{"id":20055,"date":"2023-04-04T16:35:19","date_gmt":"2023-04-04T11:05:19","guid":{"rendered":"https:\/\/gstguntur.com\/?p=20055"},"modified":"2023-04-04T16:36:45","modified_gmt":"2023-04-04T11:06:45","slug":"non-resident-taxation-ca-final-dt-question-bank","status":"publish","type":"post","link":"https:\/\/gstguntur.com\/non-resident-taxation-ca-final-dt-question-bank\/","title":{"rendered":"Non-Resident Taxation \u2013 CA Final DT Question Bank"},"content":{"rendered":"

Non-Resident Taxation \u2013 CA Final DT Question Bank<\/a> is designed strictly as per the latest syllabus and exam pattern.<\/p>\n

Non-Resident Taxation \u2013 CA Final DT Question Bank<\/h2>\n

Question 1.
\nThomas, a non-resident Indian has the following sources of income in India. You are required to compute his total income and determine his tax liability:
\n\"Non-Resident
\nInflation index: 2006-07 = 122; 2020-21 = 301
\nThe shares are sold through a recognised stock exchange and STT has been paid on it both at the time of sale and at the time of acquisition. The highest price quoted for such shares on the recognised stock exchange in total is \u20b9 4,50,000 on 31.01.2018. The property was acquired partly out of a loan from HDFC. The repayment of loan made during the year amounted to \u20b9 30,000. The assessee claims deduction of \u20b9 50,000 towards repayment of loan taken for higher education in India in 2015 before his migration. [CA Final Nov. 2011] [6 Marks]
\nAnswer:
\nAs the assessee is a non-resident Indian, provisions of Chapter XII-A (com-prising of sections 115C to 115-1) can be made applicable to him or under section 115-1, he can opt for normal provisions.<\/p>\n

Computation of Total income for A.Y. 2021-22
\n\"Non-Resident<\/p>\n

Notes:
\n1. It has been assumed that house property income here means the income from house property net of all deductions.<\/p>\n

2. As per Sec. 112A, where the capital gains arises-from the transfer of long term equity shares, the tax payable by the assessee on such long term capital gains exceeding \u20b9 1,00,000 shall be 10%, if .STT has been paid on acquisition and transfer of such shares.<\/p>\n

The cost of acquisition of such shares for the purposes of computing capital gains shall be higher of the cost of acquisition of such shares or the FMV of such shares. The FMV in respect of listed shares shall mean the highest price quoted for such shares as on 31.01.2018 on the recognised stock exchange where such shares are listed. Since, the FMV of the shares as on 31.01.2018 is higher than the cost of acquisition, it shall be taken as the cost of acquisition as per Sec. 55(2)(ac).<\/p>\n

Computation of tax liability
\n\"Non-Resident
\nIn the present case, the tax liability of Thomas, a non-resident India, will be lower if he does not opts for Chapter VII-A and therefore, it is beneficial for him to pay tax as per the normal provisions applicable to non-residents.<\/p>\n

\"Non-Resident<\/p>\n

Question 2.
\nRicky, a foreign national and a cricketer came to India as a member of South African Cricket Team in the year ended 31\u201d March 2021. He received \u20b9 4,00,000 for participation in matches in India. He also received \u20b9 1,50,000 for an advertisement of a product on Radio. He wrote an article for a local newspaper and received \u20b9 20,000 for it. During his stay in India, he also won a prize of \u20b9 25,000 from horse racing in Kolkata. He has no other Income in India during the year. You are required to do the following:<\/p>\n

(i) Compute his tax liability in India for AY. 2021.22.
\n(ii) Comment whether these incomes are subject to deduction of tax at source.
\n(iii) Comment whether he Is liable to file return of Income In India for A.Y. 2021-22.
\n(iv) What would have been his tax liability, had he been a match referee Instead of cricketer? [CA Final May 2018 (Old Syllabus), Nov. 2012] [8 Marks]
\nAnswer:
\n(i) Computation of Total Income of Ricky
\n\"Non-Resident<\/p>\n

Computation of tax liability of Ricky<\/p>\n\n\n\n\n\n\n\n\n
<\/td>\n\u20b9<\/td>\n<\/tr>\n
Tax u\/s 115BBA [(\u20b9 4,00,000 + 1,50,000 + \u20b9 20,000) \u00d7 20%]<\/td>\n1,14,000<\/td>\n<\/tr>\n
Tax u\/s 115BB [\u20b9 25,000 \u00d7 30%]<\/td>\n7,500<\/td>\n<\/tr>\n
Total tax<\/td>\n1,21,500<\/td>\n<\/tr>\n
Add: Health & Education cess @ 4%<\/td>\n4,860<\/td>\n<\/tr>\n
Total tax liability<\/td>\n1,26,360<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

As per Sec. 194E, where any income referred to in Sec. 115BBA is payable to a non-resident sportsman which is not a citizen of India, the person responsible for making the payment shall, at the time of credit or payment, whichever is earlier, deduct tax from such income @ 20%. Therefore, the income from participation in matches, income from advertisement and income from writing an article for a news-paper shall be liable for deduction at source @ 20%.<\/p>\n

\"Non-Resident<\/p>\n

As per Sec. 194BB, any person being the holder of license for the horse racing, who is responsible for paying any income by way of winnings from any horse race in an amount exceeding \u20b9 10,000 shall, at the time of payment, deduct tax thereon at the rates in force. Therefore, the prize of \u20b9 25,000 from horse racing shall be subject to deduction of tax @ 30%.<\/p>\n

Since, Ricky is a non-resident, the amount of tax deducted at the pre-scribed rates would be increased by health & education cess @ 4%.<\/p>\n

(iii) As per Sec. 115BBA, it shall not be necessary for the assessee to fur\u00acnish the return of income u\/s 139(1) if his total income consists of income referred to in Sec. 115BBA only and tax has been deducted at source from it. However, in this case, the total income of Ricky also includes income from winnings from horse race and therefore, Ricky is required to file the return of income u\/s 139(1).<\/p>\n

(iv) If Ricky had been a match referee instead of cricketer, then the in\u00accome from participation in matches, income from advertisement and 1 income from writing an article for a newspaper shall not be taxable u\/s ( 115BBA but, shall be taxable at normal rates. However, the winnings from horse racing shall be taxable u\/s 115BB only.<\/p>\n

Computation of tax liability of Ricky
\n\"Non-Resident<\/p>\n

\"Non-Resident<\/p>\n

Question 3.
\nSOL Inc, a notified Foreign Institutional Investor (FII), derived the following incomes from various sources for the financial year 2020-21:
\n(1) Income in respect of securities: \u20b9 28,50,000
\nExpenses incurred in respect thereof: \u20b9 50,000
\n(The above Income includes an interest of \u20b9 16,00,000 received from p an Indian Company on the investment in rupee denominated bonds issued on 22.08.2019 and dividend income of \u20b9 3,50,000 from a domestic company).
\n(2) Capital Gains:
\n\"Non-Resident
\nCompute the taxable income of SOL Inc and tax liability for the assessment year 2021-22 as per applicable provisions of the Income-tax Act, 1961, assuming that no other income is derived by SOL Inc (FII) during the financial year 2020-21. [CA Final Nov. 2018 (Old Syllabus)] [10 Marks]
\nAnswer:
\nComputation of total income of SOL Inc., a notified FII, for A.Y. 2021-22
\n\"Non-Resident<\/p>\n

Computation of tax liability of SOL Inc. for A.Y. 2021-22
\n\"Non-Resident<\/p>\n

Note:<\/p>\n

    \n
  1. The computation of total income and tax liability of an FII, whose income comprises solely of investment income and capital gains on sale of securities is governed by the provisions of section 115AD, as per which\n
      \n
    • no deduction is allowable in respect of expenditure to earn investment income and<\/li>\n
    • benefit of indexation is not allowable in respect of long-term capital gains.
      \nThe rates at which tax is to be calculated in respect of investment income and capital gains are also provided in section 115AD.<\/li>\n<\/ul>\n<\/li>\n
    • Since, Rupee Denominated Bonds are not issued between 18.09.2018 to 31.03.2019, interest on such RDBs shall not be exempt u\/s 10(4C).<\/li>\n
    • Since, STT has not been paid on sale of long term securities, sec. 112A shall not be applicable.<\/li>\n<\/ol>\n

      \"Non-Resident<\/p>\n

      Question 4.
      \nMr. Rameshwarm, a non-resident Indian, acquired\/purchased shares in foreign currency of a company XYZ Ltd. on 1.1.2011 for \u20b9 10,00,000. These shares were sold by him in the recognized stock exchange through a broker on 1.1.2020 for \u20b9 30,00,000. The amount of sales consideration of the shares of \u20b9 30,00,000 so received by him was again invested in purchase of shares of other company ABC Ltd. on 31.03.2020. The shares of ABC Ltd. purchased on 31.03.2020 were also sold by him on 30.06.2020 for \u20b9 35,50,000.<\/p>\n

      Discuss the tax implications relating to the two transactions of sales of the shares in the relevant assessment years under the Income-tax Act, 1961 by ignoring the effect of first proviso to section 48. [CA Final Nov. 2018 (Old Syllabus)] [4 Marks]
      \nAnswer:
      \nAs per Sec. 115F, where any long term capital gains arises from transfer of Specified Foreign Exchange Assets and the non-resident Indian reinvests the whole of the net sale consideration in specified assets within 6 months from the date of transfer, the whole such capital gains shall be exempt. However, the new asset acquired shall not be transferred within 3 years from the date of acquisition, otherwise the exemption granted earlier shall be deemed to be the Capital Gains in the year when the new asset is transferred.<\/p>\n

      In this case, Mr. Rameshwarm, has invested whole of the net consideration on transfer of a foreign exchange asset (being shares purchased in XYZ Ltd. in foreign currency), in shares of ABC Ltd., an Indian company, being a specified asset, within 6 months and therefore, the long-term capital gain of \u20b9 20,00,000 (\u20b9 30,00,000, being the sale consideration (-) \u20b9 10,00,000, being the cost of acquisition) would not be chargeable to tax during the assessment year 2020-21 as per section 115F.<\/p>\n

      However, in A.Y. 2021-22, Mr. Rameshwarm has sold the shares of ABC Ltd. and therefore, the amount not chargeable to tax in A.Y. 2020-21 i.e., \u20b9 20,00,000 would be chargeable to tax as long-term capital gains in the assessment year 2021-22, being the year of sale of such shares.<\/p>\n

      Further, short-term capital gain of \u20b9 5,50,000 (\u20b9 35,50,000 – \u20b9 30,00,000) would arise on transfer of shares of ABC Ltd., since such asset is held for d a period of less than 12 months.<\/p>\n

      Note: It is assumed that STT has not been paid at the time of acquisition of shares and the transaction does not fall in the exempted category notified by the Central Government vide Notification No. S.0.1789(E) dated 5.6.2017.<\/p>\n

      \"Non-Resident<\/p>\n

      Question 5.
      \nPranab, a non-resident Indian (aged 41) has furnished the following particulars of income relating to financial year 2020-21:
      \n\"Non-Resident
      \nCompute tax payable by Pranab for Assessment Year 2021-22, assuming that he opts for provisions of Chapter XII-A of the Income-tax Act, 1961. [CA Final Nov. 2018 (Old Syllabus)] [6 Marks]
      \nAnswer:
      \nAs the assessee is a non-resident Indian, provisions of Chapter XHA (comprising of sections 115C to 115-1) can be made applicable to him or under section 115-I, he can opt for normal provisions.<\/p>\n

      Computation of total income for A.Y. 2021-22
      \n\"Non-Resident<\/p>\n

      Notes:
      \n1. As per Sec. 71(3A), loss from house property shall be set off against income under the head only upto \u20b9 2,00,000 and balance shall be allowed to be carried forward for set off in subsequent years. Therefore, out of loss of \u20b9 2,50,000, only \u20b9 2,00,000 shall be allowed to be set off against income from business and balance \u20b950,000 (\u20b9 2,50,000 – \u20b9 2,00,00) shall be carried forward to A.Y. 2022-23.<\/p>\n

      2. Indexation benefit would not be available for calculating cost of acquisition while computing long term capital gains under Chapter XII-A.<\/p>\n

      Computation of tax liability<\/p>\n\n\n\n\n\n\n\n\n
      <\/td>\n\u20b9<\/td>\n<\/tr>\n
      Tax on interest as per section 115E @ 20% of \u20b9 1,50,000<\/p>\n

      Tax on long term capital gains (\u20b9 2,88,000 \u00d7 10%)<\/p>\n

      Tax on balance income of \u20b9 6,15,000 (\u20b9 5,50,000 + \u20b9 65,000)<\/td>\n

      		30,000<\/p>\n

      28,800<\/p>\n

      35,500<\/td>\n<\/tr>\n

      94,300<\/td>\n<\/tr>\n
      Add: Health & Education cess @ 4% Total Tax payable<\/td>\n3,772<\/td>\n<\/tr>\n
      98,072<\/td>\n<\/tr>\n
      Total Tax payable (Rounded off)<\/td>\n98,070<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

      \"Non-Resident<\/p>\n

      Question 6.
      \nDiscuss the correctness or otherwise of the following with reference to the provisions of Income-tax Act, 1961:
      \nA non-resident Indian despite having during the year ended on 31.3.2021 income in India from the investment and long term capital gains is not required to file the return of income for A.Y. 2021-22. [CA Final Nov. 2018 (Old Syllabus)] [2 Marks]
      \nAnswer:
      \nThe statement is correct\/partially correct.
      \nA non-resident Indian need not furnish a ROI u\/s 139(1), if he satisfies both of the following conditions:-
      \n(a) His total income consists only of investment income or income by way of long-term capital gains or both; and
      \n(b) Tax deductible at source under the provisions of Chapter XVII-B has been deducted from such income.<\/p>\n

      Note: The statement would be correct only if both the above conditions are satisfied.<\/p>\n

      \"Non-Resident<\/p>\n

      Question 7.
      \nThe following data is furnished by Mr. Sumedh, a non-resident and a person of Indian Origin, for the financial year ended 31-3-2021:
      \n\"Non-Resident<\/p>\n

      Compute balance tax payable\/refund due for the A.Y. 2021-22 in accordance with special provisions applicable to non-resident.\u00a0 \u00a0[CA Final May 2019 (New Syllabus)] [6 Marks]
      \nAnswer:
      \nIf Mr. Sumedh opts for Chapter XII-A
      \nComputation of Tax payable\/Refund due to Mr. Sumedh for A.Y. 2021-22
      \n\"Non-Resident
      \n\"Non-Resident<\/p>\n

      \"Non-Resident<\/p>\n

      Notes:
      \n1. As per Sec. 115E, long term capital gains from foreign exchange asset shall be taxable @ 10% and interest on deposits with public limited companies, interest on government securities and dividends from domestic companies shall be taxable @ 20%. However, interest on deposits with private limited companies shall be taxable at normal tax rate, since it is not a specified foreign exchange asset.<\/p>\n

      2. As per Sec. 115D, no deduction under chapter VI-A shall be allowed from investment income. Therefore, investments made in notified savings certificates referred to Sec. 10(4B) shall not be allowed as deduction u\/s 80C.<\/p>\n

      3. As Sec. 115F, long-term capital gain from transfer of specified foreign exchange asset shall be exempt if the non-resident Indian reinvests the whole or part of the net sale consideration in specified assets within 6 months from the date of transfer. In this case, Mr. Sumedh made investment in shares of Indian Public Limited companies on 31.12.2021 ie. after 6 months from the date of transfer and therefore, no exemption u\/s 115F shall be allowed.<\/p>\n","protected":false},"excerpt":{"rendered":"

      Non-Resident Taxation \u2013 CA Final DT Question Bank is designed strictly as per the latest syllabus and exam pattern. Non-Resident Taxation \u2013 CA Final DT Question Bank Question 1. Thomas, a non-resident Indian has the following sources of income in India. You are required to compute his total income and determine his tax liability: Inflation …<\/p>\n

      Non-Resident Taxation \u2013 CA Final DT Question Bank<\/span> Read More »<\/a><\/p>\n","protected":false},"author":2,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"spay_email":"","footnotes":""},"categories":[169],"tags":[],"jetpack_featured_media_url":"","_links":{"self":[{"href":"https:\/\/gstguntur.com\/wp-json\/wp\/v2\/posts\/20055"}],"collection":[{"href":"https:\/\/gstguntur.com\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/gstguntur.com\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/gstguntur.com\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/gstguntur.com\/wp-json\/wp\/v2\/comments?post=20055"}],"version-history":[{"count":3,"href":"https:\/\/gstguntur.com\/wp-json\/wp\/v2\/posts\/20055\/revisions"}],"predecessor-version":[{"id":20114,"href":"https:\/\/gstguntur.com\/wp-json\/wp\/v2\/posts\/20055\/revisions\/20114"}],"wp:attachment":[{"href":"https:\/\/gstguntur.com\/wp-json\/wp\/v2\/media?parent=20055"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/gstguntur.com\/wp-json\/wp\/v2\/categories?post=20055"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/gstguntur.com\/wp-json\/wp\/v2\/tags?post=20055"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}