Model Question of Taxation in Nepal

Full Marks: 100 Taxation in Nepal (MGT 312)( New course) Time: 3hrs.

Candidates are required to give their answers in their own words as far as practicable. 

The figures in the margin indicate full marks.

Attempt All the questions.

1. write in short the objectives of the value added tax. [5].
2. write the short about the cannon of taxation. [5]
3. write in short, any five features of income tax Act,2058. [5]

OR

  Write in short the exemptions given by income tax Act,2058.[5]

4.   Explain the concept of value added tax. [5]

OR

 An article passes through two middlemen, wholesaler and retailer before reaching to a final consumer.Both the middle men charged 15% and 5% profit margin on their cost price respectively. The consumer paid Rs.12008 inclusive VAT. The importer had not paid VAT on its purchase but had charged 10% profit margin on its cost.

Required: A statement of value added tax showing;

1. a) Cost price of the importer.
2. b) VAT paid to government at each level of sales. [3+2].
3. Mr.X joined a retail shop as salesmen. He disclosed the following details of his income and expenditures of the previous year for tax purpose.

salary	Rs.7500 p.m
Overtime allowance	Rs.12000 p.m
Commission	2% on sales
Sales for the period	Rs.400000
Dashain allowance	Equal to one month salary
Transport allowance	Rs.500 p.m
Average expenses on transport	Rs.4000 p.m
His contribution to unrecognized provident fund	10% of salary.

He claimed contribution to provident fund and transport expense for deduction.

Required: net (assessable) income from employment. [5].

6. Mr.Z, an employee of a private office has submitted the following income and expenditure for the previous year

Salary	Rs.18000 p.m
Provident fund as per government regulations
Dearness allowance	Rs.2500 p.m
Income tax paid by employer	Rs.15000
Life insurance paid by employer	Rs.8000
Entertainment allowance	Rs.1500p.m
Best employees award from employer	Rs.18000
Family allowance	Rs.30000
Dashain allowance provided by the employer as per government rule.
Car facility provided by the employer.
Donation was paid to approved firm		Rs.12000
Children education expenses paid by him		Rs.8000

Required: a).Net (assessable) income. b).statement of taxable income

C). Tax liability. [5+2+1].

7. Mr. Limbu submitted the following particulars of his incomes for the previous year:

Net(Assessable) income from employment.	Rs.198000
Net( Assessable) income from profession	Rs.302000

He claimed the following expenses for deduction: 

Donation to Nepal football Association	Rs.50000
Life insurance premium of Rs. 8000 on his own life policy of Rs.200000 and of his son Rs. 5000.

Required: a) statement of taxable income. b) Tax liability. [4+1].

 

8. Ms. Ramkaji, an employee of government owned organization has submitted the following particulars of his income and expenditures of the previous year.

Salary scale		Rs.12000-350-14100EB 400-15700
Date of appointment		1st kartik 2058.
Local allowance		Rs.4000 p.m
Entertainment allowance		Rs.1500 p.m
House facility provided by the employer
Project allowance	Rs.7000 p.m

He claimed the following expenses for deduction.

Contribution to provident fund @10% of salary
Advance income tax	Rs.30000
Life insurance premium	Rs.15000 (insured sum Rs.200000)
Education expenses of his son	Rs. 12000
Donation to eye hospital	Rs. 18000

Required: a) Net assessable income from employment. 

1. b) Taxable income. [5+2]
2. Mention the provision of depreciation in income tax Act, 2058.

OR

Write in short the features of value added tax. [5].

10. Mr. Gurung, who was migrated to UK 30 years ago, earned the following incomes during his stay in Nepal from 1St Aswin to Last of Falgun of the previous year.

Net(assessable) income from export business

Rs. 500000

He claimed the following expenses for deduction:

Rent of the room used for the business office Rs.3000 p.m for the above period.

Required: a) Residential status of Mr. Gurung.

b). Tax payable by Mr.Gurung. [2+3]

11. Mr. Hari disclosed the following details of his income and expenditures fot the previous year.

 

Royalty from natural resources after TDS	Rs. 170000
Interest on private money lending	Rs.100000
Royalty from publishers after TDS	Rs.127500
Interest credited by bank after TDS	Rs.18800
Rent from house after TDS	Rs.76500
Royalty from writing articles in newspapers after TDS	Rs.10200
Gift from the publishers after TDS	Rs.12750

Expenditures claimed for deduction were:

Collection cost of royalty from natural resources	Rs.5400
Collection cost of royalty from writing articles	Rs.200
Collection cost of royalty from publishers	Rs.3500
Collection cost of interest on private money lending	Rs.8000
Collection cost of rent from house let-out	Rs.2000
Depreciation of the house rented	Rs.7500
Donation to a public school	Rs.10000

Required: a). Net(assessable) income from investment.

b). statement of total taxable income. [4+2]

12. The following is the receipts and payments accounts of a

Accountant for the previous year:

Dr Receipt and payment Cr
Receipts	(Rs.)	Payments	(Rs.)
To balance b/d	150000	By salary to staff	150000
To consultation fees	250000	By office expenses	50000
To accounting fees	120000	By interest collection charge	10000
To commission relating to accounting work	50000	By domestic expenses	15000
To income from agriculture	40000	By Collection charges on government securities	1000
To interest on fixed deposit	60000	By telephone and electricity	5000
To Interest received related to his profession	14000	By donation to public school	15000
To interest on non-taxable government securities	25000	By balance c/d	463000
Total	709000	Total	709000

Required: a). Net (assessable) income from profession.

b). Statement of taxable income. [5+2]

13. following are the operating results of a company during the last 7 years.

Years	1	2	3	4	5	6	7
Profit/(loss)Rs	(170000)	(50000)	150000	80000	(50000)	900000	50000

Company paid donation of Rs.20000 in the 1st year. The profit of the third year derived before deducting interest on bank loan of Rs.15000.

Required: Taxable income of the company giving explanation when necessary. [4+1]

14. Mr.Raju has submitted the following details of his house located at Lalitpur Sub-Metropolitan City.

 

• Area of house 7000 sq.ft.

• Mode of constriction RCC frame structure.

• Land and compound of house 3 ropanies.

• Yrer of construction 5056/57 B.S.

• Government valuation of land per ropani Rs.5000000.

 

Required: a). valuation of house and land.

b). Tax liability. [5+2]

15. A company Ltd. provided the following details about its fixed assets under group B for the previous year:

a). Depreciation base of the assets at opening date.Rs.1500000.

b). New addition of assets:

on Marga. Rs.900000

on Jestha. Rs.900000

c). Assets disposed off:

Book value Rs.300000

Cash value Rs.400000

Required :a) Amount of depreciation to be charged for the previous year.

1. b) Depreciation base of assets at year end. [3+2] 
2. The trading & profit and loss Account of Mr.Hari for the previous year is given below:

Dr Trading and P/L Account Cr
Particulars	(Rs.)	Particulars	(Rs.)
To opening stock	200000	By sales	2500000
To purchase	1300000	By closing stock	600000
To wages	300000
To custom duty	150000
To gross profit c/d	1150000
Total	3100000	Total	3100000
To office salaries	100000	By gross profit	1150000
To printing & stationary	130000	By interest	140000
To legal expenses	20000	By miscellaneous income	150000
To general expenses	160000	By agriculture income	20000
To interest on loan	60000	By dividend received (net)	15000
To depreciation on plant	50000	By amount received for accepting restriction of business	45000
To life insurance premium	20000	By bad debt recovered	20000
To provision for tax	5000	By gain on sale of non-business asset.	60000
To provision for tax	5000
To misc. expenses	40000
To research and dev.cost	40000
To discount allowed	2000
To donation	50000
To bad debt	7000
To advertising	20000
To net profitc/d	896000
Total	1600000	Total	1600000
Additional information: Purchase of trading goods include Rs.150000, the value of plant purchased in Aswin of previous year. The beginning depreciation base of plant was Rs.50000. No part was sold during the previous year. Legal expenses include Rs.15000 spent for domestic use. 40% of donation was paid to non approved firm by IRD. 50% of bad debts recovered was allowed previousely. General expenses include Rs.60000 paid for electricity for business use. Life insurance premium includes Rs.15000 paid for fire insurance premium. Required: a) Net(assessable) income from business.   b) Net( assessable) income from investment.   c)  Statement of taxable income.   d) tax liabilities. [10+1+3+1] OR. Given below is the Receipts and Payments Account of Mr.Khadka, a medical practitioner, for the previous year: Dr Receipts & payaments Cr Receipts Rs. Payments Rs. To balance b/d 40000 By staff salaries 200000 To cosultation fees 400000 By office rent 72000 To legal fees 300000 By purchase of furniture 60000 To meeting allowance (net) 5100 By office supplies 50000 To dividend (net) 19000 By car expenses 20000 To Loan from bank  200000 By domestic expenses 150000 To agriculture income 40000 By interest on loan 32000 To sale of professional related land (b00k value Rs.20000) 70000 By donation to public school 50000 To misc. income 50000 By tax paid on lottery income 200000 To Sale proceeds from the professional journal 2900 By subscription to journal 6000     By balance c/d 287000 Total 1127000 Total 1127000 Additional information: On aswin , Mr.khadka won a car valued Rs.800000. which he used for his personal as well as professional purpose. Loan was taken for his professional purpose, however 75% of the loan was used on the construction of his personal use. Domestic expenses include Rs.12000: life insurance premium paid on policy of Rs.150000 on his own life. Misc. receipts include Rs.1000 bad debt recovered. On scrutiny it is found that 60% of this amount was not allowed previously for deduction. Charge depreciation on car as well as furniture. Required : a).Net (assessable) income from profession.     b).Net (assessable) income from investment.     c). statement of taxable income.       d). tax liability. [10+1+2+2]  BEST OF LUCK