CMA JANUARY 2023 EXAMINATION

ADVANCED LEVEL II
ADVANCED INCOME TAX & VAT

Course Code : LT453 Total Marks : 100

Reading Time : 15 minutes Writing Time : 180 minutes

Instructions to Candidates
 You MUST NOT write anything during the reading time.
 There are 5 (five) questions.
 You should attempt ALL questions.
 Answers should be properly structured and relevant.
 Show all necessary computations.
 Carefully read ALL the requirements and sub-questions before attempting a specific
question.
 ALL answers must be written in the answer book.
 AVOID WRITING/MARKING on the question paper at any time which may cause disciplinary
action.
 Start answering each question from a fresh sheet.
 Answers should be clearly numbered with the sub-question number.

Allowable Materials
 Writing Stationaries
 Non-programmable Calculator

Assessment Structure

Sub- Expected Time

Marks
question Required
Question 1 Essay/Computational/Case 4 20 35 minutes
Question 2 Essay/Computational/Case - 20 35 minutes
Question 3 Essay/Computational/Case - 20 35 minutes
Question 4 Essay/Computational/Case 4 20 35 minutes
Question 5 Essay/Computational/Case 4 20 35 minutes
Revision 5 minutes
Total 100 180 minutes

RESTRICTED USE
This paper MUST NOT BE REMOVED from the examination venue

Do not turn the page until instructed

QUESTION 1
(a) "Tax rate on capital gain varied with different types of assessee"- Explain.
(b) What is a tax treaty? How does it address double taxation problem?
(c) Why in Bangladesh corporate tax rates are historically higher than the personal tax rates?
Describes your answer by taking the statistical references from other countries.
(d) Rifat Traders, an importer, imported 200 pieces of LED TV at CIF price @ Tk. 100,000 per
piece and paid tax at import stage. The clearing and other incidental charges amounted to
Tk. 100,000 for the total consignment. He sold 80 pieces of TV to a whole seller at a markup
of 10% (exclusive of VAT). The whole seller charged 10% mark up to sell it to retailers. The
retailers incurred a cost @ Tk. 2,000 for maintenance and other expenses and added 10%
markup to the price.
Required:
Compute the output tax, input tax and net VAT payable by importer, the wholesaler and the
retailer assuming that the retailers sold 60 pieces of TV in a trade fair among various
customers.
[Marks: 4+4+4+8 = 20]
QUESTION 2
Mr. Ruhul is an Employee of a Public Limited Company. His salary and other income for the
income year 2021-22 are as follows:
Basic Salary Monthly Tk. 62,500
House Rent Allowance Monthly Tk. 34,375
Medical Allowance Monthly Tk. 6,250
Conveyance Allowance Monthly Tk. 2,500
Entertainment Allowance Monthly Tk. 3,125
Utility Allowance Monthly Tk. 3,125
Festival Bonus Yearly Tk. 125,000
Baishaki Allowance Yearly Tk. 7,813
Company maintains mandatory Contributory Provident Funds @10% of Basic Salary.
He received Tk.582,000 as rental income from a flat at Dhaka from where 3% AIT was deducted.
He received Tk.81,000 as dividend from the listed companies.
He encashed 5 Years Bangladesh Sanchay Patra of Tk.10.00 Lac from which he earned 11.28%
interest less 10% Income Tax.
Early he bought 3 months Antar Munafa Vittik Sanchay Patra of Tk.10.00 lac from which he
earned & received only an interest @ 11.04% less 10% Income Tax.
Early his wife bought Paribarik Sanchay Patra of Tk.20.00 lac from which he earned & received
only an interest @ 11.52% less 10% Income Tax.
His company deducted AIT @Tk.1,000 monthly from his salary. Last year’s refundable tax was
Tk.5,555 only.
Balance of his net wealth is Tk.3.51 crore at end of this income year. Advance tax paid Tk.75,000 only.
He invested in the following head of investment during the 2021-22 income year:
Purchase PSP (Saving Certificate) of Tk.50,000 in his father’s name of 66 years old.
Replaced his Personal Laptop by a cost of Tk.50,000 only, no way he know value of his old one at
the replacement time. Deposited to a DPS account in his wife name Tk.90,000.
Contributed Tk.15,000 to Benevolent Funds & Tk.6,250 to Super Annuation Funds.
Spent Tk.150,000 for Educational expenses of his 3 children.
Paid insurance Premium of Tk.50,000 against policy value of Tk.4,00,000 only.
Required: Please calculate Total Income, Taxable Income, Total Tax Liability & Net Tax Liability
of Mr. Ruhul for assessment Year 2022-23.
[Marks: 20]

CMA January 2023 Examination, LT453 [Page 2 of 4]

QUESTION 3
XYZ Limited is a Private Limited Company whose Income Statement for the Financial Year 2021-
22 is as follows figure in BDT:

Sales Revenue 11,000,000

Cost of Sales 8,555,000
Gross Profit 2,445,000
Dividend Income (Net) 24,000
Interest Income (Gross) 12,000
Sale of old car 48,000
TOTAL INCOME 2,529,000
Expenditure
Salary & Allowances 794,000
Gratuity Provision 30,000
Rental Expenses 120,000
Office Expenses 106,000
Foreign Travelling 180,000
Legal Expenses 24,000
Audit & Compliance Fee 50,460
Maintenance Expenses 30,000
Bank Charges 35,000
Interest Paid 45,000
Interest Paid u/s 68 2,400
Sample Cost 132,000
Bed Debt 30,000
Other Expenses 162,000
TOTAL EXPENDITURE 1,740,860
NET PROFIT 788,140
Provision for Income Tax 216,739
On scrutinizing by the DCT, following information found:
(a) No tax was deducted from rent.
(b) No VAT was deducted from Legal Expenses.
(c) Cost of sales includes Depreciation of Tk.9,50,000 while Tax Depreciation was Tk.8,00,000.
(d) The cost price of sold car was Tk.1,20,000 and WDV was Tk.72,000.
(e) Excess perquisite given Tk.1,00,000.
(f) Actual gratuity payment was Tk.52,000.
(g) Other expenses include Capital Expenses Tk.1,10,000 and personal expenses of Directors
Tk. 25,000.
(h) Last year’s Gross Profit was 26%.

Required:
Calculate taxable income & tax liability of the company for the assessment year 2022-23,
considering rate of income tax used making Provision for Income Tax.
[Marks: 20]
QUESTION 4:
(a) What is the problem of related party transactions in VAT system? How can this problem be
controlled
(b) How ‘Zero Rate of VAT’ differs from ‘Exemption of VAT’?
(c) What is VAT buoyancy or elasticity? Compare VAT buoyancy of Bangladesh with that of
other countries.
(d) Fragile Co. has imported 15,000 mother boards @ C&F value of USD 50.00 per board. The
relevant exchange rate is USD 1= Tk. 78. The Co. has paid insurance cost 1% of C&F value.

CMA January 2023 Examination, LT453 [Page 3 of 4]

 For this import, the tax authority has determined “duty paid value” equal to 89,956,912.5 Tk.
Further, the tax authority has determined the rate of “supplementary duty” which is 30% less
than the “custom duty” applicable for this import (i.e. SD=CD rate-0.30). Calculate cost of
one board including all taxes (without VAT) and the total VAT payable at import stage
assuming company is subject to 5% IDSC on their import and VAT rate is 12%.
[Marks: 4+4+4+8 = 20]
QUESTION 5
(a) The national budget for fiscal year (FY) 2022-23 has been announced at a time when
existing turbulent global economic context and our continuous import dependencies.
Consequently, through Finance Act 2022, we observed a lot of changes in Income Tax
structure and rates. What are those changes?
(b) What tax policy Bangladesh government should adopt to counter tax avoidance strategy of a
MNC with regard to royalty, interest and head quarter overhead expenditure?
(c) Corporate income tax is higher in banks compared to other industries but at the same time
allows provision for doubtful debts in banks which are not available in other industries. Do
you think it is a zero sum game? Explain critically.
(d) Describe the different computation methods of arm’s length price in case of transfer pricing
with example.
[Marks: 5+5+5+5 = 20]

END OF QUESTION

CMA January 2023 Examination, LT453 [Page 4 of 4]