CMA (Cost & Management Accountancy) Intermediate: Direct and Indirect Taxation Syllabus

Intermediate: Direct and Indirect Taxation syllabus — full chapter and topic list

Expand any chapter to see its topics and sub-topics. This is the whole examinable outline for Intermediate: Direct and Indirect Taxation in CMA (Cost & Management Accountancy), not a summary of it.

1. 1

   Basics of Income Tax and Residential Status

   3 topics

   • Basic Concepts and Definitions
     • Assessee, assessment year and previous year
     • Charge of income tax
   • Residential Status and Scope of Total Income
   • Incomes Exempt from Tax
2. 2

   Heads of Income

   4 topics

   • Income from Salaries
     • Allowances, perquisites and deductions
   • Income from House Property
   • Profits and Gains of Business or Profession
     • Allowable and disallowable expenses
     • Depreciation under Income Tax Act
   • Capital Gains and Income from Other Sources
3. 3

   Total Income, TDS and Assessment

   4 topics

   • Clubbing of Income and Set-off of Losses
   • Deductions under Chapter VI-A
   • Computation of Total Income and Tax Liability
   • TDS, TCS and Advance Tax
4. 4

   Goods and Services Tax (GST)

   4 topics

   • Concept and Levy of GST
     • CGST, SGST, IGST and UTGST
     • Supply: scope, composite and mixed supply
   • Time, Place and Value of Supply
   • Input Tax Credit and Registration
   • Returns, Payment and Basics of Customs Duty

Intermediate: Direct and Indirect Taxation flashcards for CMA (Cost & Management Accountancy)

18 of 52 cards from the Intermediate: Direct and Indirect Taxation deck — real questions with worked answers.

1. Under the Income Tax Act, 1961, what is the difference between the 'previous year' and the 'assessment year'?

   The previous year is the financial year (1 April to 31 March) in which income is earned. The assessment year is the immediately following financial year in which that income is assessed and taxed. For income earned in PY 2024-25, the AY is 2025-26.

2. Define 'assessee' as per Section 2(7) of the Income Tax Act.

   An assessee is any person by whom any tax or any other sum (interest, penalty) is payable under the Act. It includes a deemed assessee, a representative assessee, and an assessee in default.

3. What are the categories of 'person' defined under Section 2(31) of the Income Tax Act?

   Seven categories: (1) Individual, (2) Hindu Undivided Family (HUF), (3) Company, (4) Firm, (5) Association of Persons (AOP) or Body of Individuals (BOI), (6) Local authority, and (7) Every artificial juridical person not falling in the above.

4. What is a 'deemed assessee' under the Income Tax Act?

   A deemed assessee is a person who is treated as an assessee in respect of the income of some other person, e.g., the legal representative of a deceased person, the guardian of a minor, or the agent of a non-resident.

5. On whose total income is income tax charged, and under which section is the charge created?

   Section 4 is the charging section. Income tax is charged for an assessment year at the rates prescribed by the annual Finance Act on the total income of the previous year of every person.

6. What are the five heads of income under Section 14 of the Income Tax Act?

   (1) Income from Salaries, (2) Income from House Property, (3) Profits and Gains of Business or Profession, (4) Capital Gains, and (5) Income from Other Sources.

7. State the basic conditions under Section 6(1) for an individual to be a 'resident' in India.

   An individual is resident if either: (a) present in India for $\geq 182$ days in the previous year, OR (b) present in India for $\geq 60$ days in the previous year AND $\geq 365$ days during the 4 preceding previous years.

8. What are the two additional conditions under Section 6(6) to determine if a resident individual is 'ordinarily resident' (ROR)?

   He must satisfy BOTH: (1) be resident in India in at least 2 out of the 10 preceding previous years, AND (2) be present in India for $\geq 730$ days during the 7 preceding previous years. If either fails, he is Resident but Not Ordinarily Resident (RNOR).

9. How does the scope of total income differ between a Resident and Ordinarily Resident (ROR) and a Non-Resident (NR)?

   For an ROR, global income (income received/accrued in India and abroad) is taxable. For an NR, only income received or deemed to be received in India, or income that accrues/arises or is deemed to accrue/arise in India, is taxable.

10. For an RNOR, which foreign income is taxable in India?

    For an RNOR, foreign income is taxable only if it is derived from a business controlled in or a profession set up in India. Other foreign income is not taxable.

11. Under Section 10(2A), is the share of profit received by a partner from a firm taxable?

    No. The share of profit received by a partner from a firm (assessed as a firm) is exempt under Section 10(2A), since the firm has already paid tax on its income.

12. What is the tax treatment of agricultural income in India?

    Agricultural income is exempt under Section 10(1). However, it is included for the limited purpose of 'partial integration' to determine the rate of tax on non-agricultural income (when non-agricultural income exceeds the basic exemption and agricultural income exceeds $\rupee 5{,}000$).

13. What components are included in 'salary' for income tax purposes under Section 17(1)?

    Salary includes wages, annuity or pension, gratuity, fees/commission/perquisites/profits in lieu of salary, advance salary, leave encashment, and the employer's contribution to a recognised provident fund in excess of the prescribed limit.

14. What is the standard deduction available from salary income under Section 16(ia)?

    A standard deduction of $\rupee 50{,}000$ or the amount of salary, whichever is less, is allowed under Section 16(ia). (Under the new regime, it is $\rupee 75{,}000$ for salaried taxpayers.)

15. Define a 'perquisite' under Section 17(2) of the Income Tax Act.

    A perquisite is any casual or non-monetary benefit or amenity provided by an employer to an employee in addition to salary, such as rent-free accommodation, the value of any benefit provided free or at concessional rate, employer-paid obligations of the employee, etc.

16. How is House Rent Allowance (HRA) exemption under Section 10(13A) computed?

    Exempt HRA is the least of: (1) actual HRA received, (2) rent paid minus 10% of salary, and (3) 50% of salary (metro cities) or 40% of salary (non-metro). Here salary = basic + dearness allowance (if part of retirement benefits) + commission on turnover.

17. Distinguish between a fully taxable allowance and a fully exempt allowance, giving one example each.

    A fully taxable allowance is added entirely to salary (e.g., Dearness Allowance, City Compensatory Allowance). A fully exempt allowance is not taxed at all (e.g., foreign allowance to government employees serving abroad; allowances to High Court/Supreme Court judges).

18. How is the 'Gross Annual Value' (GAV) of a let-out house property determined under Section 23?

    GAV is the higher of (a) expected rent (higher of municipal value and fair rent, but limited to standard rent) and (b) actual rent received/receivable. If the property is vacant for part of the year, the actual rent may be lower.

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