CS Executive Taxation Numericals Practice & Revision 2026

CS Executive Taxation Numericals are an important part of the Tax Laws paper and require strong conceptual clarity along with regular practice. Questions related to residential status, GST valuation, depreciation, agricultural income, and GST liability calculations are frequently asked in examinations. This revision guide covers important taxation numericals with step-by-step explanations to help students strengthen their problem-solving skills and improve exam performance. 

Residential Status Determination (Income Tax)

This section details the determination of Mr. Subhash's residential status for Assessment Year 2026-27. Mr. Subhash is an Indian Citizen employed with an overseas company in Country X and is not liable to pay tax in Country X.

Case Facts for Mr. Subhash:

• Indian Citizen, employed outside India, not liable for tax in Country X.

• Stay in India (Previous Year 2025-26): 135 days.

• Stay in India (Four Preceding Previous Years): 271 days.

• Annual Income (PY 2025-26):

• Foreign Sources (excluded from deemed resident test): Salary (Country X) ₹2,00,000, House Property (Country X) ₹5,00,000.

• Indian Sources (included): Deemed to accrue in India ₹2,00,000, Retail business (controlled from India) ₹10,00,000, Accruing in India ₹4,00,000.

Basic Conditions for Resident Status (for an Indian Citizen employed outside India):

1. Stay in India for 182 days or more in the Previous Year (PY).

2. Stay in India for 120 days or more in the PY AND 365 days or more in the four immediately preceding PYs. This modified condition applies if the individual's total income (other than income from foreign sources) exceeds ₹15 lakh. 

Application of Basic Conditions to Mr. Subhash:

• Condition 1 (182 days in PY): Mr. Subhash stayed 135 days in PY 2025-26. This is less than 182 days. Condition 1 is NOT met.

• Condition 2 (120 days in PY AND 365 days in 4 PPYs): His stay in PY 2025-26 was 135 days (meets 120 days), but his stay in 4 PPYs was 271 days (does NOT meet 365 days). Thus, Condition 2 is NOT met.
  Since neither basic condition is met, Mr. Subhash would initially be considered a Non-Resident (NR).

Deemed Resident Concept:

An Indian Citizen (or a person of Indian origin) who is not liable to pay tax in any other country or territory by reason of his domicile or residence, or similar criteria, is deemed a resident in India if his total income (excluding income from foreign sources) exceeds ₹15 lakh during the previous year. (Memory Tip: A Deemed Resident is always treated as a Resident Not Ordinarily Resident (RNOR).) 

Income Calculation for Deemed Resident Test (PY 2025-26):

To apply the Deemed Resident provision, Mr. Subhash's total income, excluding income from foreign sources, must be calculated:

• Income deemed to accrue and arise in India: ₹2,00,000

• Income from retail business (controlled from India): ₹10,00,000

• Income accruing and arising in India: ₹4,00,000
  Total Income (excluding foreign sources) = ₹2,00,000 + ₹10,00,000 + ₹4,00,000 = ₹16,00,000.

Final Conclusion:

Mr. Subhash's total income (excluding foreign sources) is ₹16,00,000, which exceeds ₹15,00,000. Since he is also not liable to pay tax in Country X, he is considered a Deemed Resident for PY 2025-26 (AY 2026-27). A Deemed Resident is always treated as a Resident Not Ordinarily Resident (RNOR).

Computation of Taxable Supply Under GST

This section focuses on computing the amount of taxable supply for Mr. Jitendra, a registered regular taxpayer. All amounts are exclusive of taxes. This problem emphasizes understanding exemptions and inclusions for various transactions.

Transactions and GST Treatment:

1. Rent received for renting of land for fish farming (₹6,00,000): Nil (Exempt, services for renting land for uses ancillary to agriculture like pisciculture).

2. Received price linked subsidy from M/s Happy Days, a registered Charitable Trust (₹2,00,000): ₹2,00,000 (Taxable, subsidies from a non-government body are generally included).

3. Provided services as National Testing Agency (NTA) to M/s Fine Future Institute, a recognized education institute, for conducting an entrance examination for admission to educational institutions (₹3,00,000): Nil (Exempt, services by an agency for conducting entrance examinations for recognized educational institutions).

4. Services by way of pre-conditioning, pre-cooling, ripening, and waxing of fruits (₹1,00,000): Nil (Exempt, these services relate to agricultural produce).

5. Providing room having room charges of ₹4,500 per day to a person receiving health care services from an established health care clinic (Total ₹1,50,000): Nil (Exempt, services providing a room in a clinical establishment are exempt if room charges are less than or equal to ₹5,000 per day per patient).

Total Taxable Supply:

Sum of taxable amounts: ₹0 + ₹2,00,000 + ₹0 + ₹0 + ₹0 = ₹2,00,000.

Computation of Depreciation Under Section 32 (Income Tax - PGBP)

This section demonstrates computing depreciation under Section 32 for Mr. Gama, a proprietor running a manufacturing business, for Assessment Year 2026-27. Mr. Gama has exercised the option of shifting out of the default tax regime, making both normal and additional depreciation applicable.

Case Facts for Mr. Gama:

• Assessee: Mr. Gama, proprietor, manufacturing business (tires/tubes).

• Business Commencement: 1st January 2025 (assets used for more than 180 days in PY 2025-26).

• Total Cost of Plant & Machinery installed: ₹120 Crore.

• Includes:

• Second-hand Plant & Machinery: ₹20 Crore.

• Machinery for Scientific Research: ₹15 Crore.

Calculation of Normal Depreciation:

1. Normal Depreciation Rate for Plant & Machinery: 15% per annum.

2. Adjustment for Scientific Research Machinery: Expenditure on plant and machinery used for Scientific Research is 100% deductible under Section 35(1)(iv) in the year of acquisition. This amount is not eligible for depreciation under Section 32. (Memory Tip: Watch out for Plant & Machinery used for Scientific Research. It is fully deductible under Section 35, not subject to depreciation under Section 32.)

• Adjusted Cost for Normal Depreciation: ₹120 Crore - ₹15 Crore = ₹105 Crore.

3. Normal Depreciation: ₹105 Crore * 15% = ₹15.75 Crore.

Calculation of Additional Depreciation:

1. Applicability: Available only to manufacturing or power generation businesses. Mr. Gama's business qualifies.

2. Eligibility: Only on new Plant & Machinery. Not available on second-hand P&M or P&M used for scientific research.

3. Rate: 20% of the actual cost.

4. Adjusted Cost for Additional Depreciation: ₹120 Crore - ₹15 Crore (Scientific Research) - ₹20 Crore (Second-hand) = ₹85 Crore. (Memory Tip: Watch out for Second-hand Plant & Machinery. It is not eligible for Additional Depreciation.)

5. Additional Depreciation: ₹85 Crore * 20% = ₹17 Crore.

Total Depreciation:

• Normal Depreciation: ₹15.75 Crore

• Additional Depreciation: ₹17.00 Crore

• Total Depreciation: ₹15.75 Crore + ₹17.00 Crore = ₹32.75 Crore.

Partial Integration of Agricultural Income (Income Tax)

This section discusses the tax treatment of income from processed agricultural produce, specifically Rubber, Coffee, and Tea (RCT), under Rules 7A, 7B, and 8. These rules segregate income into agricultural income (exempt) and business income (taxable under PGBP). (Memory Tip: Rules 7A, 7B, 8 specifically deal with the apportionment of income from the sale of Rubber, Coffee, and Tea. Remember the percentages by heart.)

Income Apportionment for Specific Agricultural Products:

Critical Rule: Significance of "In India"

A critical factor for taxability is the location where the produce is grown. If produce (e.g., coffee) is grown outside India, the entire income from its sale becomes fully taxable as Business Income. The segregation rules do not apply. For instance, if coffee grown in Colombo is sold, the entire sale amount is fully taxable.

Income from Sapling and Seedling Grown in a Nursery

Income from saplings and seedlings grown in a nursery is considered pure agricultural income and is 100% exempt.

Depreciation on Assets for Professional Income

This section covers calculating depreciation for assets purchased by professionals, such as a chartered accountant, for professional use.

Key Principles for Depreciation Calculation:

• Date of Put to Use vs. Date of Acquisition: The Date of Put to Use is the relevant date for depreciation.

• 180-Day Rule: If an asset is put to use for less than 180 days in the previous year, only 50% of the normal depreciation is allowed.

• Payment Method: Assets purchased via account payee cheque are eligible for depreciation.

• Additional Depreciation: This is generally not available for assets used in a profession or non-manufacturing activities.

Depreciation Rates for Common Assets:

• Computer: 40% (includes computer peripherals).

• Books: 40%.

• Furniture: 10%.

Example Calculations:

• Computer printer: Cost ₹12,500, put to use October 1st.

• Calculation: ₹12,500 * 40% * 50% = ₹2,500 (due to 180-day rule).

• Computer EPS: Cost ₹8,500, put to use October 8th.

• Calculation: ₹8,500 * 40% * 50% = ₹1,700 (due to 180-day rule).
  The criticality of correctly applying the 180-day rule is emphasized to avoid common exam errors.

GST Payable Calculation

This section presents a comprehensive problem on calculating Net GST Payable for Mr. Prithviraj, a service provider in Maharashtra, for February. It covers Outward Supply (FCM), Reverse Charge Mechanism (RCM), Input Tax Credit (ITC), and final cash payment.

GST Calculation Components:

The solution involves calculating four components:

1. GST Payable on Outward Supplies (FCM): Tax on services provided.

2. GST Payable under Reverse Charge Mechanism (RCM): Tax on specific services received.

3. Input Tax Credit (ITC) Available: Credits for GST paid on inputs.

4. Net GST Payable in Cash: Final amount payable after ITC adjustment.

General Information:

• Location: Maharashtra (intrastate unless specified).

• GST Rate: Generally 18% (9% CGST, 9% SGST).

• ITC Conditions: All conditions fulfilled.

• Turnover: Previous year turnover was ₹2.5 crore.

Calculation of GST Payable on Outward Supplies (FCM):

• Music Performance for Brand Promotion (₹1400): Taxable at 18% GST = ₹252 (₹126 CGST, ₹126 SGST). Not exempt as it's for brand promotion.

• Transportation Service to a College (₹1,00,000): Taxable at 18% GST = ₹18,000 (₹9,000 CGST, ₹9,000 SGST). Exempt only for primary/higher secondary schools.

• Business Correspondent Service to Urban Bank (₹2,00,000): Taxable at 18% GST = ₹36,000 (₹18,000 CGST, ₹18,000 SGST). Exempt only for banks in rural areas.

• Recovery Agent Service to Car Dealer (₹15,000): Taxable at 18% GST = ₹2,700 (₹1,350 CGST, ₹1,350 SGST). Exempt only for banks or financial institutions.

Calculation of GST Payable under Reverse Charge Mechanism (RCM):

• Legal Service from Advocate in Gujarat (₹1,75,000): Subject to RCM. This is an interstate supply, attracting IGST.

• GST (RCM): ₹1,75,000 @ 18% = ₹31,500 IGST. (Recipient pays). This tax must be paid in cash.

Total GST Payable (Output Tax Liability):

• CGST Payable: ₹28,476

• SGST Payable: ₹28,476

• IGST Payable: ₹31,500

Calculation of Input Tax Credit (ITC) Available:

• ITC from RCM Legal Service (₹31,500): Eligible for ITC as IGST was paid under RCM. ITC Available: ₹31,500 IGST.

• Outdoor Catering Services (₹500): Blocked credit under Section 17(5); ITC not available.

• General Insurance on 5-seater Car (₹400): Blocked credit under Section 17(5); ITC not available for vehicles carrying less than 13 persons.

Total ITC Available: ₹31,500 IGST.

Calculation of Net GST Payable in Cash:

 Utilisation of ITC: IGST ITC of ₹31,500 is first utilized against IGST payable. The remaining IGST ITC is then assumed to be utilized equally against CGST and SGST payable (₹15,750 each).

 GST payable under RCM (₹31,500 IGST) must be paid in cash.

Regular practice of CS Executive Taxation Numericals helps students improve speed, accuracy, and conceptual clarity. Topics such as residential status, GST valuation, depreciation, agricultural income, and GST liability calculations are frequently tested in examinations. 

Revising these important numerical concepts can significantly improve performance in the CS Executive Taxation paper.