CA INTERVIEW QUESTIONS AND ANSWERS
What does personal mean to you by term?
The term personal according to section 2(31) includes a person, a family that is undivided, a firm or a company, a press association or a body of important individuals, an authority that is local, every person who is artificial and doesn’t fall under any of the sub clauses that are preceding.
List The Five Heads Of Income To Calculate Total Income Of The Assessee?
- Income from Salaries
- Income from House Property
- Profits from Business and Profession
- Income from Capital Gains
- Income from Other Sources
Talk about the heads of income which are needed to calculate total income?
The five heads of income which are needed to calculate the whole body of income includes income from salaries, income from house properties, income from sources and other capital gains, income from house property etc.
What Is Gratuity?
Gratuity is the amount payable by the employer to the employee as recognition for the long term association of the employee with the employer.
It may be payable by the employer in two ways:
- On employee’s retirement.
- On the death of the employee to the legal heirs of the employee.
But in both the cases the treatment will be different. The amount paid by the employer to the employee on his retirement is taxed as ‘Income from Salaries’ while the amount paid by the employer on the death of the employee is taxed as ‘Income from Other Sources’.
What do you mean by resident or an ordinary resident?
A person who is being treated as resident and ordinary resident if he has managed to satisfy any of the conditions as given. The basic condition include that the person should be living in India for periods of time that go upto a 182 days in the current or previous year.
Second, he could be in India for around 60 or even more during the previous year and has been in the same country for 365 days or even more during the past four years after preceding the previous year.
The additional conditions include that he has been a resident of India for two out of ten years or that he has been in India for 730 days or even more in the past seven years which preceds the previous years.
What Is Pension?
Pension is a periodical payment received by the employee from the employer after he ceases to be the employee. It is taxed as Salary.
Calculation of pension is done in two forms:
- Uncommuted Pension – is regular periodical pension to employee which is taxable to all kinds of employees.
- Commuted Pension is a lump sum payment in lieu of periodical pension.
- If such pension is received by government employee then it is wholly exempt.
Non government employees can avail exemption to a certain extent:
- If employee is in receipt of gratuity, 1/3 of commuted value.
- If not, then one half of commuted value
What will you define as the incidence of tax especially in the case of residents who are not ordinary?
A resident who is not ordinary shall be taxed if the income which has been received or has been received in India in the past year.
Second incomes that have been risen or even deemed to boost or raise in India in the past one year.
Third, incomes which have risen outside India from any business that has been controlled or professionally set up in India! Income received from outside of India from any business and was controlled or even by a profession that has been set up in India recently.
List The Criterion For Exemption Of H.r.a?
H.R.A depends upon the following:
- Salary of the employee
- House Rent Allowance
- Rent paid by the employee
- The place where the house is taken on rental basis.
Which incomes have been believed to arisen here even if they have risen outside India?
While answering this question, you can say that any income which is risen from a property that is tangible and found in India, whether it is movable or not.
Income from the transfer of any of the capital asset which is found in India or any salary which was earned India even if it hasn’t been paid outside the country.
It could also be salaries which are paid by the government to any citizen of India or any national services that have been rendered outside the country.
Explain The Difference Between Short Term Capital Asset And Long Term Capital Asset?
Short term capital assets are those assets which are held by an assessee for not more than 36 months, immediately prior to its date of transfer.
But in the following cases an asset help for not more than 12 months is treated as short term capital asset:
- Equity or Preference shared in a company.
- Securities listed in a recognized stock exchange in Country.
- Units of UTI
- Units of a mutual fund specified under sec 10(23D)
Which incomes are not kept under section number ten of the act?
The incomes which have been exempted from section ten of the act include income related to agriculture, any amount which is received under any life insurance policy, sharing of profits of any partner from a firm, interest, bonus, premiums or any investment that is specified.
Other includes educational scholarships, local authority and mutual funds, payments made to member of parliaments or trade unions and funds, state insurance fund employees etc.
Capital gains and dividends which are received from state funds and gains which arise from the transferring of units can be counted.
Others have also added gifts and incomes that come occasionally, capital gains which are long term and capital gains because of acquisition of any agricultural land.
Tell Me What Types Of Income Is Included Under The Head Of Income From Other Sources?
- Bank Interest
- Interest on deposits with the companies
- Interest received on delayed refund of income tax
- Interest on Loan
- Insurance commission
- Agricultural income received from a land situated outside the Country
- Sitting fees received by a director for attending board meetings
- Remuneration received by a Member of Parliament
- Family Pension – The amount of pension received by the legal heirs of a deceased employee.
- Interest on Income Tax Refund.
Which of the items are needed in a salary?
Some of the basic items that are needed in any salary include wages, gratuity, annuity, payments which are received from any employer for any period of leave that is not availed of, free commission, profits instead of salary or in addition to wages, advancement of salary etc.
Describe Allowances Which Are Fully Taxable?
- Dearness Allowance
- City Compensatory Allowance
- Medical Allowance
- Lunch Allowance
- Servant Allowance
- Family Allowance
- Warder Allowance
- Overtime Allowance
- Family Allowance
What is the definition of gratuity?
Gratuity has been defined as the amount which is payable to the employer to the employee as a matter of recognition for any long term association of the employer or the employee. It can be paid to the employer in two occasions.
First of all, during the retirement of the employee and secondly when the employee has died and passed on the legal heirs to some other employee. In both these cases the way of treatment will not be the same.
The amount that is paid by one employer to another during his retirement has been taxed as income from the salaries while the amount which is paid by the employer on matters of death of the employee is being taxed as income which comes from other sources.
What Is Superannuation Fund?
Superannuation fund is an employee welfare scheme which is usually applicable in case of very senior employees. When the employee ceases to be the employee, employee’s contribution, employer’s contribution and the interest thereon is paid to the employee and in case of death of the employee to the legal heirs of the employee.
Which Employers Are Covered Under Voluntary Retirement Scheme?
- A Public Sector Company
- Any other Company
- An authority established under a Central or State Act
- A local Authority
- A Co-operative Society
- A University
Define pension and mention how it can be calculated:
Pension has been defined as a method of payment that is periodical and has been received by the employee itself from the other employee after he has ceased to be the employee. It may also be taxed as a salary.
Calculation of pension may be done in two forms.
Pension that is uncommuted and one that is commuted.
The uncommuted one happens to be pensions that are paid and given regularly and is also taxable to all kinds of employees.
Commuted pension is one which happens to be a big sum of payment which is in lieu of any pension that is periodical.
Explain What Are The Disadvantages Of Mixed Economy System?
The disadvantages of a mixed economy really depend on how “mixed” it is. For instance, if it is mixed more towards a free-market, there is little regulation (some may see this as a good, though), but if it is mixed more towards a command economy, the control may stifle growth.
Mixed economies can also have different characteristics. Each of these will share a different set of disadvantages. A will stifle profits due to its high tax structure, but will encourage new ideas due to its low regulation (this could result in many weird effects such as an economy comprised almost solely of small, well-niche businesses).
B will encourage profits, but due to its regulation, some new ideas (and some growth) will be stifled. For instance, if environmental regulations are strict, the building of new plants or refineries might be lowered. This could result in a small number of very large and profitable businesses.
Define Economics And Explain About It?
Economics is usually defined as the problem of how best to distribute limited resources, limited because wants are characterized as unlimited, but common sense tells us that rather than limited resources, there is an abundance of resources. The difference is one of perspective and this is core to any alternative understanding of economics.
If wants are the focus, then of course resources are limited by definition, but if minimum needs or essentials are used as the foundation, then resources are seen to be abundant. The difference is between a description and an explanation. A focus on wants or desires describes a market situation, while a focus on essentials or needs allows an explanation of choices to begin.
There is a rank holder outside and you have failed consistently. Why should I give you the job?
While answering the question, don’t ever hesitate or show any signs of failure. Don’t let such questions put you down. Instead you should answer by saying that he does have a good knowledge base and that being a rank holder makes him good.
But during your article ship, you have sharpened your knowledge as well. You have also had practical experiences and your recruiter should hire someone who is more knowledgeable and that you have better practical knowledge and experiences.
Explain Why Is Economics Seen As A Social Science?
The social sciences are a group of academic disciplines that study human aspects of the world. They diverge from the arts and humanities in that the social sciences tend to emphasize the use of the scientific method in the study of humanity, including quantitative and qualitative methods.
Economics is clearly a human phenomenon. Even though some topics in economics, such as game theory, are used in the natural sciences and mathematics, economics remains a study of purely human phenomenon.
What are your areas of interest:
When you are being asked a question like this, don’t ever speak about things that are not related to the job. Instead speak about what you would like to do in the job. Like if international taxation and finance is something you like, talk about it.
Talk about what is happening in the world around you and mention a few solutions to the problem. That will let your recruiting manager know you are intelligent, have enough knowledge and can handle an interview.
What is more important, money or company?
On being asked this question, you should always talk about company. Here you should say that the company can help you learn and grow, something money cannot. Money will only take care of the financial aspects but not help me gather any experience.
Therefore it is better to focus on the company and gather more experience, learn new things so that you can improve not just the company but also yourself at the same time and that definitely is far more important than money.
Explain What Is The Incidence Of Tax?
Tax incidence can be divided into:
- Formal incidence: the party liable to the tax
- Informal incidence: party, who actually pays the tax
The tax incidence is decided by the elasticity of demand and supply for a good or service.
Explain What Is Bop?
It is called as Balance of payments – an economic term. (BOP) measures the payments that flow between any individual country and all other countries. It is used to summarize all international economic transactions for that country during a specific time, usually a year.
The BOP is determined by the countrys exports and imports of goods, services, and financial capital, as well as financial transfers. It reflects all payments and liabilities to foreigners (debits) and all payments and obligations received from foreigners (credits).
Explain Trade Discount, Discount And Rebate?
Trade discount is normally given to the regular customers who are buying the products in large numbers. It can be like if you buy 100 numbers we will give you 10 numbers free or buy for Rs.1500/- and get 150/- worth free.
Discount is similar to above but will be given for Credit customers like if you pay within one week 15%, within 15 days 10% and more than 15 days no discount.
Rebate is like buy for 70/- and pay only Rs65/-.