Skip to content

CMA Intermediate · Direct and Indirect Taxation · Income which does not form part of Total Income

Mr. Rao, a non-resident, holds GDRs of an Indian company bought in foreign currency through an approved intermediary under a notified scheme. He earns dividend of Rs 80,000 on them and long-term capital gain of Rs 2,00,000 on transfer of the GDRs. He has no other income. Applying the Income-tax Act, 2025, the tax before cess is:

Tax is Rs 33,000. The dividend of Rs 80,000 bears 10%, giving Rs 8,000, and the long-term capital gain of Rs 2,00,000 bears 12.5%, giving Rs 25,000. The two amounts add up to Rs 33,000 before cess.

  1. ARs 33,000Correct
  2. BRs 25,000
  3. CRs 8,000
  4. DRs 40,000

Explanation

Dividend Rs 80,000 x 10% = Rs 8,000. LTCG Rs 2,00,000 x 12.5% = Rs 25,000. Total = Rs 33,000. Rs 25,000 alone omits the dividend, and applying 12.5% to both would give Rs 35,000.

Did you get it right without looking?

One question tells you little. A timed set on Income which does not form part of Total Income shows your real accuracy, how long you take and where you lose marks.

Practise Income which does not form part of Total IncomeFree diagnostic mock

More Income which does not form part of Total Income questions