CA Final · May 2026 · Paper 4
CA Final Direct Tax Laws & International Taxation May 2026: paper analysis
Our own analysis of the official paper, as of 12 October 2026. The questions and answers belong to ICAI; read them on ICAI's website.
Chapter-wise marks
Where the marks were in this paper (out of 100; internal-choice alternatives not double counted).
What each question tested
In our words, by question number. Open the official paper for the full question.
| Q | Marks | Tests | Chapter |
|---|---|---|---|
| 1 | 14 | Computing total income of a manufacturing company from net profit with business adjustments, and comparing regular rates with the concessional company regime | Profits and Gains of Business or Profession |
| 2(a) | 4 | Long-term capital gains on sale of jewellery with indexation and exemption for investment in a residential house | Capital Gains |
| 2(b) | 4 | Carry forward of business loss and unabsorbed depreciation of a closely held company after change in shareholding | Aggregation of Income, Set Off or Carry Forward of Losses |
| 2(c) | 6 | Presumptive taxation of a non-resident cruise ship operator and taxability of related-party lease rentals | Non Resident Taxation |
| 3(a)(i) | 3 | Reference by the Assessing Officer for cancellation of a trust's registration due to a specified violation | Assessment of Trusts and Institutions, Political Parties and Other Special Entities |
| 3(a)(ii) | 3 | Deemed application of income received at year end and applied in the following year by a charitable trust | Assessment of Trusts and Institutions, Political Parties and Other Special Entities |
| 3(a)(iii) | 2 | Distribution obligations of a newly approved electoral trust to retain exemption on contributions | Assessment of Trusts and Institutions, Political Parties and Other Special Entities |
| 3(b) | 6 | Total income and tax of a resident with foreign income under treaty and non-treaty countries, including foreign tax credit | Double Taxation Relief |
| 4(a)(i) | 2 | TDS on benefits or perquisites in kind provided to a business distributor | Deduction, Collection and Recovery of Tax |
| 4(a)(ii) | 2 | TDS on interest paid by a partnership firm to its partners | Deduction, Collection and Recovery of Tax |
| 4(a)(iii) | 2 | Grossing up of TDS where the payer bears tax on professional fees, and credit to the payee | Deduction, Collection and Recovery of Tax |
| 4(a)(iv) | 2 | TDS on interest from a capital gains account deposit after the depositor's death | Deduction, Collection and Recovery of Tax |
| 4(b) | 6 | Arm's length price using the range concept and resulting transfer pricing adjustment | Transfer Pricing |
| 5(a)(i) | 4 | Validity of automatic vacation of an Appellate Tribunal stay order where delay is not attributable to the assessee | Appeals and Revision |
| 5(a)(ii) | 4 | High Court appeal decided without framing the substantial question of law at admission | Appeals and Revision |
| 5(a)(iii) | 4 | Eligibility for the Dispute Resolution Committee against a rectification order, and effect of a set-aside detention order | Dispute Resolution |
| 5(b) | 6 | Business profits and the mutual agreement procedure under the OECD and UN Model Tax Conventions, with key differences | Overview of Model Tax Conventions |
| 6(a) | 6 | Ethical implications for a tax auditor who relied on management certificates without verifying withholding on non-resident payments | Tax Audit and Ethical Compliances |
| 6(b) | 4 | Distinguishing tax planning, tax management and tax evasion in given fact patterns | Tax Planning, Tax Avoidance and Tax Evasion |
| 6(c) | 4 | Rejection of an advance ruling application where the issue is pending before a High Court, and available remedies | Advance Rulings |
What stood out
- Question 1 remained a 14-mark corporate business income computation, now paired with a comparison against the concessional company tax regime.
- TDS and TCS carried 16 marks across both parts, with heavy focus on TCS on overseas remittances, tour packages and buyer-side TDS on goods.
- Trusts were tested in a four-MCQ case on accreted income on merger and in three short written parts on registration, deemed application and electoral trusts.
- International taxation contributed about a quarter of the paper through non-resident special provisions, cruise ship presumptive taxation, foreign tax credit, transfer pricing ranges and model conventions.
- Procedural law featured strongly in Question 5, with Tribunal stay orders, High Court substantial question of law and Dispute Resolution Committee eligibility.
Practise the chapters that carried the marks
Assessment of Trusts and Institutions, Political Parties and Other Special Entities, Deduction, Collection and Recovery of Tax, Profits and Gains of Business or Profession: study guides and practice questions in the CA Final format.