Mock Test Paper - Series II: August, 2025

Date of Paper: 06th August, 2025

Time of Paper: 10 A.M. to 1 P.M.

INTERMEDIATE COURSE: GROUP-I

PAPER – 3: TAXATION
SECTION – A: INCOME TAX LAW
SOLUTIONS
Division A – Multiple Choice Questions

MCQ Sub-part Most Appropriate MCQ Most Appropriate

No. Answer No. Answer
1. (i) (c) 3. (d)
(ii) (a) 4. (a)
(iii) (b)
2. (i) (a)
(ii) (c)
(iii) (b)

Division B – Descriptive Questions

1. Computation of total income of Mr. Rajesh for A.Y. 2025-26 under normal
provisions of the Act

Particulars ` ` `
I Income from business or profession
Net profit as per profit and loss account 3,95,11,290
Add: Items of expenditure debited but
not allowable while computing
business income
- Donation to Gurudwara in cash [Not 15,000
allowable as deduction since it is
not incurred wholly and exclusively
for business purpose. Since the
amount is already debited, the same

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 has to be added back while
computing business income]
- Contribution to a university -
approved and notified u/s 35(1)(ii)
for scientific research [Eligible for
deduction @100%. Since, 100% of
the expenditure is already debited to
profit and loss account, no
adjustment is required]
- Interest on loan taken for purchase 1,75,000
of e-vehicle [Interest on loan for
purchase of e-vehicle for personal
purpose is not allowed as deduction
from business income since the
same is not incurred wholly and
exclusively for business purpose.
Since it is already debited, the same
has to be added back while
computing business income]
- Employer’s contribution to NPS in 12,800
excess of 14% of salary [Employer’s
contribution to the extent of 14% of
salary i.e., basic salary plus
dearness allowance forming part of
salary would be allowed as
deduction. Thus, excess
contribution i.e., ` 12,800 [` 80,000,
being 20% of ` 4,00,000 less
` 67,200 being 14% of ` 4,80,000
(` 4,00,000 + 20% of ` 4,00,000]
has to be added back
- Sale of goods to brother at less than - 2,02,800
FMV [The provisions of section
40A(2) are not applicable in case of
sale transaction, even if the same is
to a related party. Therefore, no
adjustment is necessary in respect
of difference of ` 3 lakh]
3,97,14,090

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 Less: Items of income credited but not
taxable or taxable under any other
head of income
- Bad debt recovered [The excess of 1,50,000
amount recovered i.e., ` 3 lakhs
over the amount due after bad debt
allowance i.e., ` 1,50 lakhs will be
taxable as business income. Since
the entire ` 3 lakhs is credited to
the profit and loss account, ` 1.50
lakhs has to be reduced]
- Short term capital gains on transfer 10,00,000 11,50,000
of listed equity shares
3,85,64,090
Add: Undervaluation of Closing stock 25,000
3,85,89,090
Less: Allowable expenditure
Depreciation on car [` 14 lakh x 15%,
since car is put to use for more than 180
days in the P.Y.2024-25] 2,10,000
3,83,79,090
II Capital Gain
Short term capital gains
Short term capital gains on transfer of 10,00,000
listed equity shares
Long term capital gains
Compulsory acquisition of industrial
plot by the Central Government
taxable as per section 45(5)
Compensation received 15,00,000
Less: Indexed cost of acquisition 7,13,115
[` 2,50,000 x 348/122]
Long-term capital gain [Since such plot 7,86,885
is held for more than 24 months]

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 Less: Exemption u/s 54D
Acquisition of industrial plot within 3 7,00,000 86,885
years from the date of transfer
10,86,885
III Income from Other Sources
Interest on enhanced compensation 1,05,000
Less: 50% as deduction 52,500 52,500
Gross Total Income 3,95,18,475
Less: Deduction under Chapter VI-A
Deduction under section 80D
- Mediclaim premium for self and 20,000
spouse [In case of lump sum
premium for medical policy,
deduction is allowed for equally for
each relevant previous years.
[` 1,20,000/6 years, being relevant
previous years in which the
insurance is in force]
- Preventive health check up of self 5,000 25,000
and spouse [Preventive health
check up paid in cash allowed to
the extent of ` 5,000]
Deduction under section 80EEB 1,50,000
[Since the loan is sanctioned by
Bank during the P.Y. 2022-23,
interest on loan taken for purchase
of e-vehicle is allowed to the extent
of ` 1,50,000]
Deduction under section 80G - 1,75,000
[Donation of ` 15,000 to Gurudwara
not allowable as deduction since
amount exceeding ` 2,000 paid in
cash]
Total income 3,93,43,475
Total income (Rounded off) 3,93,43,480

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 Computation of tax payable by Mr. Rajesh for A.Y.2025-26
Particulars ` `
Tax on ` 10 lakhs, being short term capital gains on 2,00,000
transfer of listed equity shares @20% u/s 111A
Tax on ` 86,885, being long term capital gains on 17,377
compulsory acquisition of industrial plot @20%
u/s 112
Tax on balance income of ` 3,82,56,595
Upto `3,00,000 Nil
` 3,00,001 - ` 5,00,000 [@5% of ` 2 lakh] 10,000
` 5,00,001 - `10,00,000 [@20% of `5,00,000] 1,00,000
`10,00,001 - ` 3,82,56,595 [@30% of ` 3,72,56,595] 1,11,76,979 1,12,86,979
1,15,04,356
Add: Surcharge @15% on ` 2,17,377 32,607
Add: Surcharge @25% on ` 1,12,86,979 28,21,745
1,43,58,708
Add: Health and education cess@4% 5,74,348
Total tax liability 1,49,33,056
Less: TCS u/s 206C(1) @2.5% on ` 25 lakh i.e., 62,500
sale of timber
TCS u/s 206C(1F) @1% of `14 lakh i.e., sale of 14,000 76,500
motor car where consideration exceeds `10
lakh
Tax payable 1,48,56,556
Tax payable (rounded off) 1,48,56,560

2. (a) Under section 6(1), an individual, being a person of Indian origin or an Indian
citizen, who comes on a visit to India and he is having total income other than
income from foreign sources exceeding ` 15 lakhs during the previous year,
such individual is said to be resident in India, if he stays in India during the
relevant previous year for 120 days or more and for 365 days or more during the
4 years immediately preceding the relevant previous year. As per section 6(6),
such individual whose stay in India is for 120 days or more but less than 182
days in the relevant previous year would be resident but not ordinarily resident.

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Ms. Priya is a person of Indian origin who has come on a visit to India during the
previous year 2024-25. Her total income other than income from foreign sources
for the A.Y. 2025-26 is as below:
Computation of total income other than income from
foreign sources of Priya for the A.Y. 2025-26
Particulars `
Income from other sources
Cash gifts received from non-relatives is chargeable to tax as
per section 56(2)(x) if the aggregate value of such gifts exceeds
` 50,000.
- ` 1,51,000 received from parents of husband would be Nil
exempt, since husband’s parents fall within the definition of
‘relatives’ and gifts from a relative are not chargeable to
tax.
- ` 21,000 received from sister-in-law is exempt, since sister Nil
of husband falls within the definition of relative and gifts
from a relative are not chargeable to tax.
- Gift received from close friends of her husband of
` 16,00,000 is taxable under section 56(2)(x) since the 16,00,000
amount of cash gifts exceeds ` 50,000.
Total Income other than income from foreign sources 16,00,000

Since her total income other than income from foreign sources exceed
` 15,00,000, she would be considered a resident of India if she stays in India
during the P.Y. 2024-25 for 120 days or more and for 365 days or more during
the 4 years immediately preceding the relevant previous year.
Her stay in India during the previous year 2024-25 is as under:
P.Y. 2024-25
01.04.2024 to 10.07.2024 - 101 days
24.02.2025 to 25.03.2025 - 30 days
Total 131 days
Since she stayed in India for 131 days during the P.Y. 2024-25 and for 400 days
during the 4 years immediately preceding the P.Y. 2024-25, she would be a
resident but not ordinarily resident in India for the P.Y. 2024-25.

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 In such case, her total income would be ` 16 lakhs and tax liability would be
computed in the following manner:
Computation of tax liability of Priya for the A.Y. 2025-26
under default tax regime under section 115BAC
Particulars `
Tax on total income of ` 16,00,000
Upto ` 3,00,000 Nil
` 3,00,001 – ` 7,00,000 @5% 20,000
` 7,00,001 – ` 10,00,000 @10% 30,000
` 10,00,001 – ` 12,00,000 @15% 30,000
` 12,00,001 – ` 15,00,000 @20% 60,000
` 15,00,001 – ` 16,00,000 @ 30% 30,000 1,70,000
Add: Health and Education cess@4% 6,800
Tax liability 1,76,800

(b) (i) Tax has to be deducted at source by the transport company @10% under
section 194A on payment of ` 1,51,000 to Ms. Asha, a resident
individual, as interest income on compensation awarded by Motor
Accidents Claims Tribunal, since the interest paid exceeds the specified
threshold of ` 50,000.
Tax to be deducted = ` 1,51,000 x 10% = ` 15,100.
(ii) Tax has to be deducted @30% under section 194B on payment of
` 15,00,000 to Mr. Narsimha for winnings in a TV Serial contest.
Tax to be deducted = ` 15,00,000 x 30% = ` 4,50,000
3. (a) Computation of gross total income of Mr. Rajeev for the A.Y. 2025-26 under
normal provisions of the Act
Particulars `
I Salaries
Salary [` 56,000 x 12] 6,72,000
Medical facility [in the hospital maintained by -
the company is exempt]

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 Gift given on the occasion of work anniversary -
` 4,500 is exempt, since its value is less than
` 5,000
Perquisite on use of dining table for 4 months
[` 90,000 x 10 /100 x 4 /12] 3,000
Perquisite on sale of dining table
Cost 90,000
Less: Depreciation on straight line 18,000
method @ 10% for 2 years
Written Down Value 72,000
Less: Amount paid by the assessee 50,000 22,000
Purchase through credit card 10,000
[covered by section 17(2)(viii) read
with Rule 3(7)]
Perquisite on sale of car
Original cost of car 2,50,000
Less: Depreciation from 16.7.2021 50,000
to 15.7.2022 @ 20%
2,00,000
Less: Depreciation from 16.7.2022 40,000
to 15.7.2023 @ 20%
Value as on 14.07.2024 - being the 1,60,000
date of sale to employee
Less: Amount received from the 80,000
assessee on 14.07.2024 80,000
Gross Salary 7,87,000
Less: Standard deduction under section 16(ia) 50,000
Taxable Salary 7,37,000
II Income from Other Sources
Interest on fixed deposit with a company 5,000
Income from specified mutual fund 3,000

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 Interest on Fixed Deposit received by minor 1,500 9,500
daughter (` 3,000 - ` 1500)
Gross Total Income 7,46,500

(b) Computation of taxable income of Mr. Verma for A.Y. 2025-26 under default
tax regime
Particulars ` ` `
Income from house property House 1 House 2
Municipal value (A) 1,24,000 3,90,000
Fair rent (B) 1,25,000 3,95,000
Higher of (A) and (B) = (C) 1,25,000 3,95,000
Actual rent received 1,20,000 2,85,000
Gross Annual Value 1,25,000 3,95,000
[Higher of (C) and Actual rent]
Less: Municipal tax paid 18,000 70,000
Net Annual Value (NAV) 1,07,000 3,25,000
Less: Deductions u/s 24
30% of NAV 32,100 97,500
Interest on loan Nil 57,000
74,900 1,70,500
Income from house property 2,45,400
[` 74,900 + ` 1,70,500]
Income from Other Sources
Rental income from Car [` 20,000 x 12] 2,40,000
Purchase of rural agricultural land for
inadequate consideration a
consideration less than stamp duty
value [Not taxable under section
56(2)(x), since rural agricultural land is Nil 2,40,000
not a capital asset]
Taxable Income 4,85,400
Note - Expenditure on repairs, insurance premium on building and ground
rent are not allowable under the head “Income from house property.”

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4. (a) Computation of total Income of Mr. Shitij for the A.Y. 2025-26 under default
tax regime
Particulars Amount Amount
(`) (`)
Income from Salary 3,40,000
Income from house property
Loss from let out property 75,000
Self-occupied property [Interest u/s 24(b) is not -
allowed in case of self-occupied property since
Mr. Shitij is paying tax under default tax regime]
Loss from house property is not allowed to be set 75,000 -
off against any other head of income under
default tax regime and it cannot be carried
forward
Profit and gains from business or profession
Profit and gains from manufacturing business 96,000
Add: Additional depreciation not allowable in case
of section 115BAC 4,000
1,00,000
Less: Brought forward loss from manufacturing 35,000
business
Less: Unabsorbed normal depreciation 10,000 55,000
Capital Gains
Long term capital gains on sale of house property 1,40,000
Less: Long term capital loss on sale of shares on
which STT is paid can also be set-off as per
section 74(1), since long-term capital gain arising
on sale of such shares is taxable under (1,15,000) 25,000
section 112A
Income from Other Sources
Winnings from lottery tickets [As per section 58, 40,000
no expenditure is allowed against winnings from
lottery tickets]
Gross Total Income 4,60,000

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 Losses to be carried forward to A.Y. 2026-27
Particulars Amount (`)
Loss from the activity of owning and maintaining the race 50,000
horses
[As per section 74A(3), loss from the activity of owning and
maintaining the race horses cannot be set-off against
income from any source other than the activity of owning
and maintaining race horse.]
(b) Any person, being an individual or a Hindu undivided family is an eligible person
who can file their return through a Tax Return Preparer (TRP).
However, the following eligible person (an individual or a HUF) cannot furnish a
return of income for an assessment year through a Tax Return Preparer:
(i) who is carrying out business or profession during the previous year and
accounts of the business or profession for that previous year are required
to be audited under section 44AB or under any other law for the time
being in force; or
(ii) who is not a resident in India during the previous year.
An eligible person cannot furnish a revised return of income for any assessment
year through a Tax Return Preparer unless he has furnished the original return
of income for that assessment year through such or any other Tax Return
Preparer.
OR
(b) As per section 139(5), if any person, having furnished a return within the due
date or a belated return, discovers any omission or any wrong statement therein,
he may furnish a revised return at any time –
(a) before three months prior to the end of the relevant assessment year; or
(b) before the completion of assessment,
whichever is earlier.
Since Mr. Avinash has filed his return after 31.7.2025, being the due date under
section 139(1) in his case, the said return is a belated return under section
139(4).
Mr. Avinash can file a revised return in October, 2025, since he has found an
omission in the belated return filed by him for A.Y.2025-26 before 31.12.2025
and assessment is yet to be completed.

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 SECTION B – GOODS AND SERVICES TAX (50 MARKS)
SUGGESTED ANSWERS
Division A - Multiple Choice Questions
Question Answer
No.
1 (b) ` 8,08,000
2 (d) 5th September; 5th September
3 (d) ` 3,00,000
4 (d) not a supply as gifts not exceeding ` 50,000 in value in a financial year
by an employer to an employee shall not be treated as supply in terms
of Schedule I of the CGST Act, 2017.
5 (d) Nil
6 (b) Mumbai
7 (c) He needs to mandatorily have a place of business in Delhi.
8 (c) 20th December

Division B - Descriptive Questions

1. (a) Computation of net GST payable in cash
Particulars CGST SGST IGST
@ 9% (`) @ 9% (`) @ 18% (`)
Output tax liability [Refer Working Note] 40,491 40,491 54,000
Less: ITC available 2,250 2,250 -
Net GST payable 38,241 38,241 54,000
Add: Tax Payable under reverse charge 2,250 2,250
to be paid in cash [The amount available
in the electronic credit ledger may be
used for making any payment towards
output tax. Further, output tax means the
tax chargeable on taxable supply of
goods and/or services but excludes tax
payable on reverse charge basis. Thus,
tax liability under reverse charge has to
be paid in cash]
Total GST Payable in cash 40,491 40,491 54,000

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Working Note
Computation of total value of taxable supplies made by M/s Nithilan &
Co. for the month of October

Particulars Amount CGST SGST IGST

(`) (`) (`) (`)
Taxable under Forward Charge
Intra-State taxable supply of DSA 2,50,000 22,500 22,500
service
[Since DSA services are provided
by partnership firm, so taxable
under forward charge]
Services provided to a 99,900 - -
Governmental authority
[Specifically exempt under GST]
Information Technology services Nil
[Import of services from a non-
related person without
consideration, in the course or
furtherance of business is not a
supply.]
Training and performance 3,00,000 54,000
appraisal services to Bhavya
Private Limited [Taxable; The
place of supply of services in
relation to training and
performance appraisal to a
registered person, shall be the
location of such person. Thus
place of supply is Kerala and
hence an inter-State transaction.]
Training and performance 1,00,000 9,000 9,000
appraisal services to Ujjwal
Cones. [Taxable, The place of
supply of services in relation to
training and performance
appraisal to an unregistered
person, shall be the location
where the services are actually

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 performed. Thus, place of supply
is Bengaluru, hence Intra-State
transaction]
Total output tax payable under 63,000 40,491 40,491 54,000
forward charge

Computation of ITC that can be availed by M/s Nithilan & Co. for the
month of October
Particulars CGST SGST IGST
(`) (`) (`)
Rent paid to residential dwelling 2,250 2,250 -
[ITC not available as raw material is not
received in October]
Purchase of car Nil
[Blocked credit in terms of section 17(5) of the
CGST Act, 2017]
Total ITC 2,250 2,250 -

(b) Computation of value of taxable supply made by Vishwas Ltd.

to Nandan Ltd.
Particulars Amount
(`)
Price of machinery (exclusive of taxes and discounts) 5,50,000
Installation and testing charges 15,000
[Any amount charged for anything done by the supplier in respect
of the supply of goods at the time of/before delivery of goods is
includible in the value of supply in terms of section 15(2)(c) of the
CGST Act, 2017.]
Amount paid by Nandan Ltd. directly to the supplier for the part 30,000
fitted in the machinery
[Any amount that the supplier is liable to pay in relation to a supply
but which has been incurred by the recipient of the supply and not
included in the price actually paid or payable for the goods is
includible in the value of supply in terms of section 15(2)(b) of the
CGST Act, 2017.]
Less: Discount @ 2% on the price of machinery [` 5,50,000 x 2%] 11,000

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 [Since discount is given at the time of supply of machinery and
recorded in the invoice, the same is deductible from the value of
the supply in terms of section 15(3)(a) of the CGST Act, 2017.].]
Less: Additional 1% discount at year end Nil
[Though the additional discount is established before/at the time
of supply, it is not deductible from the value of supply in terms of
section 15(3)(b) of the CGST Act, 2017 as the same is not linked
to any specific transaction and is adjusted by the parties at the
end of the financial year.]
Value of taxable supply 5,84,000

2. (a) (i) Yes. Services provided to an educational institution by way of

transportation of students are exempted from GST. Shaurya Boys Higher
Secondary School qualifies as an educational institution. Thus, service
provided by a private transport operator to Shaurya Boys Higher Secondary
School by way of transportation of students to and from the school is
exempt from GST.
(ii) No. Services provided by way of vehicle parking to general public are not
exempted from GST. Therefore, GST is payable on the services provided
by way of vehicle parking to general public in a Ruby shopping mall.
(b) Section 10(1) of the CGST Act, 2017 provides that a registered person, whose
aggregate turnover in the preceding financial year did not exceed ` 1.5 crore
(` 75 lakh in Special Category States except Assam, Himachal Pradesh and
Jammu and Kashmir), may opt to pay, in lieu of the tax payable by him, an amount
calculated at the specified rates. However, as per proviso to section 10(1) of the
CGST Act, 2017, person who opts to pay tax under composition scheme may
supply services other than restaurant services, of value not exceeding 10% of the
turnover in a State or Union territory in the preceding financial year or ` 5 lakh,
whichever is higher.
In the given case, since Mr. Vivaan is an exclusive supplier of services other than
restaurant services [viz. repair services], he is not eligible for composition scheme
under section 10(1) & 10(2) of the CGST Act, 2017.
However, section 10(2A) of the CGST Act, 2017 provides an option to a registered
person (subject to certain conditions) whose aggregate turnover in the preceding
financial year is upto ` 50 lakh and who is not eligible to pay tax under composition
scheme under section 10(1) & 10(2) of the CGST Act, 2017, to pay tax @ 3%
[Effective rate 6% (CGST+ SGST/UTGST)] of the turnover of supplies of goods
and services in the State or Union territory.

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 Thus, in view of the above-mentioned provisions, Mr. Vivaan is eligible to avail the
composition scheme under section 10(2A) as his aggregate turnover in the
preceding FY does not exceed ` 50 lakh and he is not eligible to opt for the
composition scheme under section 10(1) & 10(2) of the CGST Act, 2017.
Thus, the amount of tax payable by him as per the composition scheme under
section 10(2A) of the CGST Act, 2017 is ` 2,10,000 [6% of ` 35 lakh].
A registered person cannot opt for composition scheme under section 10(2A), if,
inter alia, he is engaged in making any inter-State outward supplies. However,
there is no restriction on inter-State procurement of goods. Hence, answer will
remain the same even if Mr. Vivaan procures few items from neighboring State of
Madhya Pradesh.
3. (a) The understanding of Kartik is not correct.
A chartered accountant can become a GST practitioner (GSTP). However,
holding a certificate of practice as a chartered accountant and having GST
registration does not imply that such chartered accountant is a GST practitioner
as well. For becoming a GSTP, even a chartered accountant in practice has to
follow the enrolment process of GSTP as provided under the GST law and only
upon approval of such enrolment can a chartered accountant represent himself
as a GSTP.
(b) The given statement is invalid. An electronic statement has to be filed by the
ECO containing details of the outward supplies of goods and/ or services effected
through it, including the supplies returned through it and the amount collected by
it as TCS during the month within 10 days after the end of the each month in which
supplies are made.
Additionally, the ECO is also mandated to file an Annual Statement on or before
31st day of December following the end of the financial year.
The Commissioner has been empowered to extend the due date for furnishing of
monthly and annual statement by the person collecting tax at source.
4. (a) The place of supply of services by way of transportation of goods, including by
mail or courier when both the supplier and the recipient of the services are located
in India is as under:
(a) If the recipient is registered, the location of such person is the place of
supply.
(b) However, if the recipient is not registered, the place of supply is the place
where the goods are handed over for transportation.

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 Or
(a) In case of an event, if the recipient of service is registered, the place of supply of
services for organizing the event is the location of such person. However, if the
recipient is not registered, the place of supply is the place where event is held.
Since the event is being held in multiple states and a consolidated amount is
charged for such services, the place of supply will be deemed to be in each State
in proportion to the value for services determined in terms of the contract or
agreement entered into in this regard.
In the absence of a contract or agreement between the supplier and recipient of
services, the proportionate value of services made in each State (where the event
is held) will be computed in accordance with rule 5 of the IGST Rules by the
application of generally accepted accounting principles.
(b) Consignment value of goods shall be the value:
♦ determined in accordance with the provisions of section 15 of the CGST
Act, 2017,
♦ declared in an invoice, a bill of supply or a delivery challan, as the case
may be, issued in respect of the said consignment and
♦ also includes the Central tax, State or Union territory tax, integrated tax
and cess charged, if any, in the document and
♦ shall exclude the value of exempt supply of goods where the invoice is
issued in respect of both exempt and taxable supply of goods.

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