Taxation Assignment Unit-1
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Questions and Answers

What is the amount of salary that Vikrambhai earned during the Previous Year 2023-24?

  • ₹3,00,000
  • ₹1,80,000
  • ₹2,40,000 (correct)
  • ₹2,00,000

    • Which of the following comprises Vikrambhai's profit from business controlled from New York?

  • ₹3,75,000 (correct)
  • ₹2,80,000
  • ₹5,55,000
  • ₹6,50,000

    • What is the total agricultural income earned by Vikrambhai in New York?

  • ₹4,00,000
  • ₹2,80,000 (correct)
  • ₹3,00,000
  • ₹1,50,000

    • From where did Vikrambhai receive his pension income?

    <p>From a former employer in India</p> Signup and view all the answers

    What is the total amount of interest Vikrambhai received from the bank deposit?

    <p>₹1,60,000</p> Signup and view all the answers

    What is a characteristic of direct taxes?

    <p>They are levied on income or profit.</p> Signup and view all the answers

    What does 'Agriculture Income' specifically refer to?

    <p>Income derived from farming activities.</p> Signup and view all the answers

    Which of the following is considered Casual Income?

    <p>Winnings from a lottery.</p> Signup and view all the answers

    What defines 'Ordinary resident' status for an individual in taxation?

    <p>An individual who meets specific stay requirements in India.</p> Signup and view all the answers

    Which of the following is NOT a merit of direct taxes?

    <p>They lead to unequal income distribution.</p> Signup and view all the answers

    What is the purpose of tax planning?

    <p>To minimize tax liabilities legally.</p> Signup and view all the answers

    Which of the following illustrations is classified as non-agriculture income?

    <p>Interest on savings accounts.</p> Signup and view all the answers

    When is an individual classified as a Non-resident for tax purposes?

    <p>When they have not resided in India for over 182 days in the previous year.</p> Signup and view all the answers

    Which income source is partially received in India?

    <p>Interest on Japan Development Bonds</p> Signup and view all the answers

    What is the total amount earned from the agriculture income in Bangladesh?

    <p>₹ 93,000</p> Signup and view all the answers

    Which income source is received outside India?

    <p>Income from property in London</p> Signup and view all the answers

    Which of the following would most likely classify Mr. Kohali's residential status?

    <p>Ordinary Resident</p> Signup and view all the answers

    What is the amount of profits earned from the business in Ahmedabad managed from outside India?

    <p>₹ 13,27,000</p> Signup and view all the answers

    Which income source involved receiving income in both countries?

    <p>Interest on Japan Development Bonds and income source where part is received in india</p> Signup and view all the answers

    What was the highest number of days Mr. Kohali stayed in England during the last five years?

    <p>318 days</p> Signup and view all the answers

    Which of these income sources would be considered for calculating Shri Bradman's gross total income?

    <p>Income earned from business in Germany</p> Signup and view all the answers

    What is the maximum deduction available under Section 80C of the Income Tax Act for the financial year 2023-24?

    <p>₹1,50,000</p> Signup and view all the answers

    Which of the following contributions is NOT eligible for deduction under Section 80C?

    <p>Investment in National Pension System</p> Signup and view all the answers

    How much was paid into the Public Provident Fund (PPF) account in this scenario?

    <p>₹12,000</p> Signup and view all the answers

    What is the employee's contribution to the Recognised Provident Fund based on the basic salary given?

    <p>₹3,000</p> Signup and view all the answers

    Which allowance is included in the salary components for Shri Vinodbhai that is taxable?

    <p>Entertainment Allowance</p> Signup and view all the answers

    How much total is contributed under ULIP of LIC for this assessment year?

    <p>₹12,000</p> Signup and view all the answers

    What is the total amount of deduction that can be claimed under Section 80C in this scenario?

    <p>₹1,50,000</p> Signup and view all the answers

    Which of the following is considered as additional benefits provided by the employer?

    <p>Free furnished house</p> Signup and view all the answers

    What is the total commission Mr. Sameer earns based on his sales?

    <p>₹45,000</p> Signup and view all the answers

    How much is Mr. Sameer's dearness allowance annually?

    <p>₹1,20,000</p> Signup and view all the answers

    What is the total account value credited to Mr. Sameer’s Recognized Provident Fund, including interest?

    <p>₹5,64,000</p> Signup and view all the answers

    Which of the following is classified as a taxable allowance?

    <p>Mobile Facility</p> Signup and view all the answers

    What amount was deducted from Mr. Sameer's salary for the furniture provision?

    <p>₹1,000</p> Signup and view all the answers

    How much to the total medical bills paid by the employer amount for Mr. Sameer?

    <p>₹22,000</p> Signup and view all the answers

    What is the value of the car provided to Mr. Sameer for tax purposes?

    <p>2000 cc</p> Signup and view all the answers

    What is the cumulative monthly input from Mr. Sameer’s salary for his contribution to the Recognized Provident Fund?

    <p>₹7,450</p> Signup and view all the answers

    Study Notes

    Direct Taxes

    • Merits of Direct Taxes:
      • Ensure equitable distribution of wealth.
      • Stable revenue for governments.
      • Encourage transparency in income declaration.
    • Demerits of Direct Taxes:
      • Compliance can be burdensome for taxpayers.
      • Higher rates can discourage investment.
      • Potential for tax evasion and avoidance.

    Taxation Concepts

    • Previous Year: The financial year immediately preceding the assessment year, used for tax assessments.
    • Tax Planning: The analysis of one’s financial situation to ensure optimal tax efficiency, compliance, and savings.
    • Company: A legal entity engaged in business, subject to taxation depending on its profits.
    • Casual Income: Income that is not recurring and is not part of habitual income; examples include winnings from lotteries.
    • Objectives of Tax Planning: Minimizing tax liabilities, maximizing savings, ensuring compliance with tax laws.

    Casual Income

    • Definition: Income that is earned incidentally and does not occur frequently.
    • Illustration: Winning a lottery or prize money.
    • Exceptions: Regular income streams like salary or business profits do not qualify as casual income.

    Agricultural Income

    • Definition: Income derived from agricultural activities, exempt from tax under certain conditions.
    • Examples of Non-Agricultural Income:
      • Salary earned from corporate employment.
      • Rental income from property.
      • Interest earned on bank deposits.
      • Profits from non-agricultural businesses.

    Assessment Terms

    • Assessee: An individual or entity that is subject to tax assessments by tax authorities.

    Tax Avoidance

    • Definition: Legally utilizing tax laws to minimize tax liability without violating any laws.

    Income Tax Payments

    • Payment of Income Tax: Annual taxes paid by individuals, corporations, etc., based on taxable income.
    • Advance Income Tax: Payments made in advance on expected taxable income, usually in installment phases.
    • Permanent Account Number (PAN): A unique identification number issued to taxpayers, necessary for tax returns.

    Residential Status

    • Criteria for Assessment:
      • Resident: Individuals who stayed in India for 182 days or more during the current financial year.
      • Ordinary Resident: A resident who has been in India for 2 out of the last 10 years and has lived for 730 days in the previous 7 years.
      • Non-Resident: Individuals who do not meet the resident criteria.

    Example Case Study - Ms. Asha

    • Determining Status:
      • Analyze days of stay over the last few assessment years.
      • For 2023-24 at 200 days, Ms. Asha qualifies as a Resident.

    Example Case Study - Income Calculation

    • Meet different income classifications from various sources (Indian and foreign).
    • Types of Income: Includes interest, agricultural income, and business profits across countries.

    Mr. Kohali's Residential Status

    • Analyzing days spent in India and abroad to determine residency for tax purposes.

    Income Breakdown for Mr. Vikrambhai

    • Total Gross Income: Includes all sources, distinguishing between ordinary resident, resident but not ordinarily resident, and non-resident for tax calculations.

    Income Exemptions

    • Exempted Income: Income that is not subject to tax under specific provisions.
    • Agricultural Income: Typically exempted, provided certain conditions are met.
    • Exempt Income for Non-Residents: Specific exemptions available under tax treaties.

    Income Heads and Taxability

    • Heads of Income: Different categories such as Salary, Business Income, Capital Gains.
    • Taxability of Gratuity: Subject to exemptions based on service length.
    • Perquisites: Non-cash benefits provided to employees, taxable under certain conditions.
    • House Rent Allowance (HRA): Tax exemption available, contingent on fulfilling specific criteria.

    Deductions under Section 80C

    • Eligible deductions include investments in provident funds, life insurance premiums, and more, capped at ₹1.5 Lakhs.

    Housing Property Taxation

    • Interest on Borrowed Capital: Deduction available for interest paid on loans utilized for house property.
    • Subletting Taxability: Income from subletting is assessed as per tax regulations.
    • Unrealized Rent: Non-collectible rent, not considered while calculating yearly income.
    • Deduction Details: Significant deductions available for borrowing costs related to housing investments, enhancing tax efficiency.

    Summary Cases

    • Detailed case studies such as Shri Kalpanath Roy and Mr. Sameer, assessing salaries, deductions, and taxable amounts for the financial year.

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    Description

    This quiz delves into the foundational aspects of taxation, focusing on the merits and demerits of direct taxes, as well as key tax concepts such as casual income and agriculture income. Students will explore important terms and definitions critical to understanding taxation principles. Ideal for those studying Taxation in Semester 3.

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