1. What is the difference between gross income and taxable income?
Answer:
- Gross Income: Total income before any deductions (salary, rental, business income, etc.).
- Taxable Income: Gross income minus deductions under Chapter VI-A (like 80C, 80D, etc.).
2. What are the income tax slabs for individuals (FY 2024-25 under new regime)?
Answer:
- Rs.0 – Rs.3 lakh: Nil
- Rs.3 – Rs.6 lakh: 5%
- Rs.6 – Rs.9 lakh: 10%
- Rs.9 – Rs.12 lakh: 15%
- Rs.12 – Rs.15 lakh: 20%
- Above Rs.15 lakh: 30%
3. What are some common deductions available under Income Tax?
Answer:
- 80C – LIC, PPF, ELSS, NSC (up to Rs.1.5 lakh)
- 80D – Mediclaim
- 80E – Education loan interest
- 24(b) – Home loan interest (up to Rs.2 lakh for self-occupied property)
4. What is Form 16 and Form 16A?
Answer:
- Form 16 – TDS certificate for salary income
- Form 16A – TDS certificate for non-salary payments like rent, professional fees, etc.
5. What is TDS?
Answer:
TDS (Tax Deducted at Source) is a mechanism where a person (deductor) making specified payments (such as salary, interest, rent, professional fees, etc.) deducts tax at a prescribed rate before making the payment to the payee (deductee). The deducted tax is then deposited with the government.
6. What is the difference between TDS and TCS?
Answer:
|
TDS (Tax Deducted at Source) |
TCS (Tax Collected at Source) |
|
Deducted at the time of payment |
Collected at the time of sale |
|
Applicable on payments like salary, rent, interest, etc. |
Applicable on sale of specified goods like scrap, minerals, etc. |
|
Deducted by the payer |
Collected by the seller |
|
Governed by Section 192 to 196D of Income Tax Act |
Governed by Section 206C of Income Tax Act |
10. What are the due dates for depositing TDS?
Answer:
- For Government deductors: On the same day (without challan).
- For other deductors:
- Month ending March: By 30th April
- Other months: By 7th of the next month
11. What is Form 26AS?
Answer:
Form 26AS is a consolidated tax statement that shows:
- TDS deducted on your income
- TCS collected on sales
- Advance tax/self-assessment tax paid
- Details of high-value transactions
12. What is the penalty for late filing of TDS returns?
Answer:
- Rs.200 per day until the return is filed (under Section 234E).
- A penalty of Rs.10,000 to Rs.1,00,000 (under Section 271H) if not filed for more than a year or with incorrect details.
13. What is the TDS rate on rent payments under Section 194-I?
Answer:
- For individuals/HUF: 5% (if rent exceeds Rs.50,000/month)
- For others (companies/firms): 10%
14. What is the threshold limit for TDS on interest income under Section 194A?
Answer:
- For Banks/Post Office deposits: Rs.40,000 (Rs.50,000 for senior citizens)
- For Others (like bonds, loans): Rs.5,000
15. What is the difference between PAN and TAN?
Answer:
- PAN (Permanent Account Number) is used for all financial transactions and tax filings.
- TAN (Tax Deduction and Collection Account Number) is mandatory for entities deducting/collecting TDS/TCS.
16. Under which sections TDS is deducted commonly?
Answer: Some commonly used TDS sections are:
- Section 192 – Salary
- Section 194A – Interest other than interest on securities
- Section 194C – Payment to contractors
- Section 194H – Commission and brokerage
- Section 194I – Rent
- Section 194J – Professional fees
17. What is the threshold limit for TDS deduction under section 194C?
Answer:
- Single payment: Rs.30,000
- Aggregate in a financial year: Rs.1,00,000
18. When is TCS applicable on sale of goods?
Answer:
TCS is applicable on sale of specified goods like:
- Scrap (1%)
- Minerals like coal, lignite (1%)
- Motor vehicles over Rs.10 lakh (1%)
- Overseas remittances over Rs.7 lakh (5%)
19. What is the due date for filing TDS returns (Quarterly)?
Answer:
|
Quarter |
Due Date |
|
April-June |
31st July |
|
July-September |
31st October |
|
October-December |
31st January |
|
January-March |
31st May |
20. What is Section 192 related to?
Answer:
Section 192 deals with TDS on Salaries. Employers deduct TDS based on the employee’s estimated taxable income and tax slab rates.
21. What is the penalty for not deducting TDS?
Answer:
- Interest @ 1% per month from the date of deduction (or due date if not deducted).
- Disallowance of expense under Section 40(a)(ia) if TDS is not deducted/deposited.
22. What is Form 16?
Answer:
Form 16 is a TDS certificate issued by employers to employees, showing salary details and TDS deducted. It has two parts:
- Part A (TDS details from TRACES)
- Part B (Salary breakup and deductions)
23.What is the difference between TDS on rent (194-I) and TDS on rent by individuals (194-IB)?
Answer:
|
Section 194-I |
Section 194-IB |
|
Applies to all rent payers |
Applies only to individuals/HUF not covered under tax audit |
|
Threshold: Rs.2,40,000/year |
Threshold: Rs.50,000/month |
|
TDS rate: 5%/10% |
TDS rate: 5% |
24. How can a deductee claim a TDS refund?
Answer:
If excess TDS is deducted, the deductee can claim a refund by filing Income Tax Return (ITR). The refund is processed by the Income Tax Department.
25. What is TCS and who collects it?
Answer:
TCS is the tax collected by the seller from the buyer at the time of sale of specified goods such as scrap, alcohol, tendu leaves, etc. The seller is responsible for collecting and depositing it with the government.
26. What are the common rates and items under TCS?
Answer:
Examples:
- Sale of scrap – 1%
- Sale of alcohol – 1%
- Sale of motor vehicle above Rs.10 lakhs – 1%
- Foreign remittance under LRS above Rs.7 lakh – 5%
27. What is the due date for depositing TCS?
Answer: 7th of the next month from the month of collection.
28. Is PAN mandatory for TCS transactions?
Answer: Yes. If PAN is not provided by the buyer, higher TCS rates may apply (usually twice the applicable rate or 5%, whichever is higher).
29. Which form is used for filing TCS return?
Answer: Form 27EQ.
30. What is Advance Tax?
Answer: Advance Tax is the income tax paid in installments during the financial year instead of a lump sum at the year-end. It applies when the taxpayer’s estimated tax liability for the year exceeds Rs.10,000.
31. Who is liable to pay Advance Tax?
Answer:
- Individuals, freelancers, and businesses (including companies, LLPs, and sole proprietors) with an estimated tax liability of Rs.10,000 or more in a financial year.
- Senior citizens (60+ years) not having business income are exempt from paying advance tax.
32. What are the due dates for Advance Tax payments?
Answer:
|
Due Date |
Percentage Payable |
|
15th June |
15% of estimated tax |
|
15th September |
45% (cumulative) |
|
15th December |
75% (cumulative) |
|
15th March |
100% (remaining tax) |
(For companies, the last installment is due on 15th March, while for others, it’s 31st March.)
33. What happens if Advance Tax is not paid on time?
Answer:
- Interest under Section 234B (if ≥90% of tax not paid by March 31) – 1% per month.
- Interest under Section 234C (for deferment of installments) – 1% per month on the shortfall.
34. How is Advance Tax calculated?
Answer:
- Estimate total taxable income for the year.
- Calculate tax liability (including cess).
- Deduct TDS/TCS (if any).
- Pay the remaining tax in installments as per due dates.
35. Can Advance Tax be revised during the year?
Answer: Yes, if the estimated income changes, the taxpayer can adjust subsequent installments accordingly.
36. Is Advance Tax applicable for capital gains or lottery income?
Answer: Yes, if such income is received before the last installment date, advance tax should be paid in the remaining installments.
37. What is the penalty for non-payment of Advance Tax?
Answer: No separate penalty, but interest under Sections 234B & 234C is levied for late/non-payment.
38. Can a salaried employee avoid Advance Tax?
Answer: Yes, if TDS covers most of their tax liability and the remaining tax is below Rs.10,000.
39. How to pay Advance Tax online?
Answer:
- Via Challan 280 on the Income Tax Portal (https://www.incometax.gov.in).
- Select "Advance Tax (100)" under Tax Applicable.
40. What is the difference between Advance Tax and Self-Assessment Tax?
Answer:
|
Advance Tax |
Self-Assessment Tax |
|
Paid during the year in installments |
Paid after the year-end before filing ITR |
|
Based on estimated income |
Based on actual income |
41. Are NRIs required to pay Advance Tax?
Answer: Yes, if their tax liability in India exceeds Rs.10,000 (subject to DTAA benefits).
42. Can a taxpayer claim a refund if excess Advance Tax is paid?
Answer: Yes, the excess amount can be claimed as a refund while filing the Income Tax Return (ITR).
These questions test a candidate’s practical knowledge of tax compliance, due dates, and calculations, which are crucial for accounting and finance roles.
43. What is TAN? Why is it important?
Answer: TAN stands for Tax Deduction and Collection Account Number. It is a 10-digit alphanumeric number that deductees must obtain. Deductors must quote their TAN in all TDS-related documents, including challans, returns, and certificates.