December 2025 — Tax Laws & Practice (527) — Question 1 (Karan) — Fully Solved 

ICSI Executive Programme (Syllabus 2022) | Assessment Year 2025-26 | Old Tax Regime | 15 Marks 

This is the complete step-by-step solution of Question 1 (Karan, 15 Marks) from the ICSI CS Executive Programme December 2025 examination, Tax Laws and Practice (Paper 527).

The question covers computation of Total Income and Tax Liability of Karan, aged 38 years, working as Sales Manager with Arjun Grand Ltd., for the Assessment Year 2025-26 under the Old Tax Regime (having opted out of Section 115BAC default regime).

The solution is divided into five sub-parts (a) to (e) and covers all four heads of income and deductions as follows:

Sub-part (a) — Income from Salary — Basic Salary, Dearness Allowance, Commission on turnover, Bonus, Project Allowance, Perquisites including use of Music System under Rule 3(7)(vii), Smart TV gift, Employer's RPF contribution in excess of 12%, Interest on RPF in excess of 9.5%, Standard Deduction u/s 16(ia) and Professional Tax u/s 16(iii).

Sub-part (b) — Profits and Gains from Business or Profession — Presumptive taxation under Section 44AE for two light goods vehicles at ₹7,500 per vehicle per month.

Sub-part (c) — Income from Other Sources — Interest on SBI Bank FD, Grossing up of TDS on debenture interest, and taxability of gold ring received as gift from a non-relative u/s 56(2)(x) (with clear reasoning on why the "marriage" exception does NOT apply to wedding anniversary gifts).

Sub-part (d) — Chapter VI-A Deductions — Section 80C (LIC, NSC, 5-year SBI Tax-saver FDR, own RPF contribution), Section 80D (Mediclaim for spouse), and Section 80G (PM National Relief Fund at 100% and donation to approved institution at 50% with 10% of Adjusted GTI qualifying limit).

Sub-part (e) — Net Tax Payable — Slab-wise tax computation under Old Regime, Health and Education Cess @ 4%, and TDS credit adjustment, with final rounding u/s 288A and 288B.

Key provisions applied include Section 17(2) perquisites, Rule 3(7)(vii), Rule 3(7)(iv), Section 10(12) read with Rule 6 of Part A of Fourth Schedule, Section 44AE, Section 56(2)(x), Section 80C, 80D, 80G, 16(ia), 16(iii), and Section 288A/288B rounding provisions.

Students appearing for CS Executive, CA Inter, CMA Inter, and B.Com taxation papers will find this solved question useful for understanding the integrated computation approach expected in the examination.

For doubts and classes, contact Goodwill Tuition Centre for Accountancy & Income Tax Online, Ernakulam, Kerala at PH: 9567902805 (WhatsApp available).

Tags: ICSI, CS Executive, Tax Laws 527, December 2025, Karan, Salary Income, Section 44AE, Section 56(2)(x), Chapter VI-A, Section 80G, Old Regime, AY 2025-26, Solved Question Paper, Goodwill Tuition Centre, Ernakulam 

December 2025 — Tax Laws & Practice (527) — Question 2 (Rakesh, Anju Lata & Pratap) — Fully Solved

ICSI Executive Programme (Syllabus 2022) | Assessment Year 2025-26 | Old Tax Regime | 15 Marks | Three Assessees

This is the complete step-by-step solution of Question 2 (15 Marks) from the ICSI CS Executive Programme December 2025 examination, Tax Laws and Practice (Paper 527).

Unlike Question 1 which deals with a single assessee, Question 2 is a composite question involving three independent assessees — Rakesh, Anju Lata, and Pratap — each testing a different head of income and a different set of provisions under the Income Tax Act, 1961, for the Assessment Year 2025-26 under the Old Tax Regime.

Sub-part (a) — Rakesh — Profits and Gains from Business or Profession (5 Marks) — This part requires computation of business income starting from the given Profit and Loss Account by applying the classic "add-back and deduct" methodology. The solution demonstrates treatment of disallowed expenses including depreciation as per books being replaced by depreciation as per Income Tax Act, interest on capital paid to proprietor (self-payment not allowed), donation to political party (allowed only u/s 80GGC and not as business expense u/s 37), commission paid without TDS (30% disallowance u/s 40(a)(ia)), cash payment to contractor exceeding ₹10,000 (fully disallowed u/s 40A(3)), and goods withdrawn for personal use (added back u/s 28). It also covers profit on sale of car where the entire block ceases to exist (taxable as Short-Term Capital Gain u/s 50, not PGBP) and refund of income tax (not income under any head).

Sub-part (b) — Anju Lata — Income from House Property (5 Marks) — This part covers computation of income from two house properties — one Self-Occupied Property (Delhi) and one Let-out Property with vacancy (Mumbai). The solution demonstrates application of Section 23(1)(c) where actual rent received falls short of expected rent due to genuine vacancy, computation of Expected Rent using the three-step approach (Municipal Value, Fair Rent, Standard Rent), treatment of Municipal Taxes paid by owner versus tenant, Standard Deduction @ 30% of NAV u/s 24(a), Interest on Borrowed Capital u/s 24(b) with the ₹2,00,000 cap for Self-Occupied Property and no cap for Let-out Property, and final aggregation of income/loss from both properties.

Sub-part (c) — Pratap — Computation of Gross Total Income with Set-Off & Carry Forward (5 Marks) — This is the most integrated part of Question 2 and tests the student's command over the inter-head and intra-head set-off provisions. It includes income from Salary, loss from House Property (restricted to ₹2,00,000 u/s 71B), speculation business income, loss from non-speculative business (marbles trading), loss from specified business u/s 35AD, short-term capital loss, betting income u/s 115BB (flat 30%, no set-off, no deduction), and income from Virtual Digital Assets (Bitcoin) u/s 115BBH (flat 30%, only cost of acquisition allowed, no other expenses, no set-off, no carry forward). Key provisions tested include Section 71(2A) — business loss cannot be set off against Salary; Section 73 — speculation loss only against speculation profit but non-speculative business loss can be set off against speculation profit; Section 73A — specified business loss only against specified business income; Section 71B — HP loss set-off capped at ₹2,00,000; Section 74 — STCL carry forward; and the self-contained codes of Section 115BBH (VDA) and Section 115BB (Betting/Lottery).

The solution also includes a summary of losses carried forward with correct classification under Section 72 (business loss — 8 years), Section 73A (specified business — no time limit), and Section 74 (capital loss — 8 years).

Key provisions applied across the question include Section 28, 29, 37, 38, 40(a)(ia), 40A(3), 50, 23, 24(a), 24(b), 71(2A), 71B, 72, 73, 73A, 74, 80GGC, 115BB, and 115BBH of the Income Tax Act, 1961.

This question is extremely important from the examination point of view because it tests three heads of income, multiple disallowance provisions, and the entire set-off and carry forward framework in a single integrated problem — a pattern which ICSI frequently repeats in every session of CS Executive Tax Laws.

Students appearing for CS Executive, CA Inter Taxation, CMA Inter Direct Tax, and B.Com / M.Com taxation papers will find this solved question useful for understanding the examination-oriented presentation style and the sequential flow of reasoning expected by ICSI examiners.

For doubts, clarifications and live online classes, contact Goodwill Tuition Centre for Accountancy & Income Tax Online, Ernakulam, Kerala at PH: 9567902805 (WhatsApp available). 

Tags: ICSI, CS Executive, Tax Laws 527, December 2025, Rakesh, Anju Lata, Pratap, PGBP, House Property, Gross Total Income, Set-off, Carry Forward, Section 40(a)(ia), Section 40A(3), Section 50, Section 23(1)(c), Section 24(b), Section 71B, Section 73, Section 115BBH, Bitcoin VDA, Section 115BB Betting, Old Regime, AY 2025-26, Solved Question Paper, Goodwill Tuition Centre, Ernakulam

December 2025 — Tax Laws & Practice (527) — Question 3 (Vikram, Chirag & Arvind) — Fully Solved

ICSI Executive Programme (Syllabus 2022) | Assessment Year 2025-26 | 15 Marks | Three Assessees | IFOS + Capital Gains + Total Income

This is the complete step-by-step solution of Question 3 (15 Marks) from the ICSI CS Executive Programme December 2025 examination, Tax Laws and Practice (Paper 527).

Question 3, like Question 2, is a composite question involving three independent assessees — Vikram, Chirag, and Arvind — each testing a different segment of the Income Tax Act, 1961, for the Assessment Year 2025-26. The three sub-parts together cover Income from Other Sources, Capital Gains, and the residence-based scope of Total Income.

Sub-part (a) — Vikram — Income from Other Sources (5 Marks) — This part tests the student's command over Section 56 of the Income Tax Act, 1961, which is the charging section for Income from Other Sources. The solution demonstrates treatment of various receipts such as interest on fixed deposits, interest on debentures with grossing up of TDS, dividend income, family pension (with standard deduction of one-third or ₹15,000 whichever is lower u/s 57(iia)), casual income like winnings from lottery / crossword / horse races (taxable @ 30% flat u/s 115BB with no deduction), and gifts received from relatives and non-relatives under Section 56(2)(x). The distinction between taxable and exempt gifts, the ₹50,000 aggregate threshold, the definition of "relative", and the special occasions when gifts are fully exempt (marriage of the assessee, inheritance, from a local authority, etc.) are all covered.

Sub-part (b) — Chirag — Capital Gains (5 Marks) — This part deals with Section 45 read with Sections 48, 49, 50C, and 54B of the Income Tax Act. Section 50C is a deeming provision which substitutes the stamp duty value for the sale consideration when land or building is transferred for a consideration lower than the stamp duty value (subject to the 10% tolerance band). Section 54B provides exemption from Long-Term or Short-Term Capital Gains arising from the transfer of agricultural land used by the assessee or his parents for at least two years immediately preceding the transfer, provided the sale proceeds (or the capital gain) are reinvested in another agricultural land within two years from the date of transfer. The solution demonstrates computation of Indexed Cost of Acquisition using the Cost Inflation Index, calculation of Long-Term Capital Gain, application of Section 50C where stamp duty value exceeds sale consideration by more than 10%, and claim of exemption u/s 54B with its lock-in condition of three years for the new agricultural land purchased.

Sub-part (c) — Arvind — Scope of Total Income u/s 5 (5 Marks) — This is a purely conceptual part which tests the student's understanding of the residential status framework and the scope of total income under Section 5 of the Income Tax Act, 1961. Section 5 is the foundation of Indian income tax because it determines what income is taxable in India based on the residential status of the assessee. For a Resident and Ordinarily Resident (ROR), global income (income received or deemed to be received in India, accrued or deemed to accrue in India, and income accrued and received outside India) is taxable. For a Resident but Not Ordinarily Resident (RNOR), only Indian income plus foreign income from a business controlled from India or profession set up in India is taxable. For a Non-Resident (NR), only Indian income is taxable. The solution correctly classifies each item of Arvind's income (such as income earned in India, income earned abroad, income received in India from a foreign source, past untaxed foreign income remitted to India, agricultural income from outside India, dividends from foreign companies, etc.) under the correct residential status and computes the taxable Total Income in India accordingly.

Key provisions applied across Question 3 include Section 5 (Scope of Total Income), Section 6 (Residential Status — for referential understanding), Section 45 (Capital Gains — charging section), Section 48 (Mode of computation of Capital Gains), Section 50C (Stamp Duty Value deeming provision for Land/Building), Section 54B (Exemption for Agricultural Land), Section 55 (Cost of Acquisition provisions), Section 56(1) and 56(2)(x) (Income from Other Sources — charging and gifts), Section 57 (Deductions from IFOS), Section 115BB (Casual Income flat 30% tax), and Cost Inflation Index notification for AY 2025-26.

This question is highly scoring for well-prepared students because each sub-part is self-contained and follows a standard computation template. Students should particularly pay attention to Section 50C (a favourite examiner topic), the 10% tolerance limit for Section 50C, the two-year reinvestment window and three-year lock-in of Section 54B, and the precise classification of income under Section 5 based on residential status — a single mis-classification can cost 2 to 3 marks.

Students appearing for CS Executive, CA Inter Taxation, CMA Inter Direct Tax, B.Com and M.Com taxation papers, as well as candidates preparing for CA Final International Taxation electives, will find this solved question useful for building conceptual clarity on the scope of Total Income and the deeming and exemption provisions under Capital Gains.

For doubts, clarifications and live online classes on CS Executive Tax Laws, contact Goodwill Tuition Centre for Accountancy & Income Tax Online, Ernakulam, Kerala at PH: 9567902805 (WhatsApp available).

Tags: ICSI, CS Executive, Tax Laws 527, December 2025, Vikram, Chirag, Arvind, Income from Other Sources, IFOS, Capital Gains, Total Income, Section 56, Section 56(2)(x), Section 50C, Section 54B, Section 5, Section 45, Section 48, Stamp Duty Value, Agricultural Land Exemption, Residential Status, ROR, RNOR, Non-Resident, Gifts Taxation, Cost Inflation Index, AY 2025-26, Solved Question Paper, Goodwill Tuition Centre, Ernakulam

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