CMA JANUARY 2023 EXAMINATION

INTERMEDIATE LEVEL-II
LT234.TPF-FOUNDATION OF TAXATION, VAT AND PUBLIC FINANCIAL MANAGEMENT
MODEL SOLUTION

Section-A (Marks: 20)

Solution to the Q No.1
i (b)
ii (c)
iii (c)
iv (c)
v (d)
vi (a)
vii (a)
viii (d)
ix (d)
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 Duty 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.
(c) Answer: True
(d) False, Value added tax (VAT) is borne by the consumer (customer).

(e) True

Solution to the Q No.3

1. (d)
2. (e)
3. (a)
4. (g)
5. (c)

Page 1 of 6
 Section B
Solution to the Q No.4
Mr. Sharif
Income Year: 2021-2022; Assessment Year: 2022-2023
Calculation of taxable income
Tk. Tk. Tk.

1. Income from Salary (section: 21)

Basic Salary 272,000

Medical allowance 36,000

Less: Lower of 120,000 or 10% of BS 27,200 8,800

Festival bonus (18,000 x 2) 46,000

Performance bonus (24,000 x 3) 72,000

House rent allowance 149,600

Less: Lower of 25,000 pm or 50% of BS 136,000 13,600

Dearness 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

10,875 1,125
salary
Conveyance Facility 13,600

Entertainment allowance 12,000

Advance salary 44,000 523,925

2. Income from Securities (section: 22 & 23)

Interest from tax exempt government securities 10,000

Less: exemption (full) 10,000 -

Interest from taxable govt. securities (gross) 10,000

Less: Admissible expenses —

Bank charge -333 9,667
Interest from debentures 20,000
Less: Admissible expenses –
Bank charge (16,150 x 1,350 / 27000)
667
Interest on borrowed fund
1,867 18,133 27,800
1200

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 1,000

Prize Bond Lottery 30,000

Sale of Fish 1,000

Income from Copy Right 4,000

Unexplained Investment 125,000

171,000
Total
Income 722,725

Calculation of Tax Liability:

Tax Liability
300,000 0% 0
100,000 5% 5000
292,725 10% 29272.5
On Prize Bond
30,000 20% 6000
Gross Tax 40272.5
-Investment tax credit 15% 20,782
Net Tax Liability 19,491
-TDS 14,500
Surcharge 30% 5847.225
Net tax liability 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
manner
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 3 of 6
(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 that is attributable to such repair, by adding
to the cost of related freight and insurance, if 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 turnover 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 note, debit note, etc; and (b) return
the VAT registration certificate, and all certified copies thereof to the Commissioner
within the prescribed time, and pay the tax due, and file a final VAT return.
d) VAT Current Account
Solution to the Q No.6
(d)
C&F= BDT. 58,500,000
CIF=BDT. 59,085,000
IDSC=BDT. 2,954,250
Custom Duty=BDT. 27,917,663
Duty Paid Value=BDT. 89,956,913
Custom Duty Rate=45%
Supplementary Duty=(45-30)=15%
Supplementary Duty =BDT. 19,542,364
VAT base=109,499,276
Cost per board=7296.62
VAT at import stage= 13,139,913.12

Solution to the Q No.7

Mokles Limited
Assessment Year: 2022-2023; Income Year: 2021-2022
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 1,900,000
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) 1,100,000 50,000
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
3/4th of actual expenditure (i.e. 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

Page 5 of 6
 Gain on sale of Motor Vehicle 45,000
Waiver on trading liability 180,000 345,000
49,750,000
Less: Expenses admissible but not shown: 2,100,000
Depreciation
47,650,000
Add: Sale of scientific apparatus 600,000
48,250,000
Less: Income received from non-business head
Dividend 220,000
Income from business 48,030,000
Add: Non-business income:
Dividend Income 220,000
Total Income 48,250,000

Computation of Tax Liability

Particulars Gross Income Tax Rate 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