Q: What does this paper cover?

This one paper carries both the Income-tax Law questions and the GST questions. On the Income-tax side it asks you to value a perquisite and compute salary income, to fix residential status and the scope of total income, to apply the ceiling on deductions from gross total income, and to work out marginal relief. On the GST side it asks you to classify a supply, to fix the place and the time of supply, to place the tax liability under reverse charge, to read the registration conditions and to state an exemption.

Q: How many questions are there and how long do I have?

There are 16 questions and the paper carries 30 marks. Fifteen questions are worth 2 marks each and the last one is worth 1 mark. The time limit is 60 minutes. In exam mode the paper is timed and marked once at the end, so you can move between questions and return to any of them before the time is up.

Q: How are the questions arranged on the paper?

The 16 questions sit in 7 case scenarios. The Income-tax Law questions come first, followed by the GST questions, in the order the paper sets them. A scenario passage is shared by the questions that follow it, so the same facts often carry more than one question. Read each passage once and note the key figures and dates before you begin.

Q: Which chapters does the paper cover?

The Income-tax chapters are Chapter 1: Basic Concepts, Chapter 2: Residence and Scope of Total Income, Chapter 3, Unit 1: Salaries and Chapter 6: Deductions from Gross Total Income. The GST chapters are Chapter 2 - Supply under GST, Chapter 3 - Charge of GST, Chapter 4 - Place of Supply, Chapter 6 - Time of Supply, Chapter 9 - Registration and Chapter 5 - Exemptions from GST. Note that the two sets of chapters are numbered separately.

Q: Which law do the questions follow?

The paper follows two law bases. For Income-tax Law it is the Income-tax Act 1961 as amended by the Finance Act 2025, with notifications and circulars up to 30 June 2026, for assessment year 2026-27. For GST it is the CGST Act 2017, the IGST Act 2017 and the CGST Rules as amended by the Finance Act 2025, with notifications and circulars effective up to 28 February 2026. The content is stated as at 31 October 2026.

Q: Which computations are in the paper?

Several questions ask you to work out figures. You compute the value of a perquisite and the salary income chargeable, the total income of a person who is resident but not ordinarily resident, the allowable deduction after the overall ceiling is applied, and the marginal relief on surcharge. On the GST side you fix a place of supply, a time of supply and the tax payable by an operator of an online platform.

Q: Is there negative marking?

No. There is no negative marking, so a wrong answer costs nothing. Each question carries the marks set out above and the paper is marked on that basis. If you are unsure of an option, attempt it rather than leave it blank, because an attempt that turns out wrong does not reduce your score.

Q: Can I take the paper without a timer?

Yes. In practice mode there is no timer, and you can read the explanation for every answer as you go, so you can pause and work through the questions at your own pace. In exam mode the paper is timed and marked once at the end, and you get a certificate carrying your name and score when the paper closes.

Q: Do I need to sign up or pay anything?

No sign-up is needed and there is no payment. Nothing about a student is stored on a server. You can open the paper, attempt it and read the result without creating an account, and the same applies to the timed mode and the untimed mode alike.

Q: Is this paper issued by ICAI?

No. This is a practice test by HeyArtha. It is not issued by or affiliated with ICAI, and it is written for students of CA Intermediate Group 1 preparing for the January 2027 attempt. Use it alongside your study material and the applicable statutory update, and check the position of each rule as at the date stated in the paper.

Question 1

During the previous year 2025-26, Mr. Aarav Mehta, an employee of a private company, received basic salary of ₹50,000 per month, dearness allowance of ₹10,000 per month (forming part of pay for retirement benefits), and an annual bonus of ₹50,000. He is neither a director nor an employee having substantial interest in the company. Throughout the year, his employer provided him with an employer-owned motor car having engine capacity exceeding 1.6 litres, together with a chauffeur, for both official and personal purposes. The employer bears all running and maintenance expenses of the car and did not recover any amount from him for this facility. He received no other allowances or perquisites. Aarav pays tax under the default tax regime under section 115BAC. Assume that he was employed throughout the previous year and that no other deduction or exemption is applicable.

Considering Notification No. 133/2025 dated 18 August 2025, whether Aarav qualifies as a specified employee under section 17(2)(iii) for taxation of the motor-car facility provided by his employer?

Accepted Answer

Yes, because his salary, excluding non-monetary benefits, exceeds the prescribed limit of ₹4,00,000. Notification No. 133/2025 inserted Rule 3C prescribing ₹4,00,000 as the salary threshold for determining specified employees under section 17(2)(iii). Aarav's salary before including the motor-car facility is ₹7,70,000 (₹6,00,000 basic salary + ₹1,20,000 dearness allowance + ₹50,000 bonus). He therefore exceeds the prescribed threshold. The provision also independently covers directors and employees having substantial interest, but neither condition is necessary here.

Answer

No, because the prescribed salary limit continues to be ₹2,50,000.

Answer

No, because his salary must exceed ₹10,00,000.

Answer

No, because only directors and employees having substantial interest can be specified employees.

Question 2

During the previous year 2025-26, Mr. Aarav Mehta, an employee of a private company, received basic salary of ₹50,000 per month, dearness allowance of ₹10,000 per month (forming part of pay for retirement benefits), and an annual bonus of ₹50,000. He is neither a director nor an employee having substantial interest in the company. Throughout the year, his employer provided him with an employer-owned motor car having engine capacity exceeding 1.6 litres, together with a chauffeur, for both official and personal purposes. The employer bears all running and maintenance expenses of the car and did not recover any amount from him for this facility. He received no other allowances or perquisites. Aarav pays tax under the default tax regime under section 115BAC. Assume that he was employed throughout the previous year and that no other deduction or exemption is applicable.

What is the taxable value of the motor-car perquisite provided to Aarav for the previous year 2025-26? The vehicle is employer-owned, its engine capacity exceeds 1.6 litres, and a chauffeur is provided for both official and personal use. Ignore rounding.

Accepted Answer

₹39,600 Under Rule 3(2), where an employer-owned motor car with engine capacity exceeding 1.6 litres is used for both official and personal purposes and a chauffeur is provided, the prescribed monthly perquisite value is ₹3,300. The vehicle was available throughout all 12 months. Therefore, the taxable value is ₹3,300 × 12 = ₹39,600. The tempting ₹28,800 option applies the monthly value of ₹2,400 applicable where a chauffeur is not provided.

Answer

₹28,800

Answer

₹21,600

Answer

₹43,200

Question 3

During the previous year 2025-26, Mr. Aarav Mehta, an employee of a private company, received basic salary of ₹50,000 per month, dearness allowance of ₹10,000 per month (forming part of pay for retirement benefits), and an annual bonus of ₹50,000. He is neither a director nor an employee having substantial interest in the company. Throughout the year, his employer provided him with an employer-owned motor car having engine capacity exceeding 1.6 litres, together with a chauffeur, for both official and personal purposes. The employer bears all running and maintenance expenses of the car and did not recover any amount from him for this facility. He received no other allowances or perquisites. Aarav pays tax under the default tax regime under section 115BAC. Assume that he was employed throughout the previous year and that no other deduction or exemption is applicable.

Compute the income chargeable under the head Salaries in Aarav's hands for AY 2026-27 under the default tax regime. Assume the standard deduction is available and no other deduction applies. Ignore rounding.

Accepted Answer

₹7,34,600 Aarav's gross salary includes basic pay, dearness allowance, bonus and the taxable motor-car perquisite. These aggregate to ₹8,09,600. Under the default tax regime, the standard deduction under section 16(ia) is ₹75,000. Consequently, taxable salary is ₹7,34,600. Option (a) is a tempting error because it deducts only ₹50,000, the standard deduction applicable under the normal tax regime rather than the default regime.

Answer

₹7,59,600

Answer

₹6,95,000

Answer

₹8,09,600

Question 4

Ms. Leena Kapoor is a Canadian citizen and a person of Indian origin. She came to India on a visit during the previous year 2025-26 and stayed for 125 days. Her total stay in India during the four previous years immediately preceding 2025-26 was 400 days. During 2025-26, she earned salary of ₹9,00,000 from employment in Canada for services rendered and received there. She also earned ₹6,00,000 from a consultancy profession set up in India, although the services were rendered and the fees received in Canada. Further, she earned gross rental income of ₹6,00,000 from an Indian house property, dividend income of ₹1,50,000 from an Indian company and business profits of ₹4,00,000 from a business carried on in India. Assume the house property qualifies for the standard deduction under section 24(a), and no other deductions or exemptions are applicable.

Determine Leena's residential status for AY 2026-27 under the Income-tax Act, 1961.

Accepted Answer

Resident but not ordinarily resident, because she satisfies the special 120-day visit condition and the applicable preceding-stay condition. An Indian citizen or person of Indian origin visiting India with non-foreign-source income exceeding ₹15 lakh can become resident if the relevant-year stay is at least 120 days but less than 182 days and the preceding four-year stay is at least 365 days. Leena satisfies these conditions with 125 days and 400 days respectively. Such an individual is treated as RNOR under section 6(6). Section 6(1A) does not apply because Leena is not an Indian citizen.

Answer

Non-resident, because her stay in India is less than 182 days.

Answer

Deemed resident under section 6(1A), because her income exceeds ₹15,00,000.

Answer

Resident and ordinarily resident, because her stay during the preceding four years exceeds 365 days.

Question 5

Ms. Leena Kapoor is a Canadian citizen and a person of Indian origin. She came to India on a visit during the previous year 2025-26 and stayed for 125 days. Her total stay in India during the four previous years immediately preceding 2025-26 was 400 days. During 2025-26, she earned salary of ₹9,00,000 from employment in Canada for services rendered and received there. She also earned ₹6,00,000 from a consultancy profession set up in India, although the services were rendered and the fees received in Canada. Further, she earned gross rental income of ₹6,00,000 from an Indian house property, dividend income of ₹1,50,000 from an Indian company and business profits of ₹4,00,000 from a business carried on in India. Assume the house property qualifies for the standard deduction under section 24(a), and no other deductions or exemptions are applicable.

Which of the following correctly describes the tax treatment of Leena's Canadian salary and consultancy income under the scope-of-total-income provisions?

Accepted Answer

Canadian salary is not taxable, but consultancy income is taxable because it is derived from a profession set up in India. An RNOR is taxable on income received or deemed to be received in India, income accruing or deemed to accrue in India, and foreign income derived from a business controlled in or profession set up in India. Leena's Canadian employment salary is earned and received outside India and has no stated Indian connection. Her consultancy income, however, is derived from a profession set up in India and is therefore included. Foreign receipt alone does not exclude this professional income.

Answer

Neither income is taxable in India because both were received outside India.

Answer

Both incomes are taxable in India because Leena is a resident.

Answer

Canadian salary is taxable, but consultancy income is not taxable because the services were rendered outside India.

Question 6

Ms. Leena Kapoor is a Canadian citizen and a person of Indian origin. She came to India on a visit during the previous year 2025-26 and stayed for 125 days. Her total stay in India during the four previous years immediately preceding 2025-26 was 400 days. During 2025-26, she earned salary of ₹9,00,000 from employment in Canada for services rendered and received there. She also earned ₹6,00,000 from a consultancy profession set up in India, although the services were rendered and the fees received in Canada. Further, she earned gross rental income of ₹6,00,000 from an Indian house property, dividend income of ₹1,50,000 from an Indian company and business profits of ₹4,00,000 from a business carried on in India. Assume the house property qualifies for the standard deduction under section 24(a), and no other deductions or exemptions are applicable.

Compute Leena's total income chargeable to tax in India for AY 2026-27, considering her residential status. Apply the deduction under section 24(a) to gross rental income. Assume no other deductions or exemptions. Ignore rounding.

Accepted Answer

₹15,70,000 As an RNOR, Leena's foreign employment salary is excluded because it accrues and is received outside India and is not connected with a business controlled in or profession set up in India. Her consultancy income from a profession set up in India remains taxable. Indian house-property income is taxable after the 30% deduction, and Indian dividend and business profits are also taxable. Their aggregate is ₹15,70,000. Option (d) incorrectly includes the Canadian employment salary.

Answer

₹9,70,000

Answer

₹14,20,000

Answer

₹24,70,000

Question 7

Mr. Dev Sharma, an individual, exercises the option to shift out of the default tax regime for AY 2026-27. During FY 2025-26, he contributed ₹80,000 to PPF, paid ₹45,000 as tuition fees for his two children pursuing full-time education in India, and repaid ₹40,000 towards the principal of a housing loan taken from an eligible financial institution. All payments satisfy the applicable conditions for deduction under section 80C.

What is the maximum deduction allowable to Dev under section 80C for AY 2026-27?

Accepted Answer

₹1,50,000 Contributions to PPF, eligible tuition fees for up to two children pursuing full-time education in India, and repayment of eligible housing-loan principal qualify for deduction under section 80C. Dev's eligible payments total ₹1,65,000. However, section 80CCE restricts the aggregate deduction under sections 80C, 80CCC and 80CCD(1) to ₹1,50,000. Therefore, the allowable deduction under section 80C is ₹1,50,000.

Answer

₹50,000

Answer

₹1,30,000

Answer

₹1,65,000

Question 8

Ms. Ira earns total income of ₹50,40,000 for AY 2026-27 and is taxable under the default tax regime under section 115BAC. Her entire income is ordinary income taxable at the applicable slab rates. She has no special-rate income, and no rebate or other tax adjustment is available. Determine the marginal relief applicable in respect of surcharge. All amounts are in rupees.

Calculate the marginal relief available to Ira in respect of surcharge. Apply the applicable default-regime slabs and surcharge rates for AY 2026-27. Ignore rounding.

Accepted Answer

₹81,200 At total income of ₹50,40,000, tax is ₹10,92,000 and surcharge at 10% is ₹1,09,200, so tax with surcharge is ₹12,01,200. Marginal relief limits the total payable to the tax on ₹50,00,000 (₹10,80,000) plus the income earned above ₹50 lakh (₹40,000), i.e. ₹11,20,000. Relief is therefore ₹12,01,200 − ₹11,20,000 = ₹81,200. Option (c) is the extra tax before relief, and option (d) is only the excess income.

Answer

₹1,09,200

Answer

₹1,21,200

Answer

₹40,000

Question 9

Vistara Components Pvt. Ltd. is registered in Indore, Madhya Pradesh and holds a separate GST registration in Jaipur, Rajasthan under the same PAN. In FY 2025-26, its Indore unit (i) transfers components worth ₹7,80,000 to the Jaipur registration for business use without consideration; (ii) gives one employee gifts worth ₹50,000 in total, with no other gifts to that employee during the year; and (iii) sells a production machine for one price with installation and commissioning, which are ordinarily bundled with the machine and ancillary to it. In a separate sale, Vistara invoices goods to a buyer whose principal place of business is Jaipur; before the movement ends, on the buyer's instruction, Vistara delivers the goods directly to an independent factory in Pune. Vistara also sells a packaging machine assembled at the buyer’s site in Surat. Vistara operates Vistara Local, an electronic commerce platform. On 10 October 2025, an independent provider with aggregate turnover of ₹14,00,000, not liable for registration under section 22(1), supplies local delivery services through that platform. Vistara also receives legal services from an individual advocate. Its aggregate turnover in the preceding financial year was ₹80,00,000; the advocate issues the invoice on 1 December 2025, and the payment is recorded and debited from Vistara’s bank account on 5 February 2026.

With reference to the gifts given to the employee, which statement correctly describes their treatment under GST for FY 2025-26?

Accepted Answer

The gifts are not treated as supply because their aggregate value for the employee does not exceed ₹50,000 during the financial year. Schedule I, paragraph 2, treats supplies between related persons in the course or furtherance of business as supply even without consideration. However, its proviso excludes gifts by an employer to an employee not exceeding ₹50,000 in value during a financial year. Here, the aggregate value is exactly ₹50,000. Option a incorrectly interprets the expression not exceeding as strictly below ₹50,000.

Answer

The gifts constitute supply because the exclusion applies only when their value is below ₹50,000.

Answer

The gifts constitute supply because every transaction between an employer and employee is taxable.

Answer

The gifts are not treated as supply only when the employee is not a related person.

Question 10

Vistara Components Pvt. Ltd. is registered in Indore, Madhya Pradesh and holds a separate GST registration in Jaipur, Rajasthan under the same PAN. In FY 2025-26, its Indore unit (i) transfers components worth ₹7,80,000 to the Jaipur registration for business use without consideration; (ii) gives one employee gifts worth ₹50,000 in total, with no other gifts to that employee during the year; and (iii) sells a production machine for one price with installation and commissioning, which are ordinarily bundled with the machine and ancillary to it. In a separate sale, Vistara invoices goods to a buyer whose principal place of business is Jaipur; before the movement ends, on the buyer's instruction, Vistara delivers the goods directly to an independent factory in Pune. Vistara also sells a packaging machine assembled at the buyer’s site in Surat. Vistara operates Vistara Local, an electronic commerce platform. On 10 October 2025, an independent provider with aggregate turnover of ₹14,00,000, not liable for registration under section 22(1), supplies local delivery services through that platform. Vistara also receives legal services from an individual advocate. Its aggregate turnover in the preceding financial year was ₹80,00,000; the advocate issues the invoice on 1 December 2025, and the payment is recorded and debited from Vistara’s bank account on 5 February 2026.

How should the transfer of components from Vistara's Indore registration to its Jaipur registration be treated under GST?

Accepted Answer

It is a supply under Schedule I because the two registrations are distinct persons and the transfer is in the course or furtherance of business. Under section 25, registrations obtained by the same person in different States are treated as registrations of distinct persons. Paragraph 2 of Schedule I specifically covers supplies between distinct persons made in the course or furtherance of business, even without consideration. Therefore, the inter-registration transfer is a supply. Option b incorrectly assumes that having a common PAN prevents separate GST registrations from being treated as distinct persons.

Answer

It is a supply only if the transferred components have a value exceeding ₹50,000.

Answer

It is not a supply because both registrations belong to the same legal entity and share one PAN.

Answer

It is not a supply because no consideration has been charged between the two registrations.

Question 11

Vistara Components Pvt. Ltd. is registered in Indore, Madhya Pradesh and holds a separate GST registration in Jaipur, Rajasthan under the same PAN. In FY 2025-26, its Indore unit (i) transfers components worth ₹7,80,000 to the Jaipur registration for business use without consideration; (ii) gives one employee gifts worth ₹50,000 in total, with no other gifts to that employee during the year; and (iii) sells a production machine for one price with installation and commissioning, which are ordinarily bundled with the machine and ancillary to it. In a separate sale, Vistara invoices goods to a buyer whose principal place of business is Jaipur; before the movement ends, on the buyer's instruction, Vistara delivers the goods directly to an independent factory in Pune. Vistara also sells a packaging machine assembled at the buyer’s site in Surat. Vistara operates Vistara Local, an electronic commerce platform. On 10 October 2025, an independent provider with aggregate turnover of ₹14,00,000, not liable for registration under section 22(1), supplies local delivery services through that platform. Vistara also receives legal services from an individual advocate. Its aggregate turnover in the preceding financial year was ₹80,00,000; the advocate issues the invoice on 1 December 2025, and the payment is recorded and debited from Vistara’s bank account on 5 February 2026.

Considering the ordinary business practice and the relationship between the machine and the ancillary activities, how should the production machine package be classified?

Accepted Answer

Composite supply, with the production machine as the principal supply and the tax treatment determined by the rate applicable to that principal supply. A composite supply comprises two or more taxable supplies that are naturally bundled and supplied together in the ordinary course of business, with one constituting the principal supply. Here, the machine is the predominant element, while installation and commissioning are ancillary. Section 8(a) consequently applies the tax treatment of the principal supply. Option b confuses a single price with a mixed supply, overlooking the natural bundling of the package.

Answer

Two independent supplies, because installation and commissioning are services whereas the machine is goods.

Answer

Mixed supply, because more than one taxable supply is included for a single price.

Answer

Composite supply, with installation and commissioning necessarily constituting the principal supply.

Question 12

Vistara Components Pvt. Ltd. is registered in Indore, Madhya Pradesh and holds a separate GST registration in Jaipur, Rajasthan under the same PAN. In FY 2025-26, its Indore unit (i) transfers components worth ₹7,80,000 to the Jaipur registration for business use without consideration; (ii) gives one employee gifts worth ₹50,000 in total, with no other gifts to that employee during the year; and (iii) sells a production machine for one price with installation and commissioning, which are ordinarily bundled with the machine and ancillary to it. In a separate sale, Vistara invoices goods to a buyer whose principal place of business is Jaipur; before the movement ends, on the buyer's instruction, Vistara delivers the goods directly to an independent factory in Pune. Vistara also sells a packaging machine assembled at the buyer’s site in Surat. Vistara operates Vistara Local, an electronic commerce platform. On 10 October 2025, an independent provider with aggregate turnover of ₹14,00,000, not liable for registration under section 22(1), supplies local delivery services through that platform. Vistara also receives legal services from an individual advocate. Its aggregate turnover in the preceding financial year was ₹80,00,000; the advocate issues the invoice on 1 December 2025, and the payment is recorded and debited from Vistara’s bank account on 5 February 2026.

Identify the respective places of supply for (i) the goods directed by the Jaipur buyer to Pune and (ii) the packaging machine assembled at the buyer's site in Surat.

Accepted Answer

Jaipur and Surat, respectively. Under section 10(1)(b) of the IGST Act, where goods are delivered to another person on the direction of a third person before or during movement, the third person is deemed to have received the goods. The place of supply is the principal place of business of that third person, Jaipur. Under section 10(1)(d), goods assembled or installed at a site have their place of supply at that installation or assembly site, Surat. Option a incorrectly uses the physical delivery address for the first transaction.

Answer

Pune and Surat, respectively.

Answer

Pune and Indore, respectively.

Answer

Jaipur and Indore, respectively.

Question 13

Vistara Components Pvt. Ltd. is registered in Indore, Madhya Pradesh and holds a separate GST registration in Jaipur, Rajasthan under the same PAN. In FY 2025-26, its Indore unit (i) transfers components worth ₹7,80,000 to the Jaipur registration for business use without consideration; (ii) gives one employee gifts worth ₹50,000 in total, with no other gifts to that employee during the year; and (iii) sells a production machine for one price with installation and commissioning, which are ordinarily bundled with the machine and ancillary to it. In a separate sale, Vistara invoices goods to a buyer whose principal place of business is Jaipur; before the movement ends, on the buyer's instruction, Vistara delivers the goods directly to an independent factory in Pune. Vistara also sells a packaging machine assembled at the buyer’s site in Surat. Vistara operates Vistara Local, an electronic commerce platform. On 10 October 2025, an independent provider with aggregate turnover of ₹14,00,000, not liable for registration under section 22(1), supplies local delivery services through that platform. Vistara also receives legal services from an individual advocate. Its aggregate turnover in the preceding financial year was ₹80,00,000; the advocate issues the invoice on 1 December 2025, and the payment is recorded and debited from Vistara’s bank account on 5 February 2026.

Who is liable to pay GST on the local delivery service supplied through Vistara Local on 10 October 2025?

Accepted Answer

Vistara Components Pvt. Ltd., as the electronic commerce operator, under section 9(5). The September 2026 statutory update includes local delivery services supplied through an electronic commerce operator in the notified categories under section 9(5), effective from 22 September 2025. The exception applies where the underlying service provider is liable for registration under section 22(1). Since the provider in this case is not liable for registration, Vistara, as the electronic commerce operator, pays the tax. Option a overlooks the specific exclusion of local delivery services from the general road-transport exemption.

Answer

No person, because all local delivery services by road remain exempt from GST.

Answer

The customer receiving the delivery service, under the reverse charge mechanism.

Answer

The independent delivery provider, because the actual service provider always pays GST.

Question 14

Vistara Components Pvt. Ltd. is registered in Indore, Madhya Pradesh and holds a separate GST registration in Jaipur, Rajasthan under the same PAN. In FY 2025-26, its Indore unit (i) transfers components worth ₹7,80,000 to the Jaipur registration for business use without consideration; (ii) gives one employee gifts worth ₹50,000 in total, with no other gifts to that employee during the year; and (iii) sells a production machine for one price with installation and commissioning, which are ordinarily bundled with the machine and ancillary to it. In a separate sale, Vistara invoices goods to a buyer whose principal place of business is Jaipur; before the movement ends, on the buyer's instruction, Vistara delivers the goods directly to an independent factory in Pune. Vistara also sells a packaging machine assembled at the buyer’s site in Surat. Vistara operates Vistara Local, an electronic commerce platform. On 10 October 2025, an independent provider with aggregate turnover of ₹14,00,000, not liable for registration under section 22(1), supplies local delivery services through that platform. Vistara also receives legal services from an individual advocate. Its aggregate turnover in the preceding financial year was ₹80,00,000; the advocate issues the invoice on 1 December 2025, and the payment is recorded and debited from Vistara’s bank account on 5 February 2026.

Determine the time of supply of the legal services received by Vistara under the reverse charge mechanism, considering the invoice and payment dates given in the scenario.

Accepted Answer

31 January 2026. Legal services supplied by an individual advocate to a business entity located in the taxable territory are generally subject to reverse charge. The exemption for qualifying small business entities does not apply here because Vistara's preceding-year aggregate turnover is ₹80 lakh. For services under reverse charge, the relevant time-of-supply rule compares the payment date with the date immediately following 60 days from the invoice date. The latter occurs first in this case. Option d incorrectly selects the payment date without applying the 60-day provision.

Answer

2 March 2026.

Answer

1 December 2025.

Answer

5 February 2026.

Question 15

Neel Traders applies for registration under rule 8 in Madhya Pradesh. Its monthly output tax liability on supplies to registered persons, including CGST, SGST/UTGST, IGST and compensation cess, is ₹2,50,000. Aadhaar authentication has been completed, and it seeks one registration under the same PAN in the State.

Which statement correctly describes Neel Traders' eligibility and the registration procedure under Rule 14A of the CGST Rules?

Accepted Answer

It is eligible because its monthly liability does not exceed ₹2.50 lakh; following successful Aadhaar authentication, registration is granted electronically within 3 working days from submission. Rule 14A permits an applicant who has applied under rule 8 to use the electronic registration option when its total output tax liability on supplies to registered persons does not exceed ₹2.5 lakh per month and the required Aadhaar authentication is completed. Equality is included within the prescribed ceiling. The common portal grants registration electronically within 3 working days from submission after successful authentication. Option c overlooks the restriction of one registration per State or Union territory under this option against the same PAN.

Answer

It is ineligible because Rule 14A requires monthly output tax liability to exceed ₹2.50 lakh.

Answer

It is ineligible because the monthly output tax liability must be strictly below ₹2.50 lakh.

Answer

It is eligible and may obtain multiple registrations in the same State under this option against the same PAN.

Question 16

On 1 October 2025, Surya General Insurance Ltd. provides a health insurance contract to Meera, an individual. The policy covers Meera, her spouse and child, each expressly included as family under the contract. The contract does not insure an employer group or any other group of persons.

What is the GST treatment of the health insurance service supplied under the contract, considering the exemption effective from 22 September 2025?

Accepted Answer

Exempt, because the insured is an individual and the contract also covers that individual's family. The September 2026 statutory update introduces an exemption for health insurance business supplied by an insurer to an insured who is not a group, effective from 22 September 2025. It expressly covers contracts where the insured is an individual or an individual and family. Family includes all individuals insured as family under the contract. Meera's policy therefore qualifies. Option d wrongly treats family coverage as a group insurance arrangement.

Answer

Exempt only when the insured person is a registered business entity.

Answer

Taxable, unless every insured family member holds a separate individual contract.

Answer

Taxable, because the inclusion of family members automatically makes the policy a group insurance contract.

CA Inter Taxation MCQ Test 1 (Income-tax + GST): answer key

Chapters covered

Questions, answers and explanations

Question 1 · 2 marks · Chapter 3, Unit 1: Salaries · easy

Question 2 · 2 marks · Chapter 3, Unit 1: Salaries · medium

Question 3 · 2 marks · Chapter 3, Unit 1: Salaries · hard

Question 4 · 2 marks · Chapter 2: Residence and Scope of Total Income · easy

Question 5 · 2 marks · Chapter 2: Residence and Scope of Total Income · medium

Question 6 · 2 marks · Chapter 2: Residence and Scope of Total Income · hard

Question 7 · 2 marks · Chapter 6: Deductions from Gross Total Income · easy

Question 8 · 1 marks · Chapter 1: Basic Concepts · medium

Question 9 · 2 marks · Supply under GST (Chapter 2) · easy

Question 10 · 2 marks · Supply under GST (Chapter 2) · medium

Question 11 · 2 marks · Supply under GST (Chapter 2) · medium

Question 12 · 2 marks · Place of Supply (Chapter 4) · medium

Question 13 · 2 marks · Charge of GST (Chapter 3) · hard

Question 14 · 2 marks · Time of Supply (Chapter 6) · hard

Question 15 · 2 marks · Registration (Chapter 9) · easy

Question 16 · 1 marks · Exemptions from GST (Chapter 5) · easy

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