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BBA Taxation and Auditing

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Chapter Wise NotesQuestion BanksSyllabusChapter Wise Questions
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Faculty of Management

2025

Bachelor in Business Administration

Taxation and Auditing

ACC 204

Full Marks: 100

Candidates are required to give their answers in their own words as far as practicable. The figures in the margin indicate full marks.

"Section A"

Brief Answer Questions :

[10*2=20]

1.

Define direct tax with example.

[2]
2.

What do you understand by Permanent Account Number (PAN)?

[2]
3.

Define output VAT with suitable example.

[2]
4.

What are the difference sources of income as per the Income Tax Act, 2058?

[2]
5.

Define tax audit with suitable example.

[2]
6.

Ramesh a citizen of Pakistan came to Nepal on 1st Magh 2080 and stayed here till Baisakh last 2081. He earned Rs 200,000 as consultancy fees.

Required: Taxable income, tax liability and residential status of Mr. Ramesh.

[2]
7.

Mr. Anish has been operating a proprietorship business located at Lalitpur Metropolitan City, his sales and taxable income was Rs 2,600,000 and Rs 300,000 respectively. He had adopted to be presumptive tax payer.

Required: Determine the tax liability with explanation as he is a presumptive taxpayer.

[2]
8.

Mr. Dahal is working in a reputed bank as a senior officer. The bank provided him car loan facility amount to Rs 3,000,000 on 1st Marga of previous year at interest rate of 8% p.a. The prevailing rate of interest was 10% p.a.

Required: Quantified amount of interest subsidy to be included in employment income of Mr. Dahal.

[2]
9.

Ms. Thapa is a government officer and received net salary after deducting approved retirement fund Rs 60,000 and tax deduction at sources Rs 20,000, including one-month equal Dashain allowance Rs 570,000 in the previous income year.

Required: Monthly salary, taxable income and tax liability of Ms. Thapa, she elected family status.

[2]
10.

Mr. Pandey, purchased shares two years ago at cost Rs 500,000 and entire shares sold at Rs 1,200,000.

Required: Capital gain and tax liability.

[2]

"Section B"

Short Answer Quetions (Attempt any SIX Questions )

[6*5=30]

1.

What are the tax exempt incomes under the Income Tax Act, 2058 under section 10.

[5]
2.

Describe the provision of installment method of tax collection as per the Income Tax Act, 2015 with example.

[5]
3.

What do you mean by final withholding payments? List out any five final withholding incomes.

[5]
4.

Following are the financial results of a company of last 6 years:

Year 1 2 3 4 5 6
Profit / (Loss) (Rs) (200,000) (400,000) 175,000 400,000 200,000 300,000

On scrutiny, it was found that a donation of Rs 300,000 was given to Public Hospital charged in year 1. Similarly, the profit of 4th year was calculated after deducting pollution control cost Rs 400,000 and before deducting interest on bank loan Rs 50,000 at 5th year.

Required: Taxable income with giving explanation wherever necessary.

[5]
5.

A customer bought a television from a retail store paying Rs 339,000. The TV was imported by Mr. Sundar and it was sold to the retailer. The importer and retailer both incurred Rs 1,000 each as an additional cost and profit margin of 10% on selling price as included in all cases.

Required:
(a) Import price of TV
(b) Amount of VAT payable to the government at each stage

[5]
6.

Following are the details of the fixed assets of ABC Trading Organization.

Particulars Block 'D'
Opening WDV Rs 600,000
New addition during the year:
• on 1st Marg Rs 100,000
• on 15th Falgun Rs 120,000
• on 20th Jestha Rs 180,000
Disposal value during the year book value Rs 10,000 Rs 20,000
Repairs and maintenance during the year Rs 60,000

Required:
a. Allowable depreciation and repairs and maintenance
b. Value of fixed assets at the end of the fiscal year.

[5]
7.

Mrs. Barsha is an advocate, maintains her account on a cash basis furnished the following statement for the year end 31st Ashadh.

Receipts and Payments Account Rs. Payments Rs.
To Balance b/d 25,000 By Office expenses 40,000
To Legal fees 256,000 By Office rent 60,000
To Consultation fees 52,400 By Telephone expenses 6,000
To Lottery income(net) 7,000 By Interest on bank loan 25,000
To Dividend (net) 5,700 By Membership subscription 2,000
To Interest from Bank (net) 21,500 By Electricity charges 8,000
To Sundry incomes 37,400 By Newspaper expenses 6,500
To Gift from clients 20,000 By Donation 40,000
To Birthday Gifts received 5,000 By Car expenses 10,000
By Premium of life insurance (own) 30,000
By Balance c/d 202,000
Total 430,000 Total 430,000

Additional information:

1 ) Legal fees include Rs 56,000 relating to two years ago.
2) Allowable depreciation Rs 30,000.
3) Office expenses included Rs. 10,000 paid for household servant.
4) Outstanding salary Rs 20,000 is yet to be paid.
5) Electricity and telephone expenses is used equally for profession and domestic purpose.

Required:

a. Net assessable income profession

b. Statement of taxable income

[5]

"Section C"

Long Answer Questions (Attempt any THREE Questions )

[3*10=30 ]

1.

Describe the provision regarding depreciation as laid down under the Income Tax Act, 2058 under Sec-19.

[10]
2.

"Self-assessment of tax system is effective in developed country". Explain.

[10]
3.

Mr. Kamal furnish the following income details of previous income year.
- Rent from natural resources of Rs 425,000 (Net).
- Royalty income Rs 85,000 (Net).
- Dividend from the foreign country Rs 100,000.
- Compensation received Rs 63,000.
- Bad debts recovered (20% not allowed previously) Rs 10,000.
- Interest received from private money lending transaction Rs 170,000 (Net).
- Gain from the investing insurance Rs 190,000 (Net).
- Rent received for letting machinery Rs 360,000 after TDS Rs 40,000.
- Income from joint investment Rs 100,000. Mr. Jhalak is the investment partner with 20% share.
- Interest from the fixed deposit Rs 20,000 (Net).
- Gift from the client with market value Rs 9,000.
- Wind fall gain Rs 15,000 (Net).
- Payment received from the natural resources after TDS Rs 8,500.

Following expenses are claimed for deduction:
- Cost of lottery ticket Rs 500.
- Joint investment expenses Rs 10,000.
- Royalty collection charge Rs 4,000.
- Allowable depreciation of machinery Rs 20,000.
- Rent paid for office Rs 42,000.
- Personal expenses Rs 20,000.

Required:
(a) Net assessable income from investment
(b) Statement of total taxable income
(c) Tax liabilities

[10]
4.

Mr. Rohit is an employee of Nepal Government. He was appointed 1st Baishakh 2075 at the pay scale Rs 54,000 – 2000 – 60,000 EB – 3,000- 75,000. He has submitted the following particulars of his incomes and expenses of previous year.
- Saving from TADA Rs 50,000
- Dearness allowance Rs 2,000 p.m.
- Local allowance Rs 2,500 p.m.
- Medical allowance Rs 60,000.
- He received salary in lieu of leave Rs 18,000.
- Meeting allowances Rs 20,000 (net).
- Life insurance premium paid by employer on behalf of Mr. Rohit was Rs 50,000 on the insured sum of Rs 300,000.
- Office has provided him accommodation and vehicle facility.
- Office has provided him a household servant whose salary was Rs 5,000 p.m. but office has deducted Rs 3,000 p.m. from his salary income.
- He received dividend Rs 19,000 (net) from a bank.
- Salary from part time teaching Rs 170,000 (Net).

He claimed the following expenses as deduction:
- Donation to social welfare organization Rs 20,000.
- Health Insurance premium paid Rs 31,000.
- Personal and household expenses Rs 25,000.
- Approve medical expenses Rs 30,000 paid by office.
- Tuition fees of his son paid Rs 50,000.
- He is working at remote area 'B' zone.
- House insurance premium Rs 15,000.

Required:
(a) Assessable income from employment
(b) Statement of taxable income
(c) Tax liability.

[10]

"Section D"

Comprehensive Answer / Case/ Situation Analysis Questions :

[20 ]

1.

Mr. Bhandari, a trader furnished the following trading and profit and loss account for previous year:

Particulars Amount Particulars Amount
To Opening stock 90,000 By Sales 2,950,000
To Purchases 500,000 By Closing stock 55,000
To Carriage 150,000
To Wages 250,000
To Gross profit c/d 2,015,000
3,005,000 3,005,000
To Salaries 180,000 By Gross profit b/d 2,015,000
To Legal expenses 19,000 By Commission 30,000
To Bad debts expenses 20,000 By Interest on investment 50,000
To General reserve 100,000 By Refund of income tax 20,000
To Pollution control cost 50,000 By Sundry income 25,000
To Depreciation 150,000 By Dividend (Net) 37,500
To Repairs expenses 100,000 By Bad debts recovered 15,000
To Donation paid to public school 80,000 By Amount received for accepting restriction regarding business 25,000
To Office expenses 165,000 By speculation income 5,000
To Audit fees 15,000 By Rent from staff quarter 17,500
To Hospitality expenses 20,000 By gain on sales of (non business chargeable assets) 60,000
To Advance income tax paid 7,500
To Fine and penalty 25,000
To Bonus to staffs 35,000
To Advertising 9,000
To Net profit 1,324,500 2,300,000
2,300,000

Additional information:

  • Opening stock undervalued by 10% and closing stock overvalued by 20%

  • Refund of income tax includes Rs 15,000 as refund of custom duty.

  • Legal expenses included Rs 5,000 for fine and penalty paid to local government.

  • Depreciation on car has not been charged in the above statement. The depreciation base of the car was Rs 500,000.

  • Office expenses include Rs 55,000 as a printing expenses paid at a time by cash while banking facilities available within 10 kilometers.

  • Previous year business loss stood Rs 50,000.

Required:

 a. Net assessable income from Business.

 b. Net assessable income from investment.

c. Statement of total taxable income.

d. Tax liability.

 e. Giving explanation wherever necessary.

[20 ]