‘\wt WY a »e a (CMA MAY-2023 EXAMINATION INTERMEDIATE LEVEL4I ‘SUBJECT: LT234-FOUNDATION OF TAXATION, VAT AND PUBLIC FINANCIAL MANAGEMENT MODEL 101 SECTION-A Solution of the Question No. 1 ® © ® © (i) @) ™ ©) © (OC) (wi) @) (wii) (0) *® ® Solution of the Question No. 2 (a) False. If a registered person falls to submit the VAT return within the specified date, he may be imposed a maximum penalty of T. 10,000 (0) False. The Bangladesh Model of Avoidance of Double taxation Agreement generally consists of 29 Articles (c)__ False. Gift Tax Act of Bangladesh came into force on 1" July 1990 in Bangladesh. (4) True. (e) False. If set off is possible in the same year then you can't camy forward losses to next year. Solution of the Question No. 3 1 (a) 2 () 3 4 (e) OL Page 1 of 5Section B Solutlon of the Question No. 4 Income Y« 2021-2022; As Calculation of taxable Income ysmant Year: 2022-2023 Tk. Tk Tk 1. Income from Salary (section: 21) [ Basic Salary 700,000 ‘Medical allowance Less: Lower of 120,000 or 10% of BS 120,000 50,000 Bonus, 120,000 Rent Free Accommodation: Lower of 25% of Basic orRental Value __| Employer's contribution to RPF 175,000 144,000 144,000 __ 70,000 Interest from RPF Less: lower of Interest @ 14.50 or 1/3 of basic salary 5,400 4,994 506 Conveyance Facility 60,000 Leave encashment 10,917 Total Income From Salary =| 11,55,423 2. Income from Securities (section: 22 & 23) Interest from tax exempt _govemment securities Less: exemption (full) 5,000 5,000 Interest from taxable govt. securilies (gross) Less: Admissible expenses — Bank charge 1,500 143 1,357, Interest from debentures Less: Admissible expens Bank charge 27,300 3. Income from Hose Property Annual Value ‘Advance Received Unspent Repair Expenses 88: Deductions: Repair and Maintenance | City Corporation tax Interest on Loan Income from House Property __ 4. Income from agriculture Leased Land Page 2 of 55. Forelgn Income Income from Japan Less: Fully Exempted 6. Income from other sources (Sec 33 & 34): Income from Royalty Dividend from ICB Mutual Fund Exempted: upto 25,000TK. Dividend from a public limited company Exempted: upto 50,000TK. profit from Islami Bank. Total Income Income Summary Calculation of Total Income Income from salary Income from interest on Securities 26.063 Income from house Property 255,000 Income from agriculture 200000 [Income from other sources 50,000 Foreign Income oO Total Income 16,86 486 Tax Liability 350,000 0% 0 100,000 5% 5000 300,000 10% 30000 400,000 15% 60000 500,000 20% 100000 36.486 25% | 9122 Gross Tax 204,122 | -Investment tax credit 15% 45,000 Net Tax Liability 159,122 -TDS -73,940 [Surcharge = 10% 15.912 | Less: Tax refund =10,000 Less: AIT -25,000 Net tax lability (66,094 [ Actual investment 300000 20% of Total Income 337,297 Investment Rebate 45000 Page 3 of §Solution of the Question No. 5 fa) ‘VAT Amount Rate Amount | Output Vat | 2000000 | 15% | 300000 | | 100000 750% | _ 7500 | Total Output VAT I | 307500 | Input VAT | 350000 | 15% | 52500 250000 | 15% | 37500 | 150000 | 15% | 22500 Total Input VAT. | | 412500 | [ | Increasing Adjustment, | VAT collected at source from suppliers during January | 8000 Issuance of debit note during January | 6000 | | | 14000 Decreasing Adjustment | | AT paid on raw materials paid from India 300000 | 5% | 15000_ Issuance of credit note [ | 8000 | 73000 | i) Net VAT Liability = Output Vat+increasing Adjustment -Input Vat-Decreasing Adjustment = Tk. 186,000 Rate TK. ii) Net Vat lability 186,000 Interest due to late filing of return as per sec. 127 1% 1860 Late payment penalty under sec. 65 I 5000 | Solution of the Question No. 6 Computation of Taxable Income of the Firm ict Tk] Tk] | a) Income from House Property _ I Annual Value 120000 | | ‘Add: Tax paid by the tenant 4000 I | 124,000 | | Less: repair and maintenance 25% 31,000 1 Municipal Tax 9,000 84,000 'b) Income from Business Gross Profit as per Trading AC 1,000,000 "Add: Understatement of Closing | Stock _ 14,285 1,014.285 | Less: Depreciation and other expenses 400,000 614,285 Page 4 of 5Add inadmissible oxpenses: | Repairs Municipal Tax : Salaries to partners, 1 Loss on speculative transactions ¢) Incame from other source: Display of advertisement —_ ess: bate on investment Net Tax Liability Minimum Tax : Allocation of Profit to each 380,514 ach partner AA 5 300,514 | 464,514 | 310,257 | = THE END = Page 5 0f 5(CMA JANUARY 2023 EXAMINATION INTERMEDIATE LEVEL-I L1234.TPF-FOUNDATION OF TAXATION, VAT AND PUBLIC FINANCIAL MANAGEMENT MODEL SOLUTION Section-A (Marks: 20) Solutton to the Q No.1 (0) ie) ili(e) iv(o) v@) vi(a) vii (a) viii (4) ix (@) x ((a) Solution to the Q No.2 True / False (marks: 5) (a) Answer: False. Supplementary duty is imposed as per the VAT and Supplementary Duly Act, 2012. (b) Answer: False Where a refund due to an assessee is not paid within two months of the date of claim for refund, 7.5% simple interest will be payable to assessee. (0) Answer: True (d) False, Value added tax (VAT) is borne by the consumer (customer). {e) True Solution to the QNo.3 1. @) 2. (e) 3. (a) 4. (g) 5. () Page 1 of 6Solution to the Q.No.4 Mr. Sharif Income Year: 2021-2022; Assessment Yo: ;alculation of taxable income Tk. Tk. Tk. T. Income from Salary (section: 21) Basic Salary 272,000 Medical allowance 36,000 Less: Lower of 120,000 or 10% of BS 21,200 8,800 Festival bonus (18,000 x 2) ‘46,000 Performance bonus (24,000 x3) 72,000 House rent allowance 149,600 Less: Lower of 25,000 pm or 50% of BS 136,000 | 13,600 Deamess allowance 13,600 Employer's contribution to RPF 27,200 | Interest from RPF 12,000 Less: lower of Interest @ 14.50 or 1/3 of basic salary 10,875 4,125 Conveyance Facility 13,600 Entertainment allowance 12,000 ‘Advance salary 44,000 | $23,925 2. Income from Securities (section: 22 & 23) Interest from tax exempt government securities | 10,000 Less: exemption (full) 10,000 : Interest from taxable govt, securilies (gross) 10,000 Less: Admissible expenses — Bank charge 333 9.667 _ Interest from debentures 720,000 = Less: Admissible expenses — Bank charge (16,150 x 1,350 / 27000) 667 inerest on borrowed fund) 4867 | 10,133 | 27,800 Page 2 of 63. Income from other sources (Sec 33 & 34): : : Dividend 5,000 Interest on fixed deposit 3,000 Interest on post office savings bank 2,000 Remuneration of exam scripts 7,000 Prize Bond Lottery 30,000 Sale of Fish 7,000 Income from Copy Right T 4,000 Unexplained investment 125.000 | 174.909 Total Income, 122,125 Calculation of Tax Liability: Tax Liability — I i ee 300,000 | 0% | 0 { z 100,000 5%) 5000 | 292,725, 10% | 292725 | On Prize Bond i | | 30.000 [Ee 20 6000 | Gross Tax [402725 | Anvestment tax credit “| 15% 20,782 | Net Tax Liability | 19,491 |-Tos I [14.500 | Surcharge I 30% | 5847 225 [ Net tax lability | 10,838 Eligible Investment = Tk. 138,545 Solution to the Q No.5 (a) Section 27. Manner of VAT collection on taxable imports.—The Commissioner of Customs or Customs Officer shall collect VAT on the taxable imports in the same mannor ‘and at the same time as they collect customs duty on such imports under the Customs Act ‘even if import duty is not imposable on such import Section 28. Determination of value of taxable imports.—The value of a taxable import shall be the summation of the following amounts, namely- Page 3of8(a) the value of the goods determined for the collection of customs duty under the Customs Act; and (b) the amounts, if any, of customs duty, supplementary duty, or other tax (other than VAT and advance income tax) payable on the import of the goods. Section 29. Determination of value of re-imported goods—Where goods are reimported after being exported for repair, then the value of the import of the goods shall ‘be the amount of the increase in their value thal is attributable to such repair, by adding to the cost of related freight and insurance, i the form, feature, character and quality of the goods has not been changed by such repair. ‘Section 30. Imports for exports.—A goods which is not imported or released for home ‘consumption but only for export shall not be subject to any tax. Section 31. Payment and adjustment of advance tax.—(1) Every person registered or required to be registered or enlisted person who makes a taxable import through his economic activities shall make payment of the VAT or turnover tax on the supply of such ‘commercially imported goods in advance at the rate specified in sub-section (2) (2) An advance tax, at the rate of 3 (three) percent of the value of the taxable import, shall be payable at the same time, and in the same manner as VAT is payable on a taxable import (3) Every registered or enlisted importer who has made a payment of advance tax may, in the prescribed manner, claim, in the return of the related tax period, a decreasing adjustment equal to the amount paid as advance tax. (4) Any person who has paid an advance tax but is neither registered nor enlisted may, in the prescribed manner, make an application to the Commissioner for a refund of such advance tax. b) Section 9 of Vat and SD Act 2012 Cancellation of VAT registration. —(1) If a registered person refrains from carrying on his economic activity, then he shall make, within such time, on such terms and in such manner as may be prescribed, an application to the Commissioner for the cancellation of VAT registration thereof: Provided that the VAT registration shall not be cancelled until the tax due is paid in full (2) A person who does not require to remain registered anymore he if continues to make taxable supply may, within such time, on such terms and in such manner as may be prescribed, apply for the cancellation of his registration to the Commissioner: Provided that a person who is registered voluntarily under section 8 shall require to remain registered for at least one year. (3) The Commissioner may, within such time, on such terms and in such manner as may be prescribed, cancel the VAT registration. (4) If a registered person does not apply for the cancellation of VAT registration under sub-section (1), and if it appears to the Commissioner on appropriate enquiry that the VAT registration of such person is liable to be canceled, then he shall issue an order directing such person to make an application for the cancellation of VAT registration; and if no such application is made in accordance with such order, then the Commissioner shall, suo moto, cancel the VAT registration of such person. (5) If, after the cancellation of a VAT registration of a person, it appears to the Commissioner that such person is required to be enlisted, then he may, suo moto or upon an application, enlist such person as a tumover taxpayer. (6) Where registration of a registered person. is cancelled, he shall— (a) immediately refrain from using or issuing any tax invoice, Page 4 of 6combined tax invoice, withholding certificate, credit nota, dobit note, otc; and (b) return the VAT registration certificate, and all cortified copins thoroof to the Commissionor within the prascribed time, and pay tho tax duo, and filo a final VAT roturn, d) VAT Current Account Solution to tho Q No.6 CIF=BDT. 59,085,000 IDSC=BDT. 2,954,250 Custom Duty=BDT. 27,917,663 Duty Paid Valu ‘Custom Duty Ral ‘Supplementary Dut ‘Supplomentary Duty = VAT base=109,499,276 Cost per board=7296.62 VAT al import stage= 13,139,913.12 1OT. 89,956,913 5-30)=15% DT. 19,542,364 Solution to the Q No.7 Moklos Limited Assossmont Year: 2022-2023; Income Year: ‘Computation of Total Income Taka Taka Income from Business of Profession: Net profit as per Profit and Loss Account 46,000,000 ‘Add: Inadmissible expenses Salary (Section 30) 330,000 Head Office Expenses 3,000,000 Intra Group Expenses 4,900,000 4,900,000 Less: Allowable (46,000,000 x 10%) 4,600,000. 300,000 Perquisites to MD and CFO 1,150,000 Less: Allowable (550,000 x 2) 4,100,000. 0,000 Fine for violation of customs law 80,000 Donation to non-recognized school 15,000 Royalty paid 1,300,000 Fees for technical services 1,650,000 Technical know-how fee 875,000 3,825,000 Less: Allowable (46,000,000 x 8%) 3,680,000. 145,000 Legal expenses 10,000 Depreciation 2,350,000 Repairs and operating expenses 25,000 Travel of employee for recreation 400,000 Less: 3 months basic (i.e. 360,000) or 3/4"" of actual expenditure (ie. 300,000) whichever is lower 300,000 100,000 _3,405,000_ ‘49,405,000 Add: Not credited to P&L Account Recovery of bad debt which was written off 120,000 earlier Pago 5 of 8Gain on sale of Motor Vehicle Waiver on trading liabllty Less: Expenses admissible but not shown: Depreciation Add: Sale of scientific apparatus Less: Income received from non-business head Dividend Income from business ‘Add: Non-business income: Dividend income Total Income Computation of Tax Liability Particulars Gross Income | TaxRate | Amount of Tax Total Income except dividend 48,030,000 30% 14,409,000 Dividend Income 220,000 20% 44,000, Total Tax, 14,453,000 | Test of Minimum Tax: (60% of gross receipts Tk. 95,00,00,000 = Tk. 57,00,000 which is less than Tk. 14,453,000. So, net tax liability is Tk. 14,453,000. = THE END = Page 6 of 6(CMA SEPTEMBER 2022 EXAMINATION INTERMEDIATE LEVEL-N ‘SUBJECT: LT234-FOUNDATION OF TAXATION, VAT AND PUBLIC FINANCIAL MANAGEMENT Model Solution Section A Solution of the Question No. 1 0} (b) (i) (eo) (ill) (d) (iv) (a) vy) © (vi) (ce) (vil) (e) (vill) (d) (ix) (ce) (x) (co) Solution of the Question No. 2 (2) False. Dividend income does not include bonus share issued by a company (b) False. DCT may, at any time after expiry of the date specified u/s 75, send a notice to file a retum within 21 days. (c) False. Amount of monetary penalty is Tk. 10,000 for non-compliance or irregularity for not applying for registration or enlistment within the prescribed time limit. (d) Tre. (e) True. Solution of the Question No. 3 (i) (h) indirect tax (ii) (1) 10% surcharge (ili) (4) 10% tax. (iv) (c) 15% TDS (v) (a) 4 tiers. Solution of the Question No. 4 (b) Participa Output VAT Input VAT VAT liability | Manufacturer ,000°(15/115)] 8185 | 435 _ Whole seller ,00,000°(15/1715)] a 43 — Relailer (c) {Amounts are in thousands} Stage: 1: Importer: Import value of products= [200°100) = 20,000 VAT a import stage= 3000 Page 1 of 4Input value 20,000 (*) eating and other incidental charges 100 Total for 200 units 20,100 Cost of 80 units) 10% markup * 8844 VAT collected from wholesaler ® 1326.6 VAT hiabity for importars [1326.6-13000" af (80/200) 26.0 st jnole sellor Cont price to whole sollor 8844 (+) markup (10%) 8844 Total 9,728.4 Vat collected from retailer (99728.4°0. 15] = 1459.26 Vat lability = 1459.26-1326.6 =132.66 Stage: 3: Retallor Cost price of 60 units (9728.4"(60/80)} 7296.3 (#) maintenance and other expenses 120 Total 7416.3 (+) markup (10%) 741.43 Total 8157.93 Vat collected from customer =8157.93°0.15 Solution of tho Question No. 5 Mr. RKM Income Year: 2021-2022; Assessment Year: 2022-2023 Calculation to Total Income: Income from Salary 847,500 Income from House property 153,000 Income for Business or Profession 140,000 Income from Interest on Securities 64,000 Income from other sources 225,000 14,29,500 Workings: Taka = Taka 4. Income from Salary (Section: 21) Basic Salary House rent allowance 240,000 Less@ Exempted 210,000 Performance Bonus Entertainment allowance Travel Allowance 45,000 Less: Exempted -45,000 Deamess allowance Employer's contribution to RPF Conveyance faciliios: Medical Allowance 48,000 Page 2 of 4 Taka 420,000 30,000 140,000 21,000 0 42,000 42,000 60,000Less. Exempted (lower of 10% of BS of 120,000 42,000 6,000 annually) 70,000 Festival Bonus 16,500 Leave Encashment 12,500 Interest on RPF 12,500 Q Less: Exempted Of} Total income from salaries 2. Income from House Property (Section 24 & 25) Actual rental value 216,000 Less, Tenants’ expenses (22,000) Add: Advance Receipts 30,000 224,000 Less: Admissible expenses- Repair & Maintenance (25% on 194,000Tk) 48,500 ‘Municipal tax 4,000 Interest on Mortgage Loan 6,500 Fire Insurance Premium 12,000 71,000 Income from House Property 153,000 3. Income from Business or Profession Income from Stationary Shop 140,000 Income from electronic Business 22,000 Less: Carry forward of previous year's loss 10,000} Q Income from Business or Profession 140,000 4. Income from Interest on Securities Tax Exempted Government Securities 20,000 Taxable Government Securities 20,000 Debentures 12,000, 5 Years Sanchaypatra 12,000 64,000 5. Income from other sources ( Section: 33 & 34) 200,000 Unexplained income Profit from Islamic Bond 25,000 225,000 Calculation of Tax Liability: Calculation of allowable investment: Rates ‘Share Purchase 65,000 (On fist Tk 300,000 0% = Donation to Heart Foundation 5,000 On next Tk. 100,000 5% 5,000 Donation to Relief Fund 20,000 5 Years Saving Certificate 100,000 On Next Tk. 300,000 10% 30,000 Donation to Ahsania Mission 10,000 On next Tk. 15% 60,000 On next Tk. 20% 63,500 Sanchaypatra 10% 1,200 Total 1,53,700 — Employee's and employer's contribution to RPF Actual investment Less: Investment tax credit ‘Maximum limit: lower of 20% of _ (42,525) 1,417,500 or AATA75 Allowable investment 10,000,000 Less. Advance Income Tax Tax Rebale 42,525 Less: Tax deducted al source on bond Add. Surcharge Net Tax Liabilly Page 3 of 4Solution of the Queation No, 0 MAH Company Ltinitod Income Year; 2021-22 Aamenamont Yoar; 2092-23 Particulara Tk. tk, Net Income aa per agcounts 4,00,000 Add: Insdnutealble exny Adortisonvont (6) 190,000 Donation 0,000 Bad Debt 36,000 Trademark 26,000 Fines and penall 30,000 Legal expenses: 40,000 Loss on embezzlement 330,000 Income Tax 25,000 Share Discount 10,000 Dividend equalization fund 40,000 Depreciation 170,000 Entertainment exponsen 1,000 500,000 Loss. Expenses admisaible but not shown Depreciation (00,000) Less: Income received from non-business hoads Dividend 60,000 Gnin on sale of assots 25,000 (8,000) ‘Add: Revenue Profit rom sale of aswata 6,000 Waiver of trading liability 20,000 25,000 Taxable Income {rom Business 6 08,600 Non-Business Income; Dividend 60,000 Capital Gain on sales of assole 20,000 = 80,000 Computation of Tax Liabilly ‘On total income except dividend and capital gain | Tk. 866,600(022.5% 194,085 (On Dividend Income 60,000@20% 12,000 ‘On Capital Gain 20,000@ 15% 3,000 ‘On Stock Dividend 100,000@10% ~ 10,000 On Retained Eamings 300,000@ 10% — 30,000 Gross Tax Liability 249,985 Loss: Tax Robate of CSR activitioa 50,000 10% (6,000) Not tax liability Tk. 244,086 Minimum tax: 60% on Tk, 13,00,00,000 = Tk. 78,000. @ THE END® Page 4 ot 4CWA May 207) Exsnrniration Nenermediete (eek Sutyect LT7S4-Foundation of Taxation, VAT and Pubic Financia! Mamagarnant Model Solution Section-A Sotution of the Question Mo. oO ® a) te) ma) ~ {6 (4) (wi) (8) (vie) (a) (9) Cn) Solution of the Question No. 2 (eo) Folse Government may acquire the asset f the far market valve exceeds the full vatue of the consideration declared by the assessee by mere han 25% of such declared value (> False. Any payment not exceeding Tk 25.000 received by an employee from the Worker's Participation Fund (WPF) shall be exctuded trom the calculation of total income, () Tre (6) False Maximum limit of the CSR expenditure, on which rebate wil be allowed, wil be 20% of the total income af the company or Tk 12crore, whichever is jower (0) True. Solution of the Question No. 3 a ©) 2) @) @) @) a 6) @) Page totSolution of the Question No. 4 (a) (b) ¢) (a) (f) (9) (h) a “ (b) (c) (d) (e) Assessee: Jewel Majumder ‘Assessment Year » 2021-2022 Income Year : 2020-2021 Computation of Total Income Basic Salary Leave fare allowance Medical allowance (6,000 x 12) 10% of Basic (10,80,000 X 10%) = 1,08,000 or Tk. 1,20,000 annually, whichever is lower Medical exepnse for heart surgery Less: Exemption - Full Ren! free accommodation: Lower of rental value ie. Tk.4,80,000 or 25% of basic salary ie. Tk. 2,70,000 Employer's contribution to provident fund Interest on Provident fund Less: Exemption ‘Conveyance allowance (3,500 X 12) Conveyance facility (Higher of Tk.60,000 or 5% of Basic Salary i.¢)54,000. Entertainment allowance (500 x 12) Bonus (Tk. 90,000 X 2) Interest on Securities (a) Interest on Tax exempt Government Securities Less: Exempt Interest from taxable government securities (5,700 x 100/95) Less: Admissible expense (collection fee) Interest on Wage Eamers Dev. Bond Less: Exempted - Full Interest on Debenture Income from 1 year zero coupon bond Less: Exempted Income from House Property Actual Rental Value (20,000 X 12) Page 2 of 9 150,000 150,000 240,000 1,080,000 90,000 270,000 108,000 42,000 60,000 6,000 180,000 5,900 1,836,000 53,9000 ww) (wi), (Ww) Muntogal ake 2:390,000 | Annual Vale (Nigher one) | 240,000 | | Lona Admuasitie expenses | | | Repair ant Maintenance (2.40.00 X 258) 60,000 | city Corporation Tay 5,000 | Land revenue 1,500 | Wauiranoe Premiuny 2,000 | | 68,500 Inoome fiom Other Sones. Dividend from IC Unit Fund (38,000 0.00) 40,000 Lesa: Exempted Upto TR 28,000 25,000 | 15,000 | Interest on Pest Office Savings Rank (18,000/0.00) 20,000 | Prizebond's Lottery (20,000.80) 25,000 | Interest on Savings Bank Deposit (5,400/0.00) 6,000 Unexplained Investment and Expense 300,000 | 674,500 Total Income 2564400 Tax Calculation _ . Rate Tax (Amount) | For the First Tk. 2,50,000 total income : : For the next TR. 4,00,000 total income 10% 40,000 For the next TR. 6,00,000 total income 15% 75,000 For the next TR, 6,00,000 total income 20% 120,000 For the rest Tk. 8,14,400 total income 25% Tax Payable a oe Investment = Insurance Premium 48,000 Purchase of Savings Certificate 00,000, Donation to Prime Ministers Reliot Fund 10,000 Deposit to Pension Scheme 60,000 Paid to Zakat Fund __6,000, Actual Investment 624,000 ‘Allowable investment 25% of income (25,64,400 X 25% = Tk, 6,41,100 or Actual investment Tk. 6,24,000 or Tk. 1,50,00,000, whichever is lower 624,000 Tax Rebate Page 3 of 9- Particulars [_Regate | _Amountof Tax For Taka 6,24,000 Investment 10% | 62,400 62,400 Net Tax Liability = (4,38,600 - 62.400 }= 3,76,200 Note: 1) Fuel cost and Driver's salary of full time car is not a part of his total income. 2) Legal expense in not an admissible expense. Electricity installation expense is capital ‘expense. 3) Since the actual repair and maintenance expense is more than the allowable limit. there is ho unspent amount. 4) Unexplained Investment: Purchase of Land 450,000 Purchase of Vehicle 800,000 FDR in local Bank 200,000 Travel to Singapore 250,000 Total Investment and Expense 1,700,000 Less: Source Explained Unexplained Investment and Expense 300,000 Solution of the Question No. 5 Assesse: Ispahani Limited Assessment Year : 2021-2022 Income Year : 2020-2021 Computation of Total Income Particulars Tk. Tk. Net Profit as per Profit and Loss Account 2,700,000 ‘Add: Inadmissible expenses: Salary 330,000 Royalty paid 300,000 Fees for technical services 245,000 Technical know-how fee 150,000 695,000 Less: Allowable (4,60,00,000x 8%) ____216,000| 479,000 Donation 45,000 Provision for Sales Commission 3,000,000 ‘Subscription paid to the Association 500,000 Advertisement (For 4 years} 160,000 Loss on Sale of Investment 200,000 Income tax 400,000 Provision for Bad Debt 600,000 Loss on Stock destroyed by fire 400,000 Page 4 of 9Chanily, 400,000 Lowe on Mevahiation 600,000 Depreciation 1,600,000 Fines for violation af Gustoria Aot ‘100,000 Commission ; Managing Agency 300,000 Provinion for Taxation 800,000 9,914,000 12,614,000 Lown: Admissible Expenses Commision 1,000,000 Depreciation 800,000 Bad debt __ 200,000 2,000,000 10,614,000 ‘Add: Salo of scientific apparatus 230,000 10,844,000 Lens: Non-businose incomo: Sharo Promlum 400,000 Income Tax Rofund 140,000 Dividond 400,000 Intorost on Taxable Commorcial Security 820,000 Income from Businass Non-businoss income: Dividend 400,000, Intorost on Taxablo Commercial socurily ____ 820,000 - Tol Tox Liability Particulars Gross Income | TaxRote | Amount of Tax 1 Tux on Business Income 9,674,000 30% 2,902,200 (88,54,000 + 8,20,000) 2. Dividend Income 400,000 20% Not Tax Payable Notes: ‘Amount spont for visits abroad as a member of trade delegation sponsored by the government is an allowable expense. The company is treated as Non-publicly Traded company. For this reason tax rate imposed off @ 37.5%. Proliminary oxpansos, under wriling commission & cost of construction of canteen aro capital oxpondituro, Page 6 of 9ow Donation, debenture redemption, reserve for bad debls, income tax reserve, finas and penalties are not admissible. Loss on sale of securily is a capital loss. As the company received waiver of a trading liability during this year, il should be shown as deemed income of the year [under section - 19] Solution of the Question No. 6 (a) (1) (2) (b) (c) VAT and Supplementary Duty Act, 2012 following persons are required to be registered for VAT in Bangladesh: Irrespective of any central, or branch unit, each of the following persons shall, from the first day of a month, be required to be registered for VAT, namely— (a) @ person whose turnover exceeds the registration threshold (3 crore TK) within a 12 (twelve)- month-period closing at the end of the month preceding that month; or (b) @ person whose estimated tumover exceeds Ihe registration threshold (3 crore TK) within the succeeding 12 (Iwelve)- month-period beginning at the start of the start of he Preceding month, Notwithstanding anything contained in sub-section (1), every person carrying on the folowing economic activities of— Has to be registered for VAT, if he— (a) manufactures any good subject fo supplementary duly in Bangladesh; or (b) supplies any service subject to supplementary in Bangladesh Necessary documents are: * Trade license + TINCertiicate + Import Registration cerlficatelexport registration Cerificate * List of all sales shops; Sales centers, full address, equipment, machinery, fittings, Product features and amendment of the products manufactured. List of invoice and stored product * Passport sized photos © Deed of Agreement + Bank solvency certificate + BIDA registration * Memorandum of Association (MOA) and Articles of Association No goods specified in the following clauses shall be brought, whether by air or land or sea, into Bangladesh (a) counterfeit coin; {b) forged or counterfeit currency notes 1{ and any other counterfeit product); (c) any obscene book, pamphlet, paper, drawing, painting, representation, figuie, photograph, film or article 2[ , video or audio recording, CDs or recording on any olher medial; (4) 3[ goods having applied thereto a counterfeit trade mark within the meaning of the Penal Code ( Act XLV of 1860), or a false trade description within the meaning of the aM prod hood sy awiy_) (Trademarks Act, 2009 (Act No. 19 of 2009));) (e) goods made or produced outside Bangladesh and having applied thereto any name or trade mark, being or purporting to be the name or trade mark of any manufacturer, dealer or trader in Bangladesh unless- Page 60f 9(the name or trade mark is, as to every application thereof, accompanied by a defn ‘indication of the goods having been made or produced in @ place outside Bangladesh; and (ii) the country in which that place is situated is in that indication shown in letters as large and conspicuous as any letter in the name or trade mark, and in the same language ‘and character as the name or trade mark; (()plece-goods manufactured outside Bangladesh (such as ate ordinarily sold by length or by the piece), unless the real length thereof in standard 4 metres) or other measurement for he ing in Bangladesh has been conspicuously stamped on each piece in Arabic 6{ (g) goods made or produced outside Bangladesh and intended for sale, and having applied thereto, a design in which copyright exists under the Patents And Designs Act, 1911 (Act No. IV of 1911) and in respect of the class to which the goods belong and any fraudulent or obvious imitation of such design except when the application of such design has been made with the license or written consent of the registered proprietor of the design: 7°~] (h) goods or items produced outside Bangladesh involving infringement of at. rece eve vv az ) (Copyright Act, 2000 (Act No. 28 of 2000) or infringement of layout design of integrated circuit that are intended for sale or use for ‘commercial purposes within the territory of Bangladesh8f; and))) Qi) Goods made or produced outside Bangladesh in violation of the provisions of 8 ) at rose bose ce ata ) intended for sale or use for commercial purpose within the territory of Bangladesh.) (4) Computation of AIT, SD and VAT import Vatue $ ER BOT July 2020 650,000 89 '57,850,000 October 2020 740,000 91 67,340,000 ‘Assessable value in BOT 425,190,000 ‘Add: 1% Insurance 1,251,900 _| Assessable value 126,441,900 import Duly @20% _ 25,288,380 ie for supplementary duly 151,730,280_| ‘Add: Supplementary duty@25% 37932570 Base value for VAT 189,662,850 VAT@15% _ | 28,449,427.5 | 218,112,277: ‘AIT@7% on assessable value 7 15,267,859. f 233,380,136.9 ‘Computation of AIT by customers: A(TK) B(TK) ck) ‘YT O(IK) Total 600,000 1,100,000 | _ 5,000,000 : Sha ‘Applicable 3% 3% 3% 5% | Rate _ AIT 18,000 33,000 450,000 255,000, Page7 of 9Solution of the Question No. 7 8) PFM refers to the set of laws, rules, systems and processes used by sovereign nations (and sub-national govemments), o mobilise revenue, allocate public funds, undertake public spending account for funds and audit resulls It encompasses a broader set of functions than financial management and is commonly conceived as a cycle of six phases, beginning with policy design and ending with external audit and evaluation A large number of actors engage in this ‘PFM cycle’ to ensure il operates effectively and transparently, while preserving accountability b) IBAS++ (Integrated Budget and Accounting System) is an Integrated Financial Management Information System (GFMIS) of Government of Bangladesh (GoB) It is a software system to keep track of all types of financial transactions, cluding receipts and payments, The system has been designed to ensure faster delivery of services to the cients. It has been developed over time to meet their emerging financial needs. The system, as of now, contains as many as eight modules thal support activities like budget preparation, budget execution, accounting, aniline bill submission and payment, financial reporting, and so on. iBAS++ is a centralised and web-based system, designed following an architecture that is database and hardware independent. The system is used by the Finance Division, line ministries, departments/directorates, line ministry field offices, accounting offices, SAEs, and employees. It is also used by the offices ‘under the Comptroller and Auditor General (CAG) to assist auditing. It is accessible by the citizens for viewing various financial progress and analysis and checking the status of challan deposits, Features of IBAS++ Nis an automated government financial transaction system. Nensures quality of information. also ensures timely provision of financial services. leases delivery of government financial services to the citizens at large. Functions: i. iBAS#+ allows budget preparation through a combination of top-down and bottom-up approaches by capturing budget requirements from field offices and matching it with the policy level distribution of resources. ii, tt allows budget preparation in various phases (e.g. strategic phase and estimation phase), using “Resource Envelop” or Forward Baseline Estimation (FBE), It also slores different versions of the proposed budget and allows finalising one of those. iii, After finalising the budget, the system prints out various budget documents for presenting at ‘the parliament which has to be followed by the appropriate process in iBAS++. iv. I creates budgetary journals and populates the budget column of General Ledger. v. As the demand for the grant is approved by parliament at the national level, budget distribution among field offices is required before expenditure can be made. Vi. iBAS++ budget distribution module helps directorates perform the tasks. Distributed budget is the basis of fund checking during issuing work orders or creating bils. It also keeps records of {und release and budget re-appropriation. vil. iBAS++ has an option for implementing commitment control by allowing Drawing and Disbursement Officers (DDOs) to enter work orders. It also allows the creation of bills by DDOs and submission of those bills online to the respective accounts offices that acknowledge the receipts of the bills online, carry out necessary auditing and checking, and then approve (or return) through iBAS+*. ix. iBAS#+ checks whether the fund is available to make the transaction before the approval of bills. After that cheque, EFT, or payment orders are being issued against the approved bills. iBAS++ transmits EFT orders to Bangladesh Bank and electronic bank advice for cheques to Bangladesh Bank or Sonali Bank using a secured channel and digital signature. x. iBAS++ has separate sub-modules for sell-accounting entities. iBASt* is integrated with employee database and pensioner database and automates pay bill preparation and viii. Page 8 of 9pensimn payment Hl aiso Buomates employre-reinted services He General Provedert Furl (GPF) employee loans and advances, emoloyen serve mconds. ate an The system has intertaces with the Core Banking Systems (CBS) cf flangladesh Bark ant Sonali Bank Thoto banks send dedt soro%s (sting of bark payments) and credit scrote (isting of bank receipts) using @ secured channel to a central FTP tocabon ftom whore IBAS+* uploads to those, making them available for accounting Mices ta perform Bank reconciliation and inchide in the accounts ¢) List of 17 Goals GOAL, 1 No Poverty GOAL 2 Zero Hunger GOAL 3: Good Health and Well-being GOAL 4 Quality Education GOAL 5 Gender Equality GOAL 6: Clean Water and Sanitation GOAL 7: Affordable and Clean Energy GOAL 8 Decent Work and Economic Growth GOAL 8: Industry, Innovation and Infrastructure GOAL 10: Reduced Inequality GOAL 11: Sustainable Cities and Communities GOAL 12: Responsible Consumption and Production GOAL 13: Climate Action GOAL 14: Life Below Water GOAL 15: Life on Land GOAL 16; Peace and Justice Strong Institutions GOAL 17: Partnerships to achieve the Goal (4) Open ended = THEEND= Voge of 0(CMA JANUARY 2022 EXAMINATION INTERMEDIATE LEVEL-II ‘SUBJECT: LT234-FOUNDATION OF TAXATION, VAT AND PUBLIC FINANCIAL MANAGEMENT Model Solution ‘Sectlon-A ‘Answer of the Question No. 4 (i) Answer (c) (i) Answer (b) li) Answer (a) (wv) Answer (a) () Answer (c) (wi) Answer (a) (vii) Answer (d) (vii) Answer (4) (x) Answer (a) (%) Answer (a) Answer of the Question No. 2 (a) Tre, (b) False. (c) False. Any dividend income by an individual from a mutual fund or a unit fund is exempted from Tax up to Tk. 25,000. (d) False. Unabsorbed depreciation can be carried forward for unlimited time period. (e) False. Anti-dumping duty is imposed as per the Customs Act, 1969. Answer of the Question No. 3 a) @) (2) (e) (3) (4) (4) () (5) fa) Answer of the Question No. 4 Assessee : Mr. Aminur Rahman. Assessment Year : 2021-2022 Income Year : 2020-2021 Computation of Total Income Page 1 of 6 Particulars _ Tk Te Tk Income from Salary Basic Salary (1,20,000 x 12) 1,440,000 (iv) House rent allowance (50,000 X 12) 600,000 Less: Annually Tk. 3,00,000 or 50% of Basic (14,40,000 x 60%) = 7,20,000 whichever is lower 300,000 300,000 (W) Festival Bonus (120,000 x 2) 240,000 (Medical allowance (15,000 X 12) 180,000 Less: 10% of Basic (14,40,000 X 10%) = 144,000 (oF Tk. 1,20,000 annually, whichever is lower {_ 120,000Loss Less Loss Loss, Income from House Property: Put tere comemyancn (5% of Bat 1440.00 X 5% | im TK 72.000 oF TR 0,000 whichever is higher) 72.000 | Emtrtninmnet aewnnce (8.000 X 12) 6,000 Temas Atonance Creag Commission {40 00,090,000 X01 10%) Love eacastement Income trom Stary ‘Actual Rental valve (60,000 X 12) Tenant's expanses paid by te owner ‘Municipal Value Annual Value (Higher of actual rent and Municioat 1 Value 700.000 | Unspent amount of repair and maintenance expense Admissible Expenses, | Repair and maintenance (700,000 X 25%) | City corporation tax | Fire insurance premism | {ntorest on DBH Loan f Interest on Securttios: Exemption [20.000] Interest on Taxable Govt Secunibos (300,000 X 15%) | | 45,000 Inte ebenture 10,000 Discount on zero coupon bond 20,000 20, | | | | | Interast on Tax exempt Govt Securities | 30,000 | Exemption |__20,000 | For the First Th. 300,000 total income For the next Tk. 1,00,090 tots! income For the next TA 3,00,000 total come For the next Th 4,00,000 total income For the next Th §,00,000 total ncome For tie rest Th. 18,32,000 total wcome Tax Payable - Page 201 6frecenert . oS 4 reareree Pramas s.000 Precane of Sara Corticae sen 006 Doeueten te Prine Miniter Rated Ford S000 Comntanie 10 Dagon Peenicn Somme, nme erin to Zak Furs ____se908 Ack Wremetrrare mon Aircon rereatintes 20% of merme (93,32,000 % 28% = Th 752.000 oF Actat remetmact Th 8.00,000 oF Th 1.50.00,000, whichewer tower n.000 (TL Tir on treme Lows tervwstment Tear Cenc (656) 000 X 10%) Net Tax Uisbiy __ (i) Contributory Provident Fund ts nef recognazad, hence employer's contrbution & ret mckaded in Income trom satary (8) Expense tor Instattation of Electret & capital mn nature, hence not afowable against HP Income (ii) Unspent repair and maintenance = 175,000 - (120,000 + 36,000) = 19,000 Answer of the Question No. 5 Aavesse: Delta Enterprise Limited Asvevsmert Yeat 2021-2022 Income Year 2026-2021 Compassion of Tota! income (Wet Profit 2s per Profit and tons Accoset had tnadeiaibie expenses: i Provsson tor Sates Commnasson 3,000,000 ‘ubacrigoon paid to the Assocuton 50,200 Adverwsemect (For 4 years) 16000 Loss on Sale of terestmiert 230,500 Income tas 400 206 Promcn tor Bad Debe $00,000 nts on Stock Bestroved by toe 490.500 Charny 300,000 Los on Remsen $00,200 Deprecation 1300.00 Fave Lar ckatins A Custos Bet 300,000 Comenaian Managers hpery 300,000 Page 36tes Provision for Taeation -Admicsible Lepenses Commission Depreciaion Bad debt Non- business income Share Premium Income Tar Refund Dividend Interest on Taxable Commercial Security Income from Business Non-business income. Dividend Interest on Taxable Commercial security L_ loo Particulars (80,00,000 + 8,20,000) Answer of the Question No. 6 AS & AA International Tax tistty Gross Income 1,000,000 800.000 | 200.000 | 400,000 | 140,000 400,000 £20,000 | 800,000 LL | amou Income Year: 2020-21 Assessment Year: 2021-22 Travelling expenses Salary of GM Trademark Patent Depreciation Legal expenses Miscollaneous. Promovonal expenses bag Debt Salary fo MR. AS Commission to AA Interest on Capital. AA and AS Interest on Loan to AS Page 4 ot 6 | 30,000 | } 32,000 | | 18,000 | 22,000 | 20,000 120,000 | 60,000 | 22.000 | __ 8,000 __| 9,220,000} 9,040 900 1,760,000 2,000,000 9,760,000 1,760,000, 1,220,000, untof Tax | 2,646,000 | £0,000 2,726,000 | } 599,000 |599,000 ‘Add: Income not recorded 60,000 Less: Inadmissible expenses Obsolescence losses of Motor car 10,000 ee 1,649,000 Tess: Non-Business Income Interest on securities, 80008 Income from House property , Income from sale of Tea 168,000 528,000 Total Business 7,121,000 ‘Non Business Income: Income from tax exempted government securities 10,000 Less: Fully exempted : 52,632 10,000 Interest on Commercial securities 225,000 Income from House property 300000 67,200 344,832 Less: Repair and Maintenance - 75,000 Income from sale of Tea 168,000 Less: Cost of Production a 400,800 Total Taxable Income of the firm __1,485,832 | Allocation of Firm's Income to the Partners MR.AS | MR. AA Total ‘Amount to be distributed ‘Amounts to be distributed 1,465,632 Salaries 720,000 120,000, 1,345,832 | ‘Commission —_ 60,000 | 60,000 1,285,832 Interest on Capital 12,000| 10,000 | 22,000, 1,263,832 Interest on Loan. —_ 8,000 | 8,000 1,255,832 Profit allocation 627,916 | 627,916 | 1,255,832 | Total Amount 767,916 | 679,916 | 1,465.83: = ‘Taxable Income of the Partners: Mr. AS Total taxable Income 915,196 Tax Liabilty of the Firm . __‘Slab Rate ei) First 300,000 0% ‘Next 100,000 5% . oe Next 300,000 10% Next 400,000 15% On Balance 365832 20% al Total Tax Liability Minimum Tax Liability: 19,000,000@.60% = 114,000 TK. So, minimum tax is not applicable. Tax Liability of the partners: Slab Mr AS Mr. AK Rate Mr. AS Mr. AA First 300,000 300,000 300,000 0% Page 5 of 6| | 56,452 _Rebate a: 7 {Net tax habiiy ofthe pariners | 4082 Lit Answer of the Question No. 7 {e) i) Compliance Audit audit scope and objective, Compliance audit may be concemed with requlaity ie. adherence to formal criteria of laws, rules and regulations or agreements. It may be concemed with propriety Le observance of general Principles of sound public sector management, the conduct of public officials or cannons of financial propriety, ii) Financial Audit Financlal Audits (FA) are allestation engagement. The subject matters (nancial position, financial performance, cash flow statement, Owner's equily statement) of financial audits recognized and measured against the criteria of financial reporting framework by the responsible Party who presents the financial statements which are treated as subject matter information. i) Performance Audit Performance Audit (PA) focuses on whether interventions, programmes, and institutions are Performing in accordance with the principles of economy, efficiency, and effectiveness and Whether thera is room for improvement. The subject matter of a performance audit is defined by the audit objectives. (d) PEM refers to the set of laws, rules, systems and processes used by sovereign nations (and Sub-national governments), to mobilise revenue, allocate publec funds, undertake public spending, account for funds and audit results. It encompasses a broader set of functions than financial management and is commonly conceived as a cycle of six phases, beginning with policy design 4and ending with external audit and evaluation. A large number of actors engage in this 'PFM cycle’ {0 ensure it operates effectively and transparently, while preserving accountability y Process i) Macroeconomic Forecasting li) Budget Preparation ili) Budget Execution \v) Accounting and Fiscal Reporting v) Cash Management vi) Debt Management vil) Revenue Administration vil) Auditing = THE END = Page 6 of 6