taxation examination questions

TAXTATION – B.COM II YEAR

Question for Present Examination purpose

1. Explain the residential Status of an Individual?

For the purpose of determining the residential status of an individual there are two sets of conditions called (i) Basic Conditions (ii) Additional ConditionsBasic Conditions:-(a) He is in India in the relevant precious year for a minimum period of 182 days.(b) He is in India for a period of 60 days or more during the current previous year and

365 days or more during the four years proceeding the relevant previous year.Additional Conditions:-(a) He has been resident in india for 2 out of 10 previous years preceding the current

previous year.(b) He has been in india for a period of 730 days or more during the 7 years proceeding

the current previous year.

Rules for determining the residential status of individuals

(i) Resident and Ordinary Resident:- Any individual who satisfies any one of the basic conditions and both the additional conditions is called Resident and Ordinary Resident. Resident But Not.

(ii) Ordinary Resident:- Any individual who satisfies one of the basic conditions but does not satisfy both the additional conditions or any one condition is called as Resident But Not Ordinary Resident.

(iii) Non Resident:- Non Resident is a person who does not satisfy any one of the basic conditions. It is immaterial whether he satisfies additional conditions or not. Even if he satisfies both the additional conditions but failed to satisfy one of the basic conditions, Still he is treated as Non – Resident.

Explanation:-

(a) The period of 182 days of stay may not be continuous.(b) He may stay in his own house or rented house or in a choultry or in a lodge.(c) His stay may not be at one place.(d) While calculationg number of days of stay in india, day of departure was not

included. But now as per decision of Authority for advance Rulings, both day of departure from india and day of arrival in india are to be counted as stay in india.

2. Blanket rate method:- (Short Questions) Under this method, the assessee’s total income is divided into different groups and for each group, the rate of tax is prescribed. The rate of tax of that group shall be applicable on the assessee’s total income which group the total income of the assessee falls.

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This method is based on the principle that the person with lower income should pay tax at a lower rate. This method is in force in so many countries of the world, but it was discontinued in india after 31st March 1939. For Example:

Group Income Rate of TaxOne Upto Rs. 1,50,000 NilTwo from Rs. 1,50,001 to

3,00,00010%

Three from Rs. 3,00,001 to 5,00,000

20%

Four from Rs. 5,00,001 onwards 30% If the total income of assessee in Rs. 3,25,000 it will fall under group three where the rate of tax is 20%.Therefore tax payable by him is Rs. 65,000 (3,25,000X20%)

3. Explain the Import Procedure to be followed under Customs Duty?

The Import of goods is of two types (1) Import of goods for personal purpose (2) Import of goods for commercial purpose. If a person desires to import goods from any Foreign country for commercial purpose has to obtain ‘Import Export Code Number’ from the Director General of Foreign Trde. If goods are imported by Air, Sea and Land normal provisions are applicable. Simple provisions are applicable if goods are imported by Baggage, Store and Post. The procedure to be observed for importing the goods through Land, Water and Air is more or less the same with slight differences here and there. Iport procedure will be discussed under two headings.Differences here and there. Import procedure will be discussed under two headings.(a) Procedure to be followed by importer(b) Procedure to be followed by person-in-charge of conveyance carrying imported

goods.

Procedure to be followed by person-in-charge of conveyance:- According to Sec 2(3) of Customs rules one of the staff members of the transport organization is made responsible to follow the rules and regulations of the Customs Act, and such person is designated as ‘ Person-in-charge’.

The following are the important duties to be discharged by person in charge:

1) The person in charge has to submit a Report known as Import Manifest or Import Report.

2) He is responsible to ensure that the conveyance comes through approved route and lands at specified place only.

3) Goods are unloaded only after obtaining the permission from the customs officials.



4) He has to ensure that the conveyance does not leave india without written order of customs authorities.

5) For violation of any rule, he will be penalized. Generally the following are the reasons for punishment or penalty or both.a. Giving false declaration or statement.b. Shortage of goods in the conveyance.

6) Other provisions related to conbeyance.a. Verification of import report by Officer-in-Charge.b. Obtaining permission to unload the goods i.e., Entry Inwards.c. The goods which are mentioned in import Manifest alone are to be unloaded.d. Unloading of goods will be done at the approved place only.e. Unloading of goods shall take place under the supervision of customs official.f. Goods are to be unloaded on working days in working hours only.

Import procedure to be observed by the Importer:

1. Submission of Bill of Entry – an application to the Customs department for clearance of goods.

2. Assessment of Duty: there are two methods of assessment (i) First check or appraisement method (ii) Second check or Appraisement method.

3. Clearance of goods: If the importer has not cleared the goods within 30 days from the date of unloading the custodian is authorized to sell the goods by auction. In the case of animals, perishable goods he can sell them before the expiry of 30 days.

4. Best judge ment assessment:- (Short Question) (Sec 144) When the assessment is made by the assessing officer based on his judgment it is known as Best judgment assessment. In the following situations assessing officer may adopt this method.

I) When assessee has not filed the return.II) When assessee fails to produce the books of accounts.III) When the assessee fails to get audit of his books.IV) When the assessing officer finds that the particulars furnished in the return

are incomplete and incorrect.V) Assessee failed to comply with the notice issued by the Dept.

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