Title tax test 7 key (1).pdf ✅

Less: Rebate u/s 87A – lower of INR 10,545 or INR 12,500 allowable, since total income does not exceed INR 5,00,000 10,545 Tax Payable Nil Option advantageous to Mr. Pramod It is beneficial for Mr. Pramod to opt for presumptive provisions under section 44AD (15 Marks) Question 2 (a) (1) Yes (2)No (3)Yes (4)Yes Alternative answer – No, since allowances paid by the Government to a citizen of India for the services rendered outside India is exempt u/s 10(7). (5)No (6)No (3 Marks) (b) Computation of taxable income of Mr. Sanjay for the A.Y. 2025-26 Not ordinarily resident (RNOR) Non- resident (1) Interest on England Development Bonds (1/3 received in India), amount of INR 20,000 being received in India would be taxable in case of both RNOR and non-resident. 20,000 20,000 (2) Interest received from non-resident against a loan given to him to run a business in India would be deemed to accrue or arise in India. Thus, such interest is taxable in case of both RNOR and non- resident 5,000 5,000 (3) Royalty received from Akhil, a resident for technical services given to run a business outside India would not be deemed to accrue or arise in India, since such services are utilised for business carried outside India. Thus, royalty would not be taxable in case of both RNOR and non-resident. - - (4) Income from business in Sri Lanka of INR 25,000 out of which INR 15,000 were received in India. Whole of the income from business in Sri Lanka is taxable in case of RNOR, since business is controlled from India. However, in case of non-resident only the amount received in India would be taxable. 25,000 15,000 Taxable Income 50,000 40,000 (4 Marks) (c) Bank of Baroda, being a specified bank notified by the Central Government u/s 194P is required to deduct tax at source at the rates in force on the total income of Mr. Kumar, being a specified senior citizen (75 years or more) computed as follows: Visit Us: www.dheeratest.com
Computation of total income of Mr. Kumar not opting for section 115BAC and tax liability for A.Y.2025-26 Particulars INR INR I Salaries Pension (INR 72,000 x 12) 8,64,000 Less: Standard deduction u/s 16(ia) 50,000 8,14,000 II Income from Other Sources Interest on savings account 15,000 Interest on fixed deposit (INR 10 lakh x 7% x 9/12) 52,500 67,500 Gross total income 8,81,500 Less: Deductions under Chapter VI-A Under section 80TTB Interest on fixed deposit and savings account, restricted to INR 50,000, since Mr. Kumar is a resident Indian of the age of 60 years or more 50,000 Total Income 8,31,500 Computation of tax liability for A.Y. 2025-26 Tax on INR 8,31,500 [20% on income exceeding INR 5 lakhs, being the basic exemption limit, since Mr. Kumar is of the age of 80 years or more] 66,300 Add: Health and Education Cess@4% 2,652 Tax liability 68,952 Tax liability (Rounded off) 68,950 Accordingly, Bank of Baroda is required to deduct tax at source of INR 68,950 for the P.Y. 2024-25. In such case, Mr. Kumar is not required to file his return of income for A.Y. 2025-26. Note – The question mentions that Mr. Kumar has deposited INR 10 lakhs in a Term Deposit in the same bank but does not specify the duration of the term deposit. The above solution is given assuming that term deposit is not for 5 years. However, alternate assumption that such term deposit is for 5 years is also possible. In such a case, Mr. Kumar would be eligible for deduction under section 80C of INR 1,50,000 for deposit in 5 years term deposit. In that case, deduction under Chapter VI-A would be INR 2,00,000, total income would be INR 6,81,500 and tax liability (rounded off) would be INR 37,750. (3 Marks) Question 3 (a) (i) Computation of Capital Gains on sale of unlisted shares for A.Y.2025-26 Particulars INR Net Sales Consideration [INR 10,00,000 – INR 2,000] 9,98,000 Less: Indexed cost of acquisition [INR 2,00,000 x 363/240] 3,02,500 Less: Exemption u/s 54F 6,95,500 Deposit in Capital Gains Accounts Scheme on or before the due date of filing return of income would be deemed to be cost of new asset. Accordingly, exemption u/s 54F would be INR 3,51,501 [INR 5,00,000 x INR 6,95,500 / INR 9,98,000] 3,48,447 Capital Gains chargeable to tax 3,47,053 (ii) Tax treatment of unutilized amount in Capital Gains Accounts Scheme The unutilized amount will be chargeable to tax as capital gains on proportionate basis in the Visit Us: www.dheeratest.com