Tax Paper Review | Tax Paper Analysis May 2026 | Check Pinned Comment

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[00:00:04]Yeah, one minute.

[00:00:08]I hope I'm I'm audible.

[00:00:16]>> Perfect.

[00:00:18]Yes guys uh yeah the paper has arrived income tax. So this is income tax paper review. GST review also will be posting it in um you know few few minutes. So in this MCQ paper completely I have analyzed and even figured out the answer. The level of difficulty in MCQ according to me was 8 out of 10.

[00:00:40]Difficulty level of MCQ paper. Now what about descriptive? Right now once MCQ answers is completed we'll go with descriptive. Yeah it is above moderate but not extreme difficult guys. It's above moderate fine because most of the provisions were something which are not something uh different. They were tested from whatever routinely we expect. Okay.

[00:01:00]Next descriptive paper have not yet seen guys. I'll I'll see right away along with you know MCQ solving. Now look at the questions. So one of the question is vai there is a clubbing related question. So he gifted house property to wife and the wife has gifted the same to daughter-in-law. It is treated as indirect gifted to daughter-in-law and 64 subsection 1 clause 4 will attract.

[00:01:23]Yes or no? Clause six will attract. As per that the income will be taxable from that house property in the hands of the transfer. So what is the rent income your 54,000 monthly multiplied by she rented from 1 May 11 months minus 30%.

[00:01:37]So 4 lakh 15,800.

[00:01:40]So the first question they're asking I mean one of the question that they're asking is in whose hands rental income will be taxed is it in the hands of Vizai or the wife or the daughter-in-law Anushka? It's taxable in the hands of Vizai and nothing will be taxable in the hands of the wife and then daughter-in-law. Therefore the answer is B here might be for you the option might have been jumbled carefully evaluate then then another question that they're asking by the way remember here SSA did not opt out of default tax regime he opted out means optional tax regime did not opt out means it's actually default tax regime sorry by the way I'm actually at my hometown the camera setup was not available in this room at another classroom uh power was shadow that's it that's the reason I'm using a webcam so excuse me for that now now here they're asking one more Examine the applicability of advanced tax provision.

[00:02:26]She not she she does not have rashmi.

[00:02:30]You know what is rashmi? Is a CA having gross resist 45 lakhs you know and 44 ADA provisions are you know fulfilled.

[00:02:37]If an assess going for present to taxation on 44 AD and ADA only one installment of advanced tax is applicable. So she just have to deposit entire amount of advanced tax by 15th March for the relevant year. Therefore the answer is option number C. Next rental income. That point is already done. For example, if assuming the property was gifted by Vizay to Banu.

[00:02:59]Fine. Original scenario is what? Vijay gifted to Rashmi. Rashmi gifted to daughter-in-law. Right. But what if it is gifted directly to Banu who is a major son instead of wife? Then in whose hands rental income will be taxed. If at all you transfer house property without consideration for son major son that too. Remember there is no clubbing provision attracted. The income from that house property will be accessible in the hands of Vijay. I mean the son himself Banu. So Banu lettered the property at a 54,000. So 54,000 into first Maya which means 11 months minus 30%. House property income 4 lakh 15,800 only. But it is tax in the hands of Banu itself. Yes or no. Therefore answer is next. By the way just comment below where are you watching this from and how you felt the paper. MCQs as far as MCQs are concerned. I did not feel they were extreme hard and all because right now I just showed you and explained you the provision. These are the points something which I already covered in the marathon also. These are the points in fact which I which I even mentioned it in expected questions. Even if you see income tax expected question slump sale 50b I selected and then gave fine.

[00:04:02]Anyhow exam has already happened. Just share your feeling like many students are commenting that it is very hard and all. Fine. Next.

[00:04:12]What shall be the amount of deduction available to Vijay in respect of contribution to pension scheme? Remember it's a default tax reso how much he contributed you know his salary is 1 lakh 20,000 for 12 months it is 14 lakh 40 they contributed 15% 2AK 16,000 to you know employer also contributed same amount remember under default tax regime you get deduction only for employer contribution under ATCC subsection 2 up to 14% of salary 14% of salary means what 14 lakh 40,000 into 14% which is 2 lakh 1,600 therefore the answer is 2K 1,600 because the SSC is choosing optional taxism. Therefore, the answer is C. Next. Coming to case scenario two.

[00:04:52]P slump sale question has been asked. If you remember guys, I told you even in expected questions in capital gains only solve slum sale. Even I told you in the marathon also immobile property taxation. I told you they also insisted on you to solve slum sale. At least slum sale is tested. And again this time slum sale is tested along with the TDS provision. Nothing to worry. You know there is a sale of unit A happened. Sale consideration 1,600 market value you know 1,750 whichever is higher so full value of consideration is what 1,750 now there is a transfer expenditure which he incurred professional fee and then commission 55,000 then the net consideration 1749.45 45 minus net worth of the undertaking. Net worth of the undertaking is what? You see I calculated here what happened? 2,500 rupees is the land value after upward revaluation of 500. Which means if you remove revaluation 2,000 into 40% which is 800 is unit related land value.

[00:05:52]Then planted missionary already WD value they gave already planted missionary WDB into 40%,800,000 detours into 25% 150 closing stock into 40 which is 333 other assets 800 into 4320 which includes 200 rupees worth of goodwill guys and on that goodwill depreciation is not calculated for first year if you observe September 1st 200 lakhs in the last year so more than 180 days 25% depreciation if you remove which is minus 50 you get total assets 2553.33 then liabilities bank loan you know 60% 600 to 6360 credit 7 to 2020 20% which is 140 therefore total liabilities 500 gross assets minus liability is equal to 2053.33 this is net worth actually there is an alternative net worth calculation is also available by the way here also you reduce 50 33 okay 1733 alternative But this they didn't consider that. So nothing to worry this option they didn't give. So happy fine. So actually they give one confusing point. Land is purchased in April 2012 at 1200 lakhs because here if I remove revaluation no so 2,000 it is getting but purchase value is 1200. One confusion slightly was created but I ignored it. Okay. Land land information which they gave here I ignored it. Now look at I considered all other possibilities also and then this is the answer which I figured out.

[00:07:18]Compute the net worth 2053.33.

[00:07:21]This is the net worth which I already calculated and then showed you here.

[00:07:24]Then um amount of capital gain or loss you know it's a long-term capital loss.

[00:07:30]You see here net worth I mean net consideration this is net worth if you remove 303.88 guys. Some students might ignore this and select 33 guys. No it's a long-term capital loss because unit was started in 2012 and it is sold in 2026. more than 36 months. Remember for slum sale 36 months is a criteria to decide whether it's a you know um uh to decide whether it's a default tax res I mean sorry to decide whether it's a long-term capital set or short-term capital set. Yeah, somebody's commenting case number case scenario one. Yeah, that's what default tax resume. Yes, that's what I told guys. Okay, fine. Look at So this is the answer. 33.88.

[00:08:09]That's it. And compute the amount of TDS J. Remember he paid you know approximately 20K professional fee and which is 94J 35K commission which is 94H and he is covered under hijack exemption is not applicable therefore 94 H is applicable and professional fee is just 20K for professional fee threshold is 50k perom yes or no therefore no TDS on this whereas on this 35k into 2% 700 rupees TDS is applicable that's it then coming to this is capital asset definition they tested you Remember right capless it means any property held by SSE whether track whether mobile or removable you know depreciable or non-depreciable related to business or not excluding stock and trade within stock trade there is one more exclusion FYI is any securities held by foreign portfolio investor or foreign institutional investor whatever the name you call for them it is always a capital asset here there is a come there is a firm which is an FPI nothing but foreign institutional investor they're buying in they're trading in shares and securities even though the word is trading for them the shares and securities are always treated as the capital asset. Therefore, under which head of income the income is taxable, it's always the capital gains.

[00:09:17]It's actually definition of capital asset which is tested here. That's it guys. Okay. All the eight questions answer I have given clearly. If any other answer if at all for you it is possible if at all wherever see I am 99% sure that my answers are right. But sometimes I might also go wrong out of you know um speed solving but I'm 99% sure I checked twice before even coming into the live. So it was clear the answers were I just tried alternatives also and alternative answers were not possible here. So every alternative is considered and then given you the final answers within the shortest time possible. That's it. This is with respect to income tax all the eight MCQs related answers 15 out of 15 you can easily secure. I don't say easy it's moderate but not hard and extreme hard at all. with respect to MCQs is concerned. Next descriptive part I will look at descriptive part I will look at I'll just briefly go through the descriptive part. So here uh they have given P&L account 64 years. Okay. Uh net profit they have given and various debits and credits depreciation interest paid on loan taken from schedule bank to buy pollution control equipment amount of 850 was taken. Okay, this is interest on loan taken on 1st J 1st June amount of loan which was taken on 1st June. So, so they might have given some other information. Remember until the asset is put to use until the date of put to use the asset any interest is there that should be capitalized that should be added to the actual cost if at all that is debited to PN it should be added back but we don't know when the asset was put to use we don't know exactly that information might have been given later purchase of raw material include one lakh towards MSME okay the purchase was made on 1st February but the payment was made in 20th July since it is not paid within 15 days or 45 days 43bh is applicable therefore it is disallowed for this year and again you can claim deduction in the respective 26 27 Interest of 2 lakh 50 on enhanced compensation. Yes or no? Uh however the he actually received the amount in bank account in 20th May 2026. So interest probably would have been credited to P&L. Please reduce us. Please reduce us.

[00:11:18]Then in other sources tax it in 2627 but here in the P&L they would have accidentally credited in the P&L. So reduce it. Then 50,000 given as contribution through account paycheck for a brow to political party actual working in so factor register. Okay.

[00:11:31]Okay, this is a donation to political party technically speaking. Okay, this add back you know because it is debited to PNL. Remember all the following were debited or credited. If it's a payment item debited receipt item would have been credited. So add back and again if it is by the way which regime is that here which regime he has never opted for default tax reason. Therefore it's an optional tax res and the SSI is an individual senior citizen be careful this amount can be claimed as deduction under AD GGC guys.

[00:11:59]Then two lakh received as dividend from Indian company was credited. Please reduce it and tax it and other sources.

[00:12:05]Interest of 65,000 was incurred on loan taken to earn dividend. This from this 2 lakhs income this 65,000 rupees the 65,000 rupees reduce it but don't fully reduce it because 65,000 is subject to 20% which is 40,000 rupees only you should reduce it under other sources.

[00:12:20]Fine. Until now all the adjustments were quite simple. No big deal at all. He had taken a housing loan for purchase of flat on 1st April interest of 2 lakh 15 and principal repayment of 1 lakh 20 reflected in bank statement and uh okay mun 20,000 was paid during the year from his savings bank account okay so he had taken housing loan self occupation so indirectly house property information is also given remember it's an optional tax res is equal to zero interest maximum limit is 2 lakhs principle is eligible for ATC that's it uh a new missionary costing 50 lakh the this first commissioner in the 15% block it was installed and put to use on 24th October 2024 means last information they have given he did not want any the depreciation asset on that date so for that last year you know it was put to use on 24th October right so claim less than 180 technically little all these were slight twist you have to be very very carefully so last year 2425 half depreciation you claim then you calculate WDB value for the last year closing the same will be the opening value for the current year then again he imported air pollution which is also falling out of 15% block just now they said which was purchased outside India by a seller at a cost of 10 lakh on 1st June for this purpose he took a loan from the bank at 85,000 on 1st June 2025 the equipment was delivered on 15th September and was put to use oh my god so June July August September for 4 months whatever the loan interest is there added to the actual cost whatever the loan interest is added to the actual cost around that entire cost has to be added in the block this is a very tricky adjustment this is a very tricky adjustment you have to be very careful those of you who have watched my marathon on the depreciation I explained this point very clearly I don't want to say proudly that I did that but but I just wanted to remind you that I covered this point explanation 8 to43 subsection one interest on loan borrowed for acquiring the fixed asset shall be added to the cost as I know up and up what what interest the interest up to the date of put to use that interest be careful remaining interest amount till the year and whatever is that that will be claimed as deduction under section 36 guys. Then this point is specifically emphasized even in the marathon also.

[00:14:28]Yes. Next.

[00:14:31]Next.

[00:14:32]Then then capital gain related information they have given.

[00:14:37]Then here they have given salary information all that he graduated. Okay.

[00:14:42]He never visited India. So residential status related information is also given. Determine residential state and compute the total income. Fine.

[00:14:49]Descriptive paper. I will give you the entire rating in the comment below.

[00:14:53]Okay. They're asking TDS related provisions.

[00:14:57]Indian partnership forms. It open luxury mall. Mr. X a resident Bollywood star purchased a handbag worth of 12 lakhs.

[00:15:04]Remember handbag handbag comes under specified goods 26 C 1F. So since it is more than 10 lakh value T TCS is applicable. TCS is applicable at 1% you need to collect TCS. Then Robo Limited an Indian company made a payment for the supply of new year diaries. However, new metal was supplied by Robo for production of the diaries.

[00:15:26]Okay. So this is regarding 94 C applicability. So no middle was supplied which means it's purely a sale of goods contract. So 94 C will not apply.

[00:15:37]Actually goodwill depreciation point technically somebody's asking regarding sum sale goodwill. Okay. in that since goodwill since the goodwill is purchased on or after 1920 you should not technically calculate depreciation but that option answer was not given in the answers below that alternative option was not given there so that's the reason I considered this okay I considered depreciation also probably they might have ignored that logic okay fine that was actually one of the very old question so that is only tested but different numbers so in that question goodwill depreciation would have been calculated so they reduced it technically speaking any asset any goodwill purchased on or after 1920 20 year you should not calculate depreciation in the slum cell that's an alternative to answer that's what I told so that you ignore it next so he opted out of default tax resism which means optional tax resis so here what what the information employed private sector basic salary the company also maintains and runs an engineering college in Ranchi uh where the son is admitted for study mining engineering okay he gives you following information he was transferred to so and so where he was provided room in a prominent residence his stay was from 2nd September to 12th September the hotel room remember any hotel accommodation provided for less than 15 days is exempted not taxable his employer sold a car it's a sale of mobile setma 15% rate is irrelevant 20% is a depreciation issue considered for purposite valuation his employer entered into staff group insurance which is completely exempted group insurance policy taken is fully exempted Next term the annual fee just a minute. Yeah. The annual fee of other student in same college is where where his son is studying is two lakh. Remember here education is provided in the school which is maintained by employer. Yes or no? In the same the company also runs a school where his son is admitted. Yes or no? So it is two lakhma which means similar education cost is more than 1,000 rupees per month. Correct? So his company provides education to his son at free of cost. Entire two lakhs is treated as per visit. He went on holiday within India for three children. Leave travel assistance. Okay. One major two twin daughters. So it is considered as two only. Entire travel cost is exempted. Then he his wife expired on in May 2024 on duty. Just a minute. She was employed with government school as a school teacher. The family pension received was 2K50,000.

[00:18:01]The family pension received was 2K50,000.

[00:18:04]Just a minute guys, my pen got hanged.

[00:18:07]Fine. It's okay. I'll see. So family pension that is taxable under other sources. Remember 1/3 of the family pension or 15,000 because it's an optional tax regime. So whichever is low that deduction available. Pam received 10 lakhs from a trust registered under 12 of the income tax. Any amount received from charitable trust is exempted 56 subsection to class 10.

[00:18:25]That's a exempted gift to that. You remember this question is very much solvable. Not a big deal. Then coming to this question, there's another question.

[00:18:32]Discuss taxility of these transactions.

[00:18:34]Okay. Abinash residential booked an apartment in Pune for 2021 for 50 lakh.

[00:18:38]He took possession of this apartment on 1st April 25. The standard value as per the munipal records was 1st April 25 was 75 lakhs. On the booking it was 60. He has paid 5 lakhs but DD as a down payment on the date of booking. Okay.

[00:18:49]Which means which value is applicable?

[00:18:51]Remember actual consideration 50 lakh.

[00:18:53]Stand duty value 60 lakh per 60 lakh is more than 110%. Therefore 60 lakh is standard value. free portion 60 lakh minus 50 lakh is equal to 10 lakh is free portion which is more than 50,000 therefore gift provision is applicable in the year 25 26 year mark okay next he has paid okay fine also on 16th January his gold chain costing six lakhs was stolen during marriage party which okay which was purchased on 20 August was stolen when the FMV was 30 lakh on 28th he received insurance claim of 4 lakh 50 towards this particular loss okay so uh 45 subsection 1A provision you can apply. So uh as per that full value of consideration is 4 lakh50 S or no minus gold chain cost of acquisition market value is irrelevant cost of acquisition 6 lakh you have to reduce it's a short-term capital loss of 1 lakh 50,000 rupees it's a short-term capital loss of 1 lakh 50,000 that's it guys two points I told one is gifted 10 lakhs which is taxable short-term capital loss of 1 lakh 50 which is uh you have to carry forward that's it he did not opt for default tax regime thank god it's working he did not opt out for default tax regime he did not opt out means it's DTR which is applicable That's it. So I think u here with the gift provision and capital gains provision both are tested and not an issue at all. Next then n resident 39 years gives you following particulars. This is set off and carry forward provision. I guess it's something you can easily solve it.

[00:20:17]So this I'm not giving any much focus on because set off and carry forward. This model would have been already covered in our question bank also. Next mention the due dates up to which action can be taken. Filing of updated return in case of partnership irrespective of SS 4 years is a time limit 48 months is available income under 1391 for a non-working partner or a you know for a non-working partner or working partner doesn't matter if it is related to firm whose books are liable for audit 31st October is the due date filing of revised return in case of Indian company yeah still 3 months prior to the due date 3 months prior to 31st March or completion of assessment whichever is earlier that is a due date yes or Mention the due dates or time limits up to which action can be taken in case.

[00:21:02]Okay. Fine. Applying for PAN number in respect of resident if total income exceed maximum by which by 31st May I guess I think 31st May I guess you need to apply the you know u pan number. Yeah technically descriptive paper was tough but not it is extreme hard and all.

[00:21:18]That's it. I gave you a brief clue of the entire answers as a whole.

[00:21:24]That's it. I think second question seems to be lengthy. You can take it as a choice. Okay, you can take this as a choice. Second question, third question you can easily answer. Fourth question you can easily answer. First question you can answer. That's it guys. Remember descriptive paper. I have not given a detailed study. Uh solving detail I didn't do. I briefly read and then explained you. But MCQs I gave you eight questions MCQs were there as part of income