Income tax is a very scoring subject in PCC/IPCC, if you work out properly then you can score high marks in this subject. If a person scores poor marks or if he/she is not confident about this subject then there is definitely wrong technique used in the preparation.
Tax is in two parts in IPCC i.e. 50 marks for Income Tax and 50 marks for Service Tax & Vat. Although income tax portion requires guidance like tuitions but one can complete service tax & vat on its own.
I would like to share some tips for this subject.
1.Buy V.K SINGHANIA book for Tax, you can refer other famous authors also like T.N MANOHARAN or GIRISH AHUJA.
2.Start (or revise) from the INCOME TAX portion as you will need some time to complete this part first because it is vast. You can do Service Tax and Vat portion after that.
First of all don’t just stick with the 5 heads of Income Tax, although 5 heads of the income are the most important area to cover but students usually don’t give importance to other small areas which also plays important role like Residential Status, Provisions relating to filing of Return, TDS, Advance Tax, Income that is exempt from tax (like sec 10, 11, 12, 13 ) etc. So don’t sit for the last days of your exam to complete these parts. Keep on revising each such topic while you are doing the other important chapters of Tax.
3. Income under the 5 heads is the main part, everyone knows about this but still they lack in the method of preparation and conceptual understanding which ends up scoring poor marks or incomplete syllabus. So here you can follow some tips for Income under the five heads.
Start from INCOME FROM HOUSE PROPERTY, there has been no amendment in this chapter as per the Finance Act and the chapter is also not big, so you can complete revising this chapter in few hours. Just refer to the book or if you have notes for this chapter then it can be easily done.
4. After that Start from CAPITAL GAINS. This chapter needs time to complete and requires conceptual understanding, everyone faces problems most of the time in CAPITAL GAIN and BUSINESS PROFESSION topic, so if you can complete some tough chapters at the beginning then this will increase your confidence and interest for this subject. So you can start from Capital Gain.
Please read every topic in this chapter slowly and do concept wise studies. Read all the provisions which are covered in your syllabus and check the problem sums of all the sections which are given as examples in V.K SINGHANIA book (or any other book). Capital gain requires your own prepared notes. Your own notes work as fast track reference for you, so even if this chapter is vast you can quickly recap every provision of this chapter in 1-2 hours with your own prepared notes. So you can write down all the provisions and prepare very short notes of yours in some sheet of papers.
You can divide this chapter into 4 parts
A) Basic topics i.e. Meaning of Capital Assets Sec2 (14), what is LTCG, STCG, Cost of acquisition, rules regarding cost of Improvement, How to compute Capital gain (formula) and other misc topics.
B) What are the certain transactions not included in transfer > write down all the points section wise and give short description beside it.
C) Capital Gain under certain special cases > write down 3-4 short points on the topic beside each section so that next time when your revise this part, everything pop up in your mind quickly.
D) Exemptions under capital gain > make a chart of this topic in short.
This way the chapter looks easy and organized.
Notes are there to recap all the provisions quickly but to understand them perfectly you have to go through all the topics in details for at least once before your exams. At least do the important topics in depth. For e.g.: revise all the provisions of Capital Gain under certain special cases i.e. Sec 45(2), 45(3), 45(4), 45(5) and do the sums of each section under this topic. The best way to complete this chapter is to do it in parts i.e. takes around 4-5 days or so to complete and revise this chapter. Don’t rush to gulp it at one go, otherwise you will lose interest.
5. The most important thing in Tax is to do the presentation of your answer. You have to write down the notes and the required provisions after you have done the sum. For e.g. if you a get a question on Slump sale (Sec 50B) under capital gain, then after you complete the sum give the working note and write down the provisions of slump sale which are associated with your question. You can write down section if you remember. Don’t write incomplete sections like you are quoting section but you forget the subsection. You can also check suggested answers issued by ICAI to see how they are answering the questions.
6. So after completing INCOME FROM HOUSE PROPERTY and CAPITAL GAIN, you can do a small chapter to ease your pressure i.e. INCOME FROM OTHER SOURCES. This chapter can be done in 1-2 hours. You can make your notes if you want for easy reference otherwise just go through the book.
7. Now there are only two big chapters are left, you can do any one but its better if you complete Income from business/profession first.
There has been some changes in this chapter as per the amendment of the Finance Act 2010, like Sec.32, Sec.35, Sec. 35 AD, Sec.35 DDA, Sec.40 (a), Sec.44 AB, Sec.44AD, Sec.44AE, Sec.43(1), Sec.43(6) under the head income from business profession, are all modified. So please read the amendments as they can ask questions from amendments, it is must.
Like CAPITAL GAIN, prepare notes of this chapter and read all the provisions in depth for at least once before the exam and do a lot of practice of all the sums and the technique of presentation should be same i.e. do the sum and give the working notes of the related provisions which are associated with the question. Don’t write unnecessary provisions, write directly to the point, you can practice this from complier solutions issued by ICAI.
8. Income from salary is an easy chapter, though little big but you can control this chapter very quickly. Read the provisions of all the Allowances, Perquisites, how to compute gratuity, leave salary, pensions etc. The perquisite part is little big (but not tough) and apart from that there is nothing difficult in salary. You must practice all kinds of sums in this chapter. At least check the solved examples of all the topics like Perquisites, allowances etc in VK SINGHANIA’S book.
9. The thing is that you can have grip on Income tax only if you are thorough with the provisions and rules, so do proper revision of at least 2-3 topics every day from the theory part and you can do 2-3 problem sums of all the heads of income. If you are short of time then at least revise practical sums from salary, capital gain & business profession every day .
10. Time management is important. You cannot give all your time to just one subject, so don’t give your whole day to only one subject and skip the other subjects because like tax other subjects also require similar attention. So plan your studies properly. Allocation of time plays an important role during the exam days. Make sure you are in touch with other subjects and doing proper revisions.
11. After completing income under the 5 heads there is not much effort needed to complete the other miscellaneous topics like clubbing, setoff & carry forward etc you can do it within few hours. Although you have to read deductions part properly.
12. Now practice total computation of taxable income (i.e. computation of all the incomes together) for Individual, HUF, Firms & association of persons. Computation of total income is very important , not only this covers all the heads of income and other topics in one problem but also questions from this topic is asked every time in the exams. Like they had asked to compute total income in all the exams of IPCC i.e. NOV 09, MAY 10 & NOV 10.
13. Service tax and VAT. These are completely theory based chapters, so read the theory as given in the institute material or whatever book you are referring or if any tuition notes you have. Follow the last year question papers and see the kind of questions they are asking. Basically theory plays the important role here and questions are straight forward but now the scope of practical question have increased in IPCC. So after reading the theory part please do the practical problems of service tax and VAT as well, it is must. Like in Nov 2010 exam they had asked some good problem sums from Service Tax and VAT apart from the theory questions.
14. Service tax and VAT portion consists of 50 marks in IPCC, so it is equally important like the Income Tax part, hence don’t take it lightly and don’t revise this topic only during the last days before the exams. Read all the amendments and new services that is applicable for May 2011 exams. Like in IPCC it is clarified that students will be examined in respect of the following services
1. Legal consultancy services
2. Commercial training or coaching services
3. Information technology software services
4. Cargo handling services
5. Custom housing agent’s services
6. Practicing Chartered Accountant’s services
7. Consulting engineer’s services
8. Manpower recruitment or supply agency’s services.
Therefore please read the theory part properly and practice the question answers of service tax & Vat after reading the theory.
15. To make strong grip on this subject you have to keep on revising the provision and rules . You don’t need to mug up the provisions word by word, just make sure you know the points on the basis of which you can answer the theory and practical questions in exams. However in case of service tax and Vat you can mug up some topics as the questions are straight forward.
df Unlike other subjects tax can be revised quickly moreover if anytime you get distracted or you feel bored of your studies then you can read tax at that time as it is a very interesting subject and it can bring your study mood back on track.