CMA SEPTEMBER-2022 EXAMINATION MANAGEMENT LEVEL
SUBJECT: R2. TAXATION
Time Allocated: Three hours Total Marks: 100
Instructions to Candidates
There are three sections (that is A, B & C) in this paper. You are required to answer ALL questions.
Answers should be properly structured, relevant and computations need to be shown wherever necessary.
You are strongly advised to carefully read ALL the question requirements before attempting the question concerned (that is all parts and/or sub-questions).
ALL answers must be written in the answer book. Answers written on the question paper will not be submitted for marking.
Start answering each question from a fresh sheet. Your answers should be clearly numbered with the sub-question number then ruled off, so that the markers know which sub-question you are answering.
Section No of questions in the Section
No of sub-questions in the Section
Marks allocation
A 01 08 20%
B 01 05 30%
C 02 50%
TURN OVER
SECTION A – 20 MARKS
This section consists of 1 question and 8 sub-questions.
You are advised to spend no longer than 36 minutes on this section. Section will carry 20 marks and one sub-question will carry 2.5 marks each.
QUESTION 01
(a) How far is it true that VAT avoids ‘tax on tax’?
(2 ½ Marks) (b) Discuss the role of DCT in the whole tax administration.
(2 ½ Marks) (c) Briefly explain the rule of carry forward of losses under the head ‘capital gain’.
(2 ½ Marks) (d) What is minimum tax as per section 82(c)?
(2 ½ Marks) (e) Mention the amount of penalty for default and concealment of gift item by a person.
(2 ½ Marks) (f) When anti-dumping duty is imposed as per section 18B of the Customs Act, 1969?
(2 ½ Marks) (g) What is credit of advance tax?
(2 ½ Marks) (h) "Any income of a farmer is to be treated as agricultural income"- Do you agree? Explain.
(2 ½ Marks)
END OF SECTION A SECTION B Starts on page 3
Section B– 30 MARKS
This section consists of 1 question and 5 sub-questions.
You are advised to spend no longer than 9 minutes on each sub-question in this section. Section will carry 30 marks and one sub-question will carry 6 marks each.
QUESTION 02
(a) Mr. MMZ is a government employee. He has got salary and other benefits during the year 2021- 22 in the following ways:
Monthly salary Tk. 56,500 Medical Allowance Tk. 1,500
Festival Bonus equal of one month’s salary Bangla Naboborsho Bonus Tk. 11,300
He lives a government quarter. He contributes in PF amounting Tk. 14,000 per month. He received Tk. 108,500 on that fund during the year. He also contributed in benevolent Fund and Group Insurance Fund amounting Tk. 150 & 100 respectively per month. He deposits Tk. 5,000 per month as DPS.
Determine his tax liability during the IY 2021-22.
[Marks: 6]
(b) Calculate taxable income and tax liability for Mrs. Islam, living is Dhaka, considering her income for the year 2021-22 includes following different sources:
Dividend income from public Ltd company Tk. 55,000; Interest received on Fixed deposits Tk.
2,700; Interest received on Post office saving bank Tk. 1,800; remuneration for exam script evaluation and invigilation Tk. 1,000; prize of winning Prize bonds lottery received Tk. 24,000;
sale of fish of pond Tk. 1,000; income from copyright and royalty Tk. 4,000; remuneration as director Tk. 15,000; and income from license Tk. 2,000. During the year she has purchased jewellery of Tk. 125,000 the source of which has not been explained to the DCT. During the year she has paid Tk. 200 as license renewal fee and Tk. 800 as interest on loan taken to purchase the share of private limited company. Her income from salary is TK. 260,000. Her total investment during the year is Tk. 20,000.
[Marks: 6]
(c) The total income of Ms. Lima was TK. 600,000 for the year ended 30 June 2018. She has paid Tk. 12,000 as advance tax and Tk. 4,000 as tax deducted at source during the income year 2019-20. At the time of submission of income tax return she has applied for two months' time extension and accordingly DCT has allowed the time. Ms Lima has submitted her income tax return on 15 January, 2021 under section 82BB of ITO 1984 along with a pay-order of Tk.
14,000. DCT has Processed the return under section 82BB(2) and no arithmetic mistake has found. Even though the return is not selected for audit under section 82BB(3).
Does Ms. Lima need to pay interest on delay payment? If yes, then what is the amount of interest?
[Marks: 6]
(d) A manufacturer sells his output to a wholesaler, the wholesaler sells it to a retailer and the retailer sells it to a customer. The cost of manufacturing the output is Tk. 50,000 which includes
(e) Total Income of Mr. Amin for the current income year includes income from: Bangladesh Tk.
20,00,000; Sweden Tk. 700,000; Singapore Tk. 350,000 an Russia Tk. 12,00,000. The Income tax rate for foreigner in Sweden is 30% but he has paid tax @20% as per DTA. 25% has been paid in Russia for the income generated in Russia. The income of Singapore has been brought in Bangladesh through Banking channel. Compute the amount of double taxation relief and his net tax liability for the income year 2021-22.
[Marks: 6]
END OF SECTION B
SECTION C Starts on page 5
Section C
This section consists of 2 questions.
You are advised to spend no longer than 45 minutes on each question in this section. Section will carry 25 marks and allocation of marks for each sub-question is indicated next to the sub-question.
QUESTION 03
Mr. Rahman is an executive of a private bank. His pay scale is 16000-2000X4-24000. In the last month of Income year he received basic salary of Tk. 18,000 per month. Annual salary increment date is 1st January. His other income for the income year 2021-2022 includes: House rent allowance Tk.
10,800 per month; Medical allowance Tk. 1,200 per month; Dearness allowance @ 5% of Basic Salary; Two festival bonus each equal to one month's Basic Salary (1st one is on 1/12/21 and 2nd one is on 5/2/2022); Interest from Recognized Provident Fund Tk. 12,000; Performance bonus equal to three month's Basic Salary given on 30/6/22; He contributes to old age fund @ 5% of basic salary. His employer provides him a car for full time use. He also received Tk. 950 per month as entertainment allowance out of which he spends Tk. 4,000 during the year. He withdrew two month's basic salary in advance on 1/3/2022 and contributes to Recognized Provident Fund (RPF) @ 10% of Basic Salary and his employer also contributed the same amount. Tk. 1,000 was deducted each month as TDS from his salary income by his employer.
Mr. Rahman received interest from tax exempt government securities Tk. 6,100, interest from taxable government securities Tk. 4,750 and interest from debentures Tk. 16,150 in his bank account. Bank charge collection fees of Tk. 1,350 against the all interest collected by the bank. Mr. Rahman borrowed Tk. 5,000 @ 12% to finance investment in debentures.
Mr. Rahman is the owner of a three-storied building at Moghbazar. Mr. Rahman resides with his family in the 2ndfloor, one flat in the ground floor is let out to a medical chamber and all other flats (in each floor there are two flats) are let out at a monthly rent of Tk. 9,000 per flat. The municipal value of the house is Tk. 675,000. The following expenses were incurred for that house: Repair expenses Tk.
150,000; City Corporation tax Tk. 1,200 per quarter; White wash expense Tk. 15,000; Insurance premium Tk. 3,000; Electricity for water pump Tk. 5,000; Caretaker's salary Tk. 2,000 per month (which was paid by the tenants); Land revenue paid Tk. 3,000; Mortgage loan paid 1k. 53,750 (of which Tk. 3,750 is interest on loan); Interest paid to HBFC Tk. 6,000; Alteration cost for ground floor Tk. 30,000. One flat in the level 3 remains vacant for two and half months during the year.
His incomes from other sources are: Interest on fixed deposit Tk. 12,420; Income from writing column in newspaper Tk. 500, Income from sale of forest timber Tk. 32,000.
Mr. Rahman made and incurred investment and expenses during the said year for: Life insurance premium Tk. 30,000 (policy value Tk. 250,000); Purchase of Shares of a co-operative society Tk.
40,000; Purchase of Share from IPO Tk. 25,000; Donation to Educational and Religious institutions Tk. 8,000; donation to Zakat fund Tk. 35,500; donation to a local club Tk. 9,000; Spent a sum of Tk.
15,000 as educational expenses of his children; Purchase of ICB certificate Tk. 20,000 and Contribution to group insurance Tk. 2,000.
Mr. Rahman lives in Dhaka and he has a physically disabled child. His net wealth is TK. 14 crore.
QUESTION 04
The following accounts appeared in the AB Foods Ltd, a publicly traded company established in 2020 through issuing 20% of paid up capital through IPO, for the year ended 30th June, 2022. Compute the Taxable Income and Tax Liability for the assessment year 2022-23:
Particulars Tk. in ‘000 Particulars Tk. in ’000
Cost of Goods Sold 50,000 Net Sales 100,000
Salaries and Wages 20,000 Interest 1,000
Interest on Loan 13,750 Dividend 2,500
Free Sample Distribution 550 Gain on sale of Land 2,000
Provision for Bad Debt 500 Gain on sale of shares 1,500
Supplies expenses 600 Bad Debt recovery 13,000
Bad Debt 600
Rent Expense 10,000
Repair expenses 2,000
Commission 600
Audit Fee 200
Depreciation 3,200
Technical Fee 600
Donation to Dhaka University 800
Travel Expense 3,000
Sales Promotion 700
Entertainment 300
Miscellaneous expenses 200
Insurance Expenses 5,000
Corporate Income Tax 2,400
Net Profit 5,000
120,000 120,000
Additional Information:
(i) Salaries and allowances include the following items: perquisites: CEO Tk. 1000,000; CFO Tk.
800,000; Chief Research Advisor (Person with disability) Tk. 27,00,000 and incentive bonus of Tk. 600,000.
(ii) Commission includes commission for salesmen Tk. 350,000; Consignee’s Tk. 150,000 and shareholders Director’s Tk. 100,000.
(iii) Allowable depreciation as per schedule 3: Tk. 2,000,000.
(iv) Provision for Bad Debt includes Tk. 100,000 as Bad debt written off.
(v) One third of the travel expenses is related to overseas travel.
(vi) It has been identified that the company appointed one foreign food safety advisor without taking proper approval from the concerned authority.
(vii) For simplicity, assume total TDS and Advance Tax amount is Tk. 1,000,000.
(viii) Land was purchased on 1/1/2015 at Tk. 3,000,000. It was sold on 31/12/2021 at Tk. 5000,000 (ix) The company declared Tk. 300,000 as cash dividend and Tk. 1,000,000 as stock dividend. So,
the rest of the amount of profit was transferred to Retained Earnings.
(x) Total Gross Receipt during the year in Tk. 12,00,00,000.
[MARKS: 25]
* End of Question Paper *
