CA Intermediate · Paper 3
CA Intermediate Taxation (Paper 3): Study Guide and Exam Strategy
CA Intermediate Taxation is Paper 3, worth 100 marks. Section A (50 marks) covers Income-tax under the Income-tax Act, 2025, tax year 2026-27. Section B (50 marks) covers GST under the CGST and IGST Acts, 2017. You solve it by learning the rules with their conditions, then practising computations in a fixed format.
Taxation is a rule-plus-numbers paper. Section A tests whether you can compute total income and tax for an individual or other assessee, using the Income-tax Act, 2025 as amended by the Finance Act, 2026, for tax year 2026-27. Section B tests GST: whether a transaction is a supply, where and when it is taxed, what the value is, and how much credit is allowed. Use the 2025 Act's terms and section numbers only. Do not mix in the old Act's terms.
The paper has 30 marks of MCQs and 70 marks of written answers. The MCQs carry 1 or 2 marks, are compulsory, and have no negative marking. The written part is mostly computation and short application questions. Papers 3 is answered in two separate answer books, one per section, but it is treated as a single paper for passing. You need at least 40% in the paper and 50% in the aggregate of your group.
Students usually score well when they treat the paper as a set of small, repeatable procedures. Most lost marks come from a missed condition, a wrong rate, or a messy computation, not from lack of effort. Marks are gained by knowing exemptions, limits and deductions precisely, and by showing clear workings so that you earn step marks even when one figure is wrong. Since the paper has two sections, a weak section can drag down an otherwise good attempt, so prepare both evenly.
Taxation: chapters and topics
Income-tax Law
Basic Concepts
- Income-tax Act, 2025 Overview and Charge of Tax
- Key Definitions: Person, Assessee and Income
- Tax Year, Previous Year and Exceptions
- Residential Status and Scope of Total Income
- Agricultural Income and Its Tax Treatment
- Heads of Income and Computation of Total Income
- Carry Forward of Losses in Amalgamation or Demerger
Income-tax Law
Residential Status and Scope of Total Income
- Residence of Individuals and Basic Conditions
- Resident but Not Ordinarily Resident (RNOR) and Deemed Resident
- Residential Status of HUF, Firms, Companies and Other Persons
- Scope of Total Income Based on Residential Status
- Income Deemed to Be Received, Accrued or Arisen in India
- Income Not Accruing in India but Taxable, and Executor Provisions
Income-tax Law
Salaries
Income-tax Law
Income from House Property
Income-tax Law
Profits and Gains of Business or Profession
- Chargeability and Computation of Business Income
- Admissible Deductions and Allowable Expenses
- Depreciation and Other Capital Allowances
- Inadmissible Expenses and Disallowances
- Deemed Profits and Business Receipts Taxable
- Special Deductions: Site Restoration Fund and Similar Provisions
- Presumptive Taxation Schemes
- Maintenance of Books and Tax Audit
Income-tax Law
Capital Gains
- Capital Asset and Transfer: Meaning and Scope
- Short-term and Long-term Capital Assets
- Computation of Capital Gains and Cost of Acquisition
- Special Cases of Capital Gains Computation
- Tax Rates on Capital Gains and Securities Transactions
- Exemption on Investment in Specified Bonds
- Exemption on Reinvestment in House Property and Assets
- Other Exemptions and Deemed Capital Gains Provisions
Income-tax Law
Income from Other Sources
- Income from Other Sources: Basis of Charge and Residuary Head
- Dividend Income and Related Deductions
- Winnings from Lotteries, Games and Other Specific Incomes
- Interest on Securities and Other Interest Income
- Income from Machinery, Plant or Furniture Letting and Composite Letting
- Gifts and Receipts Without or Inadequate Consideration
- Other Receipts: Compensation, Advance Forfeited and Sale of Shares
Income-tax Law
Income of Other Persons included in Total Income of Assessee
- Clubbing of Income: Meaning and Basic Principles
- Transfer of Income without Transfer of Asset
- Clubbing of Income of Spouse
- Clubbing of Income of Son's Wife and Daughter-in-law
- Clubbing of Income of Minor Child
- Conversion of Self-acquired Property into Joint Family Property
- Income Not Included in Total Income: Political Parties and Electoral Trusts
- Set-off, Carry Forward and Application of Clubbing Provisions
Income-tax Law
Set-Off or Carry Forward and Set-off of Losses
- Concept of Set-off and Carry Forward of Losses
- Intra-head and Inter-head Set-off of Losses
- Loss from Speculation Business
- Loss from Specified Business
- Carry Forward of Business Losses, Depreciation and Capital Losses
- Losses from Owning and Maintaining Race Horses and Other Sources
- Set-off and Carry Forward Problems and Special Cases
Income-tax Law
Deductions from Gross Total Income
- General Provisions and Deduction Framework
- Deductions for Savings and Investments
- Deductions for Health, Medical and Disability
- Deductions for Loans, Rent and Interest
- Deductions for Donations and Contributions
- Deductions for Income from Specific Sources
- Deductions for Business and Special Entities
- Comprehensive Problems on Total Income Computation
Income-tax Law
Tax Deduction or Collection at Source and Advance Tax
Income-tax Law
Provisions for filing Return of Income and Self Assessment
Income-tax Law
Income Tax Liability - Computation and Optimisation
Goods and Services Tax
GST in India - An Introduction
Goods and Services Tax
Supply under GST
Goods and Services Tax
Charge of GST
Goods and Services Tax
Place of Supply
Goods and Services Tax
Exemptions from GST
Goods and Services Tax
Time of Supply
Goods and Services Tax
Value of Supply
Goods and Services Tax
Input Tax Credit
Goods and Services Tax
Registration
Goods and Services Tax
Tax Invoice; Credit and Debit Notes
Goods and Services Tax
Accounts and Records
Goods and Services Tax
E-Way Bill
Goods and Services Tax
Payment of Tax
Goods and Services Tax
Tax Deduction at Source and Collection of Tax at Source
Goods and Services Tax
Returns
- Returns Under GST: Types and Basic Provisions
- GSTR-1: Details of Outward Supplies
- GSTR-2A, GSTR-2B and Input Tax Credit Matching
- GSTR-3B: Monthly and Quarterly Summary Return
- Composition, TDS, TCS and ISD Returns
- Annual Return GSTR-9 and Reconciliation GSTR-9C
- Late Fee, Interest, Nil Returns and Return Compliance
How to prepare Taxation
You have many chapters across two sections. The plan below builds the base first, then adds practice, then revision. Always study from the version of the law that applies to your exam: the Income-tax Act, 2025 for Section A and the CGST and IGST Acts for Section B.
- Start with Basic Concepts and Residential Status. Learn the key definitions, such as tax year, person, assessee and the tests for residence. Everything later depends on these. Practise residential status until you can decide it in two minutes.
- Work through the heads of income in order: Salaries, House Property, Business or Profession, Capital Gains, Other Sources. For each head, make a one-page sheet of what is taxable, what is exempt, what is deductible and the limits. Then solve questions on that head only.
- Learn the business and capital gains chapters slowly. They carry the longest computations. Practise the format for each: start with profit, add disallowed items, deduct allowed items. For capital gains, keep a fixed layout: sale consideration, cost of acquisition and improvement, holding period (short-term or long-term), and the applicable rate.
- Move to clubbing, set-off and carry forward of losses, and deductions from gross total income. These are condition-heavy. Make a table of each loss, the income it can be set off against, and how many years it can be carried forward. Do the same for each deduction and its limit.
- Finish Section A with TDS, TCS, advance tax, return filing and the final computation chapter. Then solve full computation questions that combine several heads. Always end with gross total income, deductions, total income, tax, and the final tax payable or refundable.
- Start GST with the foundation chapters: introduction, supply, charge, place of supply, time of supply and value of supply. Practise by asking three questions on every transaction: is it a supply, where is it made, and when is tax due. Then compute the value.
- Cover input tax credit, registration, invoices, records, e-way bill, payment of tax, TDS and TCS under GST, and returns. Learn the conditions for claiming credit and the blocked credits. Solve credit computation questions until the steps become automatic.
- In the last phase, solve MCQs daily, then solve full three-hour papers under exam conditions, and also practise each section separately in 90-minute blocks. Review every wrong answer and log the reason: missed condition, calculation slip, or weak concept. Revise your one-page sheets in the final week.
Time management in the exam
- Use this as a suggested plan, not a fixed rule: about 5 minutes to scan, 40 minutes for the MCQs, 105 minutes for the written answers and 30 minutes for review. These add up to 180 minutes, the full length of the paper. Adjust the split to your own speed and strengths.
- Spend the first 5 minutes scanning the whole paper. Mark the questions you can solve with certainty. Decide the order of your attempt before you write anything.
- Plan about 40 minutes for the MCQs. They are 30 marks with no negative marking, so attempt every one. Answer the sure ones first, eliminate options on the rest, and guess if needed.
- Divide the written time by marks. A plan of about 105 minutes for the 70 written marks works out to one and a half minutes per mark. A 14-mark computation should not take more than about 20 minutes.
- Since the two sections have separate answer books, keep track of the time you spend on each. Aim for balance, so that neither section is left unfinished.
- In long computations, write the format first and fill in figures as you go. If a figure is unclear, state your assumption, move on and return later. Do not stall the whole answer on one number.
- Keep about 30 minutes for review. Check totals, carry-forward figures, rounding and that every question and sub-part is attempted. Use any spare time to revisit the questions you skipped.
Mistakes that cost marks in Taxation
Using old Act terms or section numbers
Fix: Use only the Income-tax Act, 2025 terms, such as tax year. State a rule without a section number if you are not sure of the 2025 Act number.
Missing a condition on an exemption or deduction
Fix: For each exemption and deduction, write the rule, the limit and the condition together on your revision sheet. Check the conditions before applying any rule in a question.
Messy computations with no clear format
Fix: Use a fixed format for each head and for the final computation. Show workings in notes or a separate table and refer to them in the answer.
Getting place or time of supply wrong in GST
Fix: Identify the type of supply first, then look for a special rule before using the general rule. Practise short scenario questions to build the habit.
Wrong input tax credit computation
Fix: List the eligible and blocked items and the conditions before computing. Set out credit by tax type and check each item against your list.
Skipping MCQ practice and leaving answers blank
Fix: Practise timed MCQs through the preparation period. There is no negative marking, so answer every MCQ, using elimination when unsure.
Taxation: frequently asked questions
Which law applies to CA Intermediate Taxation from May 2027?
Section A is examined under the Income-tax Act, 2025 as amended by the Finance Act, 2026, for tax year 2026-27. Section B is based on the CGST Act, 2017 and IGST Act, 2017. Study only from material that follows these laws.
How are the marks split in the Taxation paper?
The paper is 100 marks. Section A, Income-tax Law, is 50 marks and Section B, GST, is 50 marks. Across the paper, 30 marks are MCQs and 70 marks are written answers.
Is there negative marking for MCQs in Taxation?
No. Wrong MCQ answers carry no penalty. MCQs are compulsory, carry 1 or 2 marks, and have four options with one correct answer, so attempt every one.
Do I need to pass each section separately?
No. Paper 3 is answered in two answer books but is treated as a single paper for passing, exemptions and certified copies. You need at least 40% in the paper and 50% in the aggregate of your group, at one sitting.
Which section should I start with?
Either works, but many students start with Income-tax since its heads build on each other. Whichever you pick, give both sections enough time, because a weak section can lower your total.