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CS Executive · Paper 7

CS Executive Tax Laws and Practice: Paper 7 Study Guide

Tax Laws and Practice is Paper 7 of CS Executive, a 100-mark, 3-hour written paper. Part I covers Direct Tax (60 marks) and Part II covers Indirect Tax, meaning GST and Customs (40 marks). You score by knowing the provision, applying it to the facts, computing carefully and stating a clear conclusion.

Paper 7 tests whether you can apply tax law to facts. Part I (60 marks) covers direct tax: the basic concepts, exempt income, the heads of income, clubbing, set off of losses, deductions, computation of total income, tax on companies and procedural compliance. Part II (40 marks) covers indirect tax: GST basics, levy, time, value and place of supply, input tax credit, GST procedures, and an overview of the Customs Act.

From the June 2027 session, the direct tax part is based on the Income-tax Act, 2025 as amended by the Finance Act, 2026 (tax year 2026-27). The December 2026 session still examines the Income-tax Act, 1961 as amended by the Finance Act, 2025. Study from material for your own session and do not mix the two. Section numbers and some terms differ, so use the Act and material meant for your attempt.

This is a written paper of 3 hours, with 15 extra minutes for reading the question paper. There is no MCQ section and no negative marking. Students usually score well when they practise computations repeatedly, because a correct method earns marks even if one figure goes wrong. Marks are lost through weak recall of rules, mixing up heads of income, missing GST conditions, and writing answers with no conclusion. Theory answers should follow the ICSI style: the provision, then the facts or analysis, then a clear conclusion, citing the Act and section where it matters. To pass you need at least 40% in this paper and 50% in the aggregate of your group at one sitting.

Tax Laws and Practice: chapters and topics

Part I: Direct Tax

Direct Tax at a Glance

Part I: Direct Tax

Basic Concept of Income Tax

Part I: Direct Tax

Incomes which do not form part of Total Income

Part I: Direct Tax

Income under the Head Salary

Part I: Direct Tax

Income under the Head House Property

Part I: Direct Tax

Profits and Gains from Business and Profession

Part I: Direct Tax

Capital Gains

Part I: Direct Tax

Income from Other Sources

Part I: Direct Tax

Clubbing Provisions and Set Off and Carry Forward of Losses

Part I: Direct Tax

Deductions

Part I: Direct Tax

Computation of Total Income and Tax Liability of various Entities

Part I: Direct Tax

Classification and Tax Incidence on Companies

Part I: Direct Tax

Procedural Compliance under Income Tax

Part II: Indirect Tax (GST and Customs)

Concept of Indirect Taxes at a Glance

Part II: Indirect Tax (GST and Customs)

Basics of Goods and Services Tax

Part II: Indirect Tax (GST and Customs)

Levy and Collection of GST

Part II: Indirect Tax (GST and Customs)

Time, Value and Place of Supply

Part II: Indirect Tax (GST and Customs)

Input Tax Credit and Computation of GST Liability

Part II: Indirect Tax (GST and Customs)

Procedural Compliance under GST

Part II: Indirect Tax (GST and Customs)

Overview of Customs Act

How to prepare Tax Laws and Practice

Tax rewards steady practice more than last-minute reading. Plan to read each chapter once, then spend most of your time solving problems and writing answers. Work in the order below.

  1. Fix your law version first. Confirm that your notes and the Act text are for the June 2027 session (Income-tax Act, 2025 as amended by the Finance Act, 2026). Discard older notes that cite the 1961 Act sections.
  2. Build the foundation in Direct Tax at a Glance and Basic Concept of Income Tax. Learn the key definitions: tax year, person, income, residential status and the scope of total income. Residential status drives almost every later chapter, so practise it with several cases.
  3. Study the heads of income one at a time: Salary, House Property, Business and Profession, Capital Gains, Other Sources. For each head, write a one-page sheet with what is taxable, what is allowed, what is not allowed and the method of computation. Then solve at least five computations per head.
  4. Do the linking chapters together: exempt income, clubbing, set off and carry forward of losses, and deductions. Learn conditions and limits exactly. Practise questions that start from gross income and end at total income.
  5. Practise full computations of total income and tax for individuals, firms and companies. Then study how companies are classified and taxed, and the procedural chapter covering returns, assessment and related compliance. Revise these as short answer notes.
  6. Move to Part II. Read the GST chapters in the order of the law: basics, levy and collection, then time, value and place of supply, then input tax credit and liability. Practise value of supply, ITC eligibility and net GST payable computations. Keep one sheet of blocked credits and conditions.
  7. Cover GST procedures (registration, returns, payment, refunds and similar compliance) and the Customs overview. These are theory-heavy, so make brief point-wise notes and revise them often.
  8. In the last four to six weeks, attempt full 100-mark papers in 3 hours. Check each paper for method errors, missed conditions and weak conclusions. Keep an error log and redo the questions you got wrong after a week.

Time management in the exam

  • Use the 15 minutes of reading time to choose questions. Mark the ones you can answer fully and start with the one you are surest of.
  • Split your time by marks, not by feel. Roughly one and a half minutes per mark leaves a little time to review. Part I carries more marks, so give it proportionally more time.
  • Do computation questions in a clean layout with headings for each head of income and working notes. Then move on. Do not keep rechecking one figure at the cost of other questions.
  • If you are stuck on a figure, state the rule, show the method and carry on with a reasonable value. A correct method still earns marks.
  • Keep short theory answers to the point: provision, application, conclusion. Leave 10 minutes at the end to check the computation totals, units and any unanswered parts.

Mistakes that cost marks in Tax Laws and Practice

  • Studying from notes for the wrong law version

    Fix: Study only material for the June 2027 session. Cross-check every section reference and limit against the Income-tax Act, 2025 as amended by the Finance Act, 2026.

  • Getting residential status wrong

    Fix: Practise residential status with varied fact patterns. Then state clearly which income is taxable in India for that status before you compute anything.

  • Including exempt or non-allowable items in a head of income

    Fix: Use a checklist per head: income included, items allowed, items disallowed. Mention the condition in your working note.

  • Treating GST input tax credit as automatic

    Fix: Before claiming credit, check that the conditions are met and that the item is not blocked. Show this step in the answer.

  • Mixing up time, value and place of supply

    Fix: Answer them in sequence. Decide the place of supply, the time of supply and the value separately, and name the rule used for each.

  • Ending theory answers without a conclusion

    Fix: Use the ICSI style: state the provision, apply it to the facts, then give a one-line conclusion citing the Act and section where it matters.

Tax Laws and Practice: frequently asked questions

How many marks are there in CS Executive Tax Laws and Practice?

Paper 7 is a 100-mark paper. Part I, Direct Tax, carries 60 marks and Part II, Indirect Tax (GST and Customs), carries 40 marks. It is a written paper of 3 hours.

Which Income Tax law applies for the June 2027 session?

The June 2027 session examines the Income-tax Act, 2025 as amended by the Finance Act, 2026 (tax year 2026-27). The December 2026 session examines the Income-tax Act, 1961 as amended by the Finance Act, 2025. Study the version that matches your session.

Is there negative marking or an MCQ section in Paper 7?

No. The paper is entirely descriptive, and there is no MCQ or OMR section and no negative marking. You are marked on your answers and workings.

What is the passing requirement for this paper?

You need at least 40% in the paper and 50% in the aggregate of your group at one sitting. If you fail the group but score 60% or more in a paper and at least 25% in each other paper of the group, you can claim exemption from that paper in later attempts by applying before the enrolment deadline.

Should I study Direct Tax or GST first?

Start with Direct Tax, since it carries more marks and needs more practice time. Study GST afterwards and keep revising both in short sessions so that neither fades before the exam.