Income Tax Interview Questions Asked in CA, CMA & CS Exams
Income Tax is one of the most important and scoring subjects in professional courses like CA (Chartered Accountancy), CMA (Cost and Management Accountancy), and CS (Company Secretary). Apart from written examinations, students are often tested through viva voce, interviews, and practical assessments, where conceptual clarity and application of tax provisions matter the most.
This blog covers commonly asked income tax interview questions in CA, CMA, and CS exams, along with concise explanations to help aspirants prepare effectively.
1. What is the scope of total income under the Income Tax Act?
Answer:
The scope of total income depends on the residential status of the assessee:
Resident and Ordinarily Resident (ROR): Global income is taxable
Resident but Not Ordinarily Resident (RNOR): Income received or accrued in India, and income from business controlled in India
Non-Resident (NR): Income received or accrued in India only
This concept is frequently tested in CA and CMA interviews.
2. Explain Residential Status and its importance.
Answer:
Residential status determines the taxability of income. It is determined based on the number of days an individual stays in India during the relevant previous year and preceding years. Residential status is different from citizenship and is crucial in determining taxable income.
3. What is the difference between Previous Year and Assessment Year?
Answer:
Previous Year: The year in which income is earned
Assessment Year: The year in which income is assessed and tax is paid
Example: Income earned in PY 2024–25 is assessed in AY 2025–26.
4. What are the five heads of income?
Answer:
Income under the Income Tax Act is classified into:
Income from Salary
Income from House Property
Profits and Gains from Business or Profession
Capital Gains
Income from Other Sources
This classification ensures proper computation and taxation.
5. Explain “Income from Salary”.
Answer:
Income from salary includes wages, pension, gratuity, bonus, commission, allowances, and perquisites arising from an employer-employee relationship. The existence of such a relationship is mandatory for income to be taxed under this head.
6. What is House Property Income and how is it calculated?
Answer:
Income from house property is the annual value of buildings or lands appurtenant thereto. The taxable income is calculated after deducting:
Municipal taxes
Standard deduction (30%)
Interest on borrowed capital
7. What is Capital Gain? Explain its types.
Answer:
Capital gain is the profit arising from the transfer of a capital asset. It is classified as:
Short-Term Capital Gain (STCG): Asset held for a short period
Long-Term Capital Gain (LTCG): Asset held for a longer period
Different tax rates apply to each type.
8. What is Cost Inflation Index (CII)?
Answer:
CII is used to adjust the purchase cost of long-term capital assets for inflation, thereby reducing tax liability on long-term capital gains. It reflects inflation over the years.
9. Explain deductions under Chapter VI-A.
Answer:
Deductions under Chapter VI-A reduce taxable income. Common sections include:
80C: Investments like PF, PPF, LIC
80D: Medical insurance premium
80G: Donations
80TTA: Savings account interest
These are frequently tested in CS and CMA exams.
10. What is the difference between exemption and deduction?
Answer:
Exemption: Income not included in total income (e.g., agricultural income)
Deduction: Amount reduced from gross total income (e.g., Section 80C)
11. What is Advance Tax?
Answer:
Advance tax is tax paid during the financial year in installments. It applies when tax liability exceeds ₹10,000 in a year. Non-payment attracts interest under Sections 234B and 234C.
12. Explain TDS and its objectives.
Answer:
TDS (Tax Deducted at Source) ensures regular inflow of revenue to the government and reduces tax evasion. Tax is deducted at the time of payment and deposited with the government.
13. What is Presumptive Taxation?
Answer:
Presumptive taxation simplifies tax calculation for small businesses and professionals by assuming a fixed percentage of income as profit. Sections 44AD, 44ADA, and 44AE govern presumptive taxation.
14. What is Tax Audit?
Answer:
A tax audit is the examination of books of accounts by a Chartered Accountant to ensure compliance with the Income Tax Act. It is mandatory if turnover or gross receipts exceed prescribed limits.
15. What is the New Tax Regime?
Answer:
The New Tax Regime offers lower tax slab rates but restricts most exemptions and deductions. Taxpayers can choose the regime that results in lower tax liability.
16. Explain Rebate under Section 87A.
Answer:
Section 87A provides a rebate to resident individuals with income below a specified limit, reducing or eliminating tax payable.
17. What are penalties under the Income Tax Act?
Answer:
Penalties are imposed for defaults such as non-filing of returns, concealment of income, or under-reporting. The objective is to ensure compliance.
18. Why is Income Tax important for CA, CMA & CS students?
Answer:
Income tax knowledge is essential because:
It is a core subject in professional exams
It is widely used in practice and corporate roles
It builds strong analytical and advisory skills
Conclusion
Income tax interviews in CA, CMA, and CS exams focus on conceptual understanding, practical application, and clarity of provisions. Rather than rote learning, students should concentrate on understanding the logic behind each section and its real-life application.
To strengthen this preparation, enrolling in a relevant online certification course can be highly beneficial. Such courses provide structured learning, practical case studies, real-time tax scenarios, and updated amendments, helping students bridge the gap between theory and practice.
Along with this, consistent revision, regular practice of numerical problems, mock interviews, and staying updated with the latest tax laws are key to excelling in income tax interviews and viva examinations.
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