BBS Taxation in Nepal

bbsthird year

This course covers tax concepts, tax accounting, types of taxpayers, taxation of different income sources, VAT, tax liability, tax collection, auditing, penalties, and appeal procedures.

Chapter Wise Notes Question Banks Syllabus Chapter Wise Questions

Faculty of Management

2082

Bachelor of Business Studies

Taxation in Nepal

MGT 224

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 ]

Define direct tax with example.

[2]

What do you mean by "Non-chargeable business assets"?

[2]

Explain the meaning of "Canon of Certainty"?

[2]

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

[2]

Briefly describe the provision related to quantification of accommodation facilities provided to an employee.

[2]

William is foreign citizenship holder arrived in Nepal on 1st Falgun, and stayed in Nepal at the end of Ashadh of previous income year. He earned in Nepal Rs. 500,000 as consultancy fee.

Required: Residential status and tax liability of William.

[2]

Bikram, a resident of Nepal furnished the following particulars of his income for the previous year.

a. Assessable income from garment business Rs. 500,000

b. Assessable loss from trading business Rs. 100,000

He has claimed the following deductions:

Pollution control cost Rs. 225,000

Required: a. Adjusted taxable income and allowable Pollution control cost.

[2]

Mr. Nepal is retired government employee and received pension income Rs. 612,500 including one month equal Dashain allowance.

Required: Compute tax liability with explanation.

[2]

A trading organization supplied the following information. a. Beginning inventory of merchandise of Rs. 175,000 b. Import of merchandised during the year Rs. 500,000 c. Customs duty paid Rs. 50,000 for merchandised products. d. Freight charges Rs. 25,000 for merchandised products. e. Ending inventory value costing Rs. 50,000 but the market value Rs. 70,000.

Required: Cost of trading goods.

[2]

10.

Binod is presumptive taxpayer has total turnover and income amount Rs. 3 million and Rs. 3 lacs respectively. Firm is situated in Pokhara Metropolitan City. What will be the tax payable of such presumptive taxpayer?

[2]

"Section B"

Attempt any FIVE questions .

[5*10=50 ]

Satyam is a disable government officer. He was promoted to this post on 1st Shrawan 2072, at a salary scale of Rs. 57,000-1000-60,000-EB-2,000-72,000. The other details provided by him for the previous years are as follows : a. Chief allowance Rs. 15,000 P.m. b. Remote area allowance: 10% of salary. c. Life subsistence allowance Rs. 4,000 P.m. d. Salary in lieu of leave Rs. 50,000 e. Overtime income received Rs. 30,000 f. Office has provided a free quarter and car facilities. g. A Cook facility was provided by the office. Cook salary was Rs. 6,000 P.m. and his contribution towards this facility was Rs. 2,000 P.m. h. Meeting allowance Rs. 18,500 (Net) per meeting for 20 meetings i. Interest on fixed deposit (Net) Rs. 95,000.

He claimed the following income and expenses: a. Assessable (Net) income from business Rs. 200,000 b. He is a member of Recognized Provident Fund contributing 10% of his salary towards this fund and office also contributed 12 percent. c. Salary of guard Rs. 1,500 P.m. who was appointed by Satyam. d. Life insurance premium Rs. 3,000 P.m. policy of Rs. 500,000. e. Unabsorbed medical tax credit amount Rs. 2,000. f. He paid advance income tax Rs. 1,500 P.m. g. Donation to government local bodies Rs. 110,000 and political party Rs. 40,000.

Required:

a. Net (assessable) income from Employment

b. Statement of Total Taxable Income

c. Tax liabilities

[10]

Given is the summarized statement of cash pertaining to Doctor, Abhinay for the previous income year.

Receipts	Amount	Payments	Amount
To Balance b/d -		By Office rent paid	50,000
Cash in hand	50,000
Cash at Bank	200,000	By Purchased of computer on Falgun	90,000
To Patient examination fees	850,000	By Telephone & communication expenses	30,000
To Patients counselling fees	300,000	By Salary to assistants	200,000
To Consultation fees after TDS	170,000	By Life insurance premium (Own)	50,000
To Dividend received	40,000	By Research and development	80,000
To Interest on investment	120,000	By Other office expenses	120,000
To Lottery income received	30,000	By Water/Electricity expenses	30,000
To Other professional incomes	70,000	By Refreshment & hospitality expenses	20,000
To Visiting fees	100,000	By Insurance premium of office	15,000
To Salary received from part time lecturer at NAME institute	170,000	By Donation paid	50,000
		By Balance c/d	1,365,000
Total	2,100,000	Total	2,100,000

Further information:

a. Other professional incomes includes: i. Bad debt recovered Rs.10,000 which not allowed in previous year.

ii. Income from pathological test Rs. 50,000

iii. Gifts received from patients Rs. 10,000

b. Water/electricity expenses are used equally for professional and personal purpose.

c. Outstanding office salary Rs. 30,000 is yet to be paid.

d. Visiting fees includes Rs. 2,000 relating to three years ago professional income.

e. Advance consultation fees Rs. 50,000 is not shown in above receipts account.

Required: a. Assessable (Net) income from profession

b. Statement of taxable income

c. Tax liability

[10]

(a) An importer imports certain goods of Rs. 100,000. No VAT was paid on it. The goods pass through importer to retailer before reaching to final customer. Additional packaging and administrative costs incurred by each Rs. 5,000. Profit charged by importer and retailer 20 percent on their cost price.

Required:

a. Cost price of the final consumer.

b. Total VAT to government.

(b) Define value added tax and it objectives.

[10]

(a) Regmi furnished you following particulars of income and expenses for the previous income year.

Particulars	Amount
a. Rent from building let out after TDS	Rs. 180,000
b. Rent from subletting of building let out after TDS	Rs. 450,000
c. Interest received from financial institution	Rs. 100,000
d. Interest received from unrecognized sector after TDS	Rs. 340,000
e. Dividend received from resident company after TDS	Rs. 150,000
f. Dividend received from foreign country after TDS	Rs. 200,000
g. Mining rent from natural resources after [TDS Rs. 90,000]	Rs. 510,000
h. Rent from plant and machinery let out after TDS	Rs. 90,000
i. He received gain on sales of non-listed share in NEPSE	Rs. 200,000

Regmi claimed the following expenses to deduct.

a. Collection charge of building let out Rs. 10,000

b. Rent paid to subletting of building Rs. 120,000

c. Allowable depreciation of plant and machinery Rs. 10,000.

d. Life insurance premium Rs. 50,000

e. Previous year cumulative investment loss Rs. 50,000

Required:

a. Net assessable income from investment.

b. Statement of total taxable income

(b) Described the provision of withholding method of tax collection as per the Income Tax Act, 2058 with example.

[10]

Personal and household expenses are expressly disallowed amounts in computation of taxable income as per the Income Tax Act, 2058 under section (21). Explain.

[10]

What do you mean by tax auditing? How does it differ from financial auditing?

[10]

"Section C"

Attempt any TWO questions .

[2*15=30 ]

(a) Following are the details of the fixed assets of proprietorship organization:

Particulars	Block C	Block D
Beginning WDV	1,000,000	1,000,000
New addition during the year:
Toyota Car purchased on 21st Mangsir	400,000
Purchase of plant on 20th Chaitra		180,000
Second hand Maruti car purchased on 15th Baishakh	600,000
Repairs and maintenance during the year	80,000	80,000
Disposal of the parts of plant and machinery written down value Rs. 150,000 disposed of Rs. 120,000

Required:

a. Allowable repairs and depreciation

b. Written down value of fixed assets at the end of fiscal year.

(b) Following are the profit and loss position of a trader for the previous income year:

Years	Profit or (Loss)
1	(260,000)
2	(140,000)
3	(50,000)
4	(50,000)
5	100,000
6	(50,000)
7	120,000
8	110,000
9	800,000

a. On scrutiny, it revealed that profit of 6th year was derived after deducting donation Rs. 50,000 to tax exempt entity.

Required: Taxable income of the firm giving explanation wherever necessary.

[15]

Given below is the trading, profit and loss account of a proprietorship organization.

Particulars	Amount	Particulars	Amount
To Opening stock	425,000	By Sales	8,600,000
To Purchase	49,50,000	By Closing stock	400,000
To Carriage on purchase	125,000
To Wages	400,000
To Gross profit c/d	31,00,000
	90,00,000		90,00,000
To Office rent paid	150,000	By Gross profit b/d	31,00,000
To salary	550,000	By Sundry receipts	1,00,000
To General expenses	65,000	By Dividend received	50,000
To Legal expenses	20,000	By Refund of customs duty	50,000
To Local tax paid	50,000	By Bad debt recovered	40,000
To Interest on bank overdraft	30,000	By Agriculture income	10,000
To Fine and penalties	5,000	By Rent from staff quarter	25,000
To Life insurance premium (Own)	30,000	By Speculation incomes	25,000
To Insurance premium of fixed assets	15,000	By Gain on non-chargeable business assets	100,000
To Pollution control cost	225,000
To Depreciation (Block - D)	50,000
To Membership renewal charges	5,000
To Provision for tax	10,000
To Donation	110,000
To Advance tax paid	20,000
To Drawing by proprietor	30,000
To Net profit	21,35,000
	35,00,000		35,00,000

Further information:

a. Opening and closing stock were undervalued by Rs. 25,000 and Rs. 30,000 respectively.

b. Purchase includes Rs. 250,000, the value plant purchased on Kartik of previous year, beginning depreciation base amount of plant was Rs. 50,000. No part of plant was sold during the previous year.

c. 70% of donation was paid to non-approved institution by Inland Revenue Department and balance paid to TE organization.

d. Sixty percent of bad debts recovered were allowed previously.

e. General expenses include:

a. Rs. 60,000 printing and stationery expenses paid at a time by cash, while banking facility is available within 10 KM.

b. Rs. 5,000 fine paid to the Nepal Electricity Corporation.

f. Loss from business last year stood Rs. 150,000

Required:

a. Net (assessable) Income from business.

b. Statement of total taxable Income.

c. Tax liabilities .

[15]

(a) What is tax assessment? Briefly describe the self-assessment of tax.

(b) "Tax is the compulsory contribution from a person to government". Explain.

[15]

BBS Taxation in Nepal

BBS Third Year Taxation in Nepal Question Paper 2082 (TU) – Solved

Faculty of Management