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[10×2=20]Define indirect tax with example.
Differentiate assessable income and taxable income.
Define cash basis of accounting.
What do you mean by capital and revenue expenditure?
Explain the meaning of "Canon of Certainty".
Briefly describe the provision related to quantification of vehicle facility provided to an employee.
Thomas is foreign citizenship holder arrived in Nepal on 1st Poush 2078 and stayed in Nepal at the end of Ashad 2079.
Required : His residential status for the income year 2078/79.
Mr. Nepal is retired government employee and received pension income Rs. 6,50,000 including one month equal Dashain allowance.
Required : Tax liability of Mr. Nepal he selected family status.
ABC manufacturing Company supplied the following information.
• Opening stock of raw material and closing stock of finished goods Rs. 10,000 and Rs. 20,000 respectively.
• Import during the year Rs. 500,000, Custom duty to Rs. 40,000 and administrative expenses Rs. 25,000.
Required : Cost of trading goods.
Smrity is presumptive taxpayer located in Walling Municipality and her total turnover Rs. 2 million and total operating expenses Rs. 1.8 million during the previous income year.
Required: Smrity opted presumptive taxpayer status and compute tax liability with explanation.
Attempt any FIVE questions.
[5×10=50]Basnet is an officer of government office. He was promoted to this post on 1st Shrawan 2073, at a salary scale of Rs. 50,000 - 1,500 - 53,000 - EB - 2,000 - 63,000. The other details provided by him for the previous years as follows:
❖ Family allowance Rs. 10,000 p.m.
❖ Dearness allowance 20% of basic salary.
❖ City compensatory allowance 10% of current salary and one month equal Dashain allowance.
❖ Travelling and Daily allowance (TADA) Rs. 20,000.
❖ Interest from fixed deposit amount Rs. 30,000.
❖ Office provided him car facility along with driver. Fuel expenses Rs. 25,000. Driver salary Rs. 20,000 p.m. and repairs & maintenance cost Rs. 30,000 paid by office.
❖ Office has also provided a free quarter for his accommodation.
❖ A domestic assistant provide by the office, his monthly salary Rs. 6,000 paid by office. Basnet contribution towards this facility was Rs. 2,000 pm.
He claimed the following expenses for deduction:
❖ He is a member of Recognized Provident Fund contributing 10% of his salary towards this fund.
❖ He contributed amount Rs. 30,000 in the citizen investment trust.
❖ He paid life insurance premium Rs. 35,000.
❖ Donation paid to social welfare organization Rs. 30,000.
❖ Basnet claimed medical expenses Rs. 20,000 and 50% paid by office.
Required : a. Net (assessable) income from Employment
. b. Statement of Total Taxable Income
c. Tax liabilities
Given is the summarized statement of cash pertaining to a lawyer for the previous income year.
| Receipts | Amount | Payments | Amount |
| To Balance b/d- Cash in hand | 50,000 | By Office expenses | 80,000 |
| Cash at bank | 250,000 | By Computer Purchased (Ashwin) | 150,000 |
| To Legal fees | 695,000 | By Telephone & Communication expenses | 30,000 |
| To Gifts and present from clients | 350,000 | By Salary to office assistants | 180,000 |
| To consultation fees after TDS | 85,000 | By Life insurance premium of lawyer | 35,000 |
| To Agriculture income | 40,000 | By Pollution control cost | 40,000 |
| To interest or local money transaction | 120,000 | By Office rent | 150,000 |
| To Causal income received | 30,000 | By Water Electricity expenses | 30,000 |
| To Other professional incomes | 75,000 | By Hospitality and entertainment expenses | 20,000 |
| To sales of old paper and journal | 5,000 | By Heal insurance premium (own) | 15,000 |
| By Donation to remote area school | 50,000 | ||
| By printing & stationary expenses | 30,000 | ||
| By Balance C/d | 890,000 | ||
| Total | 1,700,000 | Total | 1,700,000 |
Further information:
a. Water/electricity expenses are used equality for professional and personal purpose
b. Office expenses include Rs. 10,000 paid to domestic helper.
(a) Sharma purchased goods from retailer at Rs. 7,910 including VAT. The retailer purchased goods from importer at Rs. 5,000 excluding VAT. The importer imported the goods for Rs. 4,000 excluding value added tax.
Required: i. Value added by importer and retailer.
ii. Total VAT to government.
(b) Enumerate any five goods/services exempt from value added tax.
(a) Shisir furnished you following particulars of income and expenses for the previous income year.
i. Income from profession Rs. 200,000
ii. Mining rent (natural resources after TDS) Rs. 510,000
iii. Lottery income received after TDS Rs. 25,000
iv. Gifts & present received in respect of investment Rs. 100,000
v. Birthday gifts received Rs. 5,000
vi. Dividend received foreign and domestic country Rs. 50,000each
vii. Rent from building Rs. 100,000
viii. Rent received from property after TDS Rs. 180,000
ix. Gain on sales of vacant agriculture land Rs. 120,000
x. Interest received from saving deposit Rs. 42,500
xi. Interest received from local money transaction Rs. 60,000
He claimed the following expenses to deduct.
i. Collection charge related with natural resources Rs. 10,000
ii. One and half month equal commission paid to agent for natural resources.
iii. Other allowable investment related expenses Rs. 45,000
iv. Insurance premium of building Rs. 6.000
v. Donation paid to red cross society amount Rs. 20,000
Required: a. Net assessable income from investment
b. Statement of total taxable income
(b) State the business on which additional depreciation (1/3 of the depreciation base) is allowed as per Income Tax Act. 2058
What are the income that should be excluded while calculating employment income as per the section 10 of the Income Tax Act. 2058?
What do you mean by internal check? How does it differ from internal control?
Attempt any TWO questions.
[2×15=30](a) Following are the details of the fixed assets of XYZ Company.
Beginning written down value block - C Rs. 500,000
Beginning written down value block - D Rs. 500,000
The company has purchased a new plant & machinery as on 10th Jestha Rs. 600,000
The company has also purchased two second hand Maruti cars on 1st Ashwin, worth Rs. 300,000 each.
Repair and maintenance cost incurred during the year under block D Rs. 100,000 and Block C for Rs. 60,000.
During the year company has sold a small part of plant and machinery having book value. Rs. 90,000 sold for Rs. 100,000.
Required : a Allowable depreciation
b. Value of fixed asset at the end of the fiscal year.
(b) Following are the profit and loss position of a firm for the previous income year :
| Years | 5 | 6 | 7 | 8 | 9 |
| Profit | 20,000 | 80,000 | 155,000 | 170,000 | 600,000 |
Additional information
a. On scrutiny, it revealed that profit of the 9th year was derived before deducting research and development and donation Rs. 132,500 and Rs. 50,000 respectively.
b. The company had unabsorbed loss of 1st year, 2nd year, 3rd year, and 4th year Rs. 600,000, Rs. 75,000, Rs. 50,000 and Rs. 25,000 respectively.
Required : Taxable income and explanation wherever is necessary.
Given below is the trading, profit and loss account of a sole trade organization for the previous income year.
| Particulars | Amount | Particulars | Amount |
| To Opening stock | 50,000 | By Sales | 5,200,000 |
| To Purchase | 3,050,000 | By Closing stock | 300,000 |
| To Carriage on purchase | 30,000 | ||
| To Wages | 170,000 | ||
| To Gross profit c/d | 2,200,000 | ||
| 5,500,000 | 5,500,000 | ||
| To Office rent paid | 50,000 | By Gross profit b/d | 2,200,000 |
| To salary | 250,000 | By Other receipts | 40,000 |
| To General expenses | 80,000 | By Dividend received | 10,000 |
| To Legal expenses | 20,000 | By Refund of custom duty | 30,000 |
| To Staff welfare expenses | 120,000 | By Bad debt recovered | 40,000 |
| To interest on bank loan | 130,000 | By Sales of scraps | 10,000 |
| To Fine and penalties | 10,000 | By Rent from staff quarter | 20,000 |
| To Life insurance premium (own) | 30,000 | By Gain on non - chargeable business assets | 30,000 |
| To insurance premium of fixed assets | 20,000 | By Gain on sales of business assets | 20,000 |
| To pollution control cost | 50,000 | ||
| To depreciation of fixed assets | 50,000 | ||
| To Membership renewal charges | 10,000 | ||
| To provision for dividend | 10,000 | ||
| To Donation to tax exempt entity | 20,000 | ||
| To Advance income tax paid | 20,000 | ||
| To Drawing by proprietor | 30,000 | ||
| To Net profit | 1,500,000 | ||
| Total | 2,400,000 | Total | 2,400,000 |
Further information:
a. Closing stock was undervalued by Rs. 10,000.
b. Purchase include purchase of sofa set of Rs. 50,000.
c. Legal expense include Rs. 10,000 penalty paid to Nepal Tele-communication.
d. 40% of donation was given to a private school and rest was given to public school.
e. Seventy percent of bad debts recovered were allowed previously.
f. Allowable depreciation of all fixed assets Rs. 40,000.
g. Unabsorbed business loss of last year stood Rs. 50,000.
Required : a. Net (assessable) income from business.
b. Statement of total taxable income
c. Tax liabilities (Assume-Individual)
(a) What are the circumstances under which the Inland Revenue Department can make jeopardy Assessment of tax?
(b) What is tax clearance certificate? What documents must be submitted to Inland Revenue Office for issue of such certificate?