Answered

1. What is a direct tax? Give any three examples.

2. What do you know about the "Canon of Equality"?

3. What are the provisions for carrying forward business losses under the Income Tax Act, 2058?

4. Mr. Sharma has disclosed a total income of Rs. 10,00,000 from a sole proprietorship business before deducting a donation of Rs. 10,000 paid to a tax-exempt social organization. Compute the tax liability for the current income year.

5. A trading company provided the following information:
- Beginning inventory of raw materials: Rs. 4,00,000
- Purchases during the year: Rs. 10,00,000
- Carriage inward: Rs. 50,000
- Custom duty: Rs. 20,000
- Closing stock: Rs. 70,000

Required: Calculate the cost of trading stock.



Answer :

GinnyAnswer

Final answer:

Direct tax definition, examples, the concept of Canons of Equality, and provisions of carry forward of business loss under the Income Tax Act.


Explanation:

Direct tax is a tax imposed on individuals and entities directly by the government. Three examples of direct taxes are income tax, property tax, and gift tax.

The 'Canons of Equality' by Adam Smith emphasize that taxes should be equal in terms of sacrifice, certain, and timely to ensure fairness and efficiency.

Under the Income Tax Act, 2058, provisions for carry forward of business loss allow losses to be carried forward for set periods to be offset against future profits.


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