In the CA Intermediate Course, many students consider Income Tax to be one of the toughest papers. It covers a vast syllabus with concepts like Heads of Income, Clubbing of Income, Set-off and Carry Forward of Losses, Deductions under Chapter VI-A, TDS, TCS, Advance Tax and more.
One reason it feels challenging is that in the exam, Income Tax is often tested comprehensively in the compulsory question combining multiple concepts into a single problem. This requires not only conceptual clarity but also speed and accuracy.
Based on my own preparation experience and the Examiner’s Comments issued by ICAI, here are some of the common mistakes students make in this subject.
Common Mistakes in the Compulsory Question
1. Not checking the applicability of presumptive provisions under sections 44AD / 44ADA / 44AE.
2. Not restricting the interest deduction under section 24(b) for self-occupied property to applicable limit.
3. Failing to mention the relevant section numbers for deductions available under Chapter VI-A.
4. Not deducting TDS from the amount of tax liability.
5. Poor presentation of answers.
Other Frequent Mistakes
1. Wrong computation of Gross Annual Value without considering vacancy loss.
2. Incorrect calculation of depreciation due to lack of knowledge of the applicable rate.
3. Poor presentation of answers in Set-off and Carry Forward problems.
4. Taxing remuneration from a partnership firm under "Salaries" instead of "Profits and Gains in Business or Profession".
5. Applying the ₹50,000 cash gift limit per friend instead of applying it in aggregate for non-relatives during the year.
6. Clubbing the income of a minor child without considering that the minor was suffering from a disability.
7. Ignoring the fact that profit from a partnership firm is exempt under section 10(2A).
8. Missing out on claiming the standard deduction under the respective heads.
9. Treating a "car" as a capital gift instead of a movable asset.
10. Failing to claim exemption under section 10(32) in respect of clubbed income of a minor.
11. Incorrect computation of the qualifying limit for deduction under section 80G.
12. Treating interest on an income tax refund as "Profits and Gains in Business or Profession" instead of "Income from Other Sources".
13. Considering rebate under section 87A for non-residents.
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Master & Connect Concepts
Understand the logic behind each provision before memorising. Link related topics, like House Property and Set-off and Carry Forward rules, to see the bigger picture. This improves your accuracy in questions covering multiple areas.
Revise & Practice Smart
Revise at least 3 section numbers daily until you can recall them instantly. Practise mixed concept questions to train your brain to switch between topics quickly; this is crucial for the compulsory question.
Identify Weak Spots & Improve Presentation
Note down common mistakes you make in practice, such as wrong TDS rates or deduction limits. Present answers neatly with clear headings like “Computation of Total Income”, and write section numbers only when sure.
Show Workings & Double-Check Limits
Always include working notes, they can earn partial marks even if the final answer is wrong. Before submitting, recheck limits for 80C, 80D, 80G, TDS and presumptive taxation.
Stay Calm & Apply Logically
Unexpected facts are common in ICAI papers. Stay calm and apply the law logically instead of guessing. Remember, examiners reward clarity, accuracy and correct application of provisions over lengthy writing.
Know Special Cases & Exceptions
ICAI loves testing exceptions like clubbing of income when the minor has a disability, limits on home loan interest for self-occupied property, or applicability of presumptive taxation. Keep a “special cases” page in your notes for quick revision.
Stay Updated on Amendments
Even a small change in a section can change the entire computation. Keep a list of amendments for the year and make sure you practise questions that incorporate them.
Keep Calm on Unfamiliar Questions
If you see a provision you don’t remember perfectly, write the logic and partial computation. Half marks are better than none.
Takeaway
Income Tax in CA Intermediate is not just about memorising sections; it’s about applying them correctly in different scenarios. The compulsory question demands clarity across multiple topics, so regular practice with past exam papers and mock tests is essential. Avoiding these common mistakes can make a big difference to your score.
Summary Table
| Mistake | Why It’s Wrong | Correct Approach |
|---|---|---|
| ✘ Not checking applicability of 44AD / 44ADA / 44AE | ⚡ Wastes time solving entire sum when presumptive scheme could apply | ✔ Verify eligibility before solving |
| ✘ Interest deduction under Sec 24(b) not restricted | ⚡ Leads to excess claim & marks lost | ✔ Apply applicable deduction limit for self-occupied property |
| ✘ Missing section numbers for deductions | ⚡ Examiner may cut marks | ✔ Revise & recall at least 3 sections daily |
| ✘ Not deducting TDS in computation | ⚡ Gives higher net tax wrongly | ✔ Deduct TDS before final liability |
| ✘ Poor presentation of answers | ⚡ Hard for examiner to follow | ✔ Use headings like “Computation of Total Income” & “Working Notes”. Give heading for each heads of income |
| ✘ Wrong Gross Annual Value calculation | ⚡ Vacancy loss ignored | ✔ Deduct vacancy period correctly |
| ✘ Misclassifying remuneration from firm | ⚡ Treated as Salary | ✔ Show under “Profits & Gains of Business/Profession” |
| ✘ Misapplying cash gift rule | ⚡ Taken ₹50,000 per friend | ✔ Apply ₹50,000 aggregate per year (non-relatives) |
| ✘ Ignoring Sec 10(2A) [partner’s profit share exempt] | ⚡ Overstates income | ✔ Mark as exempt under Sec 10(2A) |
| ✘ Forgetting standard deduction | ⚡ Lowers income accuracy | ✔ Always apply under Salaries / Other Sources |
| ✘ Wrong 80G deduction limit | ⚡ Excess claim | ✔ Compute Qualifying Limit limit properly |
| ✘ Treating interest on IT refund as Business Income | ⚡ Misclassified | ✔ Show under “Income from Other Sources” |
| ✘ Considering 87A rebate for NRI | ⚡ Wrong application | ✔ Apply only to Residents |