CMA Final Direct Tax Laws and International Taxation Syllabus

Direct Tax Laws and International Taxation syllabus — full chapter and topic list

Expand any chapter to see its topics and sub-topics. This is the whole examinable outline for Direct Tax Laws and International Taxation in CMA Final, not a summary of it.

1. 1

   Income Tax Act

   3 topics

   • Basic Concepts and Definitions
   • Computation of Income
   • Tax Planning and Management
2. 2

   International Taxation

   3 topics

   • Double Taxation Avoidance Agreements
   • Transfer Pricing Regulations
   • Taxation of E-Commerce
3. 3

   Tax Administration and Compliance

   3 topics

   • Assessment Procedures
   • Penalties and Prosecutions
   • Tax Audit

Direct Tax Laws and International Taxation flashcards for CMA Final

18 of 49 cards from the Direct Tax Laws and International Taxation deck — real questions with worked answers.

1. Under the Income-tax Act, 1961, what is the definition of an 'Assessee' under Section 2(7)?

   A person by whom any tax or any other sum (interest/penalty) is payable under the Act, and includes any person against whom proceedings have been taken, a deemed assessee, and a person deemed to be an assessee in default.

2. What is the 'Previous Year' and 'Assessment Year' as defined in the Income-tax Act?

   Previous Year (Sec 3) is the financial year (1 April-31 March) in which income is earned. Assessment Year (Sec 2(9)) is the following financial year in which that income is assessed to tax.

3. How does Section 6 determine the residential status of an individual (basic conditions)?

   An individual is resident if either: (a) in India for 182 days or more in the previous year, OR (b) in India for 60 days or more in the PY and 365 days or more in the 4 preceding years.

4. What additional conditions make a resident individual 'Ordinarily Resident' versus 'Not Ordinarily Resident'?

   A resident is Ordinarily Resident if BOTH: resident in India in at least 2 of the 10 preceding years, AND in India for 730 days or more in the 7 preceding years. Failing either makes him Not Ordinarily Resident.

5. What is 'Total Income' under Section 2(45) and how does it differ from Gross Total Income?

   Gross Total Income is the aggregate of income under the five heads before Chapter VI-A deductions. Total Income (Sec 2(45)) is the GTI as reduced by deductions under Chapter VI-A, on which tax is computed.

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

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

7. What is the scope of total income for a Resident and Ordinarily Resident under Section 5?

   A Resident and Ordinarily Resident is taxed on global income: income received/deemed received in India, income accrued/deemed accrued in India, AND income accruing or arising outside India.

8. What is the scope of total income for a Non-Resident under Section 5?

   A Non-Resident is taxed only on income received or deemed to be received in India, and income that accrues or arises (or is deemed to accrue/arise) in India. Foreign income is not taxable.

9. How is income from capital gains classified as long-term vs short-term for listed equity shares?

   Listed equity shares are long-term capital assets if held for more than 12 months; otherwise short-term. (Immovable property: >24 months; other assets generally >36 months.)

10. What is the formula for computing income under the head 'House Property'?

    Net Annual Value = Gross Annual Value − Municipal Taxes paid. Income from House Property = NAV − Standard Deduction (30% of NAV under Sec 24a) − Interest on borrowed capital (Sec 24b).

11. How is depreciation computed under Section 32 for business assets?

    Depreciation is computed on the Written Down Value (WDV) of the block of assets at prescribed rates. Block WDV = Opening WDV + additions − sale proceeds of assets sold; depreciation = rate × WDV (50% rate if asset used <180 days in year of acquisition).

12. Under Section 44AB, what turnover/receipt thresholds trigger a compulsory tax audit for business and profession?

    Business: turnover exceeds Rs 1 crore (raised to Rs 10 crore if cash receipts and payments are each ≤5%). Profession: gross receipts exceed Rs 50 lakh.

13. What is the formula to compute capital gains under Section 48?

    Capital Gain = Full Value of Consideration − (Cost of Acquisition + Cost of Improvement + Expenditure on transfer). For long-term assets, indexed cost using the Cost Inflation Index is used (where indexation is available).

14. What is the difference between tax planning, tax avoidance and tax evasion?

    Tax planning is arranging affairs within the law to minimize tax using available reliefs (legitimate). Tax avoidance bends the law's letter against its spirit (often challenged via GAAR). Tax evasion is illegal concealment/misrepresentation to escape tax (punishable).

15. What is GAAR and when can it be invoked?

    General Anti-Avoidance Rules (Chapter X-A, Sec 95-102) empower tax authorities to declare an arrangement an 'impermissible avoidance arrangement' if its main purpose is to obtain a tax benefit and it lacks commercial substance, allowing the benefit to be denied/recharacterized.

16. What is the deduction available under Section 80C and its maximum limit?

    Section 80C allows deduction for specified investments/payments (LIC premium, PPF, ELSS, repayment of housing loan principal, tuition fees, etc.) up to a maximum of Rs 1,50,000 per year.

17. Under Section 115BAA, what is the concessional corporate tax rate for domestic companies?

    Domestic companies may opt for a 22% tax rate (effective ~25.17% with 10% surcharge and 4% cess), provided they forgo specified exemptions/deductions and additional depreciation; MAT does not apply.

18. What is Minimum Alternate Tax (MAT) under Section 115JB and its rate?

    MAT ensures companies with book profits but low taxable income pay a minimum tax. It is levied at 15% (plus surcharge and cess) of book profit when normal tax payable is lower; excess MAT can be carried forward as MAT credit for 15 years.

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