Module F

Advanced Taxation:
INCOME TAX

Study and Examination

strategies

Presentation by:

Rehan Uddin, CFA, ACA

 Study plan for “Advanced Taxation”

BEFORE EXAMINATIONS LEAVE

For those taking their first attempt, it is strongly advised to
go through the Income Tax law before the examination
leaves have started. They should have developed a
1 complete understanding of the legislation, before going on
leave.
It is also advisable to create a separate manual file for
taxation, in which you can arrange your notes in the order
in which you would study them.
 Study plan for “Advanced Taxation”

DURING EXAMINATIONS LEAVE

The first completion of the complete tax syllabus would
normally take 100 to 120 hours. Tax is a subject, which
requires extensive retention, and therefore, the main
2 reason for poor performance is the failure to revise the
complete syllabus in the last 10 hours before paper. It is,
therefore, necessary for you to gradually bring your
revision time to 1 day. Your first revision might take 60
hours and the second might take 30 hours. After this you
could be confident that you can revise the syllabus in ONE
day.
 How to study “Income Tax”

 Identify key parts of a section, such as what is covered under the

scope of any section.

 Finding the meaning behind the words (intention of the law-

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maker)

 Conditions laid down in any section are very important

 Give importance to definitions contained in various sections, such

as Turnover, Manufacturer, Associates, disposal of assets etc.
 General principles for taking final level papers

The students who select the easiest questions first in an exam have a
Question
selection
much higher chance of getting a pass. Quickly go through the requirements
of all the questions to select the one you can do well.

A new question is required to be started from a fresh page. But that is

Presentation rarely followed. Read the question carefully so that you answer the
question in the required format.
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The examiner would not know that you posses knowledge about an area
Communicating
knowledge
until that is reflected in your exam paper. You also need to explain to the
examiner why you did not consider an item, because that carries marks.

The first 50% marks in any question are easier to get than the last 50%. If
you don’t attempt any question at all, you are losing out on the easier
Attempting all
questions marks. However, I do not mean that you leave all your questions half
completed. Manage your time in such a manner that you can attempt all
questions.
 Paper structure for “Advanced Taxation”

The questions in the taxation paper can be broadly

classified into following types:

 Case studies / questions involving application of

5
knowledge
 Computational questions
 Theoretical questions
 Approach for answering case studies

Most students do not know how to systematically answer

case studies, including those where opinion is required. In
such questions, the examiner is more interested in the
appropriate approach and arguments, instead of the final
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opinion or conclusion.

Now, let us see what approach should be adopted for

answering case studies.
 Understanding the “Basic” flow

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 Approach for answering computational questions

Computational questions mostly involve calculation of taxable

income and related tax liability. Every exam paper contains a
comprehensive computational question carrying significant marks.
Above average performance in such question would ensure that you
at least secure a pass.
8

The marking scheme is designed to make sure that marks are

allocated to correct treatment of various items involved.

Answer the question in the form of supporting notes. Items which are
not required to be considered should also be explained a separate
note, along with the reasons for their exclusion.
 Approach for answering computational questions

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 Taxability of Receipts

10
 Approach for answering computational questions

A manufacturer purchases raw material locally and from abroad. All

sales are made locally.

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Import and local Local Sales

purchases for own use (Rs 3 million)
(Rs 2 million)
 Approach for answering computational questions

A tax payer purchases goods locally and from abroad, and sells
them in the same condition in the local market.

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Import and local Local Sales

purchases (Rs 3 million)
(Rs 2 million)
 Approach for answering computational questions

A tax payer purchases goods locally and from abroad. Some of the
goods are sold in the same condition in the local market, while the
remaining are processed, and thereafter sold in the local market.

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Import and local Local Sales

purchases (Rs 6 million)
(Rs 4 million)
 Approach for answering theoretical questions

The most alarming fact about the tax papers is that most students
are not able to secure marks in straight-forward theoretical
questions. Students do not reproduce all the relevant provisions
relating to a particular area. You need to consider the following in
respect of the theoretical part of this subject:
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 If you don’t revise it on the last day before exam, there is a high
probability that you won’t remember it. Two solutions: Either don’t
learn what you can’t revise; or revise all what you have learnt.
 While learning tax, try to identify and memorise the key parts of
the section.
 Reproduce your answer in the form of bullets and pointers,
wherever possible.
 Significant changes introduced by Finance Act ‘10

 Re-introduction of Minimum tax under section 113

 Methodology for calculation of advance tax u/s 147 payable by
companies
 Import of edible oil and packing material by manufacturers of
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edible oil
 Tax deduction u/s 150 by branch of a non-resident company out
of remittance of profits
 Minimum Tax Regime for individuals and AOPs for services
rendered to prescribed persons u/s 153
 Treatment of advance tax collected on monthly electricity bills in
cases of non-corporate tax payers
 Admissibility of provisions against advances for banks as per
Prudential Regulations
 Module F
Advanced Taxation:
INCOME TAX

Thank you