CA (Chartered Accountancy) Final: Direct Tax, International Taxation and Indirect Tax Laws Syllabus

Final: Direct Tax, International Taxation and Indirect Tax Laws syllabus — full chapter and topic list

Expand any chapter to see its topics and sub-topics. This is the whole examinable outline for Final: Direct Tax, International Taxation and Indirect Tax Laws in CA (Chartered Accountancy), not a summary of it.

1. 1

   Direct Tax - Computation and Special Provisions

   4 topics

   • Computation of Total Income and Tax Liability
     • Income heads, set-off and carry forward
   • Taxation of Companies, Firms and AOPs
     • Minimum Alternate Tax and Alternate Minimum Tax
   • Taxation of Trusts, Co-operatives and Business Trusts
   • Tax Deduction, Collection and Advance Tax
2. 2

   Direct Tax - Assessment and Administration

   4 topics

   • Assessment Procedures and Appeals
   • Penalties, Offences and Prosecution
   • Tax Planning, Avoidance and GAAR
   • Settlement, Dispute Resolution and Liability in Special Cases
3. 3

   International Taxation

   4 topics

   • Transfer Pricing and Specified Domestic Transactions
     • Arm's length price and methods
   • Non-Resident Taxation and Double Taxation Relief
     • DTAA and tax credit mechanisms
   • Equalisation Levy and Significant Economic Presence
   • Overview of BEPS and Model Conventions
4. 4

   Indirect Tax Laws - GST

   4 topics

   • Supply, Charge and Composition Levy
   • Input Tax Credit and Job Work
   • Procedures - Registration, Returns and Refunds
     • Assessment, audit and demand and recovery
   • Customs Law and FTP
     • Valuation, duties and import-export procedures

Final: Direct Tax, International Taxation and Indirect Tax Laws flashcards for CA (Chartered Accountancy)

24 of 51 cards from the Final: Direct Tax, International Taxation and Indirect Tax Laws deck — real questions with worked answers.

1. In computing Total Income, what is the standard order of the five heads of income under the Income-tax Act, 1961?

   (1) Salaries, (2) Income from House Property, (3) Profits and Gains of Business or Profession, (4) Capital Gains, and (5) Income from Other Sources. Gross Total Income is the aggregate after intra/inter-head set-off; Total Income is GTI less Chapter VI-A deductions.

2. State the formula linking Gross Total Income, Total Income and tax liability.

   $\text{Total Income} = \text{GTI} - \text{Chapter VI-A deductions}$, then $\text{Tax Liability} = (\text{Tax on Total Income} + \text{Surcharge} - \text{Rebate u/s 87A}) \times (1 + \text{HEC } 4\%) - \text{Reliefs/TDS/Advance Tax}$.

3. What is the difference between intra-head and inter-head set-off of losses?

   Intra-head (Sec 70): set off a loss against income within the SAME head. Inter-head (Sec 71): set off a remaining loss against income under a DIFFERENT head in the same year, subject to restrictions (e.g., business loss cannot be set against salary).

4. For how many assessment years can a business loss and unabsorbed depreciation each be carried forward, and against what?

   Business loss (Sec 72): carried forward for $8$ assessment years, set off only against business income. Unabsorbed depreciation (Sec 32(2)): carried forward INDEFINITELY and can be set off against any income except salary.

5. How long can speculation loss and capital losses be carried forward?

   Speculation loss (Sec 73): $4$ years, only against speculation profit. Long-term capital loss: $8$ years, only against LTCG. Short-term capital loss: $8$ years, against STCG or LTCG.

6. What is the basic income-tax rate for a domestic company, and the concessional rates under sections 115BAA and 115BAB?

   Normal rate is $30\%$ (or $25\%$ if turnover within prescribed limit). Sec 115BAA: $22\%$ for domestic companies foregoing exemptions/incentives. Sec 115BAB: $15\%$ for new manufacturing domestic companies (incorporated/registered and commencing production within prescribed dates).

7. How is a partnership firm taxed, and how is partners' remuneration treated?

   A firm is taxed at a flat $30\%$ (plus surcharge/cess). Interest to partners (max $12\%$ p.a.) and working-partner remuneration are deductible to the firm subject to Sec 40(b) limits; such amounts are taxable in partners' hands as business income, while the share of profit is exempt under Sec 10(2A).

8. State the Section 40(b) limit on deductible remuneration to working partners of a firm.

   On the first $\$3{,}00{,}000$ of book profit (or in case of loss): $\$1{,}50{,}000$ or $90\%$ of book profit, whichever is higher; on the balance of book profit: $60\%$. (As amended; older limit was first $\$3$ lakh.)

9. How is an AOP/BOI taxed where the shares of members are determinate and no member has income above the basic exemption?

   It is taxed at the rates applicable to an individual (slab rates). If any member's other income exceeds the basic exemption limit, the AOP is taxed at the maximum marginal rate; if a member's share is indeterminate, the whole AOP is taxed at MMR.

10. What is Minimum Alternate Tax (MAT) and at what rate is it levied under Section 115JB?

    MAT ensures companies with book profits but low taxable income pay a minimum tax. It is levied at $15\%$ of book profit (plus surcharge and cess). It does not apply to companies opting for Sec 115BAA/115BAB.

11. What is Alternate Minimum Tax (AMT) and to whom does it apply?

    AMT (Sec 115JC) applies to non-corporate assessees (LLPs, individuals, HUFs, firms) claiming specified deductions, levied at $18.5\%$ of adjusted total income. Individuals/HUFs are covered only if adjusted total income exceeds $\$20$ lakh.

12. How long can MAT/AMT credit be carried forward and how is it used?

    MAT credit (Sec 115JAA) and AMT credit (Sec 115JD) can be carried forward for $15$ assessment years. Credit = excess of MAT/AMT paid over normal tax, set off in a later year when normal tax exceeds MAT/AMT (to the extent of that difference).

13. What is the formula for MAT credit utilisation in a given year?

    $\text{Credit set off} = \min\big(\text{Brought-forward MAT credit},\ \text{Normal tax} - \text{MAT for the year}\big)$, available only when Normal tax $>$ MAT.

14. Under Section 11, what percentage of income must a charitable trust apply to charitable purposes to retain exemption?

    At least $85\%$ of income must be applied to charitable/religious purposes in India during the year; up to $15\%$ may be accumulated/set apart without conditions. Further accumulation beyond 15% requires Form 10 and is capped at $5$ years.

15. How are co-operative societies taxed, and what concessional option exists?

    Co-operative societies are taxed on a slab basis ($10\%/20\%/30\%$) with specified deductions under Sec 80P. Under Sec 115BAD they may opt for a concessional rate of $22\%$ (and new manufacturing co-ops under 115BAE at $15\%$), foregoing incentives.

16. What is a business trust and how is its income taxed (pass-through)?

    A business trust is a SEBI-registered REIT or InvIT. It enjoys pass-through status: interest, dividend and rental income are taxed in the unit-holders' hands, while the trust withholds tax; capital gains and other income are taxed at the trust level.

17. Distinguish TDS, TCS and Advance Tax.

    TDS: payer deducts tax at source on specified payments and remits it. TCS (Sec 206C): seller collects tax from buyer on specified goods/transactions. Advance Tax (Sec 208): the assessee pays tax in instalments during the year if estimated liability is $\$10{,}000$ or more.

18. State the four advance-tax instalment due dates and cumulative percentages for non-presumptive assessees.

    By 15 Jun: $15\%$; by 15 Sep: $45\%$; by 15 Dec: $75\%$; by 15 Mar: $100\%$. Presumptive (44AD/44ADA) assessees pay $100\%$ by 15 March.

19. What interest is charged under Sections 234A, 234B and 234C?

    234A: $1\%$ per month for late filing of return (on unpaid tax). 234B: $1\%$ per month for default in payment of advance tax (where paid $<90\%$). 234C: $1\%$ per month for deferment/shortfall in advance-tax instalments.

20. List the main types of assessment under the Income-tax Act.

    Sec 143(1): summary assessment/intimation. Sec 143(3): scrutiny assessment. Sec 144: best judgment assessment. Sec 147: income escaping assessment (reassessment). Sec 153A/153C: search-related assessment.

21. What is the appellate hierarchy for income-tax disputes?

    (1) Commissioner (Appeals) / Joint Commissioner (Appeals), (2) Income Tax Appellate Tribunal (ITAT), (3) High Court (on substantial question of law, Sec 260A), (4) Supreme Court (Sec 261). Faceless appeal scheme applies at CIT(A) level.

22. Within what time must an appeal to the CIT(Appeals) and to the ITAT generally be filed?

    Appeal to CIT(A) under Sec 249: within $30$ days of service of demand/order. Appeal to ITAT under Sec 253: within $60$ days of the order being communicated.

23. What penalty applies for under-reporting and misreporting of income under Section 270A?

    Under-reporting of income: penalty of $50\%$ of tax payable on the under-reported income. Misreporting (e.g., suppression, false entries): penalty of $200\%$ of tax payable on the misreported income.

24. What is the penalty under Section 271H and Section 234E relating to TDS/TCS statements?

    Sec 234E: late-filing fee of $\$200$ per day (capped at the TDS/TCS amount) for delayed statements. Sec 271H: penalty of $\$10{,}000$ to $\$1{,}00{,}000$ for non-filing or incorrect TDS/TCS statements.

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