Difficult Assistant Manager Tax Interview Preparation Guide

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A tax liability that a company has to pay but does not pay at that current point and it will be responsible for paying it in future is termed a deferred tax. Deferred tax occurs due to the difference in a company's balance sheet, due to the differences between accounting practices and tax regulations.

A tax audit is assessment of an organization's or individual's tax return by Internal Revenue Service (IRS) in order to find out that the income and deductions are recorded accurately.

FBT stands for Fringe Benefit Tax which is a tax that an employer has to pay in respect of the benefits that are given to his/her employees.
Fringe benefits is something that an employer provides to his employees in addition to the cash salary. Fringe Benefit Tax is payable in lieu of the value of fringe benefits provided or deemed to have been provided by an employer to his employees during the previous year.

The excess tax paid by an individual than the actual owed is returned by the government which is known as tax refund. After taking into consideration income tax, with holdings, tax deductions or credits and other factors, you file income tax for the year, after that you will receive a tax refund.

Capital gains means the profit earned from the sale of an asset. When the Capital Asset is being sold or transferred, the profit or gains arising out of it or you can term that as the difference between the actual price at which the asset was acquired and the price at which it is sold or transferred.

A long-term capital gain is the profit that arises with the sale of an asset that has been on hold for a definite period. This period ranges from one year to three years across different asset classes.

Assessment for hotel tax is made during every financial year on the basis of return documents filed, inspection carried by the field staff and after giving the representative of the hotel an opportunity of being heard. Assessment order is issued and demand is raised in demand register.

Motor vehicle Tax is levied on every motor vehicle registered in any district with registration fee. Vehicle registration involves the recording of a motor vehicle in the official records after due verification. Vehicle registration is mandatory/compulsory under the law and is essential to prove the ownership of a vehicle. It is also required during the sale of a vehicle and transfer of its ownership.

Income which has been earned but not yet received is known as accrued income. Income is recorded in the same accounting period in which it is earned rather than in the subsequent period in which it will be received.

A resident but not ordinary resident is the one who is not the resident in country for 9 out of the 10 preceding previous years or he has during the 7 preceding years been in country for a period of or period amounting to 729 days or less.

The basic conditions for being resident and ordinarily resident is the same condition that satisfies the residential status of an individual and additional conditions for Resident and ordinarily resident in country in a given previous year are mentioned below:
☛ If you are resident in country in at least 9 out of 10 previous years as per the basic conditions that satisfies the residential status of an individual preceding the relevant previous year.
☛ If you are in country for a period of at least 730 days during 7 years preceding the relevant previous year.
☛ An individual or HUF becomes ROR in country if the individual fulfills at least one of the basic conditions that satisfies the residential status of an individual both the additional conditions.

As per the provisions of Income Tax Act residential status of an individual is categorized as Resident and Non Resident. Under Section 6(1), an individual is said to be resident in country in any previous year if he satisfies any one of the following basic conditions:
☛ He is in country in the previous year for a period of at least 182 days or,
☛ He is in country for a period of at least 60 days during the relevant previous year and at least 365 days during the four years preceding that previous year.
☛ The above provisions are applicable only to those who are residents of country irrespective of their nationality otherwise they are included in Non resident.

Professional taxation, also known as an occupation taxation or a professional privilege taxation, is a taxation that a professional must pay to receive the right to practice a professional service. Professional taxation regime produces manually prepared taxation challans for business entities on annual basis. Criteria for calculating professional taxation is fixed, depending upon number of directors, employees and paid-up capital and annual turnover of establishment.

The difference between country income and foreign income as:
☛ Country's income is always taxable in India in accordance with the residential status of the taxpayer.
☛ Country's income is categorized as:
☛ Income received or deemed to be received in country during previous year and simultaneously accrual income or deemed accrual in country during previous year.
☛ Income received or deemed to be received in country during the previous year but it accrues outside country during the previous year or Income received outside country during the previous year but accrues in country during the previous year.

Tax liability of an individual does gets affected due to his residential status as per Section % of the Income Tax Act 1961 and is also dependent on place and time of accrual or receipt of income.

An Assessee is a person who is liable to pay tax or any other sum of money under the Act. It includes:
☛ Every person in respect of whom any proceeding under this Act has been taken for the assessment of his income or of the income of any other person in respect of whom he is assessable, or of the loss sustained by him or by such other person or of the amount of refund due to him or to such other person.
☛ Every person who is deemed to be an assessee under any provision of this Act.
☛ Every person who is deemed to be an assessee in default under any provision of this Act.

Income Tax is paid at 30% of taxable income. Surcharge is charged at 10% of the Income Tax, where taxable income is more than Rs. 1 crore. (Marginal Relief in Surcharge, if applicable) and Education Cess is 3% of the total of Income Tax and Surcharge.

There are five heads under total income which are given below:
☛ Income from Salaries.
☛ Income from house property.
☛ Profits and gains of business or profession.
☛ Capital gains.
☛ Income from other sources.

Total income is the amount on which the Income Tax is paid. Total income include all income that accrue, arise, earned or received. Total Income is the total amount earned by an individual or organization, including income from employment or providing services, revenue from sales, payments from pension plans, income from dividends or other sources. Total income is generally calculated for the assessment of taxes, evaluating the net worth of a company or determining an individual or organization's ability to make payments on a debt.

A person means an individual, an ordinary partnership, a non-juristic body of person and an undivided estate. The term person under the Income Tax Act includes an individual, a Hindu Undivided Family, a Company, a Firm, an Association of Persons, a Local Authority and Artificial Juridical persons.

A twelve month period starting from 1 April and ending at 31 March which is used for calculating various annual financial statements in businesses and organization is known as financial year.

Previous year is the year in which the income earned becomes taxable in the following assessment year. It can be stated as the Financial year preceding the Assessment year. For example- If the present assessment year is 2015-16 then the previous year will be 2014-2015.

If the current assessment year is 2015-16, which starts from I April 2015 and ends on 31 March 2016. To this assessment year financial year is 2014-15, starting from I April 2014 and ends on 31 March 2015. You will be calculating income tax for financial year in the assessment year.

An assessment year is the period that starts from 1 April and ends on 31 march. It is the year immediately succeeding the financial year wherein the income of the previous financial year is assessed. Government use assessment year for calculating tax on the previous year.

Income tax is an annual tax charged on income of a person by the government. It is charged for the corresponding assessment year at the rates laid down by the Finance Act for the assessment year in respect of the previous year.