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[10×2=20]What is tax?
What is Permanent Account Number?
Differentiate between income year and assessment year.
State the meaning of "Canon of Economy".
What do you mean by "Non Changeable Business Assets"?
Mention the exemption of individual working in a remote area.
Mr. Rai has received the salary from a company as an employee Rs. 6,00,000. The vehicle and accommodation facility is provided by office to him.
Required: The amount of vehicle and accommodation facility to be included in his income
Miss. Hira, a government employee, earned taxable income from employment Rs. 11,20,000.
Required: Tax liability of Miss Hira.
Sole Trader Organization provided the following information:
The opening written down value (Block D) is Rs. 5,00,000.
Addition is made in 2nd Chaitra of Rs. 3,00,000.
Actual repair and improvement cost is Rs. 50,000.
Required: Allowable amount of repair and improvement cost of the year.
Susan runs small business in Kathmandu Metropolitan city annual turnover Rs. 3 Million and taxable income amount Rs. 3 Lacks
Required : Tax liability he selected presumptive taxation.
Attempt any FIVE questions.
[5×10=50]Mrs. Muna an employee of government office was appointed on 1st Magh 2076 with a pay scale of Rs. 30,000 - 1000 - 42,000. The other particulars of her for previous year are given below.
Entertainment allowance Rs. 3,000 p.m.
Dearness allowance Rs. 3,000 p.m.
Meeting allowance Rs. 12,000
Accommodation and vehicle facility was provided by the office.
House keeper's salary provided by office Rs. 5,000 p.m. and Mrs Muna's contribution to housekeeper was Rs. 3000 p.m.
Her electricity bill of Rs. 1,000 p.m. was paid by the office.
Office provided soft loan Rs. 5,00,000 at interest rate of 5%. Market interest rate was 12%.
Her office is located at Zone B
She claimed following expenses for deduction:
Approved medical expenses spent by her of Rs. 3,000.
Life insurance premium (self) of Rs. 50,000 (on a policy of Rs. 10,00,000).
Health insurance premium of Rs. 23,000 on her own policy
She had donated Rs. 50,000 to a religious heritage of Nepal (an exempt organization approved by IRD).
Required:
a. Net (assessable) income from employment
b. Statement of total taxable income
c. Tax liability
The following receipts and payments accounts of an auditor are given below:
| Receipts | Rs | Payments | Rs |
| To Balance b/d | 160,000 | By Office salaries | 360,000 |
| To Audit fees | 890,000 | By Office expenses | 90,000 |
| To Consultancy fees (net) | 510,000 | By Office rent | 120,000 |
| To Commission relating to audit work | 50,000 | By Purchase of office equipment (Bhadra) | 240,000 |
| To Interest on fixed deposit from NBL (net) | 10,000 | By Life insurance premium (self) | 35,000 |
| To Sale of old newspaper and journals | 4,000 | By Purchase of newspaper & journals | 8,000 |
| To Gift and presents from clients | 30,000 | By Income tax paid in advance | 10,000 |
| To Interest on govt. securities (net) | 15,000 | By Donation to tax exempt organization | 140,000 |
| To Dividend received (net) | 19,000 | By Purchase of stationery | 25,000 |
| To Lottery income | 20,000 | By Travelling expenses | 30,000 |
| By Miscellaneous expenses | 20,000 | ||
| By Domestic expenses | 80,000 | ||
| By Car expenses | 24,000 | ||
| By Balance c/d | 526,000 | ||
| 1,708,000 | 1,708,000 |
Additional information:
• 20 percent of car expenses were paid for personal purpose.
• Office salaries include Rs. 10,000 paid to domestic servant.
• 40 percent of donation was given to an organization which was not approved by IRD.
• Half of domestic expenses were spent for general expenses of the office.
• Allowable depreciation for the year was not shown in account.
Required
:a. Assessable (Net) income from profession
b. Statement of taxable income
c. Tor liabilit
(a) An importer imported goods paying VAT amounted Rs. 5,200. He (importer) incurred carriage expenses of Rs. 3,000 and sold them to a retailer charging 10% margin on cost. The retailer sold the goods to customer charging 20% margin on outlay with Rs. 1,000 as selling expenses there on.
Required:
(i) Cost price of customer (ii) Total VAT payable to government at each stage
(b) "Value Added Tax is levied on added value of goods and services."Explain in brief.
(a) Mr. Hari disclosed the following incomes and expenditures for the previous year.
Dividend from resident company Rs. 25,000
Income from natural resources Rs. 340,000 (net)
Royalty income Rs. 170,000 (net)
Interest from private money lending transactions Rs. 210,000
Interest from fixed deposit Rs. 9,500
Rent from house let out Rs. 180,000
Rent received by letting an asset Rs. 90,000 (after TDS)
Compensation received relating to investment Rs. 50,000
Dividend from foreign company Rs. 85,000
He claimed the following expenses for deduction:
Donation to Pasupati Area Development Trust Rs. 50,000
Collection cost of natural resources income Rs. 1,000
Interest collection charge relating to money lending transactions Rs. 2,000
House rent collection charges Rs. 500
Collection cost of fixed deposit Rs. 400
Tax paid to foreign government Rs. 15,000
a. Assessable (Net) income from profession
b. Statement of taxable income
c. Tax liability
(b) Mention the conditions for an assesses to be resident person in case of natural person, partnership firm, trust and company.
What are the allowable reductions in calculation of taxable income of a national person?
What do you mean by tax auditing? Explain the major features of tax auditing.
Attempt any TWO questions.
[2×15=30](a) SS Trades provided the following details of its fixed assets under block B and C.
| Particulars | Block 'B' (Rs.) | Block 'C' (Rs.) |
| Opening WDV | 400,000 | 900,000 |
| New addition of assets during the year | ||
| on 1st Ashwin | 150,000 | 0 |
| on 1st Falgun | 300,000 | 300,000 |
| on 21st Baishakh | 0 | 600,000 |
| Assets disposed off during the year | 50,000 | 100,000 |
| Repair and improvement cost during the year | 40,000 | 90,000 |
Required: (i) Allowable depreciation
(ii) Closing value of fixed asset of the year
(b) The operating results of a company are provided:
| Year | 6 | 7 | 8 | 9 | 10 |
| Profit/loss(Rs) | 30,000 | 100,000 | 150,000 | 200,000 | 120,000 |
The company has incurred loss in its 2nd year of operations. The unrecovered loss of 2nd year, 3rd year, 4th year and 5th year is Rs. 30,000, Rs. 40,000, Rs. 50,000 and Rs. 60,000 respectively. The profit of the 6th year is derived without deducting interest on bank loan Rs. 20,000 and profit of the 7th year is derived without adding commission income Rs. 10,000. In year 9, profit was calculated after deducting donation to PADT Rs. 100,000 and the profit of 10th year was ascertained deducting pollution control cost of Rs. 300,000.
Required: Taxable income and explanation wherever necessary.
Given below is the trading, profit and loss account of a proprietorship firm:
| Particulars | Amount | Particulars | Rs |
| To Opening stock | 210,000 | By Sales | 4,900,000 |
| To Purchase | 2,020,000 | By Closing stock | 450,000 |
| To Carriage | 260,000 | ||
| To Wages | 340,000 | ||
| To Customs duty | 110,000 | ||
| To Gross profit c/d | 2,410,000 | ||
| 5,350,000 | 5,350,000 | ||
| To Salary | 650,000 | By Gross profit b/d | 2,410,000 |
| To Office rent | 240,000 | By Rent from staff quarter | 45,000 |
| To General expenses | 70,000 | By Interest from investment | 70,000 |
| To Water and electricity | 80,000 | By Commission received | 10,000 |
| To Legal expenses | 15,000 | By Sundry receipts | 40,000 |
| To Audit expenses | 30,000 | By Bad debt recovered | 60,000 |
| To Promotion expenses | 25,000 | By Divided received | 40,000 |
| To Interest on loan | 40,000 | By Gain on sale of non business assets | 130,000 |
| To Bad debts | 30,000 | By Gift received relating to business | 50,000 |
| To Fine and penalties | 10,000 | ||
| To Provision for tax | 30,000 | ||
| To Life insurance premium (own) | 35,000 | ||
| To Fire insurance premium | 20,000 | ||
| To Donation | 80,000 | ||
| To Pollution control cost | 110,000 | ||
| To Depreciation (Block D) | 50,000 | ||
| To Repair (Block D) | 30,000 | ||
| To Sundry expenses | 50,000 | ||
| To Net profit c/d | 1,260,000 | ||
| 2,855,000 | 2,855,000 |
Further information:
i. Opening and closing stock were over valued by Rs. 10000 and Rs. 50000 respectively.
ii. Purchase include purchase of plant costing Rs. 120,000 which was purchased on 15th Chaitra of previous year and the opening WDV of the plant was Rs. 400,000. A part of plant costing Rs. 80,000 was disposed during the previous year.
iii. Business loss of last year is Rs. 50,000.
iv. Donation was given to private nursing home and public hospital equally.
v. Legal expenses include Rs. 5,000 incurred for domestic purpose.
vi. 30% of bad debt recovered was not allowed previously by Inland Revenue Office.
Required: i) Net (assessable) income from business
ii) Statement of total taxable income
iii) Tax liability
(a) Explain the historical development of income taxation in Nepal.
(b) What are the duties of taxpayer (accesse) as per Income Tax Act 2058?