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Brief Answer Questions:
[6 × 1 = 6]Define the term tax under Income Tax Act, 2058.
List out any two final withholding payments.
Write the meaning of Jeopardy assessment of tax.
Briefly describe the provision related to quantification of accommodation facility.
Mr. Baral submitted the following information:
➢ Taxable income from business Rs 300,000
➢ Gain on sale of share (non-listed company) Rs 300,000
Required: Compute tax payable by Mr. Baral.
A businessman supplied the following information:
➢ Adjusted taxable income for the year Rs 1,000,000.
➢ Donation given to public school Rs 200,000
Required: Compute allowable amount of donation.
Descriptive Answer Questions:
[6 × 3 = 18]State any three exempt amounts under section 10 of Income Tax Act, 2058.
An individual running special industry furnished the following information regarding its assets under Block D.
➢ Opening depreciation base 1,000,000
➢ Addition during the year:
• Marga Rs 600,000
• Chaitra Rs 900,000
• Ashad Rs 300,000
➢ Disposal during the year
Book value at opening date Rs 500,000, cash disposed value Rs 600,000
Required: Allowable Depreciation for the income year.
The following is the receipts and payments account of a lawyer for the previous year:
| Receipts | Amount (Rs) | Payments | Amount (Rs) |
| To, Balance b/d | 100,000 | By, Salary to Staff | 100,000 |
| To, Legal Fees | 500,000 | By, Telephone charge | 50,000 |
| To, Commission received | 100,000 | By, Personal expenses | 50,000 |
| To, Income from agriculture | 50,000 | By, Donation to tax exempt entity | 20,000 |
| To, Interest on fixed deposit | 50,000 | By, Balance c/d | 580,000 |
| Total | 800,000 | Total | 800,000 |
Required: Assessable income from profession.
XYZ trading company earned net profit Rs 800,000 from its operation. The other details related to its net profit are as following:
➢ Dividend received from Resident Company Rs 80,000 is included in net profit.
➢ Allowable depreciation Rs 50,000 is not included in net profit.
➢ Repair & Development cost Rs 100,000 is omitted to adjust in net profit
➢ Commission earned Rs 70,000 is not included in above net profit
➢ Previous year Business Loss Rs 90,000 is not adjusted in above net profit.
Required: Taxable income and Tax Liability
Mr. Baral resident of remote area A furnished the following Receipts and Payments account for the previous year:
Dr. Cr.
| Receipts | Amount (Rs) | Payments | Amount (Rs) |
| To, Balance b/d | 100,000 | By, Collection cost of interest | 1,000 |
| To, Natural Resources Payment (net) | 255,000 | By, Office rent | 20,000 |
| By, Domestic expenses | 15,000 | ||
| To, Casual Gain | 20,000 | By, Donation to Local Club | 30,000 |
| To, Interest from Investment | 100,000 | By, Balance c/d | 459,000 |
| To, Bad Debts recovered (30% not allowed) | 50,000 | ||
| Total | 525,000 | Total | 525,000 |
Required: Net assessable income from investment
From the following information given below of business income and expenses for the relevant income year.
➢ Gross assessable income from business Rs 700,000
➢ Total deduction before PCC and R&D Rs 200,000
➢ Previous year unrecovered loss Rs 50,000
➢ Actual amount of PCC Rs 150,000
➢ Actual Amount of R&D Cost Rs 100,000
Required: Allowable Pollution Control and Research and Development expenses.
Problem Solving Questions:
[4 × 6 = 24]Describe the provision regarding depreciation as laid down under Income Tax Act, 2058 under section (19).
A customer purchased a Electric Fan from a retailer paying Rs 67,800 inclusive VAT. The Fan was imported by importer and it was sold to the retailer. The profit margin 15% on cost price was charged in all cases.
Required: (a) Invoice price of importer.
(b) VAT paid at each stage of sales.
The information of ABC Company are as follows:
| Years | 1 | 2 | 3 | 4 | 5 |
| P\L (Rs) | (200,000) | (400,000) | 400,000 | (50,000) | 100,000 |
On enquiry the following facts were found:
➢ In year 1, donation to a tax exempt organization of Rs 50,000was deducted.
➢ In year 2, interest expenses of Rs 20,000 was not deducted.
➢ In year 3, PCC Rs 25,000 was omitted to deduct.
➢ In year 4, dividend from resident company Rs 50,000 was included in the P/L account.
Required: Taxable income with explanation, whenever is necessary.
Mr. Aayyan retired from 31st Ashad current income year. He submitted following details with respect to his remuneration for the previous income year:
➢ Net salary received Rs 197,000 after deduction his contribution to provident fund Rs 24,000 and tax at source Rs 39,000 including Dashain Bonus equal to one month salary.
➢ Employer contribution to P.F. was 10% of his salary.
➢ Dearness allowance Rs 1,200 p.m.
➢ Bonus Rs 80,000 p.a.
➢ LIP paid by office Rs 22,000
➢ Saving from TADA Rs 12,000
➢ Donation to Local Club (tax exempt entity) Rs 20,000
➢ He claimed Medical expenses Rs 50,000
Required: (a) Assessable income from employment
(b) Taxable Income
(c) Tax Liability
Comprehensive Answer Question:
[1 × 12 = 12]Miss Dhakal, a sole trader furnished the following income statement for the previous year:
Trading and Profit & Loss Account
Dr. Cr.
| Particulars | Amount (Rs) | Particulars | Amount (Rs) |
| To, Opening Stock | 100,000 | By, Closing Stock | 200,000 |
| To, Purchase | 500,000 | By, Sales | 2,800,000 |
| To, Custom Duty | 50,000 | ||
| To, Carriage | 20,000 | ||
| To, Wages | 200,000 | ||
| To, Gross Profit | 2,130,000 | ||
| 3,000,000 | 3,000,000 | ||
| To, Office rent | 100,000 | By, Gross profit | 2,130,000 |
| To, Salaries | 200,000 | By, Discount received | 15,000 |
| To, Depreciation | 90,000 | By, Interest on Investment | 50,000 |
| To, Interest on loan | 60,000 | By, Sundry income | 100,000 |
| To, Bad Debts | 30,000 | By, Interest related to business | 40,000 |
| To, Provision for tax | 30,000 | By, Amount received for accepting restriction of business | 70,000 |
| To, Fire insurance Premium | 25,000 | ||
| To, Legal Expenses | 75,000 | By, Gain on sale of NBCA | 200,000 |
| To, Pollution Control Cost | 120,000 | ||
| To, Donation (60% allowed) | 50,000 | ||
| To, Net profit | 1,825,000 | ||
| Total | 2,605,000 | Total | 2,605,000 |
Additional information:
➢ Purchase includes Rs 200,000 the value of Plant & Machine purchased on Marga. Opening WDV of plant was Rs 300,000. No part of plant was sold during the year.
➢ Legal expenses includes Rs 20,000 for Income Tax Appeal.
➢ Opening and Closing Stock are undervalued by 10%
➢ Sundry income includes Rs 20,000 Refund of Custom Duty
➢ Unrecovered business loss of previous 7 years Rs 100,000 is not adjusted in above statement.
Required: (a) Assessable income from business
(b) Statement of taxable income
(c) Tax liability