Direct Tax

Difference between 194Q v 206 1H?

Section 194Q: Section 194Q was introduced by the Finance Act, 2021, and it applies to certain buyers who purchase goods from a resident seller. The key points are: Applicability: This section applies if the buyer’s turnover or gross receipts in the preceding financial year exceed Rs. 10 crores. Transaction Type: It is applicable to the…...

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Difference between 115BAA and BAB?

Section 115BAA: Section 115BAA of the Income Tax Act pertains to the concessional tax regime for domestic companies. It allows domestic companies the option to pay income tax at a reduced rate of 22% (plus applicable surcharge and cess) if they do not claim certain deductions and exemptions. The reduced rate is applicable for companies…...

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Explain interest under 234C

Section 234C of the Income Tax Act imposes interest on taxpayers who fail to pay their taxes on time during the fiscal year. The interest is calculated on the amount of tax that should have been paid as advance tax. The following are the key points related to interest under Section 234C: Interest under Section…...

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Provisions of Sec 80M

The purpose of Section 80M is to provide relief from double taxation of dividends, which can occur when profits are taxed both at the company level (dividend-paying company) and at the shareholder level (dividend-receiving company). Under the provisions of Section 80M, when a domestic company receives dividends from another domestic company in which it holds…...

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Explain Vodafone case.

CASE NAME: VODAFONE INTERNATIONAL HOLDING V/S UNION OF INDIA The “Vodafone case” refers to a landmark legal and tax dispute involving Vodafone Group Plc, a multinational telecommunications company, and the Indian government. The case centered around the acquisition of Hutchison Essar, an Indian telecom company, by Vodafone in 2007. The dispute revolved around the interpretation…...

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Tell me about a particular concept or section of Income Tax which you appreciate.

Certainly! One interesting and important concept in the realm of income tax is the provision of “Clubbing of Income,” often found in various sections of income tax laws across different countries. It aims to prevent the transfer of income from one individual to another, typically between family members, to reduce overall tax liability. This concept…...

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Discuss about form 3CD?

Form 3CD is a statement of particulars that must be filed with Form 3CA/3B, as appropriate, in compliance with Rule 6G and Section 44AB. In total, there are 41 clauses in Form 3CD (split into Part A and Part B) that contain disclosures on deductions, loans, and TDS (Tax Deducted at Source) paid, among other…...

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Suppose we are getting 200% deduction under income tax on the purchase of machinery that is purchased by us for 100,000 rupees being useful life for 5 years. How will this affect the treatment of deferred tax assets and liability in year 1 to 5?

In the given scenario, where you are eligible for a 200% deduction under income tax on the purchase of machinery, it will impact the treatment of deferred tax assets and liabilities over the useful life of the machinery (5 years). Deferred tax assets and liabilities arise due to temporary differences between taxable income and accounting…...

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Discuss section 40A of income tax act?

Expenses or payments not deductible in certain circumstances (1) The provisions of this section shall have effect notwithstanding anything to the contrary contained in any other provision of this Act relating to the computation of income under the head” Profits and gains of business or profession”. (2) (a) Where the assesse incurs any expenditure in…...

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What are most recent changes in assessment procedure

The Finance Act of 2021 brought about significant changes to the provisions governing the reopening of assessments for previous assessment years. Erstwhile Sections 147 to 151 were substituted with amended Sections 147, 148, 148A, 149, 150, and 151, effective from April 1, 2021. Consequently, any notice for reopening assessments issued after April 1, 2021, is…...

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What all you know about Sec 43A & 43AA

Section 43A and 43AA are provisions under the Income Tax Act that deal with the method of accounting for certain specified transactions. Section 43A relates to the method of accounting for certain specified transactions in respect of which the taxpayer has opted for the mercantile system of accounting. The transactions covered under this section include…...

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Different b/w professional service and technical services

Professional Services vs. Technical Services: Section 194C vs. Section 194J: Section 194C: This section covers payments made for contracts, including sub-contracts, for work such as advertising, broadcasting, carriage of goods, etc. Tax needs to be deducted at source (TDS) at the specified rates when making such payments. Section 194J: This section pertains to fees for…...

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Questions on Set off and Carry Forward in which there is change in ownership

1.What happens to the unabsorbed depreciation of the previous owner when there is a change in ownership? A:When there is a change in ownership of a business, the unabsorbed depreciation of the previous owner can be carried forward and set off against the profits of the new owner. This provision is covered under Section 32(2)…...

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Penalty for misreporting of Income?

Section 270A of the Income Tax Act, 1961 provides for penalty for misreporting of income. The penalty amount is equal to 200% of the amount of tax payable on under-reported income. Under-reported income means the difference between the income assessed by the Assessing Officer and the income returned by the taxpayer. Favorite… To get access,...

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For how many years’ unabsorbed depreciation and business losses be carried forward?

Unabsorbed depreciation can be carried forward for an indefinite period until it is fully absorbed. However, it can only be set off against income from the head “Profits and gains of business or profession.” Business losses can be carried forward for up to 8 assessment years immediately following the assessment year for which the loss…...

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Explain Effective tax rate?

The effective tax rate (ETR) is a financial metric that represents the average rate at which a company’s pre-tax profits are taxed. It provides insight into the company’s overall tax liability as a percentage of its taxable income. The effective tax rate takes into account various tax incentives, deductions, credits, and other factors that impact…...

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What is STT?

Securities Transaction Tax (STT) is a type of tax levied by the Indian government on the purchase or sale of securities such as stocks, mutual funds, and futures and options contracts traded on recognized stock exchanges in India. The tax is collected by the stock exchanges and helps to fund the government’s social welfare programs…....

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What is related party as per various laws? – Companies Act, Ind AS, GST, Income Tax

As per 2(76) of Companies Act: a. a director or his relative; b. a key managerial personnel or his relative; c. a firm, in which a director, manager or his relative is a partner; d. a private company in which a director or manager or his relative is a member or director; e. a public…...

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What is the information you required from clients to file Income Tax returns and Form 3CA and 3CB?

1. Pan Card 2. Aadhar Card (linked with Pan) 3. Form 16 (Part-B) in case of Salaried Person 4. Bank Statement in case of Salaried Person 5. Books of Account with reconciliation of GST Portal in case of Business return. 6. In capital Gain income required purchase and Sale deed. 7. In House Property Head…...

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Why Equalization levy Introduced?

Many online Advertisement portals are non-resident and do not have permanent establishment in India. Many resident assessee make payment to this non-resident for advertisement and claim as business expenditure u/s 37. Now India is losing its revenue since payer gets the deduction and amount received by payee is not taxable, so Finance Act 2016 w.e.f…....

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Any important recent judgements you’ve read about?

Supreme Court’s Landmark Judgement on Income Tax Exemption for Profit Oriented Educational Institutions (trust or societies etc.) Supreme Court overruled two previous judgements – Profit Oriented Educational Institutions (trust or societies etc.) can not Claim Income Tax Exemption u/s 10(23C) New Noble Educational Society vs Chief Commissioner of Income Tax. (Hon. CJI Uday Umesh Lalit,…...

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What do you know about Faceless assessment?

Faceless assessment means carrying out of income tax assessment procedure without human interface with the use of technology. The Cases shall be assigned to the department through automated allocation system. There will be no direct contact of A.O with assessee. a) The provisions of the proposed Section 144B will apply to assessment, reassessment, or re-computation…...

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What are most recent changes in assessment procedure?

As Amended by Finance Act, 2022 INTRODUCTION Finance Act, 2021 introduced major changes to the provisions of reopening of assessment of an assessee for previous assessments years. Erstwhile Sections 147 to 151 were replaced with amended Sections 147, 148, 148A, 149, 150 and 151 respectively, with effect from 1 April 2021. Thus, any notice for…...

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Difference between DRP & CIT(A)?

The DRP is an Alternative Dispute Resolution (ADR) mechanism for resolving disputes related to Transfer Pricing in International Transactions. Appeal can be filed before CIT(A), when an assessee is adversely affected by Orders passed by various Income tax authorities the taxpayer, being a foreign company or facing TP adjustment (eligible taxpayer), has an option to…...

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What do you know about internal transfer pricing?

Internal transfer pricing is pricing mechanism of the organisation under which one division of an organisation charges for the product or service transferred to another division of the same organisation thereby forming basis for allocation of combined revenue among the various divisions Division could be departments within a company or a group companies of a…...

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Why Equalization levy Introduced?

Many online Advertisement portals are non-resident and do not have permanent establishment in India. Many resident assessee make payment to this non-resident for advertisement and claim as business expenditure u/s 37. Now India is losing its revenue since payer gets the deduction and amount received by payee is not taxable, so Finance Act 2016 w.e.f…....

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What is DTAA?

Double taxation means the same income getting taxed twice in hands of same assessee. Any country taxes income on baris of two rules i.e. residence rule & source rule Double Taxation Avoidance Agreements is a treaty signed between two or more countries, through which the elimination of international double taxation, promotes the exchange of goods,…...

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What is Advance Ruling?

An advance ruling refers to the facility of obtaining a judgment in advance from the Authority for Advance Rulings. The facility is used when the assessee has anticipated contentious issues in the Income Tax assessment. An advance ruling enables the assessee to obtain an authoritative decision of the Authority for Advance Rulings. The Advance ruling…...

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Difference between POEM and PE. What are the types of PE?

“Place of effective management” means a place where key management and commercial decisions that are necessary for the conduct of business of an entity as a whole are, in substance made. A “permanent establishment ” (PE) is a fixed place of business that generally gives rise to income or tax liability in a particular jurisdiction…....

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Roll back provisions in case of merger and demerger?

The agreement is between the Board and a person. The principle to be followed in case of merger and demerger is that the person (company) who makes the advance pricing agreement (APA) application or enters APA would only be entitled for the rollback provision in respect of international transactions undertaken by it in the rollback…...

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Difference b/w primary and secondary adjustment?

a] Primary adjustment is defined to mean the determination of the transfer price in accordance with the arm’s length principle resulting in an increase in the total income or reduction in the loss, as the case may be, of the taxpayer. A “secondary adjustment” has been defined to mean an adjustment in the books of…...

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What are the Methods for computing ALP along with examples?

Arm’s Length Price can be computed by the following methods; 1. Comparable Uncontrolled Price Method 2. Resale Price Method 3. Cost Plus Method 4. Profit Split Method 5. Transaction Net Margin Method 6. Such other methods as may be prescribed by the board 1. Comparable Uncontrolled Price Method: Under this method the price charged or…...

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Difference between Realized and Unrealized gains?

Realized gains refer to profits from completed transactions whereas unrealized gains refer to profits that have materialized, but the transactions have not been completed. Realized gains are the profits earned from already completed transactions, thus they involve a receipt of cash. These are recorded in the income statement. Unrealized gains refer to profits that have…...

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Differentiate between Tax planning & Tax evasion?

Tax Evasion: Tax Evasion is an illegal way to minimize tax liability through fraudulent techniques like deliberate under-statement of taxable income or inflating expenses. It is an unlawful attempt to reduce one’s tax burden. Tax Evasion is done with a motive of showing fewer profits in order to avoid tax burden. It involves illegal practices…...

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Explain the concept of Marginal Relief and how it is calculated. Is there a situation in which there is no marginal relief?

The tax system is progressive in nature i.e., as the income increases, tax also increases. Assessees having higher income than the prescribed limit are required to pay extra amount of tax in the form of Surcharge. Different threshold limits have been prescribed based on the total income and the type of assessees. For instance, if…...

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W.e.f from July 2021 Sec 194Q was introduced where buyer will have to deduct TDS on high value purchase from specific seller. Do you know why such amendment has been made? Discuss regarding the provisions of the section

The Finance Act, 2021, introduced Section 194Q of the Income-tax Act, 1961, which is related to Tax Deducted at Source (TDS) on purchase of goods and not to the provisions of services. This section applies to a buyer in the following cases: A buyer whose turnover or gross receipt or sales in the immediately preceding…...

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Have you heard of TDS to be deducted Business or Profession on issuing any advantage/perquisite to individual? If yes then why such introduction is made. Discuss on the applicability

The Finance Act, 2022, introduced Section 194R, which pertains to the deduction of tax on benefits or perquisites in respect of businesses or professions. Businesses, companies, or entities often extend multiple types of benefits and perquisites to their distributors, channel partners, agents, or dealers to incentivise and motivate them to promote further growth of a…...

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