business level ii - ca sri lanka · 2020-02-28 · b. 28% c. 35% d. 40% 15) ready wear garments...
TRANSCRIPT
1
Business Level - II
Business Taxation (BL 7)
Pilot Paper
Instruction to candidates
1) Time Allowed 2 Hours
2) Total 100 marks
3) 50 Questions. All Questions are compulsory
4) All answers should be in ONE Language and the medium applied for
1) A company is required to file its income tax return on or before a stipulated date. Which of the
following statements correctly shows the position related to the statutory date?
A. Return should be filed on or before 30th September following the end of that year of
assessment.
B. Return should be filed on or before 31st December following the end of that year of
assessment.
C. Return should be filed on or before 31st March of that year of assessment.
D. Return should be filed on or before 30th November following the end of that year of
assessment.
2) Identify the correct category which indicate the tax governed authority; Provincial Revenue
Commissioners (PRC) or/and Commissioner General of Inland Revenue (CGIR) of the following
taxes:
Value Added Tax (VAT)
Drug & Chemical Tax
Individual Income tax
Stamp Duty
A. CGIR, PRC, CGIR, PRC
B. CGIR, PRC, CGIR, CGIR
C. CGIR, PRC, CGIR, PRC/CGIR
D. CGIR, PRC/CGIR, CGIR, PRC/CGIR
3) “People who have higher income pay more income tax on their personal income than lower
income people”. Which of the following principles of taxation is reflected by the above
statement?
2
A. Equity
B. Progressivity
C. Efficiency
D. Certainty
4) Mr. Ching Chang is a citizen of Republic of China and came to Sri Lanka (SL) on 01.10.2018 and
ran a business of tourist hotel with his Sri Lankan friend. He spent couples of months In SL and
went to China on 01.06.2019. He came back to SL on 15.09.2019 and returned to China on
13.01.2020. Select the correct statement with regard to the residency of Mr. Ching Chang for
the purpose of Taxation in SL.
i. He is Resident in SL for Y/A 2018/2019.
ii. He is Non-resident in SL for Y/A 2018/2019.
iii. He is Resident in SL for Y/A 2019/2020.
iv. He is Non-resident in SL for Y/A 2019/2020.
A. (i) and (ii) only.
B. (i) and (iii) only.
C. (i) and (iv) only.
D. (ii) and (iii) only.
5) Identify which income or the receipt given below is not exempted from income tax for resident
Individual, under employment Income, for Y/A 2018/2019.
A. Amounts paid on retirement from any provident fund approved by the Commissioner
General of Inland Revenue.
B. Pension received from the Sri Lankan Government or from a Department of the
Government by Government Officer.
C. Salary received from the Sri Lankan Government or from a Department of the Government
by Government Officer.
D. Benefits derived by a government employee from a road vehicle permit granted to such
employee by Sri Lankan Government.
6) PAYE tax rates applicable for Secondary Employment for Year of Assessment 2018/2019 are,
……………………………………………………………………………….
A. If the value of benefits not exceeding Rs.25,000/= per month is taxed at 10% and if the
value of benefits exceeding Rs.25,000/= per month is taxed at 16%.
B. If the value of benefits not exceeding Rs.25,000/= per month is taxed at 10% and if the
value of benefits exceeding Rs.25,000/= per month is taxed at 20%.
C. If the value of benefits not exceeding Rs.50,000/= per month is taxed at 10% and if the
value of benefits exceeding Rs.50,000/= per month is taxed at 16%.
D. If the value of benefits not exceeding Rs.50,000/= per month is taxed at 10% and if the
value of benefits exceeding Rs.50,000/= per month is taxed at 20%.
3
7) “Mathurata Umbrella Pvt Ltd” is a company having business turnover of Rs.432,000,000 for
Y/A 2018/2019. The Company has invested Rs.1,000,000 on one-year Treasury Bills on
01.04.2018 and received gross interest of Rs.120,000 on 31.03.2019 on the maturity of such
investment. Select the correct statement/statements with regard to the income tax liability of
the above interest.
i. This interest forms a part of Assessable Income of Mathurata Umbrella Pvt Ltd.
ii. This interest not forms a part of Assessable Income of Mathurata Umbrella Pvt Ltd.
iii. This interest forms a part of Taxable Income of Mathurata Umbrella Pvt Ltd.
iv. This interest not forms a part of Taxable Income of Mathurata Umbrella Pvt Ltd.
v. This interest should be taxable @ 14%.
vi. This interest should be taxable @ 28%.
A. Statements (i), (iii) and (v) only.
B. Statements (i), (iii) and (vi) only.
C. Statements (ii) and (iv) only.
D. Statement (i) only.
8) “Sadasarana Foundation” is a charitable institution engaged in charitable activities solely for
the purpose for providing care to disabled in a home maintained by such institution, and
received gross interest income of Rs.200,000 from National Savings Bank, Rs.400,000 from
Commercial Bank PLC and Rs.300,000 from Sampath Bank PLC on its savings accounts. Select
the correct statement with regard to the income tax liability of above interest.
(i) Interest received from National Savings Bank is exempted from tax.
(ii) Interest received from Commercial Bank is exempted from tax.
(iii) Interest received from Sampath Bank PLC is exempted from tax.
A. (i) only.
B. (i) and (iii) only.
C. All above statements.
D. None of above statements.
9) “Capital Support Unit Trust” received Gross dividend of Rs.400,000 from a resident company
in Sri Lanka. (Mistakenly Company has not deducted 14% withholding Tax). Select the correct
statement with regard to the income tax liability of the above dividend.
i. This dividend forms a part of Assessable Income of Capital Support Unit trust.
ii. This dividend not forms a part of Assessable Income of Capital Support Unit trust.
iii. This dividend forms a part of Taxable Income of Capital Support Unit trust.
iv. This dividend should be taxable @ 14%.
A. (i) and (iii) only
B. (i), (iii) and (iv) only
C. None of above statements
D. All of above statements
4
10) Identify incorrect statement relating to the taxation of rent income for Y/A 2018/2019 under
investment income category.
A. When rent is paid to a resident person by a Withholding agent, 10% WHT should be
deducted on the gross rent, and should be remitted to IRD. Withholdee entitled to claim
10% WHT credit against tax liability on the rent income.
B. When the rent is paid to a resident person by a Withholding agent, 10% WHT should be
deducted on the gross rent, and should be remitted to IRD. It will be treated as a final
withholding payment.
C. As far as the recipient of the rent is concerned, actual expenditure borne in respect of
repair, maintenance and depreciation or a relief of 25% of the total rental income can be
claimed for a year of assessment.
D. When the rent is paid to a non-resident, WHT should be deducted at the rate of 14%.
Thereafter, it will be treated as a final withholding payment unless it is derived through a
permanent establishment.
11) Mr. Kelum Senanayake sold his ancestral house and coconut estate located at Kurunegala on
20.02.2019 to Mr.Amarabandu for Rs.20,000,000 and for Rs.15,000,000 respectively. Further,
he sold his Toyota Premio car for Rs.6,000,000 to same customer on same day. The car was
purchased on 01.01.2018 for Rs.5,500,000. The house which he was living has received from
his father in 1998 for the deed value of Rs.3,000,000. He purchased coconut estate in 2010 for
Rs.5,000,000. The value of ancestral house as at 30.09.2017 was given by independent valuer
as Rs.18,000,000 and coconut estate as Rs.13,000,000. For selling of ancestral house he paid
broker fee Rs.25,000 and for coconut estate Rs.40,000. The valuation fees paid for
independent valuer for ancestral house is Rs.55,000 and for coconut estate Rs.60,000. The
Capital Gain Tax liability for Mr.Kelum is …………………..
A. Rs. 450,000.
B. Rs. 432,000.
C. Rs. 240,000.
D. Rs. 190,000.
12) Star Solutions (Pvt) Ltd sold 1,000 shares of Commercial Bank PLC for Rs.240,000 at Colombo
Stock Exchange with profit of Rs.40,000 on 25.02.2019. The value of those shares as at
30.09.2017 was calculated by IRD as Rs.180,000. On the same day, company sold 2,000 shares
of Lanka Aluminium (Pvt) Ltd for Rs.160,000 to one of its subsidiaries with the profit of
Rs.30,000/=. The value of those share as at 30.09.2017 was calculated by IRD as Rs.105,000.
The Capital Gain Tax liability of Star Solutions (Pvt) Ltd on above transactions is
…………………..
A. Rs. 11,500.
B. Rs. 7,000.
C. Rs. 6,000.
D. Rs. 5,500.
13) Identify incorrect statement relating to the taxation of Capital Gain for Y/A 2018/2019.
5
i. 10% Capital Gain Tax should be paid within 30 days from the realization of asset and CGT
return should be submitted within 30 days from the date of transaction.
ii. For a resident individual, any capital gain not exceeding Rs.50,000 and total Capital Gain
not exceeding Rs.600,000 for a year of assessment is exempt.
iii. For a resident individual, the capital gain on the disposal of his principal place of residence
which has been owned for three years before the date of disposal and lived in by him for
at least two years (calculated on a daily basis) exempt from tax.
iv. Capital Gain must be accounted on cash basis, unless approved by the Commissioner
General of Inland Revenue.
A. (i), (ii) and (iii) only.
B. (i), (iii) and (iv) only.
C. None of above statements.
D. All of above statements.
14) Fine Whiskey Manufacturers (Pvt) Ltd does not have any associate for Y/A 2018/2019 and is
engaged in the business of manufacturing and sale of whiskey in the local market. The business
turnover of the Company for year ended 31st March 2020 is Rs.495,000,000 and taxable
income for the Y/A 2019/2020 is Rs.105,300,000. Fine Whiskey Manufacturers (Pvt) Ltd should
pay income tax on its taxable income at the rate of............... for Y/A 2018/2019.
A. 14%
B. 28%
C. 35%
D. 40%
15) Ready wear Garments (Pvt) Ltd engages in the business of manufacturing of garments products
for local Market and the turnover of Ready wear Garments (Pvt) Ltd for the quarter ended 31st
December 2019 is Rs.326,800,000.
During the quarter, Company incurred bad debts Rs.15,400,000 and collected
Rs.14,200,000 as recovery of bad debts which related to a previous quarter.
The company has given Rs.1,200,800 as discount on the sales invoices and discount
given for early payments for the quarter is Rs.1,040,000.
Calculate the liable turnover for Nation Building Tax for the quarter ended 31st December
2019.
A. Rs. 325,600,000.
B. Rs. 324,399,200.
C. Rs. 323,359,200.
D. Rs. 311,400,000.
16) According to the provision of VAT Act, input tax relating to the imports and local purchases can
be claimed in the VAT return against the output tax. Identify the correct statement/statements
in relation to the disallowable input tax under VAT Act.
A. Input tax on purchases and expenses relevant to non-taxable activities.
6
B. Input taxes which are not supported with a valid tax invoice, Input tax not claimed within
12 months from the date of any Tax invoice or Input tax not claimed within 24 months
from the date of any Customs Declaration.
C. Input tax on motor cars and double cabs used for own travelling purposes.
D. All above statements.
17) During the quarter ended 31st March 2019, Pure Water Suppliers (Pvt) Ltd supplied bottled
water to VAT registered customers on tax invoices for Rs.18,000,000. The sales made to Non-
VAT registered customers on commercial invoices is Rs.11,500,000. The company has supplied
Rs.12,000,000 worth water bottles to Diplomatic Missions. Calculate the VAT liable supply of
Pure Water Suppliers (Pvt) Ltd for the quarter ended 31st March 2019.
A. Rs. 41,500,000.
B. Rs. 30,000,000.
C. Rs. 29,500,000
D. Rs. 28,000,000
18) To achieve consistency in the administration of the provisions of Inland Revenue Act and to
provide guidance to the general public and officers of the Department, the Commissioner-
General may issue public rulings setting out the Commissioner- General’s interpretation of the
application of this Act. State which of the following is incorrect regarding the public rulings.
A. A public ruling shall be binding on the Commissioner General and on tax payers until
withdrawn.
B. A public ruling shall be binding on the Commissioner General until withdrawn.
C. A public ruling shall be binding on tax payers until withdrawn.
D. A public ruling shall not be binding on taxpayers.
19) Royal cement manufactures (Pvt) Ltd is engaged in manufacturing and selling of cement. The
turnover of each quarter is given below for the Y/A 2018/19.
Quarter Turnover
Quarter 1 Rs. 3,800,000
Quarter 2 Rs. 2,750,000
Quarter 3 Rs. 3,250,000
Quarter 4 Rs. 4,500,000
The company is liable for Nation Building Tax for:
A. All the quarters.
B. Quarter 1 and Quarter 4 only.
C. Quarter 4 only.
D. All the quarters except Quarter 2.
20) Mr. Mohomed Navas is a chartered Engineer who is working as consultant in several civil
engineering projects. He received a computer-generated notice of assessment for Y/A
2018/2019 on 20.12.2019 by disallowing 5% WHT credit of Rs.250,000 which WHT certificates
7
with him. To submit valid Appeal/Administration Review request against the above assessment,
he should furnish his letter of request for an administration review on or before …………………
A. 18th January 2020.
B. 19th January 2020.
C. 20th January 2020.
D. 21st January 2020.
21) Latex Lanka (Pvt) Ltd is engaged in the business of manufacturing of Rubber products for the
local market and also registered for Economic Service Charge (ESC) from 2010. The company
has business turnover of Rs.230,000,000 and proceeds from sale of capital assets Rs.5,000,000
for the year ended 31st March 2019. If the company has not paid ESC, nor furnished ESC return
for the Y/A 2018/2019 up to date. ESC liability of Latex Lanka (Pvt) Ltd is ……………………
and due date for filing of ESC return is………………………….
A. Rs. 1,150,000 and 20th April 2019.
B. Rs. 1,175,000 and 20th April 2019.
C. Rs. 1,150,000 and 30th April 2019.
D. Rs. 1,175,000 and 30th April 2019.
22) Silver Design Textiles (Pvt) Ltd is engaged in the business of manufacturing and sale of textile
items for both foreign and local markets. The company has registered for Value Added Tax and
also obtained registration as Registered Identified purchaser (RIP) and Registered Identified
Supplier (RIS) under simplified Value Added Tax (SVAT) scheme. The Company has made
Rs.122,400,000 worth direct exports, Rs.52,500,000 worth indirect exports (Sales made as RIS
to RIPs who are registered under SVAT scheme and received Rs.7,875,000 worth SVAT credit
vouchers for suspended supply). Company made Rs.65,800,000 local sales for the quarter
ended 31st December 2019. If the company has Rs.5,675,000 as allowable input tax for the
quarter, the VAT liability of Silver Design Textiles (Pvt) Ltd for above quarter is ………..
A. Rs. 36,105,000
B. Rs. 17,745,000
C. Rs. 9,870,000
D. Rs. 4,195,000
Read the Mini case study given below together with information given in each question and
answer for the questions from 23 to 34.
Mr. Saman Bandara, is a Chartered Engineer working for Lanka Electric Company PLC as a
Senior Electrical Engineer from 2012. He has provided following information relating to his
employment and professional income for the Year of Assessment 2018/2019.
During the Y/A, he is entitled to monthly gross salary of Rs.350,000/=. (Deduction from
salary to Employee Provident Fund is 8% of the gross salary and Employer’s
contribution to the Employee Provident Fund is 12% and for Employee Trust Fund is at
3%).
8
He received monthly professional allowance Rs.50,000 and entertainment allowance
of Rs.15,000/=.
During the year he received Bonus Rs.1,000,000/= and detailed break up is
Rs.400,000/= paid on 10.04.2018 out of the profits for the Y/A 2017/2018 and
Rs.600,000/= paid on 20.12.2018 out of the profits for the Y/A 2018/2019.
As per the conditions of the employment agreement he received 2000cc double cab
with fuel and driver for his official and private travelling.
Mobile telephone bills of Mr.Saman have been paid by the employer as per the
conditions of employment agreement and such value for Y/A 2018/2019 is Rs.60,000/=.
In addition to that Employer paid Rs.40,000/= as Annual Membership renewal fee of
Mr. Saman to the Institute of Chartered Engineers Sri Lanka.
The company paid Rs.120,000/= to Ceylinco Life PLC as personal health insurance
premium of Mr.Saman which insurance cover taken for all full time employees on equal
terms.
Mr.Saman has been sent to Bangladesh five times to share his knowledge to related
party company and total cost of Rs.1,000,000/= was borne by himself and it was
reimbursed by the Lanka Electric Company PLC.
23) Assessable cash benefit received by Mr. Saman Bandara for Y/A 2018/2019 from primary
employment is …………………...
A. Rs. 5,980,000.
B. Rs. 4,980,000.
C. Rs. 4,800,000.
D. Rs. 4,200,000.
24) Mr.Saman was provided a furnished rent free house from Colombo city area for his residence,
and the rent paid by the employer to the land lord for that house is Rs.70,000/= per month.
Assessable non-cash benefit received by Mr. Saman Bandara from rent free house provided by
employer for Y/A 2018/2019 is …………………...
A. Rs. 240,000.
B. Rs. 300,000.
C. Rs. 480,000.
D. Rs. 540,000.
25) Lanka Electric Company paid Rs.120,000/= as 12% interest of housing loan of Mr. Saman to
the Bank of Ceylon and only collected 4% from him as concessionary interest rate, as agreed
by the Company by following the conditions of the employment agreement. (Interest rate
specified by CGIR for Y/A 2018/2019 is 9.04%). Assessable non-cash benefit received by
Mr.Saman Bandara from the concessionary interest rate housing loan for Y/A 2018/2019 is
9
…………………...
A. Rs. 25,200.
B. Rs. 50,400.
C. Rs. 90,400.
D. Rs. 120,000.
26) Assessable total non-cash benefit derived by Mr. Saman Bandara for Y/A 2018/2019 his primary
employment is …………………...
A. Rs. 1,590,400.
B. Rs. 1,745,200.
C. Rs. 1,840,400.
D. Rs. 1,990,000.
27) State primary employment income which is exempt from income tax for Y/A 2018/2019 for Mr.
Saman Bandara.
A. Employer’s contribution to the Employee Provident Fund is 12%.
B. 50% benefit of housing loan interest difference which calculated between 9.04% (Interest
rate specified by CGIR) and 4% (Interest rate charged from employee).
C. Health insurance premium of Rs.120,000 paid to Ceylinco Life PLC on insurance cover
obtain for all full-time employees on equal terms.
D. All items mentioned above.
28) Mr.Saman has an employment agreement with Lanka Transformers Ltd to provide engineering
consultancy services as his Secondary employment. The net income received for the Y/A
2018/2019 is Rs.1,440,000/= after deducting Withholding Tax. (He received equal amount as
salary for every month). Assessable income received by Mr. Saman Bandara for Y/A 2018/2019
from Secondary employment is …………………...
A. Rs. 1,440,000.
B. Rs. 1,600,000. (1,440,000 + 1,440,000x10/90).
C. Rs. 1,725,000. [(540,000 + 540,000x10/90) + (900,000 + 900,000x20/80)].
D. Rs. 1,800,000. (1,440,000 + 1,440,000x20/80).
29) Mr.Saman has provided engineering consultancy service to local company which is engaged in
construction of an apartment at Colombo - 05 as his profession. The net amount received for
the Y/A after deduction of Withholding Tax is Rs.2,850,000/=. He has travelling expenses of
Rs.240,000 for visiting this site. Assessable professional income received by Mr. Saman
Bandara for Y/A 2018/2019 is ………
A. Rs. 2,850,000.
B. Rs. 3,000,000. (2,850,000 + 2,850,000x5/95).
C. Rs. 3,166,667. (2,850,000 + 2,850,000x10/90).
D. Rs. 3,562,500. (2,850,000 + 2,850,000x20/80).
10
30) Total Assessable income of Mr. Saman Bandara for Y/A 2018/2019 is …………………...
A. Rs. 9,450,200.
B. Rs. 10,450,200.
C. Rs. 11,450,200.
D. Rs. 12,450,200.
31) Mr.Saman has donated Rs.120,000 worth medicine to the “Sri Lanka cancer society” which is
an approved charity and Rs.200,000/= cash donation to the “Api Wenuwen Api” fund. If he
does not have any other deduction as qualifying payment, Taxable income of Mr. Saman
Bandara for Y/A 2018/2019 is …………………...
A. Rs. 11,050,200.
B. Rs. 11,250,200.
C. Rs. 11,950,200.
D. Rs. 12,450,200.
32) Tax liability of Mr. Saman Bandara for Y/A 2018/2019 is …………………...
A. Rs. 1,487,028.
B. Rs. 1,648,032.
C. Rs. 2,292,048.
D. Rs. 2,450,200.
33) During the Y/A Employer has remitted Rs.210,000/= to the Department of Inland Revenue as
PAYE tax deduction on primary employment of Mr.Saman applying tax on tax table. In addition
to that Mr. Saman Bandara has made self-assessment income tax payments Rs.400,000/=.
Total Tax Credits available for Mr. Saman Bandara for Y/A 2018/2019 is …………………...
i. PAYE tax credit of Rs.210,000 on Primary employment.
ii. PAYE tax credit of Rs.160,000 on Secondary employment.
iii. PAYE tax credit of Rs.285,000 on Secondary employment.
iv. PAYE tax credit of Rs.360,000 on Secondary employment.
v. WHT credit of Rs. 150,000 on Professional Fees.
vi. Tax credit for Self-Assessment payments of Rs. 400,000.
A. (i), (ii), (v) and (vi) only.
B. (i), (iii), (v) and (vi) only.
C. (i), (iv), (v) and (vi) only.
D. All of above credits.
34) VAT payable by Mr. Saman Bandara for Y/A 2018/2019 on his income is …………………...
A. Rs. 450,000.
B. Rs. 550,000.
C. Rs. 650,000.
11
D. Rs. 750,000.
Read the Mini case study given below together with information given in each question and
answer the questions from 35 to 44.
Mr. Ajith Perera serves as a lecturer at University of Colombo and he received assessable
employment income of Rs.2,800,000 from the University during the Y/A 2018/2019.
Mr. Perera conducts lectures in Anuradhapura during weekends for professional exams, as a
professional, with one of his friends, Mr.Fernando under the partnership business “Knowledge
Partners”. Mr. Fernando is entitled only for monthly fixed salary of Rs.50,000 from partnership
as a partner. The gross income derived for the Y/A 2018/2019 by the partnership was
Rs.5,550,000.
Mr.Perera requested to claim following expenses from partnership business.
Depreciation on Toyota Allion Car used for travelling Rs.500,000 (He purchased this Car
for Rs.5,000,000 on 01.05.2016 to travel to conduct lectures for professional exams.)
Depreciation on two Laptop Computers Rs.50,000 (He purchased two Laptop
Computers for Rs.200,000 under Four-year finance lease agreement on 10.05.2018 for
conducting lectures using modern technology for professional students.)
Finance lease interest on Laptop Computers- Rs.30,000
Cost of Locally develop accounting soft wear- Rs.300,000
Tutorials and stationery- Rs.430,000
Rent for Lecture Hall- Rs.360,000
Salaries to Mr.Fernando- Rs.600,000
Salaries for Class room Assistant- Rs.120,000
Advertising- Rs.80,000
Entertainment- Rs.240,000
Hotel room chargers- Rs.480,000
35) When computing business income received by “Knowledge Partners” for Y/A 2018/2019 what
are the amounts can be deducted as Capital Allowances for tax purposes according to the
provisions of Inland Revenue Act.
i. Capital Allowance on Toyota Allion Car Rs.1,000,000 (Rs.5,000,000/5).
ii. Capital Allowance on two Laptop Computers Rs.40,000 (Rs.200,000/5).
iii. Capital Allowance on Locally develop accounting software of Rs.60,000 (Rs.300,000/5).
iv. Capital Allowance on Locally develop accounting software of Rs.300,000 (100%).
A. (i) and (ii) only.
B. (i), (ii) and (iii) only.
C. (ii), and (iii) only.
D. All of above expenses.
36) When computing business income received by “Knowledge Partners” for Y/A 2018/2019 what
are the deductible expenses for tax purposes other than capital allowance and losses.
12
i. Finance lease interest on Laptop Computers- Rs.30,000
ii. Cost of Tutorials and stationery- Rs.430,000
iii. Rent for Lecture Hall- Rs.360,000
iv. Salaries for Assistant Lecturer- Rs.600,000
v. Salaries for Class room Assistant- Rs.120,000
vi. Advertising expenses- Rs.80,000
vii. Entertainment Expenses- Rs. 240,000
viii. Hotel room chargers- Rs.480,000
A. All of above expenses.
B. (i), (ii), (iii), (iv), (v) and (vi) only.
C. (ii), (iii), (iv), (v) and (vi) only.
D. (ii), (iii), (iv) and (v) only.
37) According to given information calculate the total income received by “Knowledge Partners”
for Y/A 2018/2019 which should be shared among partners.
A. Rs. 2,810,000. [Rs.5,500,00 – (Rs.1,100,000 + 1,590,000)]
B. Rs. 2,780,000. [Rs.5,500,00 – (Rs.1,100,000 + 1,620,000)]
C. Rs. 2,510,000. [Rs.5,500,00 – (Rs.1,400,000 + 1,590,000)]
D. Rs. 1,760,000. [Rs.5,500,00 – (Rs.1,400,000 + 2,340,000)]
In addition to above Mr.Perera received following income during the Y/A 2018/2019.
Net dividends Rs.86,000 from Lanka Tiles PLC.
Interest income of Rs.150,000 from investment of Rs.1,500,000 in Treasury Bills and net
interest income of Rs.95,000 from fixed deposit in Bank of Ceylon.
Bonus prize from one of the Lottery winnings organized by National Lotteries Board (after
deduction of WHT) of Rs.860,000.
Net rent income of Rs.1,080,000 from house rented out for one of the Company directors after
deducting WHT. Rates paid for that house is Rs.60,000. No repair and maintenance expenses
bone by Mr. Perera for this house during the year.
He has written a book and it was printed and sold by a book publisher during the Y/A and he
received Rs.172,000, for his authorship after deducting WHT.
He sold a Block of land for Rs.5,000,000 in 20.02.2019 which was purchased in 2008 for
Rs.1,500,000. The market value of land as at 30.09.2017 has been given by independent valuer
as Rs.3,470,000. For selling of land he spent Rs.10,000 for advertisement and Rs.20,000 as
valuation fees. He has not paid Capital gain tax on such transaction.
38) State Final Withholding payments received by Mr. Ajith Perera for Y/A 2018/2019.
i. Dividends from Lanka Tiles PLC Rs.100,000.
13
ii. Interest income of Rs.150,000 on Treasury Bills.
iii. Interest income of Rs.100,000 from fixed deposit in Bank of Ceylon.
iv. Lottery winning received from National Lotteries Board Rs.1,000.000.
A. (i) and (ii) only.
B. (i), (ii) and (iii) only.
C. (i), (iii), and (iv) only.
D. All of above items.
39) Calculate the realization gain received by by Mr. Ajith Perera for Y/A 2018/2019 on capital
assets.
A. Rs. 3,500,000.
B. Rs. 1,540,000.
C. Rs. 1,520,000.
D. Rs. 1,500,000.
40) Mr.Perera has incurred taxable business loss of Rs.1,200,000 from his partnership business,
“Knowledge Partners”, for Y/A 2017/2018 and such loss brought forward to Y/A 2018/2019.
Calculate the Total Assessable income received by Mr. Ajith Perera for Y/A 2018/2019.
A. Rs. 7,460,000.
B. Rs. 7,430,000.
C. Rs. 7,280,000.
D. Rs. 7,130,000.
41) Mr.Perera has made following transactions during the Y/A 2018/2019.
Donation of Rs.100,000/= worth books to library of Ananda Collage - Colombo
(Government School).
Annual premium of life insurance policy Rs.150,000
Self-assessment income tax payment for Y/A Rs.160,000
State Qualifying payments and relief entitled for Mr. Ajith Perera for Y/A 2018/2019.
i. Donation to the Government of Rs.100,000.
ii. Annual premium of life insurance policy Rs.150,000.
iii. Individual relief Rs.500,000.
iv. Relief for employment income Rs.700,000.
v. Relief of 25% of total rental income for repair and maintenance Rs.300,000.
A. All of above items.
B. (i) and (ii) only.
C. (i), (ii) and (iii) only.
D. (i), (iii), (iv) and (v) only.
42) Calculate the Taxable income received by Mr. Ajith Perera for Y/A 2018/2019.
14
A. Rs. 5,860,000.
B. Rs. 5,830,000.
C. Rs. 5,710,000.
D. Rs. 5,680,000.
43) State the tax rates applicable for Mr. Ajith Perera when calculating gross income tax liability on
taxable income for Y/A 2018/2019.
i. 5% on Treasury Bills interest income of Rs.150,000.
ii. 5% on Treasury Bills interest income of Rs.150,000 and fixed deposit net interest
income of Rs.95,000 received from in Bank of Ceylon.
iii. 10% on gain on realization of investment assets/Capital gain of Rs.1,500,000.
iv. Progressive tax rates on gain on realization of investment assets/Capital gain of
Rs.1,500,000.
v. Progressive tax rates on Bonus price received from Lottery winnings organized by
National Lotteries Board Rs.860,000.
vi. 14% on balance taxable income.
vii. Progressive tax rates on balance taxable income.
A. All of above answers.
B. (i), (iii), (v) and (vii) only.
C. (ii), (iv) and (vii) only.
D. (i), (iii) and (vii) only.
44) Sisiliya Appreals (Pvt) Ltd is engaged in the business of manufacturing of garments for foreign
market. The Business turnover and taxable income of the company for year ended 31st March
2020 are Rs.660,000,000 and Rs.110,000,000 respectively. The company has exported
Rs.580,000,000 worth of garments to United Kingdom which are selected through quality
control process and balance has been sold to local buyer at Maharagama. The company has
received net interest income Rs.2,850,000 from fixed deposits and gross interest income of
Rs.4,000,000 from investment made on treasury bills. If the company does not have any other
income for Y/A 2018/2019, gross income tax liability of Sisiliya Appreals (Pvt) Ltd is ……
A. Rs.16,359,000
B. Rs.16,380,000
C. Rs.17,360,000
D. Rs.32,760,000
45) State the correct statement relating to the income tax liability of partnership, as per the
provisions of Inland Revenue Act No.24 of 2017, where a partnership’s taxable income includes
gains from the realisation of investment assets and business gain,
A. Gains from the realisation of investment assets shall be taxed to the partnership at the rate
of 10% and business gain taxable at the rate of 8% as withholding tax on partners’ share
of profit.
15
B. Gains from the realisation of investment assets shall be taxed to the partners at the rate of
10% and business gain taxable at the rate of 8% as withholding tax on partners’ share of
profit.
C. Gains from the realisation of investment assets and business gain of partnership taxable at
the rate of 8% as withholding tax on partners’ share of profit.
D. Gains from the realisation of investment assets and business gain of partnership taxable at
progressive rates in individual income tax files considering as partners’ share of profit.
46) State the correct statement relating to the income tax liability of a non-governmental
organization as per the provisions of Inland Revenue Act No.24 of 2017, Where a non-
governmental organization’s taxable income includes gains from the realisation of investment
assets,
A. Gains from the realisation of investment assets shall be taxed to the non-governmental
organization at the rate of 10% and only the remainder (amounts received by way of grant,
donation or contribution or in any other manner) of the non-governmental organization’s
taxable income shall be taxed at the rate of 28%.
B. Gains from the realisation of investment assets and the remainder (amounts received by
way of grant, donation or contribution or in any other manner) of the non-governmental
organization’s taxable income shall be taxed to the non-governmental organization at the
rate of 10%.
C. Gains from the realisation of investment assets and the remainder (amounts received by
way of grant, donation or contribution or in any other manner) of the non-governmental
organization’s taxable income shall be taxed to the non-governmental organization at the
rate of 14%.
D. Gains from the realisation of investment assets and the remainder (amounts received by
way of grant, donation or contribution or in any other manner) of the non-governmental
organization’s taxable income shall be taxed to the non-governmental organization at the
rate of 28%.
Read the Mini case study given below and answer for the questions from 47 to 49.
Ironman Concrete Products (Pvt) Ltd is engaged in the business of supplying building materials
to building constructors and retail customers. The company sells cement blocks which
manufactured by the company and also purchased from various suppliers. In addition to that
company is acting as the Piliyandala Area Distributor of a well-known local Roofing Cement
sheet manufacturing company under their supervision. Business turnover of the Company for
the quarter ended 31st March 2019 as follows.
Sale of cement blocks manufactured by company (excluding VAT)- Rs.16,000,000
Sale of other articles as buying and selling- Rs.10,000,000
Distribution of Roofing Cement sheets- Rs.14,000,000
47) If the company has Rs.1,200,000 as allowable VAT input tax for the quarter and then VAT
liability of Ironman Concrete Products (Pvt) Ltd for the quarter ended 31st March 2019 is
……………………………
A. Rs.1,200,000
B. Rs.3,300,000
16
C. Rs.4,800,000
D. Rs.6,000,000
48) If the company does not have any NBT input tax for the quarter, NBT liability of Ironman
Concrete Products (Pvt) Ltd for the quarter ended 31st March 2019 is
……………………………
A. Rs.400,000
B. Rs.490,000
C. Rs.560,000
D. Rs.800,000
49) ESC liability of Ironman Concrete Products (Pvt) Ltd for the quarter ended 31st March 2019 is
……………………………
A. Rs. 80,000
B. Rs.130,000
C. Rs.150,000
D. Rs.200,000
50) What is the Capital Gain Tax payment date and return filing date as per the provisions of
Inland Revenue Act No.24 of 2017.
A. 15th day of the following month from the date of transaction.
B. Before 15 days from the date of transaction.
C. Before the end of the month which the transaction happened.
D. Before 30 days from the date of transaction.