Tackling Taxation Paper

Students of Professional bodies often either find it difficult to attempt the paper while the rest used to take the paper lightly. The successful candidates have developed different theories while the failures propagate a different notion. Although, almost all the accounting bodies are sticking up to one theory – Increase the number of members without comprising over the quality of the qualified members.

While reading and creating an understanding over the topic or subjects, students are normally been equipped with a single word question – Why not the other way round? This question has no bearing in Taxation subject, as what has been written and understood is basically law! Hence, now you need not go towards the question why but the student must be equipped with a question what is the logic or concept behind this part of law or working related thereto? Working can be done in many different ways but such working must not mold the theme or concept of the law.

The other most important question which professional stage student must bear in mind is regarding the historical background of the piece of legislation. By the term historical background, I mean the conceptual understanding of an amendment not an audit trail of amendments in piece of legislation. The taxation papers normally possess four different types of question, which is, definition, numerical problems, application of a section and finance act amendments.

The definition question is the most misunderstood question of all the attempts. Initial stage students normally learn the definition by heart and reproduce the same while the examiner is looking for the understanding of the definition. You might be wondering, how an examiner can judge the same – as simple as 1 2 3. Student, who used to learn the definitions by heart normally produce the definitions in a Para graphic way while those having a good grip, that is, understanding, normally highlights the important points through bullets/numbering/serializing or explaining the same through examples or any other technique, whichever is applicable. It is expected that in future, student might come across through a case scenario, where they are required to explain which definitions are applicable on the case scenario, what is there concept and how they are related to that case.

The numerical question is also an area where students used to loose easy marks by sticking to the problems associated with the question. The approach of most of the students is to solve the problem correctly – definitely required – rather than looking at the various aspects of the question or more appropriately opening up the question. The most common question is related to the computation of taxable income and tax payable of an individual. Students must first try to find out the heads of income involved. Secondly, they should place an appropriate heading. Thirdly, they must list down the heads of income on a fresh page in the following manner.

MB & Co.

Computation of Taxable Income

Tax Year 2003

Income from Business (Working 1)

Income from Other sources (Working 2) etc.

Now come to a next fresh page and put a heading working 1 & start sorting out the items may be used in the working. Do not forget to put a tick over the figures used. This would avoid the problem of reconsidering the same figure in another working. After filling all the blanks, put a similar heading for Tax payable computation. Students must note that not only treatment of a single figure, that is, placement under appropriate head of income will enable them to gain marks while the figures involving judgment carries higher marks.

In case of ambiguity, do put an asterisk or mark or put a note number. At the end of the answer, put the note number and explain to examiner, why you treated that item in such a fashion or under a particular head of income. This would enable the examiner to understand regarding the ambiguity and enable them to avoid this type of mistake in future paper setting. This notes approach is hazardous where the treatment is crystal clear; hence, student should first read the question carefully. This approach will compel the examiner to give you mark leniently because you have highlighted that you have a clear understanding of which heads of income are involved in the question and any numerical mistake is segregated or attached to a type of income. Hence, the examiner can now in a position to easily judge the nature of your mistake. This approach will refrain the examiner to block only related marks. Another method is a most haphazard method where all the workings are shown on the face of the answer, hence, neatness is normally lacking – an important source of irritation.

Students must also see the forms of returns, in future it might be expected that initial stage students need to fill the return and use the answer paper as working sheet – this would make the part qualified students more competitive commodity in the market as compared to other accounting bodies.

The application of a section etc type of question involves the understanding of most common problems and misconception associated with the section. Students, normally at final stage, must be aware of that in order to tackle the question. Normally, the question itself carries a hint related to the problem and makes the task of answering the question a bit simple. Although, the hint need not or most appropriately ought not to be used with general perception – a technique normally been used by students not aware of the problems associated with the question. It is not difficult for the examiner to catch such answers. This will damage the image of the student in the eyes of the examiner and compel him or her to see the whole of your answer paper with such distorted image or unchecked question?

The last but not the least is the type of question relating to the amendments brought through finance act. Students, at final stage, normally tackle this question in the most normal way and the easiest question in the whole question paper – a general reason of loosing marks. Students at initial stage are required to explain their understanding through an example. The students at final stage must show their understanding about the amendments through the following approach.

  1. What is the position of law prior to amendment, that is, mischief related?
  2. How such mischief has been cured through remedial amendment?
  3. What is the impact over the taxpayer?

Wish you good luck!

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