Income Tax Laws & Practices

Assignment A
1.    What are the differences between Excise duty and Customs duty?    

2.    What is Tax Deduction at Source? Explain with examples?    

3.    What is Advance Payment of Tax? Why people pay taxes in advance?

4.    Critically describe the advantages and disadvanages of VAT?    

5.    Descried with examples the various incomes available 

6.    Take imaginary figures and describe how the tax liability of an individual is calculated?    

7.    Differentiate between revenue expenditure and capital expenditure?
    
8.    The followings are the details relating to Mr. Siddharth for the PY 2012-13. Compute income fromother sources: (i). Income from agriculture in Pakistan Rs. 5000 (ii). Interest on Post Office Savings bank Rs. 1000, (iii). Dividend from foreign company Rs. 700 (iv). Dividend from indian Company (v). Rent from subletting house Rs. 1000 and (v). Winning from lottery (Net) Rs. 14,000.    

Assignment B
Case Detail:
Economic Survey
The Economic Survey of India said that the government should refrain from raising exemption limits on income tax to facilitate natural growth of individual earnings and widen the taxpayers’ base, even as it also suggested increasing property tax.
The Economic Survey 2015-16, tabled in Parliament on Friday, also called for a review and phasing out of the tax exemption raj that benefited the richer private sector and a “reasonable” taxation for better-off individuals. A cross-country comparison shows that India currently has the lowest number of taxpayers, it said, adding that nearly 85 per cent of the economy still remains outside the tax net.
“Just 5.5 per cent of earning individuals are in the tax net and the ratio should be raised to a desirable estimate of about 23 per cent,” it said. Making a study of the data since Independence, the Survey said that the exemption thresholds have been raised much more rapidly than underlying income growth resulting in a widening of wedge between average income and threshold limit.
“One of the low hanging fruit would be to refrain from raising exemption thresholds for the personal income tax, allowing natural growth in income to increase the number of taxpayers. In some ways, this would be reform through inaction,” the Survey said. It said that subsidies amounting to Rs. 1 lakh crore paid to well-off need to be scaled back. Also tax exemptions raj which often amount to redistribution toward the richer private sector will also need to be reviewed and phased out.
“Reasonable taxation of the better-off, regardless of where they got their income from — industry, services, real estate or agriculture — will also help build legitimacy,” the Survey added. It also suggested that property taxation needs to be developed as sparse systematic data on property taxation shows how little attention has been given to this tax.
“Property taxes are especially desirable because they are progressive, buoyant and difficult to evade, since they are imposed on a non-mobile good which can be relatively easily identified,” it said.
Making a case for “higher property tax rates”, the Economic Survey said it would put sand in the wheels of property speculation.
“Smart cities require smart public finance and a sound property taxation regime is vital to India’s urban future,” the Survey added.
It said India has not fully translated its democratic vigour into commensurately strong fiscal capacity. “In long run, if India is to stay ‘on the line’ as its per capita income grows, it will need to build fiscal capacity.”

The Survey also said the government’s spending priorities must include essential services that all citizens consume: public infrastructure, law and order, less pollution and congestion. It said the state should prioritise on reducing corruption and government’s effort to improve transparency through transparent and efficient auctioning of public assets will help create legitimacy and over time strengthen fiscal capacity. The Survey said economic development in India lags political development.
“Independent India has averted famines, but chronic malnutrition is still a challenge. The Indian state can organise mega events, but routine safety for women has turned out to be more difficult to achieve. The Indian state responds effectively to floods and tsunamis but finds water and power metering more challenging,” it added.

Question
1.    What the case is all about? Provide the brief summary of the key issues discussed?

2.    Do you really think that the India’s recent economic survey is against raising income tax exemption limits? 

3.    What has been said about property tax?

Assignment C

Question No.  1    Marks - 10
Income-tax is an annual tax on …………………… 
.    

Options    
Royalty    
Income    
charity    
Commission

Question No.  2    Marks - 10
Previous year belongs t which section.    

Options    
Section 3 a    
Section 3    
Section 3 b    
Section 3 d

Question No.  3    Marks - 10
Deemed profits chargeable to tax under section 41 or section…………...    

Options    
57    
58    
59    
60

Question No.  4    Marks - 10
HUF stands for ……….. Undivided Family.    

Options    
Horizon    
Homogeneous    
Hindu    
Hetrogeneous

Question No.  5    Marks - 10
Receipts which are recurring by nature and which are available for meeting all day to day expenses of a business concern are known as …………………...receipts"    

Options    
Financial    
Certain    
Capital    
Revenue

Question No.  6    Marks - 10
Liability of investor which is limited to the extent of his investment is called…………… liability.    

Options    
Fixed    
Limited    
Certain    
Liabile

Question No.  7    Marks - 10
In specific cases, income tax (and other taxes) may be levied at a fixed rate instead of the rates usually applicable are known as …………. Rates.    

Options    
Lump-Sum    
Specific Tax    
Liable    
Fixed

Question No.  8    Marks - 10
Employee’s Provident Fund and Miscellaneous Provisions Act came in force in which year.    

Options    
1951    
1952    
1977    
1971

Question No.  9    Marks - 10
LTC is a non-taxable perquisite available for ……………... class.    

Options    
Poor    
Rich    
Salaried    
Business

Question No.  10    Marks - 10
Capital receipts are shown in the Balance Sheet on the ………………..  side.    

Options    
Above    
Below    
Asset    
Liability

Question No.  11    Marks - 10
Winnings from lotteries, races etc. are taxable under the head "Income from other sources".    

Options    
TRUE    
FALSE    
Sometimes    
Can't Say

Question No.  12    Marks - 10    
Wealth tax is to be rounded off to nearest multiple of.......    

Options    
1    
10    
100    
1000

Question No.  13    Marks - 10
Tax is to be rounded off to nearest multiple of.........    

Options    
Ten    
Hundred    
Rupee    
Thousand

Question No.  14    Marks - 10
Year in which income is earned is known as......................... Year.    

Options    
Annual    
Taxable    
Assessment    
Previous

Question No.  15    Marks - 10
Aggregate amount of deduction under section 80C, 80CCC and 80CCD cannot exceed:    

Options    
150000    
100000    
200000    
250000

Question No.  16    Marks - 10
LLC stands for limited liability ……………..    

Options    
Corporation    
Company    
Console    
Centre

Question No.  17    Marks - 10
Tax and/or accounting convention under which the value of assets/liabilities is adjusted to reflect fair market value of a specific date.    

Options    
conventional tax rate    
Sovereign Rate    
Mark to market    
Managerial

Question No.  18    Marks - 10
………… is an increase in the price of something, especially from the price a trader pays for something to the price he sells it for.    

Options    
Column-down    
Column-up    
Mark-down    
Mark-up

Question No.  19    Marks - 10
Tax on mortgages usually in the form of a stamp duty levied on the mortgage document.    

Options    
Mortage tax    
Document Tax    
Implied tax    
Annual Tax

Question No.  20    Marks - 10
A lack of due care or failure to do what a reasonable and ordinarily prudent person would do under the given circumstances.    

Options    
Accounting Fraud    
Negligence    
Accounting Mistake    
Fraud

Question No.  21    Marks - 10
Obligation to persuade a court or other entity of the validity of a factual assertion.    

Options    
Branch Tax    
Statutiory Tax    
Burden of Proof    
Compliance Tax

Question No.  22    Marks - 10
A tax imposed on an act, occupation, privilege, manufacture, sale, or consumption.    

Options    
Sales    
Excise    
Income Tax    
IPR tax

Question No.  23    Marks - 10
Any 12-month period which is set for accounting purpose of an enterprise is ……………… year.    

Options    
Fiscal    
Previous    
Assessment     
Monetary

Question No.  24    Marks - 10
A risk-management strategy to balance positions of different business units or with unrelated third parties is called ……………… hedging.    

Options    
Liberal    
Expatriate    
Foreign    
Global

Question No.  25    Marks - 10
The period following the due date of taxes during which legal action for recovery of delinquent taxes will not be instituted and interest will not commence to run is ………………. Period.    

Options    
Flexible    
Grace    
Advanced    
Extended

Question No.  26    Marks - 10
Reserves which are not disclosed on the balance sheet of an enterprise, either by overvaluing debts or undervaluing assets are called…………… reserves.    

Options    
Fixed    
Hidden    
Flexible    
Statutory

Question No.  27    Marks - 10
A tax applied at the same rate to all levels of income is …………. Tax.    

Options    
Straight Line    
Flat Tax    
Forward     
Fixed Tax    

Question No.  28    Marks - 10
Ratio of gross profit to the sales of a business or, alternatively, to the adjusted purchases or "goods consumed" during the accounting period is …………….. Ratio.    

Options    
Liquidity Profit    
Gross Profit    
Net profit    
Actual Profit

Question No.  29    Marks - 10
Financial instrument which has the characteristic of more than one type of instrument is ……………….. Derivative.    

Options    
Mixed    
Impure    
Hybrid    
Uncertain

Question No.  30    Marks - 10
Amount of money received by persons or entities as compensation for damages or for losses incurred.    

Options    
Deflamation    
Indemnification    
Income Shifting    
Income Spliting

Question No.  31    Marks - 10
Real property or personal property that is received by heirs.    

Options    
Solely    
Benefited    
Gifted    
Inheritance

Question No.  32    Marks - 10
A transaction among parties, each of whom acts in his or her own best interest is called …………….. Transaction.    

Options    
Arm's Length    
Attributable    
Auxilary    
Pending

Question No.  33    Marks - 10
Environment tax is commonly called as……………… tax.    

Options    
Green    
Eco    
Forest    
White

Question No.  34    Marks - 10
Rule under which one is precluded and forbidden by law to speak against his own act or deed.     
Options    
Pestel    
Escort    
Estoppel    
onograph    

Question No.  35    Marks - 10
Restriction of the amount of a particular foreign currency that can be bought or sold    

Options    
Exchange Control    
Forex Control    
Forex Reserve    
Restriction

Question No.  36    Marks - 10
DTA stands for double tax ……………….    

Options    
Arbitrage    
Autonomy    
Authorisation    
Agreement

Question No.  37    Marks - 10
Income or compensation derived from personal services in an employment, trade, business, profession or vocation is called ………….. Income.    

Options    
Compensatory Income    
Personal Income    
Earned    
Vocational Income    

Question No.  38    Marks - 10
Amount by which the face value of a debt obligation exceeds its issue or selling price.    

Options    
Discount    
offer    
Subsidy    
Rebate

Question No.  39    Marks - 10
Cost identified with a particular transaction, such as raw materials, components and goods, wages and other processing expenses.    

Options    
Indirect Cost    
Fixed Cost    
Variable Cost    
None of these

Question No.  40    Marks - 10
OECD stands for Organization for Economic Co-operation and ……………………….    

Options    
Development    
Delinqued    
Depressed Economies    
Disagreement