Income Tax Expert Interview Questions & Answers
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Refine your Income Tax Expert interview skills with our 90 critical questions. Each question is designed to test and expand your Income Tax Expert expertise. Suitable for all experience levels, these questions will help you prepare thoroughly. Don't miss out on our free PDF download, containing all 90 questions to help you succeed in your Income Tax Expert interview. It's an invaluable tool for reinforcing your knowledge and building confidence.

90 Income Tax Expert Questions and Answers:

Income Tax Expert Job Interview Questions Table of Contents:

Income Tax Expert Job Interview Questions and Answers
Income Tax Expert Job Interview Questions and Answers

1 :: Explain me what is alternative minimum tax (AMT)?

The Alternative Minimum Tax (AMT) is a way to restrict wealthy taxpayers from tax evasion. AMT uses a separate set of rules to calculate taxable income after allowed deductions. This is generally for higher income group as AMT sets a limit on certain benefits that reduces a taxpayer's regular tax amount. As a result, if the benefits on tax reduce total tax below AMT limit, taxpayer has to pay the higher AMT amount.

2 :: What is Previous 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.

3 :: Do you know what is Taxation?

Taxation is one of the mode used by the government to finance their expenditure by imposing charges on citizens and corporate entities. Government levy tax on citizens to encourage or discourage certain economic decisions.

4 :: What is financial year?

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.

5 :: Tell me what do you mean by fair rent?

Fair rent is the rent charged for a private property that is fixed and registered by a rent officer. Fair rent is decided on the basis of size, condition, and usefulness of the property. Fair rent is calculated in place of mortgage interest, other financing costs and depreciation related to certain property, including land, buildings and non movable equipment. It is calculated only once; at the time the facility begins operation.

6 :: What is the term person?

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.

7 :: Do you know what is reserves and surpluses?

Reserves and Surpluses indicate that portion of the earnings, receipt or other surplus of the company appropriated by the management for a general or specific purpose other than provisions for depreciation or for a known liability. Reserves are classified as: Capital Reserve and Capital Redemption Reserve.

8 :: Do you know what is balanced Capitalization?

Capitalization is a collection of share capital, loans, reserves and debentures. It represents permanent investment in companies and it also removes the need of long-term loan plans. It is used to show the reality of the industry by promoting competition, development, profit and investment between individuals, companies and businesses. Balance capitalization is part of this Capitalization only where it is compared to the relative importance, value and other things to make it proportionate in every sense. In balance capitalization debits and credits should be equal on both sides and the share should be shared among all in equal proportions.

9 :: Please explain explain deferred tax asset?

When a firm has overpaid on taxes then the amount is recorded in the balance sheet as deferred asset tax which is also known as provision for future taxation. Deferred tax asset arises when the firm, pays taxes early or have paid excess of tax and is entitled to get some money back from the tax authorities.

10 :: Tell us who are resident but not ordinary resident?

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

11 :: Tell me do you know what is goodwill?

Goodwill is an asset that captures excess of the purchase price over fair market value of an acquired business. Let’s walk through the following example: Acquirer buys Target for $500m in cash. Target has 1 asset: PPE with book value of $100, debt of $50m, and equity of $50m = book value (A-L) of $50m.

☛ Acquirer records cash decline of $500 to finance acquisition
☛ Acquirer’s PP&E increases by $100m
☛ Acquirer’s debt increases by $50m
☛ Acquirer records goodwill of $450m

12 :: Tell me at what rate firms are required to pay tax on their income?

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.

13 :: Do you know what is Permanent Account Number (PAN)?

Permanent Account Number (PAN) is a ten-digit alphanumeric number, which is issued by the Income Tax Department in the form of laminated card as PAN enables the department to link all kinds of transactions of the person with the department. Transactions include tax payments, TDS/TCS credits, returns of income/wealth/gift/FBT, specified transactions, correspondence, etc. PAN helps the department in maintaining a fair record of every persons transactions through a ten digit number in order to avoid tax evasion in any case.

14 :: Do you know what is deferred tax?

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.

15 :: Tell me what is opportunity Cost?

Opportunity Cost is the cost incurred by the organisation when one alternative is selected over another. For example: A person has Rs. 100000 and he has two options to invest his money, either invests in fixed deposit scheme or buy a land with the money. If he decides to put is money to buy the land then the loss of interest which he could have received on fixed deposit would be an opportunity cost.

16 :: Please explain us are you a team player?

Almost everyone says yes to this question. But it is not just a yes/no question. You need to provide behavioral examples to back up your answer.

A sample answer: "Yes, I'm very much a team player. In fact, I've had opportunities in my work, school and athletics to develop my skills as a team player. For example, on a recent project…"

Emphasize teamwork behavioral examples and focus on your openness to diversity of backgrounds. Talk about the strength of the team above the individual. And note that this question may be used as a lead in to questions around how you handle conflict within a team, so be prepared.

17 :: Please explain what is luxury tax?

A tax imposed on goods and services that are non-essential or not included in the necessities. Luxury tax is included in the indirect tax and is incurred by those who purchase or use the product. Ad valorem tax or progressive tax are some luxury tax that is imposed on high priced goods such as cars above a certain value or engine size, villas etc.

18 :: Differentiate between Financial Year, Assessment Year and Previous Year?

Assessment year and previous year are the types of financial year which consists of twelve months starting from 1 April to 31 March. Previous financial year is the preceding year of assessment financial year.

19 :: What is Assessment Year?

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.

For example : 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.

20 :: What is your greatest strength as Income Tax Expert?

This is your time to shine. Just remember the interviewer is looking for work related strengths. Mention a number of them such as being a good motivator, problem solver, performing well under pressure, being loyal, having a positive attitude, eager to learn, taking initiative and attention to detail. Whichever you go for, be prepared to give examples that illustrate this particular skill.

21 :: Explain me what is capitalization? What is its importance?

Capitalization is a term which has different meanings in both financial and accounting context. Capitalization in accounting means the cost to buy an asset which is included in the price of the asset whereas in financial terms it is the cost which is required to buy an asset which includes price of a particular asset and it also include the retained earnings of a company with stock debt and long term debt. There are two kinds of capitalization which are called as Over-capitalization and another is called as Under-capitalization. Capitalization is very import aspect in determining the value of the company in the market which is based on the economic structure of the company. This aspect depends on the previous records and economics of the company. This also shows a particular behaviour of the companies structure and allows them to create a plan to do the marketing.

22 :: Regarding salary, what are your expectations as Income Tax Expert?

This question is always a tricky one and a dangerous game to play in an interview. It is a common mistake to discuss salary before you have sold yourself and like in any negotiation, knowledge is power. Do your homework and make sure you have an idea of what this job is offering. You can try asking them about the salary range. If you want to avoid the question altogether, you could say that at the moment, you are looking to advance in your career and money isn't your main motivator. If you do have a specific figure in mind and you are confident you can get it, then it may be worth going for.

23 :: Tell me suppose if a NRI buys property in India, does he has to pay property tax?

Any income or capital gain that the NRI generates from the sale/ rent or lease of a valued property or an asset based in India will be taxed as per the Income Tax rules. f the property is more than 3 years old, long term capital gains tax will be incurred on the sale of the property. On long term capital gains, tax is payable at 20%.

24 :: Please explain what is tax audit?

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.

25 :: Please explain what is the difference between costing and cost accounting?

Costing is the process of ascertaining costs whereas cost accounting is the process of recording various costs in a systematic manner, in order to prepare statistical date to ascertain cost.
Income Tax Expert Interview Questions and Answers
90 Income Tax Expert Interview Questions and Answers