List of important Questions for CA ARTICLESHIP BIG4 Interview

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*NOTE:
The answers to the questions mentioned below are provided in concise manner in order to
provide you with the idea of it, you are advised to give the answers in brief for each.

DIRECT TAXATION DOMAIN

QUESTIONS
1. What is the difference between direct and indirect taxes?

2. Can you explain the basic structure of the Income Tax Act, 1961?

3. What are the different heads of income under the Income Tax Act?

4. How do you differentiate between tax avoidance and tax evasion?

5. What is the concept of 'previous year' and 'assessment year' in income tax?

6. Can you explain the residential status of an individual and its impact on taxation?

7. What are the various deductions available under Chapter VI-A of the Income Tax
Act?
8. How does TDS (Tax Deducted at Source) work?

9. What is the significance of Form 26AS?

10. Can you explain the concept of Minimum Alternate Tax (MAT)?

11. What are the recent changes in the income tax laws that you're aware of?

12. How does the Dividend Distribution Tax work?

13. What is the difference between LTCG and STCG?

14. Can you explain the concept of tax audit?

15. What are the key compliance requirements for a company under the Income Tax
Act?
16. How do double taxation avoidance agreements (DTAAs) work?

17. What is the significance of Section 80C deductions?

 18. Can you explain the concept of Advance Tax?

19. What is the difference between belated return and revised return?

20. How does GST impact direct taxes?

ANSWERS

1. Direct vs Indirect taxes: Direct taxes are levied directly on income or wealth (e.g.,
income tax). Indirect taxes are levied on goods and services (e.g., GST).
2. Structure of Income Tax Act, 1961: It consists of sections, chapters, and schedules.
Key components include definitions, charging provisions, computation of income,
deductions, and procedural aspects.
3. Heads of income: Salary, Income from House Property, Profits and Gains of Business
or Profession, Capital Gains, and Income from Other Sources.
4. Tax avoidance vs Tax evasion: Tax avoidance is legal use of tax laws to minimize tax
liability. Tax evasion is illegal non-payment or underpayment of taxes.
5. Previous year and Assessment year: Previous year is the financial year in which
income is earned. Assessment year is the year following the previous year in which
income is assessed to tax.
6. Residential status: Based on the number of days an individual stays in India. It affects
the scope of income taxable in India.
7. Deductions under Chapter VI-A: Include Sections 80C, 80D, 80E, etc., allowing
deductions for investments, insurance, education loans, etc.
8. TDS: Tax deducted at source by the payer on certain specified payments at prescribed
rates.
9. Form 26AS: Annual Tax Credit Statement showing TDS, TCS, advance tax, and self-
assessment tax paid.
10. Minimum Alternate Tax (MAT): Ensures that companies paying low or no tax due to
exemptions pay a minimum amount of tax.
11. Recent changes: Depends on the current year. Examples might include changes in tax
slabs, new deductions, etc.
 12. Dividend Distribution Tax: Now abolished. Dividends are taxable in the hands of
recipients.
13. LTCG vs STCG: Long Term Capital Gains (held for more than specified period) vs
Short Term Capital Gains.
14. Tax audit: Audit of accounts of certain persons carrying on business or profession.
15. Key compliance for companies: Include filing returns, advance tax, TDS compliance,
maintenance of books of accounts.
16. DTAAs: Agreements between countries to avoid double taxation of the same income.
17. Section 80C: Allows deduction up to ₹1.5 lakh for specified investments and
expenditures.
18. Advance Tax: Tax payable in installments during the financial year in which income
is earned.
19. Belated vs Revised return: Belated return is filed after the due date. Revised return is
filed to correct mistakes in the original return.
20. GST impact on direct taxes: Affects computation of business income, input credits
can reduce taxable income.

*Remember

the interviewer might also ask situational questions or case studies related to direct
taxation. It's important to not just know the concepts but also understand their practical
applications. Be prepared to explain your thought process and approach to problem-solving
in taxation scenarios.

Also

stay updated with the latest amendments and budget proposals related to direct taxation.
Big 4 firms value candidates who show awareness of current developments in the field.

Some basic case based questions relevant for Direct Taxation Domain Interview are given
below :-

CASE BASED QUESTIONS

1. International Taxation Case: An Indian company sends its employee to the US for a 9-
month project. How would the employee's income be taxed in India and the US?
2. Capital Gains Case: Mr. A bought a house in 2005 for ₹50 lakhs. He sold it in 2023
for ₹2 crores and bought another house for ₹1.5 crores within 6 months. Calculate his
tax liability.
3. Business Income Case: A company incurred expenses for a CSR activity. Can this be
claimed as a business expense? What are the tax implications?
4. TDS Case: A company paid rent of ₹40,000 per month to an individual. What are the
TDS implications? What if the landlord is a company?
5. Residential Status Case: Mr. B, an Indian citizen, moved to Dubai on July 1, 2022, for
employment. He visited India for 30 days in December 2022. Determine his
residential status for AY 2023-24.
6. Income from Other Sources Case: Ms. C received a gift of ₹75,000 from her friend on
her birthday. Is this taxable? What if she received ₹1,00,000?
7. Clubbing of Income Case: Mr. D gifted ₹10 lakhs to his minor son. The money was
invested in a fixed deposit earning 7% interest. How will this be taxed?
8. Depreciation Case: A company purchased machinery worth ₹1 crore on October 15,
2022. Calculate the depreciation allowance for AY 2023-24.
9. Advance Tax Case: Calculate the advance tax liability and due dates for a business
with estimated tax of ₹2 lakhs for FY 2022-23.
10. Tax Audit Case: A retail business has a turnover of ₹1.5 crores for FY 2022-23. Is tax
audit applicable? What if the turnover is ₹10 crores?

For each of these cases, be prepared to:

 Identify the relevant sections of the Income Tax Act

 Explain your reasoning step-by-step
 Discuss any assumptions you're making
 Mention any recent amendments that might affect the case

ANSWERS

1. International Taxation Case:

 The employee will likely be a non-resident in India for that year.

 Income for work done in the US will be taxable in the US.
 In India, foreign income may be taxable if remitted to India.
 DTAA between India and US should be consulted for specific treatment.

2. Capital Gains Case:

 Long-term capital gain: ₹2 crores - ₹50 lakhs = ₹1.5 crores

 Exemption under Section 54: ₹1.5 crores (full amount reinvested)
 Taxable capital gain: Nil

3. Business Income Case:

 CSR expenses are not deductible as per Section 37(1).

 However, certain CSR activities may qualify for specific deductions under other
sections.

4. TDS Case:

 For individual: TDS @10% if rent exceeds ₹20,000 per month.

 For company: TDS @10% without any threshold limit.

5. Residential Status Case:

 Mr. B will be considered as Non-Resident for AY 2023-24.

 He doesn't satisfy the 182-day rule or the 60-day + 365-day rule.

6. Income from Other Sources Case:

 ₹75,000 gift is not taxable (below ₹50,000 threshold).

 ₹1,00,000 gift would be fully taxable under Section 56(2)(x).

7. Clubbing of Income Case:

 Interest income: ₹10 lakhs × 7% = ₹70,000

 This will be clubbed with Mr. D's income.
 Exemption of up to ₹1,500 is available under Section 10(32).

8. Depreciation Case:

 Eligible for 50% of normal depreciation rate as asset used for less than 180 days.
 If normal rate is 15%, depreciation allowed: ₹1 crore × 15% × 50% = ₹7.5 lakhs

9. Advance Tax Case:

 By June 15: 15% of ₹2 lakhs = ₹30,000

 By Sept 15: 45% of ₹2 lakhs = ₹90,000
 By Dec 15: 75% of ₹2 lakhs = ₹1,50,000
 By March 15: 100% of ₹2 lakhs = ₹2,00,000

10. Tax Audit Case:

  For ₹1.5 crores: Not applicable (limit is ₹1 crore for cash basis, ₹10 crores for digital
transactions)
 For ₹10 crores: Tax audit is applicable

STATUTORY AUDIT DOMAIN

Technical Questions

1. Accounting Standards and Principles:

a. Explain some of the recent changes in accounting standards.

Answer: One of the recent changes in accounting standards is the introduction

of IFRS 16, which significantly changes the accounting for leases. Under
IFRS 16, lessees are required to recognize assets and liabilities for most leases,
which was not the case under the previous IAS 17. Another example is IFRS
15 on revenue recognition, which provides a comprehensive framework for
recognizing revenue from contracts with customers.

b. How do you differentiate between IFRS and Indian GAAP?

Answer: IFRS (International Financial Reporting Standards) are international

accounting standards developed by the IASB, aimed at making global
financial reporting uniform. Indian GAAP (Generally Accepted Accounting
Principles), on the other hand, are the accounting standards used in India,
developed by the ICAI. IFRS tends to be more principle-based, focusing on
the economic substance of transactions, while Indian GAAP is more rules-
based.

2. Audit Procedures:

a. What are the steps involved in the audit planning process?

Answer: The steps involved in the audit planning process include

understanding the client's business and industry, assessing the risk of
 material misstatement, determining the materiality levels, developing
an audit strategy, preparing an audit plan, and allocating resources.

b. Can you explain the substantive testing procedures?

Answer: Substantive testing procedures are audit tests that are performed to detect
material misstatements in the financial statements. These procedures include tests of details
(e.g., vouching invoices, confirming balances) and substantive analytical procedures (e.g.,
trend analysis, ratio analysis).

3. Internal Controls:

a. How do you evaluate the effectiveness of internal controls?

Answer: Evaluating the effectiveness of internal controls involves

understanding the control environment, performing walkthroughs,
testing the design and implementation of controls, and performing tests
of controls to assess their operating effectiveness.

b. Give an example of a control procedure for accounts payable.

Answer: A common control procedure for accounts payable is the

three-way match, which involves matching the purchase order, the
receiving report, and the supplier's invoice before making a payment.
This helps ensure that payments are only made for goods and services
that were actually ordered and received.

ii. Audit Reports:

a. What are the different types of audit opinions?

Answer: The different types of audit opinions are unqualified (clean)

opinion, qualified opinion, adverse opinion, and disclaimer of opinion.
An unqualified opinion indicates that the financial statements present a
true and fair view. A qualified opinion is given when there are material
misstatements or scope limitations, but these do not pervade the
financial statements. An adverse opinion is issued when the
 misstatements are both material and pervasive. A disclaimer of opinion
is given when the auditor is unable to obtain sufficient audit evidence.

b. When would an auditor issue a qualified opinion?

Answer: An auditor would issue a qualified opinion if there are

material misstatements or if there is a scope limitation, but these issues
are not pervasive and do not affect the overall fairness of the financial
statements.

iii. Risk Assessment:

a. How do you identify and assess audit risks?

Answer: Identifying and assessing audit risks involves understanding

the entity and its environment, including internal controls, performing
analytical procedures, and conducting discussions with management
and other key personnel. Risks are then categorized into inherent risk,
control risk, and detection risk.

b. Explain the concept of materiality in audit.

Answer: Materiality in audit refers to the magnitude of an omission or

misstatement of accounting information that, in the context of
surrounding circumstances, makes it probable that the judgment of a
reasonable person relying on the information would have been changed
or influenced. It is used to determine the nature, timing, and extent of
audit procedures.

iv. Sampling Techniques:

a. What are the different sampling techniques used in auditing?

Answer: The different sampling techniques used in auditing include random
sampling, systematic sampling, haphazard sampling, block sampling, and
 judgmental sampling. Random sampling gives each item an equal chance of
being selected, while systematic sampling selects items using a fixed interval.

b. How do you determine the sample size?

Answer: The sample size is determined based on factors such as the level of
assurance required, the population size, the expected error rate, the tolerable
error rate, and the desired confidence level. Statistical and non-statistical
methods can be used to calculate the sample size.

Behavioral Questions
1. Teamwork and Collaboration:

a. Describe a situation where you had to work as part of a team.

Answer: In my previous internship, I worked on a team project to
develop a financial model for a client. Each team member was
assigned specific tasks based on their strengths. We held regular
meetings to discuss our progress and resolve any issues. My role was
to analyze market data and forecast revenue. Through effective
communication and collaboration, we successfully completed the
project on time and received positive feedback from the client.
b. How do you handle conflicts within a team?
Answer: I handle conflicts within a team by addressing the issue
directly and constructively. I listen to all perspectives, try to
understand the root cause of the conflict, and work with the team to
find a mutually acceptable solution. I believe open communication and
empathy are key to resolving conflicts.

2. Time Management:

a. Give an example of how you managed a tight deadline.

Answer: During my final year of college, I had to complete a major
research project while preparing for my exams. I created a detailed
 schedule, prioritized tasks, and allocated specific time slots for
studying and working on the project. By staying disciplined and
focused, I managed to meet both the project deadline and perform well
in my exams.
b. How do you prioritize tasks when working on multiple assignments?
Answer: I prioritize tasks based on their urgency and importance. I use
a combination of the Eisenhower Matrix and to-do lists to categorize
tasks. I focus on high-priority tasks first, break down larger tasks into
manageable steps, and set deadlines for each step to ensure timely
completion.

3. Communication Skills:

a. How do you communicate complex financial information to non-financial

stakeholders?
Answer: I communicate complex financial information to non-financial
stakeholders by simplifying the language, using visual aids like charts
and graphs, and focusing on the key points that are relevant to their
interests. I ensure that my explanations are clear and concise and
encourage questions to confirm their understanding.
b. Describe a time when you had to explain an audit finding to a client.
Answer: In a previous internship, I identified an inconsistency in the
inventory records during an audit. I explained the finding to the client
by presenting the data, highlighting the discrepancies, and suggesting
potential causes and solutions. I used straightforward language and
visual aids to ensure the client fully understood the issue and its
implications.

4. Problem-Solving:

a. Tell me about a challenging audit you worked on and how you resolved
the issues.
Answer: During an internship, I was part of an audit team for a client
with complex financial transactions and inadequate documentation. I
worked closely with my team to gather additional information,
 conducted thorough analyses, and used alternative audit procedures to
verify the transactions. We also recommended improvements to the
client's documentation process to prevent future issues.
b. How do you approach solving a problem that you have not encountered
before?
Answer: When faced with a new problem, I start by gathering all
relevant information and analyzing the situation. I then research
potential solutions, consult with colleagues or mentors if necessary,
and evaluate the pros and cons of each option. I choose the best
solution based on this analysis and monitor the outcome to ensure it
resolves the issue.

5. Adaptability:

a. How do you adapt to changes in auditing standards or procedures?

Answer: I adapt to changes in auditing standards or procedures by
staying updated with industry news, attending relevant training
sessions, and reading professional publications. I also engage in
continuous learning and seek guidance from experienced colleagues to
understand the implications of new standards and how to apply them in
practice.
b. Describe a time when you had to quickly learn something new.
Answer: During my internship, I was assigned to a project that required
knowledge of a specific software I had not used before. I quickly
learned the software by taking online courses, reading the user manual,
and practicing with sample data. Within a short period, I became
proficient in using the software and successfully completed the project.

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Greetings

MVS PRASHANT