Interview Questions.

Question 1. What Is Tax Deducted At Source?

Answer :

For short and green series of taxes, the Income-tax Law has integrated a gadget of deduction of tax on the factor of technology of earnings. This machine is referred to as as “Tax Deducted at Source”, generally called TDS. Under this gadget tax is deducted at the foundation of the profits. Tax is deducted with the aid of the payer and is remitted to the Government by using the payer on behalf of the payee. 

The provisions of deduction of tax at supply are relevant to several bills inclusive of revenue, hobby, commission, brokerage, expert costs, royalty, contract bills, etc. In respect of payments to which the TDS provisions follow, the payer has to deduct tax at source on the bills made by means of him and he has to deposit the tax deducted through him to the credit of the Government.

Question 2. Can The Payee Request The Payer Not To Deduct Tax At Source And To Pay The Amount Without Deduction Of Tax At Source?

Answer :

A payee can approach to the payer for non-deduction of tax at source however for that they have got to provide a statement in Form No. 15G/15H, as the case can be, to the payer to the impact that the tax on his predicted general income of the preceding 12 months after together with the earnings on which tax is to be deducted may be nil.

Form No. 15G is for the man or woman or a person (apart from agency or firm) and Form No. 15H is for the senior citizens.

General Accounting Interview Questions
Question 3. What Are The Consequences A Deductor Would Face If He Fails To Deduct Tds Or After Deducting The Same Fails To Deposit It To The Government’s Account?

Answer :

A deductor could face the following outcomes if he fails to deduct TDS or after deducting the equal fails to deposit it to the credit of Central Government’s account:-

a) Disallowance of expenditure

As per phase forty(a)(i) of the Income-tax Act, any sum (other than earnings) payable out of doors India or to a non-resident, that's chargeable to tax in India within the arms of the recipient, shall no longer be allowed to be deducted if it's miles paid without deduction of tax at supply or if tax is deducted but is not deposited with the Central Government till the due date of submitting of return.
However, if tax is deducted or deposited in subsequent 12 months, as the case can be, the expenditure shall be allowed as deduction in that yr.
Similarly, as consistent with segment forty(a)(ia), any sum payable to a resident, that's challenge to deduction of tax at supply, would entice 30% disallowance if it's miles paid with out deduction of tax at source or if tax is deducted however is not deposited with the Central Government till the due date of submitting of return.
However, where in admire of one of these sum, tax is deducted or deposited in subsequent yr, because the case can be, the expenditure so disallowed shall be allowed as deduction in that yr.
As in step with Section 58(1A) (as amended with effect from the assessment yr 2018-19), the provisions of segment forty(a)(ia) and 40(a)(iia) shall also apply in computing the earnings chargeable underneath the head “Income from different resources”.
B) Levy of hobby

As consistent with section 201 of the Income-tax Act, if a deductor fails to deduct tax at source or after the deducting the same fails to deposit it to the Government’s account then he will be deemed to be an assessee-in-default and liable to pay simple hobby as follows:-

at one per cent for each month or a part of a month on the amount of such tax from the date on which such tax become deductible to the date on which such tax is deducted; and
at one and one-half in keeping with cent for each month or part of a month on the quantity of such tax from the date on which such tax changed into deducted to the date on which such tax is surely paid.
C) Levy of Penalty

Penalty of an amount same to tax no longer deducted or paid might be imposed under segment 271C.

Question four. Under What Circumstances A Deductor Would Not Be Deemed As An Assessee-in-default Even After He Fails To Deduct Tds Or After Deducting The Same Fails To Deposit It To The Government’s Account?

Answer :

A deductor who fails to deduct the entire or any a part of the tax at the sum paid to a resident or at the sum credited to the account of a resident shall now not be deemed to be an assessee-in-default in respect of such tax if such resident:

has supplied his go back of profits underneath section 139;
has taken under consideration such sum for computing income in such go back of profits; and
has paid the tax due at the income declared by using him in such return of earnings,
and the deductor furnishes a certificate to this impact in Form No.26A from a chartered accountant.

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Question five. What To Do If Tax Is Deducted But The Ultimate Tax Liability Of The Payee Is Nil Or Lower Than The Amount Of Tds?

Answer :

In such a case, the payee can declare the refund of complete/excess amount of TDS (as the case may be) by filing the return of income.

Financial Management Interview Questions
Question 6. If The Payer Does Not Deduct Tax At Source, Will The Payee Face Any Adverse Consequences By Means Of Action Taken By The Income-tax Department?

Answer :

It is the obligation and duty of the payer to deduct tax at source. If the payer fails to deduct tax at source, then the payee will not should face any unfavourable outcomes. However, in one of these case, the payee will have to discharge his tax legal responsibility. Thus, failure of the payer to deduct tax at supply will no longer relieve the payee from payment of tax on his earnings.

Question 7. What Are The Duties Of The Person Deducting Tax At Source?

Answer :

Following are the basic obligations of the person that is vulnerable to deduct tax at source:

He shall obtain Tax Deduction Account Number and quote the same in all of the files concerning TDS.
He shall deduct the tax at supply at the applicable price.
He shall pay the tax deducted with the aid of him at supply to the credit of the Government (by using the due date precise in this regard*).
He shall record the periodic TDS statements, i.E., TDS return (by using the due date designated in this regard*).
He shall trouble the TDS certificate to the payee in recognize of tax deducted by using him (by means of the due date certain on this regard*).
Refer tax calendar for the due dates.
Taxation Interview Questions
Question 8. What To Do If The Tds Credit Is Not Reflected In Form 26as?

Answer :

Non-reflection of TDS credit score in Form 26AS may be due to numerous motives like non-filing of TDS assertion by using the payer, quoting incorrect PAN of the deductee in the TDS assertion filed through the payer. Thus, in case of non-reflection of TDS credit in Form 26AS, the payee has to touch the payer for ascertaining the correct reasons for non-reflection of the TDS credit in Form 26AS.

Question nine. At What Rate The Payer Will Deduct Tax If I Do Not Furnish My Permanent Account Number To Him?

Answer :

As in keeping with section 206AA, in case you do no longer grant your Permanent Account Number to the payer (i.E., deductor), then the deductor shall deduct tax at the better of the following quotes :

At the fee specified inside the applicable provision of the Act.
At the rate or charges in force, i.E., the rate prescribed within the Finance Act. 
At the charge of 20%.
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Question 10. However, The Provisions Of Section 206aa Shall Not Apply In The Following Cases?

Answer :

In respect of payment of hobby on long-term bonds to a non-resident underneath segment 194LC.

Where deductee being a non-resident or a foreign agency, shall in respect of bills inside the nature of interest, royalty, expenses for technical offerings and bills on transfer of any capital asset, supply the following info and files to the deductor, namely:
call, e mail id, touch range;
address inside the united states of america or certain territory outdoor India of which the deductee is a resident;
a certificates of his being resident in any u . S . Or special territory outdoor India from the Government of that usa or precise territory if the law of that united states or distinctive territory presents for issuance of such certificates;
Tax Identification Number of the deductee within the u . S . Or targeted territory of his residence and in case no such wide variety is to be had, then a completely unique range on the idea of which the deductee is recognized by using the Government of that country or the specified territory of which he claims to be a resident.
Question 11. I Do Not Have Pan. Can I Furnish Form 15g/15h For Non-deduction Of Tds From Interest?

Answer :

As in step with segment 206AA, a announcement in Form No. 15G or Form No. 15H is not a valid declaration, if it does now not comprise PAN of the man or woman making the announcement.

If the assertion is with out the PAN, then tax is to be deducted at better of following costs : 

At the fee special within the relevant provision of the Act.
At the rate or fees in pressure, i.E., the charge prescribed within the Finance Act. 
At the price of 20%.
VAT Interview Questions
Question 12. Would I Face Any Adverse Consequences If Instead Of Depositing Tds In The Government's Account I Use It For My Personal Needs?

Answer :

Yes, failure to remit tax deducted via me within the authorities’s account within stipulated time-restrict could attract interest, penalty and rigorous imprisonment of upto seven years.

General Accounting Interview Questions
Question thirteen. I Have Not Received Tds Certificate From The Deductor. Can I Claim Tds In My Return Of Income?

Answer :

Yes, the tax credit to your case may be reflected on your Form 26AS and, subsequently, you could take a look at Form 26AS and declare the credit score of the tax for that reason. However, the claim of TDS to be made for your return of income must be strictly as according to the TDS credit score being pondered in Form 26AS. If there's any discrepancy in the tax actually deducted and the tax credit being meditated in Form 26AS then you definately need to intimate the identical to the deductor and must reconcile the difference. The credit score granted via the Income-tax Department could be as in step with Form 26AS. 

Question 14. If I Buy Any Land/building Then Is There Any Requirement To Deduct Tax From The Sale Proceeds To Be Paid By Me To The Seller?

Answer :

Yes, Finance Act, 2013 has delivered section 194-IA which gives for deduction of tax at supply in case of fee of sale consideration of immovable assets (apart from rural agricultural land) to a resident. Section 194-IA isn't always applicable if the seller is a non-resident. Tax is to be deducted @ 1%. No tax is to be deducted if the consideration is below Rs. 50,00,000. If the sale consideration exceeds Rs. 50,00,000, then tax is to be deducted on the entire amount and not only on the quantity exceeding Rs. 50,00,000.

If the seller is a non-resident then tax is be deducted underneath section 195 and no longer underneath phase 194-IA. Thus, in case of purchase of assets from non-resident TDS provisions of section 195 will follow and now not of segment 194-IA

Question 15. What Is The Difference Between Pan And Tan?

Answer :

PAN stands for Permanent Account Number and TAN stands for Tax Deduction Account Number. TAN is to be obtained with the aid of the character responsible to deduct tax, i.E., the deductor. In all the files referring to TDS and all the correspondence with the Income-tax Department regarding TDS one has to quote his TAN. 

PAN can not be used for TAN, therefore, the deductor has to obtain TAN, even supposing he holds PAN.

However, in case of TDS on buy of land and constructing (as in step with phase 194-IA) as mentioned in preceding FAQ, the deductor isn't required to attain TAN and might use PAN for remitting the TDS.

US Taxation Interview Questions
Question 16. How Can I Know The Quantum Of Tax Deducted From My Income By The Payer?

Answer :

To realize the quantum of the tax deducted with the aid of the payer, you may ask the payer to furnish you a TDS certificates in appreciate of tax deducted with the aid of him.