Everything You Need To Know About CA Intermediate Taxation Exam in 2021

Chartered Accountancy is the most sought after course for commerce students. The prestige and the fantastic opportunities this course provides is what makes it so popular among students and parents alike.

The Chartered Accountancy course and its content help in the overall development of an individual. The curriculum is formed in a manner that the students learn the required subjects along with developing their overall personality by the aided orientation training.

It comprises of the following levels -

After an individual has done his CA Foundation, he is required to do a mandatory Information Technology and Soft Skills Training.

Note: As per the Notification dated 21st August, online classes were launched as a one time measure in view of the ongoing pandemic. The Information Technology and Soft Skills training fees along with the Orientation Course were also reduced.

Today, we would be talking about the second level of the Chartered Accountancy Course, which is CA Intermediate.

CA Intermediate

CA Intermediate, previously CA IPCC, is the second level of the CA course. It comprises of two groups with four papers in each group.

Paper 1 of CA Intermediate comprises of four subjects -

1. Accountancy
2. Corporate and Other Laws
3. Cost and Management Accounting and
4. Taxation

Paper 2 comprises of four subjects as well, these are -

5. Advanced Accounting
6. Auditing and Assurance
7. Enterprise Information Systems and Strategic Management, and
8. Financial Management and Economics for Finance

CA Intermediate curriculum is a mix of both practical as well as theoretical subjects. It gives the students the required knowledge, which helps them in the successful completion of their three years of mandatory Articleship.

Today, we are going to talk about a dreaded subject among students due to its vastness and technicalities - Taxation.

We will talk about the subject content, tax amendments, how to prepare for CA Inter Taxation, and a lot more. So, read on.

Paper 4 - Taxation

CA Intermediate Taxation is often feared by students due to its huge syllabus. Proper time management is required for preparation of Taxation. If done correctly, Taxation can prove to be an interesting subject due to its relevance in the practical world.

Paper 4 of CA Intermediate, Taxation, is divided into two parts -

1. Income Tax Law, and
2. Indirect Taxes

Income Tax Law

Income Tax Law comes under Direct Tax. It is a tax levied on the income of a person and is governed by the Income Tax Act, 1961. The students, at the Intermediate level, are required to have an understanding of the application of the provisions of Income Tax Act, 1961.

CA Intermediate Taxation paper is of 100 marks, of which, Part - 1, Income Tax Law comprises 60 marks.

Indirect Taxes

At the Intermediate Level, Indirect Taxes include the Goods and Services Tax (GST), introduced in India from 1st July, 2017.

In the words of ICAI, “GST aims to make India a commonplace with common tax rates and procedures and remove the economic barriers, thus paving the way for an integrated economy at the national level.”

CA Intermediate Taxation paper is of 100 marks, of which, Part - 2, Goods and Services Tax comprises 40 marks.

CA Inter Taxation Syllabus

The syllabus of CA Inter Taxation is divided into two sections. Section - A is Income Tax Laws, and Section - B is Indirect Taxes. There are three modules in Income Tax Laws and two modules in Indirect Taxes. The detailed syllabus of CA Inter Taxation is as follows-

Section - A Income Tax Laws

Section - B Indirect Taxes

CA Inter Taxation Amendments

The Institute of Chartered Accountants of India issues statutory updates before every exam. These include the amendments in the Income Tax Law and Goods and Services Tax by the Finance Act of the respective year. It clarifies the Assessment Year relevant for the examination.

For the November 2020 examination, the significant notifications or circulars and legislative amendments up to 30.04.2020 are relevant.

These statutory updates are included in the Revision Test Paper book by the name of amendments provided by the ICAI.

You can find the amendments for CA Intermediate Income Tax for November 2020 examination here and amendments for CA Intermediate GST for November 2020 examination here.

CA Inter Taxation Resources

The Board of Studies of the Institute of Chartered Accountants of India (ICAI) is the ultimate resource of CA Intermediate students.

Apart from providing the students with the modules for different levels of Chartered Accountancy, Board of Studies ICAI also proves to be a vast online resource.

Students can get all the modules for their respective courses from the Institute of Chartered Accountants of India’s website. You can get all the resources of CA Intermediate from here.

The resources include-

1. Study Material

ICAI Study Material is the key to success in the examination. Before picking up any teacher’s book, it is important that a student is well versed with the Institute’s Study Material. Then, one is supposed to move on to the teacher’s books from whom they are taking coaching classes. Follow the teacher’s book along with the classes so that all the provisions seem simplified.

The study materials for all the levels of Chartered Accountancy are available at the institute’s website. If you don’t have a particular module or don't have the latest edition of the study modules, you can easily download it from the Institute of Chartered Accountants of India’s website.

You can find the direct links for the latest edition of Study Materials of all the subject of CA Intermediate from the below table-

2. Practice Manual

After the introduction of the new syllabus in the CA course, the system of issuing Practice Manuals has been removed. Instead, the Study Material now includes the content of the Practice Manual. One can now find both, the Study Material and the Practice Manual at the same place.

3. Revision Test Papers

ICAI also issues Revision Test Papers before both May and November Attempts. It includes all the amendments relevant for the examination and some important questions. It also includes chapter-wise questions for each subject.

You can find the direct link for the Revision Test Papers of all the subjects of CA Intermediate from the link below -

4. Mock Test Papers

The institute also issues Mock Test Papers for the practice of students. Mock Test Papers are a great way to access their preparation level by the students. Even if a student is unable to register and give the Mock Test Paper at the institute’s centre, they should try to download the papers and give it from their home and access their practice.

The direct link for the Mock Test Papers along with their answers by the ICAI are given below -

5. Question Papers

ICAI also issues a question bank separate from the suggested answers. This is for those who don’t want to refer to the solutions while solving the questions. Students might want to take a print out of the question papers and test themselves within 3 hours time in order to experience the examination situation.

You can also find the question papers from previous years on the ICAI’s website. Though the recent exam question papers are only available for the descriptive part. The Multiple Choice Questions part is not available on the website.

You can find the direct link for the previous year question papers of various subjects of CA Intermediate from the below table -

6. Suggested Answers

Suggested Answers are the answers issued by the ICAI with respect to the Question Papers. It gives a glimpse of what kind of answer is expected from the students in the CA Intermediate exams.

ICAI issues suggested answers after conducting the examinations every term. These suggested answers carry the most appropriate solutions to the questions asked in the exam. Students desirous of solving past examination papers might want to refer to the solutions deemed appropriate by the ICAI.

The direct link for the CA Inter Suggested Answers is given in the table below -

7. CA Inter Taxation MCQ booklet

Since a new system of MCQ and case study based questions has been introduced, ICAI has decided to issue a MCQs and Case Scenarios Booklet. Those willing to aim for good marks might want to practice these MCQs and Case Study based questions.

It is to be noted that the latest editions of the Study Materials do not include MCQs as was the case with the previous editions. Instead, ICAI has launched a separate MCQ booklet for the upcoming examinations.

The direct links for the MCQ booklet of each of the relevant Papers can be found hereafter -

CA Inter Taxation Section List

To make it easier for you, we have compiled a list of all the sections of CA Inter Taxation for both, Income Tax Law and Goods and Services Tax.

CA Inter Taxation Marks Allocation

Taxation at CA Intermediate level is divided into two parts Direct Taxes and Indirect Taxes. Direct Taxes comprise of Income Tax Law and Indirect Taxes comprises Goods and Services Tax (GST). Direct Tax comes for 60 marks and GST comes for 40 marks.

Multiple Choice Questions (MCQs)

In the total 100 marks paper, 30 marks are allotted to the Multiple Choice Questions. These questions include both Direct Tax and Indirect Tax. Of these 30 marks, 18 marks is for Direct Taxes and 12 marks is for Indirect Taxes.

Subjective Questions

The remaining 70% paper of CA Inter Taxation is of subjective type. It includes Short Questions as well as Descriptive Questions.

Direct Taxes

The 70 marks include 42 marks for Direct Taxes and 28 marks for Indirect Taxes.

There are a total of four questions in Direct Taxes. The first question of Direct Taxes comes for 14 marks and is compulsory. It could either be a single question of 14 marks or have multiple parts in it.

Of the remaining three questions, you have to attempt any two. These two questions are of 14 marks each. There might be some internal choice in these questions as well.

Indirect Taxes

The subjective part of Indirect Taxes comes for 28 marks. There are four questions in Indirect Taxes as well. The first question is compulsory and is of eight marks. The students have to attempt any two questions from the remaining three questions. These questions are of 10 marks each.

CA Inter Tax Chapter-wise weightage

Income Tax comes for 60 marks in CA Inter exam and you can easily score 30-35 marks if you study strategically. If you make a proper plan and follow it then you can even score 40-45 marks in Income Tax section.

Basic Concepts, Residential Status, Income which do not form part of Total Income

The sequence of the chapter matters when you are preparing for your exams. You should start with the first three chapters of Income Tax Law which are -

1. Basic Concepts
   
2. Residential Status and Scope of Total Income, and
   
3. Income which do not form part of Total Income
   

You can easily finish these chapters in one day if you have already studied Income Tax once before. These three chapters hold the weightage of 8 - 10 marks in the exam.

Advanced Tax, TDS, TCS, and Return of Income

Once you have finished these three chapters you should study Chapter 9 - Advanced Tax, Tax Deduction at Source, and Introduction to Tax Collection at Source. After that, you should finish Chapter 10 - Provisions of Filing Return of Income and Self Assessment. These two chapters come for a minimum of eight marks in the exam.

You should finish these two chapters in one day too and you can score eight to ten marks from these chapters.

Profits and Gains from Business and Profession (PGBP)

After you have finished the basic chapters, you should start with the Heads of Income. You can start with the head Profits and Gains from Business and Profession (PGBP) and give one day for its preparation. Make sure you solve each and every question of this head of income.

Capital Gains, and Income from Other Sources

Once you have finished Profits and Gains from Business and Profession, start Capital Gains. You can also give one day for preparing this head of income. Again, make sure that you can solve each and every question of Capital Gains. Try to finish Income from Other Sources on the fourth day as well.

The three Heads of Income: Profits and Gains from Business and Profession (PGBP), Capital Gains, and Income from Other Sources can account for as much as 20 to 25 marks in the exam.

There is a dedicated question on Capital Gains in the exam. You can also get a dedicated question on Profits and Gains from Business and Profession (PGBP). There is one question on Total Income and it emphasises mainly on the Profits and Gains from Business and Profession (PGBP). There can be a dedicated question on Income from Other Sources. These three heads of Income hold a lot of importance in the exam.

Note: Solve each and every question provided by the Institute of Chartered Accountants of India including the Study Materials, Revision Test Papers (RTPs), Mock Test Papers (MTPs), and Suggested Answers as per the relevant Finance Act.

Salary and House Property

Once you have completed the three heads of income, start with Salary and House Property. Finish these heads in one day. These two topics alternate in the exam, meaning, if there is a dedicated question for Salary in the paper then there would not be a question on House Property and vice versa. These questions come for around eight marks. After this, you will be done with all the heads of income and would have completed five of the most important topics for the exam.

Deductions

After finishing the above mentioned topics, start with Deductions. It is also a very good chapter from exam’s point of view as it can come for four to eight marks in the exam. Deduction is a very important chapter for the exam and can help you score good marks.

Set-off and Clubbing

Now you should solve Set-off and Clubbing. These chapters can be finished in two hours. One thing you have to ensure is that you are solving all the numericals of these chapters. The theory of these two chapters can be summarized in one page but it would not be useful for you if you don't solve the numericals.

Set-off and clubbing also impact the Total Income or Profits and Gains from Business and Profession (PGBP). In fact, Set-off and clubbing can impact any topic. Do not leave these chapters as they are short chapters and can get you around four marks in the exam.

Total Income

Once you have finished all these chapters you will be left with only Total Income. Total Income has around 10 questions. Solve all the questions of Total Income by hand and don't just go through the solution. With this, you would have finished your Income Tax preparation within 10 days.

Which CA Inter taxation books are best for preparation?

The best book for preparing CA Inter Taxation, or any other subject for that matter, is the Institute of Chartered Accountants of India’s Study Material. Make sure you are using the latest edition of ICAI’s Study Material for your preparation. The Institute of Chartered Accountants of India has made the study material in such a manner as to aid the preparation of students.

Other books can be used for reference purposes only. You can use these books to clear the concepts but the problem with them is they are not as per ICAI’s syllabus. At times you might not know which topics to study and which to ignore. Hence, you must always keep your Study Materials handy even when referring to other books.

You can find ICAI’s CA Inter taxation books pdf from the Institute of Chartered Accountants of India’s website or you can click here.

CA Inter Taxation Notes

It is always best to prepare your own notes for CA Inter Taxation. There are three types of notes you can make for Taxation-

1. Concept Notes

This is the first notebook you should create. The concept notes should contain all the concepts of taxation. The important concepts should be highlighted and should be gone through at short intervals to insure you are retaining the important concepts.

You can write down the concepts first and then try to explain them in your own words. This way you will have both a concept with keywords as expected by ICAI and an easy to understand explanation.

You can use sticky notes to mark important topics or to write down the meaning of the words that you do not understand.

2. Practice Notebook

You should solve all the numerical questions in a separate notebook. This way you will have all the questions solved at one single place.

Include your working notes in all the questions so that at the time of revisions if you can not understand a particular thing you can understand it from your workings.

Your practice notebook should also contain all the questions provided by the Institute of Chartered Accountants of India. Solve all the questions from the Study Material, Revision Test Papers, Mock Test Papers, Previous Year Papers and Suggested Answers.

This way you will have a question bank of sorts available with you by the end of your first round of studies. The best thing about this will be that all the solutions will be available in your own handwriting.

If you think the questions from the Institute of Chartered Accountants of India are not enough and you need to solve more questions for practice then you can solve questions from other sources.

MockTestPapers.com

A very good resource for getting more exam-oriented questions is giving Mock Test Papers. You can find mock tests from mocktestspaper.com. The best thing about it is you will get a detailed report after giving the mock test which will include your strong and weak points. You can work on the weak points and score good marks in the exam.

3. Summary Notes

As the name suggests, this is a notebook which contains all the topics in a concise manner. Summary Notes are a great way to organize and memorize large amounts of data. You can summarize all the topics chapter-wise.

There are some things you need to remember while making summary notes such as-

1. Don't copy everything from your book or notebook in the summary notes. Summary notes are meant to be concise.
2. Try to make your summary notes more visual. Use charts, boxes, highlighters, etc.
3. Divide your topics into sub-topics and write the details as concisely as possible.
4. Make sure you go through the entire topic thoroughly before making your summary notes.
5. Use your own words while preparing the summary notes. This will make you remember the subject-matter for a longer period of time.
6. Correlate your summary notes with your main notes. You can refer to your main notes from your summary notes, if need be.
7. Don’t include anything in your summary notes that you don't understand thoroughly.

4. Revision Notes

Revision Notes differ from the regular notes. Regular notes are the ones where each and every little detail is jotted down. However, revision notes are short and only consist of the points to be remembered right before the examination. Therefore, it is vital that a candidate prepare revision notes after preparing the regular notes. One does not get enough time to go through ALL the notes the day before the examination.

CA Inter Taxation Paper Pattern

The question paper for CA Inter Taxation exam is of 100 marks, divided into two parts. Part I comprises Multiple Choice Questions (MCQs) and Part II comprises questions which require descriptive type answers.

Part I - Multiple Choice Questions

For the Part I of CA Inter Taxation, the students get an Optical Mark Recognition (OMR) sheet. Answers to the questions of Part I are to be marked in the OMR answer sheet only. Answers, if written in the descriptive type answer book, will not be evaluated.

The MCQs are of 30 marks. Of these 30 marks, 18 marks is for Paper 1 : Income Tax Law and 12 marks is for Paper 2 : Goods and Services Tax.

This is the scoring part of the paper. If your concepts are clear, you can score good marks in this section.

The MCQs can be both direct and case study based. In the case study based question, you would be given a scenario with all the details of the assessee and his expenses and based on the information provided you have to answer the questions asked.

Part II - Descriptive Type Answers

This part is divided into two sections. Section - A contains the question from Income Tax Law and is of 42 marks.

Section - A comprises questions 1-4. Question 1 is compulsory whereas students are required to answer any two questions from question number 2-4. All the questions in Section - A relate to the relevant Assessment Year unless otherwise stated. For example, for the November 2020 exams, all the questions related to the Assessment Year 2020-21.

Section - B comprises questions 5-8. In Section - B, question number 5 is compulsory, and students have to answer any two questions from question number 6-8.

Note : All the answers should include working notes.

Mock Test

The Institute of Chartered Accountants of India conducts Mock Test series twice before the actual examination. With a minimal registration fee, students can appear for these mock tests and experience the exam hall situation twice before actually appearing for the exam. This boosts the confidence of the students and prepares them for the exam. They also get to know where they actually stand with their preparation.

In case, the students fail to go and take the mock test, ICAI also uploads these mock test questions and answers on their website. So, one can do the same at the convenience of their home also.

How to Prepare for CA Inter Taxation?

The most important thing to keep in mind for CA Inter examination, especially Taxation, is to attempt 100% paper. Step-marks are provided in the examination, so even if the tax computation is not correct, the students might get marks for correct steps.

That being said, now let’s see how you should revise your taxation syllabus.

How to revise CA Inter Taxation?

Starting with Income Tax, first of all revise the Heads of Income - Profits and Gains from Business and Profession (PGBP), Capital Gain (CG), and Salaries. These heads can be covered in 4-5 hours. For that, you can watch the revision videos of CA Neeraj Arora Sir, the links of which have been mentioned below.

Note: You have to keep the amendments in mind while revising from these videos.

After you have finished with the revision of Profits and Gains from Business and Profession (PGBP), Capital Gains (CG), and Salaried; start with Residential Status (RS) and Basics.

There are chances that Residential Status can come for as much as eight marks out of sixty. This can be a very scoring area. Most of the students don't cover Basics, but it can come for 4 marks in exam and takes very less time to revise, so you must cover Residential Status and Basics.

Once you have covered the above-mentioned topics, start with House Property (HP), Tax Deducted at Source (TDS), Tax Collected at Source (TCS), Deductions, Advance Tax and Return of Income.

It will take you around 40 minutes to revise House Property. Since there are important amendments in House Property.

The amendments of House Property are very important from the examination point of view. Ensure you go through it and solve the related questions. Amendment related questions have a high probability of coming in the examination.

Tax Deducted at source, Tax Collected at Source, Advance Tax, and Return of Income can come for 8 marks in the examination. These are easy topics and if you prepare them well you can score well.

Deductions is another topic which can help you score good marks. It can come for around 8 marks. It can either be in the Total Income question or can come as a separate question.

Once you are done with the above topics then cover the last head - Income from Other Sources. When these topics are covered the focus on the remaining topics of Income Tax such as Agricultural Income, Clubbing, Set-off, etc.

Goods and Services Tax

Good and Services Tax or GST comes for 40 marks in the examination. Once you have completed the revision for your Income Tax part, you should start with Goods and Services Tax.

Goods and Services Taxes paper is comparatively easier than the Income Tax paper. The Multiple Choice Questions in Income Tax can be comparatively easier than the Goods and Services Tax part. Overall, Goods and Services Tax is relatively easier than Income Tax.

In Goods and Services Tax, revise Input Tax Credit (ITC) first. Along with Input Tax Credit (ITC) you can cover Payment of GST. These two chapters when studies together helps in a better understanding. Since, it is definite that the paper will have at least one question from Input Tax Credit, don’t leave the topic.

After that do the Basics, Valuation, Supply, and Charging sections. Once these are done, focus on the important exemptions.

At last, you can cover Time of Supply, Registration, Tax Invoice, and Returns. In Tax invoice, make sure to cover e-way bill. Penalties and fines from the Return chapter should also be covered well.

Make sure to do theory chapters such as Time of Supply, and Composition Scheme. There are high chances of Composition Scheme to come in the exam.

You can follow the videos available for Income Tax and Goods and Services Tax by Neeraj Arora Sir on YouTube. Watch the videos keeping the latest amendments in mind and you would be good to go.

Tips for the exam

Right before the exam, it is completely normal for students to start feeling nervous and directionless. there are rules and regulations written at the back of admit cards related to the exam hall etiquettes. But there are no well-defined set of rules for attempting the examination paper. Is there?

At this point of time no one can spoon-feed a candidate about dos and don’ts of an examination hall. However, what we can do is lay down some basic guidelines following which students might avoid mistakes on the day of the exam. Given below are some basic tips and tricks that students might keep in mind before heading towards the exam hall:

1. Always try to attempt 100% paper. Taxation is a scoring subject and students are rewarded with step-marking. Even if a solution is half done, you might get half of the marks allotted for the correct portion.
2. Set a target and allot 1-1.5 minute for each mark. Don't give more time than that. Suppose you consider 1 minute for 1 mark, your target shall be to solve an 8 marks question in about 8 minutes. Considering 1-1.5 minute for 1 mark will bring it to a total of 100-150 minutes for 100 marks. You will still be left with some time to go through your answer sheet. Revising the answer script before submitting is more important than we realise.
   
3. See the paper pattern and plan your 3 hours. Divide the time you want to spend on every solution. This way you can keep a check on the time you take to solve every question and avoid running out of time.
   
4. Solve the easy questions first. Do not spend a lot of time on one single question. Move on to the next question if it takes you anything more than 12-14 minutes on one question.
   
5. Practice the sums as much as you can. Written practice is the only way to be able to solve those questions in exams.
   
6. Draw the formats wherever required.
   
7. Draw lines at the end of every solution.
   
8. Write the question number clearly and correctly in the centre of the page.
   
9. Write working notes at the end of every solution, explaining or at least mentioning the provisions.
   
10. Make a list of section numbers and their names and go through them regularly.
    
11. Do not mention the section numbers in the exam if you are not 100% sure
    

These are the very basic tips but sometimes students forget these due to the exam pressure. Stay positive, work hard and you'll surely score well in the exams.

If you want to prepare your best for CA Intermediated Taxation check out CA Inter Tax Classes by Neeraj Arora on Edu91.

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