CBSE Class 12 Sample Paper 2026 Solution for Taxation

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CBSE | DEPARTMENT OF SKILL EDUCATION
TAXATION (SUBJECT CODE: 822)
MARKING SCHEME FOR CLASS XII (SESSION 2025-2026)
Max. Time: 3 Hours Max. Marks: 60
General Instructions:
1. Please read the instructions carefully.
2. This Question Paper consists of 24 questions in two sections – Section A & Section B.
3. Section A has Objective type questions whereas Section B contains Subjective type
questions.
4. Out of the given (6 + 18 =) 24 questions, a candidate has to answer (6 + 11 =) 17
questions in the allotted (maximum) time of 3 hours.
5. All questions of a particular section must be attempted in the correct order.

6. SECTION A - OBJECTIVE TYPE QUESTIONS (30 MARKS):
i. This section has 06 questions.
ii. There is no negative marking.
iii. Do as per the instructions given.
iv. Marks allotted are mentioned against each question/part.

7. SECTION B – SUBJECTIVE TYPE QUESTIONS (30 MARKS):
i. This section contains 18 questions.
ii. A candidate has to do 11 questions.
iii. Do as per the instructions given.
iv. Marks allotted are mentioned against each question/part.

822 Taxation MS XII
1

SECTION A: OBJECTIVE TYPE QUESTIONS
Source
Material Unit/ Page no.
Q.
QUESTION (NCERT/PSSCIV Chap. of source Marks
No.
E/ CBSE Study No. material
Material)
Q. 1 Answer any 4 out of the given 6 questions on Employability Skills (1 x 4 = 4 marks)
i. Communication is the act of conveying meanings NCERT 1 1 1
from one entity or group to another through the
use of mutually understood signs, symbols and
semiotic rules.
ii. b. Obsessive-compulsive personality disorder NCERT 2 11 1
iii. Motivation is inner urge to do something and NCERT 2 9 1
self-motivation is ability to do what needs to be
done without the influence or thrust from other
people or situations.
iv. a. Title Bar NCERT 3 14 1
v. d. It is the inability of an enterprise and an NCERT 4 44-45 1
entrepreneur to take risks.
vi. Environmental Education teacher is a person NCERT 5 66 1
who takes up the role of sensitizing young
minds and creates acceptance amongst them to
contribute in protecting environment.
Q. 2 Answer any 5 out of the given 7 questions (1 x 5 = 5 marks)
i. (c) Rs,3,00,000 CBSE 1 27 1
ii. (b) Any assessee CBSE 1 16 1
iii. (d) 8 years CBSE 1 13 1
iv. (c ) 10% CBSE 1 9-10 1
v. (d) Rs. 25000 CBSE 1 11 1
vi. (b) Rs.1,50,000 CBSE 1 6-8 1
vii. (c ) 45 lakhs CBSE 1 15-16 1
Q. 3 Answer any 6 out of the given 7 questions (1 x 6 = 6 marks)
i. (d) 30% CBSE 2 81 1
ii. (b) Rs.3,00,000 CBSE 2 41-42 1
iii. (c ) 20% CBSE 2 41-42 1
iv. (b) individual with disability CBSE 2 28 1
v. (a) Nearest ten rupees CBSE 2 81-82 1
vi. (d) 18.5% CBSE 2 81-82 1
vii. (a)Rs 12500 CBSE 2 81-82 1
Q. 4 Answer any 5 out of the given 6 questions (1 x 5 = 5 marks)
i. (b) 194A CBSE 3 80 1
ii. (b ) Payment under purchase CBSE 3 83-84 1
iii. (a) Salary CBSE 3 77-78 1
iv. (d) 20% CBSE 3 82 1
v. (a) Form 16 CBSE 3 77 1
vi. (b) 10,000 CBSE 3 99 1

822 Taxation MS XII
2

Q. 5 Answer any 5 out of the given 6 questions (1 x 5 = 5 marks)
i. c)10 Lakhs CBSE 4 116 1
ii. d) GSTR-9 CBSE 4 120 1
iii. a) ITC of CGST allowed for payment of CGST & CBSE 4 116-117 1
IGST in that order
iv. b) GSTR 7 CBSE 4 121 1
v. C) GSTR-8 CBSE 4 121 1
vi. d) 20 Lakhs CBSE 4 116-117 1
Q 6. Answer any 5 out of the given 6 questions (1 x 5 = 5 marks)
i. (b) Advance tax CBSE 1 99 1
ii. (a) 12.5% CBSE 2 41-42 1
iii. (b ) 80QQB CBSE 2 27 1
iv. (b) 194H CBSE 3 83 1
v. (b) Director General of Income tax CBSE 3 95 1
vi. (c) Within three months of the date of CBSE 4 121 1
cancellation or date of order of cancellation,
whichever is later
SECTION B: SUBJECTIVE TYPE QUESTIONS
Source Material Page no.
Unit/
Q. (NCERT/PSSCIVE/ of
QUESTION Chap. Marks
No. CBSE Study source
No.
Material) material
Answer any 3 out of the given 5 questions on Employability Skills in 20 – 30 words each (2 x 3 = 6
marks)
7. Active listening requires four discrete NCERT 1 2 2
steps.
 CONTACT—connect with the
participant who is contributing; eye
contact, open posture, and nonverbal
responses.
 ABSORB—take in all aspects of the
spoken message, implicit and explicit
and nonverbal clues. Do not judge or
evaluate.
 REFLECTIVE FEEDBCK—mirror, reflect,
or feedback what you have heard and
why the contributor claims to be valid.
 CONFIRM—receive confirmation from
the speaker that you heard the
participant’s message accurately. If not,
start the method over again at the
beginning by having the speaker restate
their view.
8. According to trait theory, combining a set of NCERT 2 11 2
observable traits into a group forms an
individual’s personality. One popular
personality classification is big five. The Big

822 Taxation MS XII
3

Five, global traits associated with work . are listed below:
• Extraversion: Gregarious, assertive and sociable.(Opposite
reserved, timid, quiet.)
• Agreeableness : Cooperative, warm and
agreeable.(Opposite cold, disagreeable and antagonistic)
• Conscientiousness : Hardworking, organized and
dependable(lazy, disorganized and unreliable)
• Emotional stability : Calm, self-confident and cool(insecure,
anxious and depressed)
• Openness to experience : Creative, curious
and cultured(narrow interests)

9. Spreadsheet programs have become very popular NCERT 3 14 2
because of the following features:
• Built-in functions make calculations easier, faster, and
more accurate.
• Large volumes of data can be easily handled and
manipulated.
• Data can be exported to or imported from other
software.
• Data can be easily represented in pictorial form like
graphs or charts.
• Formulae are automatically recalculated
whenever underlying data values are changed
10. Following are the Entrepreneurial Competencies: NCERT 4 44-45 2
 Taking Initiative: It is about making the first move
towards setting up of an enterprise and taking action.
 Seeking and Acting on Opportunity: An
entrepreneur is always on the look-out or searching for
opportunity and is ready to exploit it in the best interests
of the enterprise.
 Persistence: An entrepreneur is never disheartened by
failures and keeps trying, adapting and iterating to
overcome obstacles that come in the way of achieving
goals.
 Information Seeking: A successful entrepreneur always
keeps his/her eyes and ears open and is receptive to new
ideas which can help in realizing his
goals. He/she is always open to consult with experts and
mentors to get the right guidance and advice.

822 Taxation MS XII 4

11. Environmental engineers provide solutions to NCERT 5 66 2
environmental problems by using engineering, biology and
chemistry. Providing solution to improve the quality of
soil for better productivity, devising strategies to
generate public electricity using
renewable resources like solar street lights etc. is a part of
environmental engineering.

Answer any 3 out of the given 5 questions in 20 – 30 words each (2 x 3 = 6 marks)
12. Solution: CBSE 1 11-12 2
Amount of deduction u/s 80D
Premium in respect of wife Rs 12,000
Premium for himself Rs.1 8,000
Premium in respect of children (not dependent) Nil
Total Rs 30,000 restricted to Rs 25,000
Add: Premium in respect of parents
(senior citizens) Rs 66,000 restricted to maximum Rs 50,000
Deduction available u/s 80D Rs 75,000
13. Gross Total Income 10, 45,000 Less: CBSE 1 14 2
Deduction u/s 80E 80,0 00
Total Income 9, 65,000

14. SOLUTION: CBSE 2 81-82 2
Winning from Lotteries or Crossword Puzzles (Section 194B)
1. Under Section 194B, winnings from lottery or
crossword puzzle or card game and other game of any sum
exceeding Rs. 10,000 are also subject to deduction of tax
at source as per rates in force.
2. The deduction is to be done at the time of
payment of the winnings.
3. Rate of Tax: The prescribed rate is 30%.
4. When the prize is given partly in cash and partly in kind,
income tax will be deducted from cash prize with reference
to the aggregate amount of the cash prize and the value of
the prize in kind.
5. No income tax will be deducted from the prize given
only in kind.
6. When the prize is given in installments, the tax
will be deducted only at the
time of actual payment of each installment

Insurance Commission (Section 194D)
1. Section 194D casts the obligation on any person
responsible for paying to a resident any income by way of
commission or otherwise for soliciting or procuring
insurance business (including continuance or renewal of
822 Taxation MS XII 5

policies).
2. Such person shall deduct income tax, at the time of
crediting the account of the payee or at the time of
payment thereof, whichever is earlier.
3. No deduction shall be made from the amount of any
sum credited or paid to, if
such sum does not exceed Rs. 20,000.
4. Rate of Tax:
a) The prescribed rate is 2% in case of payee is
non- corporate entities and 10% if the payee is domestic
company.
b) When the payee does not furnish his PAN to
deductor, tax will be
deducted @ 20%.

822 Taxation MS XII 6

15. SECTION 44AD CBSE 3 100-101 2
1. The scheme of section 44AD, commonly known as
CC small taxpayers engaged in a business (other
than the business of plying, hiring or leasing of
goods carriages referred to in section 44AE).
2. A taxpayer adopting these provisions will not be
required to maintain the regular books of account
and is also exempt from getting the
books of account audited
3. This scheme can be opted for by the eligible
assessee who is engaged in a business (except
the business of plying, hiring or leasing goods
carriages referred to in section 44AE), whose
turnover or gross receipts from such business do
not exceed the limit prescribed (i.e., Rs.
2,00,00,000 or 3,00,00,000 as the case maybe).
4. The provisions of section 44AD are applicable to
resident assessee who is an Individual, Hindu
Undivided Family and Partnership Firm but not an
LLP.
5. The Presumptive Taxation Scheme under section 44AD
cannot be adopted by an assessee who is engaged in
any profession as prescribed under section 44AA or is
carrying on an agency business or is earning income in
the nature of commission or brokerage
6. If an assessee adopts this scheme, his income will be
computed on an estimated basis. The rate of
computation of income on an estimated basis is 8%
of turnover or gross receipts or 6% of total turnover or
gross receipts in respect of the amount of total
turnover/ sales/gross receipts received by A/c payee
cheque/ bank draft/ ECS through a bank account or
through such other prescribed electronic modes
(credit card, debit card, net banking, IMPS, UPI, RTGS,
NEFT, and BHIM Aadhar Pay) during the PY or till the
due date for filing the return of income u/s 139(1)

822 Taxation MS XII 7

16. Solution: CBSE 4 112- 2
(i) Supply Based Tax: GST is applicable on 117
“supply” of goods or services as against the
previous concept of tax on the manufacture of
goods or on sale of goods or on provision of
services.
(ii) Destination-based Consumption Tax: GST is a
destination-based tax. This implies that all
SGST (or UTGST) collected will ordinarily
accrue to the State (or Union Territory) where
the consumer of the goods or services receives
supply.
(iii) Dual GST: Both Centre and States
simultaneously have the power to impose GST
across the entire supply chain. Centre would
levy and collect Central Goods and Services
Tax (CGST) and States would levy and collect
the State Goods and Services Tax (SGST) on
all supplies within a
State. (Intra-state supply)

Answer any 2 out of the given 3 questions in 30– 50 words each (3 x 2 = 6 marks)
17. Income from business 8,00,500 CBSE 2 18-19 3
Winning from puzzles 1,00,800
Gross Total Income 9,01,300
Less: Deductions
Contribution u/s 80C 80,000
Donation u/s 80G* 1,23,565

Net Total Income 697,735

*Calculation of Deduction U/S 80G
Adjusted Total Income = Gross Total Income – Deductions
= 9,01,300- 80,000 = 8,21,300 Qualifying Amount =
10% of Adjusted total income
= 10% of 8,21,300

WITHOUT QUALIFYING LIMIT
Donation to Prime Minister’s Drought Relief Fund (50%)
15,000
Donation to National Defence Fund (100%) 50,000
WITH QUALIFYING LIMIT
Actual Donation made (35,000+ 1, 00,000 = 1,35,000)
Donation to government for family planning 35,000
(100% with limit to Rs. 82,130)
Donation to charitable institute (approved)
(Balance Rs. 82,130- 35,000 = 47,130 @50%) 23565
TOTAL
1,23,565

822 Taxation MS XII 8

18. Solution: CBSE 3 94-95 3
The person who deducts tax has to issue a certificate
in the prescribed form to the person from whose
payments deduction has been made, showing
therein the particulars of payment, the date of tax
deducted at source and the date of its credit to the
Central Government. It is on the basis of this
certificate that the payee can claim credit for tax
paid on his behalf and can claim refund, if any, due
to him on the basis of tax liability for the relevant
year.
Following certificates have to be issued:
a) Form No. 16, if the deduction or payment of tax
is under section 192 (in case of salary);
b) Form No. 16A if the deduction is under any other
provision of Chapter XVII-B (cases other than salary).

19. Following are the advantages of introducing GST to CBSE 4 117-119 3
Manufacturers and Traders:
1. Easy Compliance: A robust and comprehensive IT
system is the foundation of the GST regime in
India. Therefore, all tax payer services such as
Registrations, Returns, Payments, etc. are
available to the taxpayers online, which also
makes compliance easy and transparent.
2. Uniformity of Tax Rates and Structures: GST
ensures that indirect
tax rates and structures are common across the
country, thereby increasing

822 Taxation MS XII 9

certainty and ease of doing business. In other
words, GST make doing business in the country tax
neutral, irrespective of the choice of place of
doing business.
3. Removal of Cascading: A system of seamless tax-
credits throughout the entire supply chain, and
across boundaries of States, ensures that there is
no cascading of taxes. This reduces hidden costs of
doing business.
4. Increase in Competitiveness: The new regime
reduce the cost of locally manufactured goods and
services. This has increased
the competitiveness of Indian
goods and services in the international market and
give boost to Indian exports. The uniformity in tax
rates and procedures across the country has
helped in
reducing the compliance cost.

Answer any 3 out of the given 5 questions in 50– 80 words each (4 x 3 = 12 marks)
20. Individuals and Hindu Undivided family (HUF) are CBSE 1 4-5 4
eligible for deduction under Section 80 C, from gross
total income equivalent to investment made of Rs.
1,50,000 whichever is less.
Apart from Insurance Premium, following are the
Investments which are eligible for deduction u/s 80 C
of the Act:

A) Any contribution made by an individual towards
statutory provident fund and
recognized provident fund.
B) Contribution towards
superannuation fund.
C) Subscription to the notified securities of the
Central Government.
D) Any contribution to a PPF by individual or HUF
E) Any sum paid or deposited in Sukanya Samriddhi
Account by an Individual in the name of any girl child.
F) Subscription to National Savings Certificates
(VIII) issue and interest accrued deemed to be
reinvested also qualifies.
G) Contributions for participation in the Unit-
Linked Insurance Plan, 1971.
H) Contributions made in the name of

822 Taxation MS XII 10

an individual or HUF for participation in any notified
Unit-Linked Insurance Plan of the LIC Mutual Fund.
I) Any contribution to effect or keep in force any
notified annuity plan of the LIC or any
other insurer.
J) Any subscription, to any units of any Mutual
Fund or the Unit Trust of India under any notified plan
formulated by the Central Government.
K) Any contribution to any pension fund set up by
any Mutual Fund as notified by the
Central Government (1+1+1+1
marks)

822 Taxation MS XII 11

21. Solution: CBSE 1 27-28 4
 Resident Author (or Joint Author) is eligible for
deduction in Respect of Royalty Income of Authors
(Section 80QQB) upto 100% of such income; or Rs.
3,00,000; whichever is less.
 Deduction under 80QQB can be claimed on the
royalty or copyright fees (payable in lump sum or
otherwise) or lump sum consideration for transfer
(or grant) of any interest in the copyright of the
book authored by him which is work of literacy,
artistic or scientific nature (excluding text-books for
schools, tracts and other publications of similar
nature, by whatever name called).
 Deduction is also allowed if the assessee furnishes
a copy of the certificate in Form no. 10CCD to the
Assessing Officer from the person responsible for
paying the income (whenever asked for examining).

A Resident Individual is eligible for deduction in
Respect of Royalty Income on Patents under Section
80RRB upto 100% of such income or Rs. 3, 00,000;
whichever is less.
 Deduction under 80RRB can be claimed on the
royalty received on respect of patent (he may be
a co- owner of a patent) which is registered.
 Deduction under this section is also allowed if
the assessee furnishes a copy of the certificate in
Form no. 10CCE to the Assessing officer from the
person responsible for paying the income
(whenever asked for
examining).
 When the eligible income is earned outside
india, such income is brought
into India in convertible foreign exchange
on or before September 30
of the assessment year in order to avail
deduction under this section. A certificate of
foreign inward remittance should be taken in
Form no. 10H from a prescribed authority (i.e.,
RBI or an
authorized bank).

822 Taxation MS XII 12

22. Solution: Computation of total income and tax payable CBSE 2 60 4
of Mr. Xavier
Income from salary 2,50,000
Income from House Property 30,000
Income from capital gain
Long term capital gain 40,000
Short term Capital loss (15,000)
25000
Income from other sources
Interest on securities 11,000
Interest on Bank Deposits 8,000
19000
Gross Taxable Income 3,24,000
Less: Deduction u/s 80C to 80U
Section 80C
(LIP premium of Rs. 2,000+PPF of Rs.
20,000) 22000

Section 80D – Medical Insurance of wife 9,000
-Medical Insurance of dependent Son
9,000
18,000

Medical Insurance on father Rs. 25,000

43,000

U/s 80DD – Medical treatment of dependent
brother, flat deduction of Rs. 75,000
irrespective of actual expenditure

75,000

U/s 80E – Interest on education loan 30,000 U/s 80G –
Donation to
National Children Fund (100%) 5,000
PM’s Relief Fund (100%) 6,000
11,000

1,81,000
1,43,000

Tax on Rs. 1,43,000 shall be
On Long Term Capital Gain NIL
(Rs.25, 000 - Rs. 25,000, unexhausted basic
exemption limit)
On other income (Rs. 1,43,000 NIL
- Rs. 25,000]
Tax Liability NIL

822 Taxation MS XII 13

23. Solution: CBSE 3 94-97 4
Following are the duties of person(s) deducting tax at
source:
1. Every person responsible for deducting tax at
source shall at the time of payment or credit of
income, whichever is earlier, must deduct such tax as
per the prescribed rates and deposit such tax
deducted in the Central Government Account within
the prescribed time .
2. Such person is required to issue a certificate of tax
deduction at source u/s 203 to the person from
whose income the TDS has been done, in the
prescribed form, i.e., Form No.16A or 16 within
prescribed time
3. A return of TDS containing details of payments
made and taxes deducted thereon along with other
prescribed details are to be submitted in form 26Q by
the deductors.
4. The deductor may file the statement of TDS on
computer readable media. RIGHTS:
1. The person from whose income (payment) the
tax has been deducted i.e. Payee or assessee shall not
be asked upon to pay the tax himself to the extent
tax has been deducted Moreover such tax deducted
at source shall be treated as payment of tax on
behalf of the payee (assessee).
2. Payee (tax payer) is entitled to obtain a certificate
from the payer (tax deductor) in Form 16-A specifying
the amount of tax deducted and other prescribed
particulars.
3. The prescribed income tax authority or the person
authorized by such authority will be required to
deliver to the person
from whose income the tax has been deducted/ paid,
a statement of deduction of tax in the prescribed form
(Form no.26AS) by the 31st July following the
financial year during which the taxes were deducted/
paid.

822 Taxation MS XII 14

24. Solution: CBSE 4 115-116 4
The basic concept of GST is based on providing the
set-off for the tax paid on the inputs used and this is
given effect through the concept of input tax credit.
This input tax credit means setting off the amount of
input tax by a registered dealer against the amount of
his output tax. The GST is based on the value addition
to the goods and the related tax liability of the dealer
can be arrived at by the supplier by discharging
input tax credit from tax collected on supplies during
the payment period.
The credit would be permitted to be utilized in the
following manner:
 ITC of CGST allowed for payment of CGST & IGST
in that order.
 ITC of SGST allowed for payment of SGST & IGST in
that order.
 ITC of IGST allowed for payment of IGST, CGST &
SGST in that order.
 ITC of CGST cannot be used for payment of SGST
and vice versa.
HIERARCHY OF UTILISATION OF INPUT TAX CREDIT
(ITC)
Accounts would be settled periodically between the
Centre and the States to ensure that the credit of
SGST used for discharge of IGST is transferred to the
consumer state. Similarly the IGST used for payment
of SGST would be transferred by the Centre to the
Importing State.
Further the SGST portion of IGST collected
on B2C supplies would also be transferred by
the Centre to the destination
State. The transfer of funds would be carried out on
the basis of information contained in the Returns
filed by the taxpayers.
ITC cannot be availed on invoices more than one year
old. The ITC of tax paid on goods and/or services
used for making
taxable supplies by a taxable person
(receiver) will be allowed subject to four conditions:
 He is in possession of tax invoice.
 He has received the goods or services.
 Tax has been actually paid by supplier to
Government.
 The valid return is filed under section 39.

822 Taxation MS XII 15

822 Taxation MS XII 16

Study Materials
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