (not included in selling price) 500
Subsidy received from Government of West Bengal 2,000
Trade discount actually allowed shown separately in invoice 100
Sale price excludes CGST @ 2.5 % and SGST @ 2.5 %

To get admission in new batch or to enquire about any course feel free to
contact us @ 8777203495
/skyhighinstitute /skyhighinstitute_shi @skyhighinstitute6362

CUSTOM DUTY
1. Mrs Chowdhury imported goods from USA . value of the goods $ 10,000. Freight
paid (air) $ 2,500. Insurance charges are actually paid but details are not available .
-Design and Development charges paid outside India $500
-Transportation charges from Indian airport to factory $5,000
Date of presentation of bill of entry :24- 02-2019
BCD on that date is 20% and exchange rate notified by CBIC is US $1=₹71
Date of entry inward :03-03-2019. BCD on the date is 18% and exchange rate notified by
CBIC is US $1=₹ 69.
IGST is 12% and social welfare surcharge is 10%.
Compute the Assessable Value and Customs Duty payable Mr. Chowdhury.
Soultion
Particulars Detail Amount
Transaction value $10,000
Add: Adjustment under rule 10(1)
Design and development charges paid outside India 500
FOB 10,500
Add: Adjustment under rule 10(2) 2,100
Freight 20% of 10,500
Insurance 1.125% of 10,500 118.125
Assessable Value (cost + insurance+ freight i.e. CIF ) 12218.125
Assessable value in ₹ 12718.125*71 ₹902987
Duty payable 902987*18% 162538
Add:SWS@10% 162538*10% 16254
1081779
CVD 3(7)IGST 12% of 1081779 129813
Landed value 1211592

Notes
1. Freight in case of aircraft maximum upto 20% of FOB
2. Rate of duty shall be considered as on the date when B/E is filed or entry inward filed
whichever is later.
3. Exchange rate shall be considered as on the date when first B /E is filed.
2. Mr. G imported goods at a transaction value of ₹8,00,000 by air. However, as per
term of sale following payments are further to be made:
Particulars Amount(₹)
Freight 2,50,000
Insurance 5,000
Loading and unloading at export port 5,000
Royalty for patent needed for production 20,000
Packing charges 30,000
Sellers commission 10,000
Buying commission 5,000
To get admission in new batch or to enquire about any course feel free to
contact us @ 8777203495
/skyhighinstitute /skyhighinstitute_shi @skyhighinstitute6362

Additional information:
Particulars Filed On Rate of duty
Bill of entry 07-07-18 10%
Arrival of aircraft 05-07-18 12%
You are required to compute the Duty payable by Mr.Giriraj.
ANS : 1,14,730
Question:
Compute the assessable value and total customs duty payable under the Customs Act, 1962 for an
imported machine, based on the following information:

Particulars $

Cost of the machine at the factory of the exporter 20,000

Transport charges from the factory of exporter to 800

the port for shipment

Buying commission paid by the importer 100

Freight charges from exporting country to India 5,000

Date of bill of entry 20.02.2021 (Rate BCD 20,%,; Exchange rate as

notified by CBIC ₹ 60 per USD)

Date of entry inward 25.01.2021 (Rate of BCD 12%; Exchange rate as

notified by CBIC ₹ 65 per USD)

IGST payable 12 %
Solution
Statement showing Assessable and customs duty:

Particulars

Cost of the machine at the factory of the exporter $ 20,000

Add: Transport charges from the factory of exporter to the port for shipment $ 800

Add: Buying commission paid by the importer -

FOB $ 20,800
Add: Freight charges from exporting country to India $ 5,000

Add: Insurance (1.125 % of FOB) $ 234

CIF (or Assessable Value) $ 26,034

CIF (or Assessable Value) (in ₹) ($26,304 x 60) ₹ 15,78,240

Add: BCD (20 % of ₹ 15,78,240) ₹ 3,15,648

To get admission in new batch or to enquire about any course feel free to
contact us @ 8777203495
 /skyhighinstitute /skyhighinstitute_shi @skyhighinstitute6362

Add: SWS (10% of BCD) ₹ 31,565

Add: IGST 12 % of (BCD + SWS) = 12 % of (315648 + 31565) ₹ 41,666

Landed value of the imported Goods ₹19,67,119

Total Custom Duty (BCD + SWS +IGST) ₹ 3,88,879

Question: An importer imported some goods for subsequent sale in India at $ 10,000 on assessable
value basis. Relevant exchange rate and rate of duty are as follows:
Particulars Date Exchange rate declared by Rate of Basic Customs
the CBIC Duty

Date of submission of bill of 25th February 2021 ₹ 58/USD 10 %

entry

Date of entry inwards granted 5th March 2021 ₹ 58.75/USD 12%

to the vessel

Calculate Assessable value and Customs Duty in Indian rupees [if SWS is 10 % and IGST is 18 %]
Answer:
Relevant rate of duty for the imported goods is 12% (i.e. Date of submission of bill of entry or Date of
entry inwards granted to the vessel whichever is later)
Exchange Rate is ₹ 58 per USD (i.e. the rate of CBIC as on the date of submission of Bill of Entry by
the importer)
Assessable value = ₹ 5,80,000 (i.e. USD 10,000 x ₹ 58) Basic Customs Duty = ₹ 69,600 (i.e. ₹
5,80,000 x 12%)
10% Social Welfare Surcharge = ₹ 6,960 (i.e. ₹ 69,600 x 10%)
IGST (Assume 18%) 1,18,181 (i.e., 18% on (580000 + 69600 + 6960))
Total Customs Duty including IGST = ₹ 1,94,741/-

Types of Custom Duties

Customs duty means a tax which is levied by the Government on import of goods into India and
export out of India. It is a central tax and mainly imposed on imported goods. Generally Govt.
levies export duty on a very few items due to export promotion. The different types of duties of
customs collected are as follows.
Basic Customs Duty
Basic customs duty is levied under section 12 of the Customs Act, 1962 read with section 2 of the
Customs Tariff Act, 1975. The duties of customs shall be levied at such rates as may be specified
under the Customs Tariff Act, 1975 or any other law for the time being in force, on goods imported
into or exported from India.
The rates of Customs duty are specified in first and second schedule of Section 2 of Customs Tariff

To get admission in new batch or to enquire about any course feel free to
contact us @ 8777203495
/skyhighinstitute /skyhighinstitute_shi @skyhighinstitute6362

Act, 1975 (First Schedule enlist the goods liable to import duty and Second Schedule enlist the
goods liable to export duty).
There are different rates for different goods but merit rate is generally 7.5%.
Basic duty may exempted, wholly or partially, with or without any conditions, by a notification
under section 25 of the Customs Act, 1962.
Basic Customs Duty is also exempted upfront or through drawback mechanism where the
imported goods are meant for re-export or for use in the manufacture of export goods.
The basic customs duty may have two rates: (A) Standard rates (B) Preferential rates:
Standard Rates: Standard rate is charged where there is no provision for preferential treatment.
Preferential Rates: If the goods are imported from the area notified by the Government as
preferential area duty to be charged at preferential rates. Preferential rate is applied only
where the owner of the article (importer) claims at the time of importation, with supporting
evidence, that the goods are chargeable with the preferential rate of duty and if importer fails
to claim with supporting evidence then duty to be charged as standard rates.
Basic Customs Duty is not creditable against any tax or duty, whatsoever.

Safeguard Duty (Section 8 of Custom Tariff Act, 1975)

The Central Government may impose safeguard duty on specified imported goods, if it is satisfied
that the goods are being imported in large quantities and they are causing serious injury to
domestic industry. The safeguard duty is imposed for the purpose of protecting the interests of any
domestic industry in India aiming to make it more competitive.
Conditions:
(a) Safeguard duty is product specific.
(b) It is in addition to any other duty.
Safeguard duty, unless revoked earlier, cease to have effect on the expiry of four years from the
date of imposition.
If the Central Government is of the opinion that the domestic industry has taken measures to adjust
to such injury or threat thereof and it is necessary that the safeguard duty should continue to be
imposed, it may extend the period of such imposition.
However, in no case the safeguard duty shall continue to be imposed beyond a period of ten years
from the date on which such duty was first imposed.
If the Central Government is of the opinion that increased imports have not caused or threatened
to cause serious injury to a domestic industry, it shall refund the duty so collected.
Exemptions from safeguard duty:
(a) If an article originating from developing country and share of imports of that article
from that country does not exceed 3% of the total imports of that article in India it
should be exempted from safeguard duty.
(b) If an article originating from more than one developing countries and aggregate of
imports from developing countries each with less than 3% import share taken
together does not exceed 9% of the total imports of that article into India then it
should be exempted from safeguard duty.

Anti Dumping Duty (Section 9 of Customs Tariff Act, 1975)

Large manufacturers from abroad may export goods at very low prices compared to prices in their

To get admission in new batch or to enquire about any course feel free to
contact us @ 8777203495
/skyhighinstitute /skyhighinstitute_shi @skyhighinstitute6362

domestic market. Such dumping may be with the intention to cripple domestic industry or to
dispose of their excess stock. In order to avoid such dumping, Central Government can impose,
anti-dumping duty up to the margin of dumping on such articles.
Dumping: Dumping means exporting goods to India, at prices lower than the price inthe domestic
market of the exporting country, subject to certain adjustments.
When the export price of a product imported into India is less than the normal value of like articles
sold in the domestic market of the exporter the Central Government may, by notification in the
Official Gazette, impose an anti-dumping duty not exceeding the margin of dumping in relation to
such article. Anti dumping duty is country specific i.e.it is imposed on imports from a particular
country.
Computation of Anti-dumping duty: The anti dumping duty is margin of dumpingor injury
margin whichever is lower.

Margin of dumping: Difference between export price and normal value of an article.
Normal Value means: comparable price in the ordinary course of trade, in theexporting country, after
making adjustments to the extent of conditions of sale,taxation, etc.
Injury Margin: It means difference between fair selling price of domestic industryand landed cost of
imported product.
Fair Selling price: Price at which the industry have expected to charge under normal
circumstances in the Indian market.
Additional Customs Duty or countervailing duty (CVD) :
This duty is popularly known as countervailing duty because it is levied to counter balance the
GST in India for such imported items. Under Section 3(1) of the Customs Tariff Act, an additional
duty on goods imported into the country is levied. The rate of this duty is equal to the GST on like
articles produced or manufactured in India.
Provisions under IGST Act, 2017 Applicable for imported goods
Goods imported into India are now subjected to IGST, not CVD and Special CVD. However,
petroleum products and tobacco products are outside the scope of GST and hence CVD and special
CVD are applicable to them as usual.
Relevant Provisions under IGST Act:

As per section 5 of the IGST Act that Subject to the provisions of sub-section (2), there shall be
levied a tax called the integrated goods and services tax on all inter-State supplies of goods or
services or both, except on the supply of alcoholic liquor for human consumption, on the value
determined under section 15 of the Central Goods and Services Tax Act and at such rates, not
exceeding forty per cent., as may be notified by the Government on the recommendations of the
Council and collected in such manner as may be prescribed and shall be paid by the taxable person.

Provided that the integrated tax on goods imported into India shall be levied and collected in
accordance with the provisions of section 3 of the Customs Tariff Act, 1975 on the value as
determined under the said Act at the point when duties of customs are levied on the said goods
under section 12 of the Customs Act, 1962.

Social Welfare Surcharge (SWS)

As per Section 110 of the Finance Act,2018, SWS is levied and collected, on the goods imported
into India, as a duty of Customs on the goods specified in the First Schedule to the Customs Tariff
To get admission in new batch or to enquire about any course feel free to
contact us @ 8777203495
/skyhighinstitute /skyhighinstitute_shi @skyhighinstitute6362

Act,1975. The SWS is calculated at the rate of ten percent on the aggregate of duties, taxes, and
cesses which are levied and collected under Section 12 of the Customs Act,1962. This surcharge
is in addition to any other duties of Customs or tax or cess chargeable on imported goods.
Social Welfare Surcharge @ 10 % on the basic custom duty (BCD) of customs levied at the time of
import.

Protective Duties [Section 6 of Custom Tariff Act]

Section 6 of the Customs Tariff Act empowers the Central Government to levy a protective duty
based on a recommendation made by the Tariff Commission.
• The protective duties should not be very stiff so as to discourage imports.
• It should be sufficiently attractive to encourage imports to bridge the gap between demand
and supply of those articles in the market.
• Section 6 provides that the protective duties are levied by the Central Government upon
the recommendation made to it by the Tariff Commission established under the Tariff
Commission Act, 1951, and upon it being satisfied that circumstances exist which render
it necessary to take immediate action to provide protection to any industry established in
India.
• As per section 7(1), the protective duty shall be effective only upto and inclusive of
the date if any, specified in the First Schedule.
• Section 7(2) provides that the Central Government may reduce or increase the duty by
notification in the Official Gazette. However, such duty shall be altered only if it is
satisfied, after such inquiry as it thinks necessary, that such duty has become ineffective
or excessive for the purpose of securing theprotection intended to be afforded by it to a
similar article manufactured in India.
• If there is any increase in the duty as specified above, then the Central Government is
required to place such notification in the Parliament for its approval.
• As per section 7(3), every notification in so far as it relates to increase of such duty, shall
be laid before each House of Parliament if it is sitting as soon as may be after the issue of
the notification, and if it is not sitting within seven days of its re-assembly, and the Central
Government shall seek the approval of Parliament to the notification by a resolution
moved within a period of fifteen days beginning with the day on which the notification is
so laid before the House of the People. If the Parliament recommends any change in the
notification, then the notification shall have effect subject to such changes. However,
anything done pursuant to the notification before the recommendation by the Parliament
shall be valid.

To get admission in new batch or to enquire about any course feel free to
contact us @ 8777203495