PAPER – 4 : TAXATION

SECTION A : INCOME TAX LAW

Question No.1 is compulsory.
Candidates are also required to answer any two questions from the remaining questions.
Working notes shall form part of the respective answers.
All questions pertaining to income-tax relate to assessment year 2021-22, unless stated
otherwise in the question.
Question 1
Mr. Shivansh, a resident and ordinarily resident aged 61 years, is engaged in the business of
manufacturing of motor parts. He is subject to tax audit under section 44AB of Income-tax Act,
1961. He has provided following information:
Profit & Loss account for the year ended 31 st March, 2021
Particulars (` ) Particulars (` )
To Administrative expenses 4,30,000 By Gross Profit 58,30,000
To Salaries & wages 20,00,000 By Profit on sale of asset of 2,00,000
scientific research
To Interest on loans 7,50,000 By Winning from lottery (Net of 31,500
TDS @ 30%)
To Depreciation 6,17,000
To Professional fees 2,70,000
To Rent, rates & taxes 2,80,000
To Travelling & conveyance 1,40,000
To Net Profit 15,74,500
Total 60,61,500 Total 60,61,500
Explanatory information:
(i) Opening and closing stock of finished goods were undervalued by 10%. Opening stock of
` 4,50,000 and Closing stock of ` 5,58,000 was shown.
The Suggested Answers for Paper 4A: Income-tax Law are based on the provisions of
Income-tax Act as amended by the Finance Act, 2020 which are relevant for December, 2021
Examination. The relevant assessment year is A.Y.2021-22.

© The Institute of Chartered Accountants of India

 2 INTERMEDIATE (NEW) EXAMINATION: DECEMBER, 2021

(ii) Salaries & wages include following items:

(a) Contributed 20% of basic salary in National Pension Scheme referred in section
80CCD regarding salary paid to an employee Mr. Ganesh who has withdrawn basic
salary of ` 3,00,000 and Dearness allowance is 40% of basic salary. 50% of
Dearness allowance forms part of the salary.
(b) Some of the employees opted for retirement under the voluntary retirement sch eme;
a sum of ` 2,40,000 was paid to them on 1 st January, 2021.
(iii) Interest on loan includes interest paid @ 15% per annum on loan of ` 12,00,000 which
was taken from State Bank of India on 01.05.2020 for purchase of new electric car of
` 15,00,000. The car is used for personal purpose.
(iv) Depreciation allowable as per Income-tax Rules, 1962 is ` 4,50,000 but during the
calculation of such depreciation following addition was not considered:
Motor car purchased for ` 3,00,000 for supply of finished goods to dealers on
25-08-2020.
(v) An asset was purchased for ` 6,00,000 on 17-11-19 for conducting scientific research
and the deduction was claimed under section 35 of the Income-tax Act, 1961. This asset
was sold on 05-09-2020 for a consideration of ` 8,00,000.
Other information:
A plot of Industrial land which was used by Mr. Shivansh for business purpose for last 10
years was compulsorily acquired by Central Government on 07.05.2020. The compensation of
` 12,00,000 was received on 27.02.2021. Such property was purchased by him on 08.08.2005
for ` 2,00,000. He has purchased another plot of industrial land on 21.04.2021 for ` 6,00,000.
Government has also paid ` 54,000 as interest on such compensation on 28.03.2021.
Cost Inflation Indices: FY 2020-21: 301, FY 2005-06: 117
Compute the total income and tax liability of Mr. Shivansh for the assessment year 2021-22
assuming that he has not opted for the provisions of section 115BAC. Ignore Provisions
relating to AMT. (14 Marks)
Answer
Computation of total income of Mr. Shivansh for A.Y. 2021-22
Particulars ` ` `
I. Income from business or profession
Net Profit 15,74,500
Add: Items debited but not allowable/item not
credited but taxable while computing
business income
- Employer’s contribution to NPS in excess of

© The Institute of Chartered Accountants of India

 PAPER – 4 : TAXATION 3

10% of salary - Employer’s contribution to

the extent of 10% of salary i.e., basic salary
plus dearness allowance forming part of
salary would be allowed as deduction. Thus,
excess contribution i.e., ` 24,000 [` 60,000,
being 20% of ` 3,00,000 less ` 36,000
being 10% of ` 3,60,000 (` 3,00,000 + 20%
of ` 3,00,000] has to be added back. 24,000
- VRS expenditure - 1/5th of expenditure on
voluntary retirement scheme is allowable
over a period of five years u/s 35DDA. Since
whole amount of expenditure is debited to
Profit and Loss A/c, 4/5th has to be added
back [` 2,40,000 x 4/5]. 1,92,000
- Interest on loan taken for purchase of electric
car used for personal purpose not allowable
as deduction while computing business
income as being expense of personal nature.
Thus, ` 1,65,000 [` 12,00,000 x 15% x
11/12] has to be added back, since the same
forms part of interest on loan debited to profit
and loss account. 1,65,000
- Sale proceeds of asset acquired for
conducting scientific research taxable as
business income under section 41(3) in the
year of sale to the extent of lower of
` 6,00,000 (being the deduction allowed u/s
35) and ` 8,00,000 being the excess of sale
proceeds and deduction allowed u/s 35 i.e.,
(` 8,00,000 + ` 6,00,000) over the capital 6,00,000
expenditure incurred of ` 6,00,000
- Undervaluation of stock [(` 5,58,000 -
` 4,50,000) x 10/90] 12,000
Note: Alternatively, undervaluation of closing
stock i.e., ` 62,000 can be added back and
under valuation of opening stock i.e.,
` 50,000 can be reduced from net profits.
- Depreciation as per books of A/c 6,17,000
16,10,000
31,84,500

© The Institute of Chartered Accountants of India

 4 INTERMEDIATE (NEW) EXAMINATION: DECEMBER, 2021

Less: Depreciation as per Income-tax Rules 4,50,000

Depreciation on Motor car purchased for
supply of finished goods [` 3,00,000 x 45,000
15%] 4,95,000
26,89,500
Less: Items of income credited to profit and
loss account but not taxable or
taxable under any other head of
income
- Profit on sale of asset of scientific
2,00,000
research [Taxable under the head
“Capital Gains”]
- Winning from lottery [Taxable under the
head “Income from other sources”] 31,500
2,31,500
24,58,000
II. Capital Gain
Short-term capital gains
Sale of asset acquired for conducting
scientific research
Sales consideration 8,00,000
Less: Cost of acquisition 6,00,000
Short- term capital gain 2,00,000
Long-term capital gains
Compulsory acquisition of industrial plot by
the Central Government taxable as per section
45(5)
Compensation received 12,00,000
Less: Indexed cost of acquisition [` 2,00,000 x 5,14,530
301/117]
Long-term capital gain [since such plot is held for 6,85,470
more than 24 months]
Less: Exemption u/s 54D
- Acquisition of industrial plot within 3 6,00,000
years 85,470 2,85,470

© The Institute of Chartered Accountants of India

 PAPER – 4 : TAXATION 5

III. Income from other sources

Winning from lottery [` 31,500 x 100/70] 45,000
Interest on enhanced compensation 54,000
Less: 50% of enhanced compensation 27,000
27,000 72,000
Gross Total Income 28,15,470
Less: Deduction under Chapter VI-A
Deduction under section 80EEB
Interest on loan taken for purchase of
electric vehicle allowable as deduction to the 1,50,000
extent of
Total Income 26,65,470
Computation of tax liability of Mr. Shivansh for A.Y.2021-22
Particulars ` `
Tax on long-term capital gains @20% of ` 85,470 17,094
Tax on winning from lottery @30% of ` 45,000 13,500
Tax on total income (excluding LTCG and winning from lottery) of
` 25,35,000
Upto ` 3,00,000 [since Mr. Shivansh, a senior citizen, he is Nil
eligible for higher exemption limit]
` 3,00,001 – ` 5,00,000[@5% of ` 2.00 lakh] 10,000
` 5,00,001 – `10,00,000[@20% of ` 5 lakh] 1,00,000
` 10,00,001- ` 25,35,000 [@30% of ` 15,35,000] 4,60,500
5,70,500
6,01,094
Add: Health and education cess@4% 24,044
Tax liability 6,25,138
Tax liability (rounded off) 6,25,140
Question 2
(a) Examine the tax implications of the following transactions for the assessment year
2021-22: (Give brief reason)
(i) Government of India has appointed Mr. Rahul as an ambassador in Japan. He
received salary of ` 7,50,000 and allowances of ` 2,40,000 during the previous year
2020-21 for rendering his services in Japan. He is an Indian citizen having status of
non-resident in India for the previous year 2020-21.

© The Institute of Chartered Accountants of India

 6 INTERMEDIATE (NEW) EXAMINATION: DECEMBER, 2021

(ii) Ms. Juhi, a non-resident in India is engaged in operations which are confined to
purchase of goods in India for the purpose of export. She has earned ` 2,50,000
during the previous year 2020-21.
(iii) Mr. Naveen, a non-resident in India, has earned ` 3,00,000 as royalty for a patent
right made available to Mr. Rakesh who is also a non-resident. Mr. Rakesh has
utilized patent rights for development of a product in India and 50% royalty is
received in India and 50% outside India.
(iv) Mr. James, a NRI, borrowed ` 10,00,000 on 01.04.2020 from Mr. Akash who is also
a non-resident and invested such money in the shares of an Indian Company.
Mr. Akash has received interest @ 12% per annum. (7 Marks)
(b) Ms. Mishika has entered into an agreement with M/s CVM Build Limited on 25.04.2017 in
which she agrees to allow such Company to develop a shopping mall on land owned by
her in New Delhi. She purchased such land on 05.05.2009 for ` 15,00,000. In
consideration, M/s CVM Build Limited will provide 20% share in shopping mall to Mishika.
The certificate of completion of shopping mall was issued by authority as on 26.12.2020.
On such date, Stamp duty value of shopping mall was ` 4,14,00,000. Subsequently on
18.03.2021, she sold her 15% share in shopping mall to Mr. Ketav in consideration of
` 65,00,000.
She has also purchased a house on 09.05.2020 in consideration of ` 46,00,000 and
occupied for own residence. Punjab National Bank has sanctioned a loan of ` 35,50,000
(80% of stamp value) at the interest rate of 12% per annum on 01.05.2020 and
disbursement was made on 01.06.2020. She does not own any other residential house
on the date of sanction of loan. Principal amount of ` 1,30,000 was paid during the
financial year 2020-21.
Cost Inflation Indices: 2020-21: 301, 2009-10: 148
Compute total income of Ms. Mishika for the assessment year 2021-22 assuming that
she has not opted for the provisions under section 115BAC. (7 Marks)
Answer
(a) (i) As per section 9(1)(iii), salaries (including, inter alia, allowances) payable by the
Government to a citizen of India for services rendered outside India shall be
deemed to accrue or arise in India.
Thus, salary received from Government by Mr. Rahul, being a non-resident of
` 7,50,000 for rendering services in Japan would be taxable in his hands, after
allowing standard deduction of ` 50,000.
However, any allowance or perquisites paid or allowed outside India by the
Government to a citizen of India for rendering services outside India wi ll be fully
exempt u/s 10(7). Hence, ` 2,40,000, being the allowance would be exempt.

© The Institute of Chartered Accountants of India

 PAPER – 4 : TAXATION 7

(ii) In the case of a non-resident, no income shall be deemed to accrue or arise in India
to him through or from operations which are confined to the purchase of goods in
India for the purpose of export.
Thus, income of ` 2,50,000 arising in the hands of Ms. Juhi would not be taxable in
her hands in India, since her operations are confined to purchase of goods in India
for the purpose of export.
(iii) Royalty payable by a non-resident would be deemed to accrue or arise in India in
the hands of the recipient only when such royalty is payable in respect of any right,
property or information used for the purposes of a business or profession carried on
by such non-resident in India or earning any income from any source in India.
In the present case, since Mr. Rakesh, a non-resident, paid the royalty of
` 3,00,000 for a patent right used for development of a product in India, the same
would be taxable in India in the hands of the recipient, Mr. Naveen, a non-resident,
irrespective of the fact that only 50% of the royalty is received in India.
(iv) Interest payable by a non-resident on the money borrowed for any purpose other
than a business or profession in India, would not be deemed to accrue or arise in
India.
In the present case, since Mr. James, a non-resident borrowed the money for
investment in shares of an Indian company, the interest on such borrowing of
` 1,20,000 (` 10,00,000 x 12%) payable to Mr. Akash, a non-resident would not be
deemed to accrue or arise to him in India. Hence, the same would not be taxable in
India in the hands of Mr. Akash.
(b) Computation of total income of Ms. Mishika for the A.Y.2021-22
Particulars Amount Amount
(`) (`)
Income from house property [Self-occupied]
Net Annual Value Nil
Less: Interest on housing loan of ` 3,55,000
[` 35,50,000 x 12% x 10/12 months] restricted to
` 2,00,000/- 2,00,000
(2,00,000)
Less: Set-off of loss against long-term capital gains 2,00,000 Nil
Long-term capital gains on transfer of land under
specified agreement
Since Ms. Mishika transferred her share in the project
after issue of completion certificate, capital gains on
transfer of land handed over to developer under specified
agreement in the P.Y. 2017-18 would be taxable in the

© The Institute of Chartered Accountants of India

 8 INTERMEDIATE (NEW) EXAMINATION: DECEMBER, 2021

previous year 2020-21, being the year in which certificate

of completion is issued as per section 45(5A).
Accordingly, capital gain arising in respect of land would
be-
Full value of consideration, being 20% share in shopping 82,80,000
mall [Stamp duty value on the date of issue of completion
certificate (` 4,14,00,000 x 20%)]
Less: Indexed of cost of acquisition [` 15,00,000 x
301/148] 30,50,676
Long-term capital gain 52,29,324
Less: Deduction under section 54F
Deduction in respect of amount invested for purchase of a
residential house acquired within one year prior to date of
transfer would be allowable proportionately, since amount
invested is less than the net consideration. Accordingly,
deduction would be ` 29,05,180 (` 52,29,324 x
`46,00,000 / ` 82,80,000) 29,05,180
Long-term capital gains 23,24,144
Less: Set-off of loss from house property [It is beneficial to
set-off loss from house property against long-term capital
gains, since in case of Ms. Mishika total income
comprises of LTCG taxable@20% and STCG taxable at
normal slab rates; and she can claim deduction of
` 2,80,000 under Chapter VI-A against STCG of
` 2,90,000. Moreover, the remaining STCG would also
not be taxable since it would be below the basic
exemption limit] 2,00,000
21,24,144
Short-term capital gains
Sale of 15% share in shopping mall [short-term capital
asset, since held for not more than 24 months]
Net Sales consideration 65,00,000
Less: Cost of acquisition, being the full value of
consideration taxable on transfer of land [` 4,14,00,000 x
15%] 62,10,000
Short-term capital gains 2,90,000
Gross Total Income 24,14,144
Less: Deductions under Chapter VI-A (allowable
against short-term capital gains of ` 2,90,000)

© The Institute of Chartered Accountants of India

 PAPER – 4 : TAXATION 9

Deduction under section 80C – repayment of principal 1,30,000

amount of housing loan
Deduction under section 80EEA – Ms. Mishika would be
eligible for deduction of interest on housing loan
(` 3,55,000 - ` 2,00,000 = ` 1,55,000) to the extent of
` 1,50,000, since stamp duty value of the house does not
exceed ` 45,00,000 [being ` 44,37,500 (` 35,50,000 x
100/80)] and she does not own any other residential
house on the date of sanction of loan. 1,50,000 2,80,000
Total Income 21,34,144
Total Income (rounded off) 21,34,140
Note -
As per section 45(5A), any capital gains arising from the transfer of a capital asset, being
land or building or both, under a specified agreement, is chargeable to income-tax as income
of the previous year in which the certificate of completion is issued by the competent
authority. In the above solution, the CII of F.Y.2020-21 has been considered on the basis of
parity, since, as per section 45(5A), it is the stamp duty value of the developed property
(shopping mall, in this case) on the date of issue of certificate of completion (26.12.2020),
which is deemed as the full value of consideration for transfer of land handed over to the
developer.
Alternate view -
The definition of transfer, inter alia, includes any arrangement or transaction where any rights
are handed over in execution of part performance of contract, even though the legal title has
not been transferred. Hence, in case of ‘specified agreement(s)’, ‘transfer’ takes place at the
time when the owner of the immovable property hands over the same to the developer i.e., in
F.Y.2017-18 in this case.
As per the plain reading of definition of ‘indexed cost of acquisition’, the CII of the year in
which the asset (land, in this case) is transferred has to be considered. Accordingly, as
per this interpretation, CII of F.Y. 2017-18 i.e., 272 can be considered for computing
indexed cost of acquisition. If the CII of F.Y.2017-18 is considered on the basis of this
line of reasoning, the figures of long-term capital gains and total income would
accordingly change. However, the CII of F.Y.2017-18 has not been given in the question
for the purpose of making such computation.
Question 3
(a) State in brief the applicability of provisions of tax deduction at source, the rate and
amount of tax deduction in the following cases for the financial year 2020 -21 under
Income-tax Act, 1961. Assume that all payments are made to residents:

© The Institute of Chartered Accountants of India

 10 INTERMEDIATE (NEW) EXAMINATION: DECEMBER, 2021

(i) Mr. Mahesh has paid ` 6,00,000 on 15.10.2020 to M/s Fresh Cold Storage Pvt. Ltd.
for preservation of fruits and vegetables. He is engaged in the wholesale business
of fruits & vegetable in India having turnover of ` 3 Crores during the previous year
2019-20.
(ii) Mr. Ramu, a salaried individual, has paid rent of ` 60,000 per month to Mr. Shiv
Kumar from 1st July, 2020 to 31st March, 2021. Mr. Shiv Kumar has not furnished
his Permanent Account Number. (4 Marks)
(b) Examine the following transactions with reference to applicability of the provision of tax
collected at source and the rate and amount of the TCS for the Assessment year
2021-22.
(i) Mr. Kalpit bought an overseas tour programme package for Singapore for himself
and his family of ` 5 lakhs on 01-11-2020 from an agent who is engaged in
organising foreign tours in course of his business. He made the payment by an
account payee cheque and provided the permanent account number to the seller.
Assuming Kalpit is not liable to deduct tax at source under any other provisions of
the Act.
(ii) Mr. Anu doing business of textile as a proprietor. His turnover in the business is
` 11 crores in the previous year 2019-20. He received payment against sale of
textile goods from Mr. Ram of ` 75 lakhs against the sales made to him in the
previous year and preceding previous years. (Assuming all the sales are domestic
sales and Mr. Ram is neither liable to deduct tax on the purchase from Mr. Anu nor
he deducted any tax at source). (4 Marks)
(c) Mr. Ravi, a resident and ordinarily resident in India, owns a let out house property having
different flats in Kanpur which has municipal value of ` 27,00,000 and standard rent of
` 29,80,000. Market rent of similar property is ` 30,00,000. Annual rent was ` 40,00,000
which includes ` 10,00,000 pertaining to different amenities provided in the building.
One flat in the property (annual rent is ` 2,40,000) remains vacant for 4 months during
the previous year. He has incurred following expenses in respect of aforesaid p roperty:
Municipal taxes of ` 4,00,000 for the financial year 2020-21 (10% rebate is obtained for
payment before due date). Arrears of municipal tax of financial year 2019 -20 paid during
the year of ` 1,40,000 which includes interest on arrears of ` 25,000.
Lift maintenance expenses of ` 2,40,000 which includes a payment of ` 30,000 which is
made in cash.
Salary of ` 88,000 paid to staff for collecting house rent and other charges.
Compute the total income of Mr. Ravi for the assessment year 2021-22 assuming that
Mr. Ravi has not opted for the provisions under section 115BAC. (6 Marks)

© The Institute of Chartered Accountants of India

 PAPER – 4 : TAXATION 11

Answer
(a) (i) The arrangement between Mr. Mahesh, the customer, and M/s. Fresh Cold Storage
Pvt. Ltd., the cold storage owner, is basically contractual in nature and main object
of the cold storage is to preserve perishable goods by mechanical process and
storage of such goods is only incidental. Hence, the provisions of section 194C will
be applicable to the amount of ` 6 lakh paid by Mr. Mahesh to the cold storage
company1.
Accordingly, tax has to be deducted@1.5%2 on ` 6 lakh.
TDS u/s 194C = 1.5% x ` 6 lakh = ` 9,000
(ii) Mr. Ramu, being a salaried individual, has to deduct tax at source @ 3.75%3 u/s
194-IB on the annual rent paid by him from the last month’s rent (rent of March,
2021), since the rent paid by him exceeds ` 50,000 p.m.
Since his landlord Mr. Shiv Kumar has not furnished his PAN to Mr. Ramu, tax has
to be deducted @ 20% instead of 3.75%. However, the same cannot exceed
` 60,000, being rent for March, 2021.
TDS u/s 194-IB = ` 5,40,000 (` 60,000 x 9) x 20% = ` 1,08,000, but restricted to
` 60,000, being rent for March, 2021.
(b) (i) Tax @ 5% is required to be collected u/s 206C by the seller of an overseas tour
programme package, from Mr. Kalpit, being the buyer of an overseas tour package,
even if payment is made by account payee cheque.
Accordingly, tax has to be collected@5% on ` 5 lakh.
TCS = 5% x ` 5 lakh = ` 25,000
(ii) Mr. Anu is required to collect tax @0.075%4 u/s 206C from Mr. Ram, since his
turnover in the P.Y.2019-20 exceeds `10 crores, and the sales receipts from
Mr. Ram in the P.Y.2020-21 exceeds ` 50 lakhs. Tax has to be collected by Mr. Anu
on ` 25 lakhs, being the amount exceeding ` 50 lakhs, at the time of receipt. Since
receipt is in the P.Y.2020-21, TCS provisions are attracted even though part of the
sales may relate to the preceding previous years.
TCS = 0.075% x ` 25 lakhs = ` 1,875
Note – It is assumed that sales receipts to the tune of at least ` 25 lakhs were
received on or after 1.10.2020, being the date when the provisions of section
206C(1H) became effective. Alternatively, it is also possible to assume that the

1 Circular No. 1/2008 dated 10.1.2008

2 Since the payment is on 15.10.2020, which falls in the period 14.5.2020 to 31.3.2021, the rate is 1.5% instead of 2%.
3 Since tax is deductible on 31.3.2021, which falls in the period 14.5.2020 to 31.3.2021, the rate is 3.75% instead of 5%.
4 Since tax is collectible on receipts between 1.10.2020 and 31.3.2021, the rate is 0.075% instead of 0.1%.

© The Institute of Chartered Accountants of India

 12 INTERMEDIATE (NEW) EXAMINATION: DECEMBER, 2021

entire receipts of ` 75 lakhs was received before 1.10.2020. In such a case, the
provisions of section 206C(IH) would not be applicable and no tax would be
required to be collected.
(c) Computation of total income of Mr. Ravi for A.Y. 2021-22 under the regular
provisions of the Act
Particulars Amount Amount
(`) (`)
Income from house property
Gross Annual Value
- Expected rent ` 29,80,000 [Higher of Municipal
Value of ` 27,00,000 p.a. and Fair Rent of
` 30,00,000 p.a., but restricted to Standard Rent of
` 29,80,000 p.a.]
- Actual rent ` 29,40,000 [` 30,00,000, being annual
rent for house property less rent of
` 60,000 (` 2,40,000 x 4/12 x 3/4) due to vacancy]
Gross Annual Value 29,40,000
In this case, the actual rent is lower than the expected rent
due to vacancy. Otherwise, the actual rent of
` 30,00,000 would have been higher than the expected
rent. In such a case, the actual rent would be the gross
annual value, even if it is lower than the expected rent.
Less: Municipal taxes actually paid during the year:
[` 4,00,000 – rebate of ` 40,000] = ` 3,60,000
[` 1,40,000 arrears – ` 25,000 interest] = ` 1,15,000 4,75,000
Net Annual Value 24,65,000
Less: Deduction from Net Annual Value
30% of Net Annual Value 7,39,500
17,25,500
Income from Other Sources/Profits and gains from
business or profession
Rent for amenities 10,00,000
Less: Loss due to vacancy
[` 2,40,000 x 4/12 x ¼] 20,000
9,80,000
Less: Expenditure in respect thereof
- Lift maintenance expenses 2,10,000
[excluding cash payment of ` 30,000
disallowed] = ` 2,40,000 – ` 30,000

© The Institute of Chartered Accountants of India

 PAPER – 4 : TAXATION 13

- Salary to staff [` 88,000 x1/4, being

the proportion pertaining to
amenities] 22,000
2,32,000 7,48,000
Total Income 24,73,500
Question 4
(a) Details of Income of Mr. R and his wife Mrs. R for the previous year 2020-21 are as
under:
(i) Mr. R transferred his self-occupied property without any consideration to the HUF of
which he is a member. During the previous year 2020-21 the HUF earned an
income of ` 50,000 from such property.
(ii) Mr. R transferred ` 4,00,000 to his wife Mrs. R on 01.04.2006 without any
consideration which was given as a loan by her to Mr. Girish. She earned
` 3,50,000 as interest during the earlier previous years which was also given as a
loan to Mr. Girish. During the previous year 2020-21, she earned interest @ 11%
per annum.
(iii) Mr. R and Mrs. R both hold equity shares of 27% and 25% respectively in AMG
Limited. They are also working as employees in such Company. During the financial
year 2020-21 they have withdrawn a salary of ` 3,20,000 and 2,70,000 respectively.
(iv) Mrs. R transferred 5,000 equity shares of RSB Ltd. on 17.09.2013 to Mr. R without
any consideration. The Company issued 3,000 bonus shares to Mr. R in 2016. On
04.03.2021, Mr. R sold entire share holdings and earned ` 5,20,000 as capital
gains.
Apart from above income, Mr. R has income from commission ` 4,00,000 and Mrs. R has
interest income of ` 3,30,000.
Compute Gross Total income of Mr. R and Mrs. R for the assessment year 2021-22.
(4 Marks)
(b) Mr. X, an employee of the Central Government is posted at New Delhi. He joined the
service on 1 st February, 2017. Details of his income for the previous year 2020-21, are
as follows:
(i) Basic salary : ` 3,80,000
(ii) Dearness allowance : ` 1,20,000 (40% forms part of pay for retirement benefits)
(iii) Both Mr. X and Government contribute 20% of basic salary to the pension scheme
referred to in section 80CCD.
(iv) Gift received by X’s minor son on his birthday from friend: ` 70,000. (No other gift is
received by him during the previous year 2020-21)

© The Institute of Chartered Accountants of India

 14 INTERMEDIATE (NEW) EXAMINATION: DECEMBER, 2021

(v) During the year 2013-14, Mr. X gifted a sum of ` 6,00,000 to Mrs. X. She started a
business by introducing such amount as her capital. On 1st April, 2020, her total
investments in business was ` 10,00,000. During the previous year 2020-21, she
has loss from such business ` 1,30,000
(vi) Mr. X deposited ` 70,000 in Sukanya Samridhi account on 23.01.2021. He also
contributed ` 40,000 in an approved annuity plan of LIC to claim deduction u/s
80CCC.
(vii) He has taken an educational loan for his major son who is pursuing MBA course
from Gujarat University. He has paid ` 15,000 as interest on such loan which
includes ` 5,000 for the financial year 2019-20.
Determine the total income of Mr. X for the assessment year 2021-22. Ignore provisions
under section 115BAC. (6 Marks)
(c) Mr. Kailash, a resident and ordinarily resident in India, could not file his return of Income
for the assessment year 2021-22 before due date prescribed under section 139(1).
Advise Mr. Kailash as a tax consultant.
What are the consequences for non-filing of return of Income within the due date under
section 139(1)?
OR
Mr. Sitaram is engaged in the business of trading of cement having turnover of ` 10
crores during the financial year 2021-215. As a tax consultant advise him what are the
particulars to be furnished under section 139(6A) along with Return of Income?
(4 Marks)
Answer
(a) Computation of Gross Total Income of Mr. R and Mrs. R for A.Y. 2021-22
Particulars Mr. R Mrs. R
Amount (`)
I. Income from house property
Income from property transferred to HUF without
consideration
Since Mr. R has transferred his property to his HUF 50,000
without consideration, income of ` 50,0006 from such
property would be included in the total income of
Mr. R as per section 64(2).

5 To be read as 2020-21
6 Assumed as computed figure.

© The Institute of Chartered Accountants of India

 PAPER – 4 : TAXATION 15

II. Capital Gains

Income from equity shares transferred by Mrs. R
to Mr. R without consideration
Capital gains arising to Mr. R from transfer of equity 3,25,000
shares of RSB Ltd. gifted to him by Mrs. R would be
included in the hands of Mrs. R [` 5,20,000 x
5,000/8,000]
Capital gains arising to Mr. R from transfer of bonus 1,95,000
shares issued by RSB Ltd. on the basis of holding of
the said equity shares would be included in the
income of Mr. R and not Mrs. R, since income derived
from accretion of the transferred asset cannot be
clubbed with the income of transferor of the original
asset i.e., Mrs. R [` 5,20,000 x 3,000/8,000]7
III. Income from Other Sources
Income from commission 4,00,000
Interest income 3,30,000
Interest income on ` 4 lakh transferred by Mr. R to
Mrs. R without consideration
Income of ` 44,000, i.e., 11% of `4,00,000, being the 44,000
amount transferred by Mr. R to Mrs. R without any
consideration and loaned by her to Mr. Girish, would
be included in the income of Mr. R
Income of ` 38,500 i.e., 11% of ` 3,50,000, being the 38,500
interest earned by Mrs. R out of amount gifted by Mr.
R and thereafter, given by her as loan to
Mr. Girish, would be included in the income of
Mrs. R, as income derived by Mrs. R from accretion of
the amount gifted by Mr. R (i.e., interest income)
cannot be included in the income of Mr. R.
Total income [before considering adjustment on 6,89,000 6,93,500
account of item (iii) i.e., salary income from a
company in which both Mr. R and Mrs. R have
substantial interest]
IV. Salary income from a company in which both Mr. R
and Mrs. R have substantial interest

7In the absence of any other information, the capital gains has been apportioned on the basis of number of
original shares to number of bonus shares.

© The Institute of Chartered Accountants of India

 16 INTERMEDIATE (NEW) EXAMINATION: DECEMBER, 2021

Since both Mr. R and Mrs. R have substantial interest

in AMG Ltd. (on account of holding equity shares
carrying 20% or more of voting power) and both are in
receipt of income by way of salary from AMG Ltd.,
such salary income would be includible in the
hands of that spouse, whose total income, before
including such salary income, is higher.
Accordingly, the salary income of both Mr. R and Mrs.
R would be included in the hands of Mrs. R in this
case, since her total income, before including such
income, is higher than that of Mr. R.
Salary income of Mr. R = ` 3,20,000 – ` 50,000 2,70,000
(standard deduction)
Salary income of Mrs. R = ` 2,70,000 – ` 50,000 2,20,000
(standard deduction)
Gross Total Income 6,89,000 11,83,500
(b) Computation of Total Income of Mr. X for A.Y. 2021-22
Particulars Amount Amount
` `
Salaries
Basic Salary 3,80,000
Dearness Allowance 1,20,000
Employer contribution to NPS = 20% of ` 3,80,000 76,000
5,76,000
Less: Standard deduction
[` 50,000 or ` 5,76,000, whichever is lower] 50,000
5,26,000
Profits and gains of business or profession
Where the amount gifted by Mr. X (` 6 lakh, in this case) is
invested by Mrs. X in a business as her capital,
proportionate share of profit or loss, as the case may be,
computed by taking into account the value of the investment
as on 1.4.2020 to the total investment in the business (` 10
lakh) would be included in the income of Mr. X [loss of
` 1,30,000 x 6/10] (78,000)
Income from other sources
All income of the minor son would be included in the income 70,000
of the parent Mr. X, since his income is higher than the

© The Institute of Chartered Accountants of India

 PAPER – 4 : TAXATION 17

income of Mrs. X (loss of ` 52,000, based on the

information given in the question). Accordingly, ` 70,000,
being amount of gift received by minor son during the
P.Y.2021-22, would be included in the income of Mr. X as
the amount of gift exceeds ` 50,000.
Less: Exemption in respect of income of minor child
included in Mr. X’s income 1,500
68,500
Less: Business loss of ` 78,000 set-off to the extent of 68,500
(Balance business loss of ` 9,500 to be carried forward
to the next year, since the same cannot be set-off against
salary income)
Nil
Gross Total Income 5,26,000
Less: Deductions under Chapter VI-A
Under section 80C – deposit in Sukanya Samridhi Account 70,000
Under section 80CCC – Contribution to LIC Annuity Plan 40,000
Under section 80CCD(1) – Employee contribution to NPS
(` 76,000 – ` 50,000 deduction claimed u/s 80CCD(1B)],
since it is lower than ` 42,800, being 10% of salary
(` 3,80,000 + ` 48,000) 26,000
Allowable in full, since less than `1,50,000, being the 1,36,000
maximum permissible deduction u/s 80C, 80CCC &
80CCD(1)
Under section 80CCD(1B) – Employee contribution to NPS 50,000
Under section 80CCD(2) – Employer contribution to NPS 59,920
restricted to 14% of basic salary + DA forming part of pay,
since employer is Central Government = 14% x (` 3,80,000
+ ` 48,000)
Under section 80E – Interest paid on loan taken for higher
education 15,000
2,60,920
Total Income 2,65,080
Notes - The following assumptions have been made while solving the question –
(i) Loan is taken from a financial institution or approved charitable institution, and
hence, interest paid on such loan qualifies for deduction under section 80E.
(ii) The question mentions that gift of ` 6 lakhs is given by Mr. X to Mrs. X during the
P.Y.2013-14. However, the date of investment in business is not given. It has been

© The Institute of Chartered Accountants of India

 18 INTERMEDIATE (NEW) EXAMINATION: DECEMBER, 2021

assumed that it was invested between 2.4.2019 to 1.4.2020 for solving the problem,
in the absence of other information in the question.
(c) [First Alternative]
Consequences for non-filing return of income within the due date under section 139(1)
Interest under section 234A
Interest under section 234A@1% per month or part of the month for the period
commencing from the date immediately following the due date under section 139(1) till
the date of furnishing of return of income is payable, where the return of income is
furnished after the due date.
However, no interest u/s 234A shall be charged on self-assessment tax paid by the
assessee on or before the due date of filing of return.
Fee under section 234F
Late fee of
- ` 5,000 would be payable under section 234F, if the return of income is not filed
before the due date specified in section 139(1) and
- ` 10,000 would be the fee payable under section 234F where the return is furnished
after 31st December,2021.
However, such fee cannot exceed ` 1,000, if the total income does not exceed
` 5,00,000.
Carry forward and set-off of certain losses not permissible
Following losses would not be allowed to be carried forward, where a return of income is
not furnished within the time allowed under section 139(1):
- business loss, speculation business loss, loss from specified business,
- loss under the head “Capital Gains”; and
- loss from the activity of owning and maintaining race horses.
(c) [Second Alternative]
Since Mr. Sitaram’s turnover from business of trading of cement is ` 10 crores which
exceeds ` 1 crore, being the threshold limit for tax audit under section 44AB, he is
subjected to tax audit.
Accordingly, Mr. Sitaram, is required to furnish the following particulars along with his
return of income -
(i) the report of audit referred to in section 44AB.
(ii) the particulars of the location and style of the principal place where he carries on
the business or profession and all the branches thereof.

© The Institute of Chartered Accountants of India

 PAPER – 4 : TAXATION 19

SECTION B: INDIRECT TAXES

Question No. 5 is compulsory.
Candidates are also required to answer any two questions from the remaining three
questions.
All questions should be answered on the basis of position of GST law as amen ded upto
30th April, 2021.
Working notes should form part of the answer.
Wherever necessary, suitable assumptions may be made by the candidates and disclosed by
way of note.
Question 5
ABC Ltd., a registered supplier in Surat, Gujarat has calculated output net GST liability after
adjusting ITC in the books for the month of February 2021:
CGST : ` 3,00,000
SGST : ` 2,50,000
IGST : ` 3,00,000
During the above month, the following additional information is provided by ABC Ltd.:
S. No. Particulars Amount
(excluding GST) `
1 The company had given on hire 5 trucks to one of the 3,75,000
transporters of Vadodara (a goods transport agency) for
transporting goods for 10 days. The hiring charges for the
trucks were ` 7,500 per truck per day
2 The company sold goods to X & Co. of Delhi on 6 th January 5,00,000
2021 with a condition that interest @ 2% per month will be
charged on invoice value if X & Co. failed to make payment
within 30 days of the delivery of the goods. Goods were
delivered and also the invoice was issued on 6 th January
2021. X & Co. paid the consideration for the goods on 20 th
February along with applicable interest.
3 The company sought legal consultancy services for it’s 1,50,000
business from A & Advocates, a partnership firm of
advocates situated at Bhuj, Gujarat.
4 The company ordered 3,000 packets of tools which are to 5,00,000
be delivered by the supplier of Delhi via 3 lots of 1,000
packets monthly. The supplier raised the invoice for full

© The Institute of Chartered Accountants of India

 20 INTERMEDIATE (NEW) EXAMINATION: DECEMBER, 2021

quantity in February 2021 and the last lot would be

delivered in April 2021.
5 The company supplied 10,000 packets of tools to one of it’s
customer at ` 10/- per packet in Gujarat in January 2021.
Afterwards, the company re-values it at ` 9 per packet in
February 2021 and the company issued credit note to the
customer for ` 1 per packet.

The rate of GST is 9% CGST, 9% SGST and 18% IGST.

You are required to compute the actual net liability of GST to be paid in cash along with
working notes for the month of February 2021. (8 Marks)
Answer
Computation of net GST liability of ABC Ltd. to be paid in cash for February 2021
Particulars Value CGST SGST IGST
(`) (`) (`) (`)
Net output GST liability as given 3,00,000 2,50,000 3,00,000
Add: Trucks given on hire to GTA 3,75,000 -- -- --
[Services by way of giving a means of
transportation of goods on hire to a
goods transport agency are exempt.]
Add: Interest on delayed payment of 15 5,900 -- -- 900
days1 (6th February, 2021 to 20th [5,90,000 ×
February,2021) 2% × 15/30]
[Includible in value in terms of section 15
of the CGST Act, 2017.]
Total output tax liability 3,00,000 2,50,000 3,00,900
Less: ITC in respect of legal services 1,50,000 (13,500) (13,500)
paid as reverse charge is available 2 [1,50,000 [1,50,000
× 9%] × 9%]
Net output tax liability (A) 2,86,500 2,36,500 3,00,900

1 Interest on delayed payment collected is assumed to be inclusive of GST. Further, the invoice value has
been taken as inclusive of GST for computing said penal interest However, it is also possible to assume the
interest to be exclusive of GST and to compute the same by taking the values as exclusive of GST (i.e.
` 5,00,000).
2
The reversal provisions under rule 42 of the CGST Rules, 2017 have not been given effect to in the above
answer on account of specific exclusion of the same via Study guidelines applicable for November, 2021
examination.

© The Institute of Chartered Accountants of India

 PAPER – 4 : TAXATION 21

Legal consultancy services received(B) 1,50,000 13,500 13,500

[Tax is payable under reverse charge on [1,50,000 [1,50,000
legal services received by a business × 9%] × 9%]
entity3 from a partnership firm of
advocates.
Further, tax payable under reverse
charge, being not an output tax, cannot
be set off against ITC and thus, will have
to be paid in cash.]
Total GST payable in cash [(A) + (B)] 3,00,000 2,50,000 3,00,900
Notes:
(1) ITC on goods received in lots is available on receipt of last lot. Hence, ITC on tools
received will not be available in February 2021.
(2) Since discount given by ABC Ltd. on the packets of tools was not known at the time of
supply, it shall not be excluded from its value of supply.
Question 6
(a) AB Ltd., a registered company of Chennai, Tamil Nadu has provided following services
for the month of October, 2021
Particulars Amount
(` )
Services of transportation of students, faculty and staff from home to 2,50,000
college and back to Commerce College, (a private college) providing
degree courses in BBA, MBA, B.Com., M.Com.
Online monthly magazine containing question bank and latest updates in 1,00,000
law to students of PQR Law College offering degree courses in LLB and
LLM
Housekeeping services to T Coaching Institute 50,000
Security services to N Higher Secondary School 3,25,000
Services of providing breakfast, lunch and dinner to students of ABC 5,80,000
Medical College offering degree courses recognized by law in medical field
All the above amounts are exclusive of GST.
Compute the taxable supplies of AB Ltd. for the month of October 2021 with necessary
explanations. (6 Marks)

3
It has been most logically assumed that the aggregate turnover of ABC Ltd. in the preceding FY was
above the threshold limit for registration under GST law.

© The Institute of Chartered Accountants of India

 22 INTERMEDIATE (NEW) EXAMINATION: DECEMBER, 2021

(b) Q Ltd. is engaged exclusively in supply of taxable goods from the following states. The
particulars of intra-state supplies for the month of May 2021 are as follows:

State Turnover (`)

Madhya Pradesh 5,00,000

Gujarat 14,00,000

Tripura 12,00,000

(i) Q Ltd. seeks to know whether it is liable for registration under GST. Give your
explanation.
(ii) Will your answer be different if Q Ltd. supplies only petrol & diesel from Tripura
instead of any other taxable goods? (4 Marks)
Answer
(a) Computation of value of taxable supplies of AB Ltd.
Particulars Amount
(`)
Services of transportation of students, faculty and staff to Commerce 2,50,000
College
[Not exempt, since transportation services provided to an educational
institution are exempt only if such institution provides pre-school
education or education up to higher secondary school or equivalent.]
Online monthly magazine to students of PQR Law College
[Services of supply of online educational journals provided to an Nil
educational institution providing qualification recognized by law are
exempt.]
Housekeeping services to T Coaching Institute 50,000
[Not exempt]
Security services 4 to N Higher Secondary School Nil
[Security services provided to an educational institution providing
education up to higher secondary school are exempt.]
Services of providing breakfast, lunch and dinner to students of ABC 5,80,000
Medical College
[Not exempt, since catering services provided to an educational
institution are exempt only if such institution provides pre-school

It has been assumed that security services are performed in N Higher Secondary School.
4

© The Institute of Chartered Accountants of India

 PAPER – 4 : TAXATION 23

education or education up to higher secondary school or equivalent.]

Value of taxable supplies 8,80,000
(b) Every person engaged in making a taxable supply is required to obtain registration if his
aggregate turnover exceeds ` 20 lakh in a financial year. An enhanced threshold limit
for registration of ` 40 lakh is available to persons engaged exclusively in intra-State
supply of goods in specified States. However, the applicable threshold limit for
registration gets reduced to ` 10 lakh in case a person is engaged in making supply from
a specified Special Category State provided such supply is a taxable supply.
(i) Since Q Ltd. is making supply of taxable goods 5from Tripura – a specified Special
Category State, the applicable threshold limit will get reduced to ` 10 lakh.
Thus, it is liable to be registered under GST as its aggregate turnover [` 31 lakh]
exceeds the said threshold limit.
(ii) In case Q Ltd. is making supply of non-taxable goods [petrol and diesel] from
Tripura, the applicable threshold limit will not be reduced to ` 10 lakh; enhanced
threshold limit of ` 40 lakh will be applicable.
Thus, it is not liable to be registered under GST as its aggregate turnover [` 31 lakh]
does not exceed the said threshold limit.
Question 7
(a) (i) An order is placed to T & Co;, Sholapur on 18 th August, 2021 for supply of fabrics to
make garments. Company delivered the fabrics on 4 th September, 2021 and after
completion of the order issued the invoice on 15 th September, 2021. The payment
against the same was received on 30 th September, 2021. Determine the time of
supply for the purpose of payment under CGST Act, 2017 with your explanations.
(ii) HM Industries Ltd. engaged the services of a transporter for road transport of a
consignment on 20th May, 2021. However, the consignment could not be sent
immediately on account of a strike in the factory, and instead was sent on 20th July
2021. Invoice was received from the transporter on 20 th June 2021 and payment
was made on 25 th August 2021.
What is the time of supply of the transporter’s service? (5 Marks)
(b) PQR Ltd., have filed their GSTR-3B return for the month of August, 2020 within the due
date i.e. 20.09.2020. It was noticed in October, 2020 that tax dues for the month of
August, 2020 have been short paid by ` 10,000. The shortfall of ` 10,000 was paid
through cash ledger and credit ledger amounting to ` 7,500 and ` 2,500 respectively
while filing GSTR-3B of October, 2020 which was filed on 20.11.2020.

5
It has been assumed that Q Ltd. is not engaged in making supplies of ice cream and other edible ice,
whether or not containing cocoa [2105 00 00], Pan masala [2106 90 20] and all goods of Chapter 24,
i.e. Tobacco and manufactured tobacco substitutes.

© The Institute of Chartered Accountants of India

 24 INTERMEDIATE (NEW) EXAMINATION: DECEMBER, 2021

(i) Examine and compute the interest payable if any under the CGST Act, 2017.
(ii) What would be your answer if, GSTR-3B for the month of August 2020 had been
filed belatedly on 20.11.2020 as above.
Note: Ignore the effect of the leap year. Electronic cash ledger and credit ledger carried
sufficient balance for the above shortfall. (5 Marks)
Answer
(a) (i) The time of supply of goods (where movement of goods involve) (fabric) for the
purpose of payment of tax is the date of issue of invoice or the last date when the
invoice ought to have been issued.
Further, a registered person is required to issue a tax invoice before or at the time of
delivery of goods or making available thereof to the recipient.
Thus, in the given case, time of supply is 4th September, 2021.
(ii) Alternative 1: Assuming that services of transportation of goods by road
have been provided by a GTA which has not paid GST @ 12%; i.e. GST is
payable @ 5%.
Tax on supply of transportation of goods by road services provided by a Goods
Transport Agency (GTA) to a body corporate is payable under reverse charge by
such body corporate.
Time of supply of services taxable under reverse charge is earliest of:-
(a) date of making payment, or
(b) 61st day from the date of issue of invoice by supplier
Thus, in the given case, time of supply is earlier of
(a) 25th August
or
(b) 20th August 2021 (61st day from 20 th June)
Thus, in the given case, time of supply 20th August 2021
Alternative 2: Assuming that services of transportation of goods by road
have been provided by a GTA which has paid GST @ 12%. Thus, GST is
payable under forward charge.
The time of supply of services in case where the invoice is issued within 30 days of
provision of service is the earlier of date of invoice or date of receipt of payment.
Thus, in the given case, time of supply is 20th June, 2021.

© The Institute of Chartered Accountants of India

 PAPER – 4 : TAXATION 25

(b) In case of delayed payment of tax,interest is payable @ 18% per annum from the date
following the due date of payment to the actual date of payment of tax.
However, interest is payable only on the short-paid tax which is paid through electronic
cash ledger if return under section 39 is furnished after the due date.
(i) In the given case, PQR Ltd. has furnished the return for August 2020 by the due
date. Hence, interest is payable on the entire amount of short payment of ` 10,000,
as under:
= ` 10,000×18%×61/365 = ` 300.82 or 301(rounded off)
(ii) If PQR Ltd. has furnished the return for August 2020 after the due date, interest is
payable only on the short payment which is paid through electronic cash ledger, i.e.
` 7,500, as under:
= ` 7,500×18%×61/365 = ` 225.62 or 226 (rounded off)
Question 8
(a) Mr. Q, a casual taxable person of Gujarat state is a trader of taxable notified handicraft
goods. It makes supplies to the states of Maharashtra, Rajasthan and Andhra Pradesh.
Turnover for October, 2021 is ` 18 Lakh.
(i) Explain the provisions of registration for casual taxable person under GST.
Examine whether Mr. Q is liable for registration or not?
(ii) What will be the answer if Mr. Q makes trading in taxable notified products instead
of taxable notified handicraft goods which involves 75% making on machine and
25% by hand? (5 Marks)
(b) Is Dynamic Quick Response (QR) Code applicable to suppliers who issue invoice to
unregistered persons? If no, list the suppliers to whom Dynamic QR Code is not
applicable. (5 Marks)
OR
(i) What is ‘e-invoicing’?
(ii) What is the threshold limit for mandatory issuance of E-invoice for all registered
businesses?
(iii) A consignor hands over his goods for transportation on Friday to the transporter.
However, assigned transporter starts the movement of goods from consigner’s
warehouse to its depot located at distance of 600 Km. on Monday.
When will the e-way bill be generated and for how many days it will be valid?
(5 Marks)

© The Institute of Chartered Accountants of India

 26 INTERMEDIATE (NEW) EXAMINATION: DECEMBER, 2021

Answer
(a) (i) A casual taxable person is required to obtain compulsory registration under GST
irrespective of the quantum of its aggregate turnover.
However, a threshold limit of ` 20 lakh (` 10 lakh in case of specified Special
Category States) is available for registration to a casual taxable per son who:
(i) is making inter-State taxable supplies of notified handicraft goods and notified
hand-made goods,
(ii) is availing the benefit of exemption from registration available to inter-State
supply of above-mentioned goods upto the aggregate turnover of ` 20 lakh
(` 10 lakh in case of specified Special Category States), and
(iii) has obtained a PAN and
(iv) has generated an e-way bill.
In the given case, since Mr. Q is engaged in supplying notified handicraft goods and
its aggregate turnover 6 does not exceed ` 20 lakh, he will not be liable to
registration provided he fulfills other conditions specified herein.
(ii) In case Mr. Q is engaged in trading of notified products which are predominantly
made by machine, he will not be eligible for the exemption from registration under
aforesaid provisions and needs to take compulsory ( mandatory) registration.
(b) Dynamic QR code is applicable to invoices issued in respect of supplies made to
unregistered persons by a registered supplier provided its aggregate turnover in any
preceding financial year from 2017-18 onwards exceeds ` 500 crores.
However, it is not applicable to following suppliers issuing invoices to unregistered
persons:-
(i) Insurer or banking company or financial institution including NBFC
(ii) GTA supplying services in relation to transportation of goods by road in a goods
carriage
(iii) Supplier of passenger transportation service
(iv) Person supplying services by way of admission to exhibition of cinematograph films
in multiplex screens
(v) Supplier of online information and database access or retrieval (OIDAR) services

6It has been assumed that Mr. Q has started supply of goods in October 2021 itself.

© The Institute of Chartered Accountants of India

 PAPER – 4 : TAXATION 27

Alternative
(b) (i) E-invoicing is reporting of business to business (B2B) invoices to GST system for
certain notified category of taxpayers.
(ii) The threshold limit for mandatory issuance of e-invoice for all registered businesses
is ` 50 crores.
(iii) E-way bill will be generated before commencement of movement of goods by
transporter on Monday.
The validity period of the e-way bill is one day from relevant date upto 200 km and
one additional day for every 200 km or part thereof thereafter.
Thus, validity period in the given case7, is 3 days

It has been assumed that goods transported are not over Dimensional cargo.
7

© The Institute of Chartered Accountants of India