Interview Questions – By CA Jatin Agarwal (Coverage-

90%-100% of your Interview questions)

S. Page
Contents Usefulness
No. No.
CV Related questions and Personality based questions 2-5
1. (Please prepare on every point mentioned in your CV). In case of all interviews.
Useful for stat audit and 6-17
2. Ind AS Related Questions Industry interviews.
Useful for stat audit and 18-19
3. Other than case study questions Industry interviews.
Useful for stat audit and 20-25
4. Case study based questions Industry interviews.
Useful for stat audit and 26-34
5. Case study based questions of top companies (like FMCG) Industry interviews.
Statutory audit related questions (including CARO and Tax Useful for stat audit 35-40
6. Audit) interviews.
Useful for Internal audit 41-42
profile and Industry
7. Internal Audit Related questions interviews.
Useful for Finance profile and 43-44
8. Finance Questions (Part -1) (CA Inter FM related questions) Industry interviews.
Useful for Finance profile and 45-46
9. Finance Questions (Part -2) (AFM questions) Industry interviews.
Used for pricing domain and 47-49
10. SCMPE and Law related questions industry interviews
For Direct tax domain & 50-56
11. Direct Tax related questions Industry interviews.
For Indirect tax domain & 57-73
12. Indirect tax related questions (GST and Customs) Industry interviews.
Current Market scenario questions (including Union Budget 74-83
13. 2024) Useful for all interviews

Hello Friends,

1. I, Jatin Agarwal, have prepared these questions based on my past interview experiences and interview
questions asked from November 2023 CA Final students.
2. These questions are specifically designed for interviews in various industries and domains, such as
management trainee, GL review, financial reporting, internal audit, direct and indirect tax work, pricing
profiles, ESG norms compliance, MD office roles, and financial planning and analysis roles. They also
cater to specific domains like statutory audit, internal audit, financial due diligence, and direct and indirect
tax compliance and advisory.
3. Please note that these interview questions are not intended for roles in equity research, core investment
banking (IB), Direct tax litigation, an certain banking-related profiles.

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 Interview Questions – By CA Jatin Agarwal (Coverage-
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CV/Personality-Based Questions (Including HR Questions)

1. Tell me something about yourself. - Separate Video.

2. They ask questions on each and every point mentioned in your CV, so please prepare thoroughly.

Please go through all your work exposure, remember your exemption subjects, and be ready to answer
questions about every extracurricular activity mentioned in your CV.

3. Apart from CA, with First Attempt/Rank – tell me something about yourself.
4. Take us through your life journey, starting from childhood and schooling to now.

I am Jatin Agarwal, born and brought up in a village near Jaipur, Rajasthan. Since my schooling days, I
have been fond of public speaking and active participation in various cultural and other events, organizing
them as well. I am the only person from my metric class who took commerce as a field and pursued CA
after my schooling. I enjoy creating content to help people and to expand my professional network (you
can write playing cricket, badminton, etc.).

Apart from this, I graduated from University Commerce College, Jaipur, and completed my articleship at
___________ in Jaipur. I was fortunate enough to clear all levels of CA on my first attempt and secure
AIR 34 in CA Foundation.

My family includes my parents, grandfather, and younger sisters (who are studying). My father is a
businessman.

5. What are your key strengths, and how have you used those skills in your life and your articleship?

My key strengths include:

1. Good analytical skills

2. Public speaking and creativity
3. Passion for learning new things
o My analytical skills have helped me gain good work exposure during articleship, stay updated
with market trends, and conduct financial analyses of companies for personal investing purposes.
o My public speaking skills have helped me build a strong professional network.
o My passion for learning new things helps me stay up-to-date and meet current demands.
6. What are your weaknesses, and how do you deal with them?

My key weaknesses are:

1. I struggle to control my emotions when I see a child working on the road, asking for alms,
and I feel grateful for the education and opportunities I have.
2. I tend to overthink problems and their solutions, but I try to mitigate this by seeking
advice from trustworthy people for better guidance.
7. Suppose I ask your principal about you; what would be the best and worst things he would say
about you?

The best thing he would say is that I am punctual and complete assignments within deadlines. The worst
thing is that sometimes I put in more effort than necessary to achieve the best results.

8. Tell me about some achievements in your life and how you achieved them. Why do you consider
them your biggest achievements? –

Please mention your own achievements.

9. Why do you want to join the profile offered by our company?

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Mention that you have a keen interest in working for the Financial Reporting profile (or any other profile
you are applying for) as it would provide good insights into the financial and non-financial aspects of the
entity, allowing you to grow professionally.

10. Why do you want to join our organization?

Link your answer to the company’s brand image, work culture (mention if seniors recommended it or if
you inquired about it on LinkedIn), employee turnover ratio, leadership position in the industry, etc.

11. Why do you want to relocate to _________ (Bangalore)? Do you have any issues with that?

Your organization has a good reputation and offers valuable learning opportunities. I have no issues with
relocating for such growth prospects.

12. Why do you not want to work in a nearby city? Why so far?

Link your answer to the company's brand value and the presence of your relatives in the city where the
company operates.

13. Do you have any issues with working late and extended hours? Have you done any such extended
hours during your articleship?

No, I don’t have issues with extended hours and have worked extended hours during my articleship.
Working extra hours when necessary provides additional knowledge.

14. What would you do to rest your mind for 5-10 minutes if you had to work continuously for 14 hours
during peak times?

To rest my mind, I talk to the people around me and my friends, which helps me relax. Additionally, I
drink water to stay hydrated.

15. How would you rate yourself in Excel on a scale of 1 to 10 (10 being the highest)?

I rate myself 7-8 out of 10 in Excel. I have done most of my work on Excel during my articleship and
have also automated ______ processes by using formulas.

16. Tell me about some of the processes that you have automated during your articleship.

Please mention your own automation work.

17. What do you describe as your biggest failure so far, and how did you deal with it?

Please mention your own failures and how you dealt with them.

18. Where do you see yourself in the future?

Describe it in two phases:

 Short-term: My objective is to understand the organization’s processes, apply my

theoretical knowledge practically, and add value to the organization and the people I work
with.
 Long-term: I aim to hold top managerial positions in the organization, leading and
guiding a team to execute assigned tasks (or you can mention your goal of starting your
own venture and providing employment to people).

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19. Since your father is in business, are you sure you won't leave the job in a year or two?

It is my decision to pursue a job after CA as I want to build a corporate career that offers a lot of practical
learning and market understanding. My family supports this decision (or you can mention that the family
business is not significant enough for you to join).

20. For girls – What are your plans for work after marriage, suppose after 2 years from now (what if
your parents arranged it?) (please don’t criticize me, it’s a factual question).

Mention your life goals of building a successful corporate career and pursuing your dreams, and that your
family supports your decisions.

21. Why not the industry, why Big 4? Why not Big 4, why the industry? Why this Big 4, not others?
Why Big 7 and not Big 4?

For industry preference: I want to build my career in the corporate sector, and that's why I haven't
applied for any job in Big 4s. Corporates appeal to me in terms of work environment and work-life
balance.

For Big 4 over industry: I want comprehensive work exposure, and Big 4 provides overall development
in terms of work experience, personality, handling work pressure, and enhancing my learning.

For choosing one Big 4 over others: Mention that you want to join one, and you have received a call
only from this particular Big 4. Or, mention specific details about that Big 4 from its website.

For Big 7 over Big 4: Mention the work profile you are getting and favorable details from the website of
that firm.

22. How are you? How are you feeling after 2 rounds of interviews (this was asked in the final round of
the interview)?

I am fine, sir. All the rounds so far have gone well, and I am feeling good to have reached this stage of the
interview process. I am hopeful for the best ahead.

23. Why a job, why not practice?

I want to build a corporate career, and as a fresher, I believe a job will provide more learning
opportunities.

24. Why should we hire you and not others?

I have strong theoretical knowledge and practical exposure from my articleship, good analytical skills, and
a commitment to adding value to any organization I am associated with. That's why you should hire me.

25. Any questions from your side?

Prepare questions from the annual report of the company, ask about extra skills you should acquire to
apply your knowledge best in the future, or inquire about the approach to reach top managerial positions
in the enterprise.

26. Are you a team player or team leader?

I describe myself as both. I was a junior article following seniors' instructions and working in a team.
Also, I have worked as a senior, giving instructions, handling the team, and ensuring work completion.

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27. Have you filed a campus form? If yes, why are you applying here?

Filing a campus form does not guarantee offers from good companies like yours. Moreover, I want to
work for the profile offered by your company, hence my application here.

28. They may ask, if you get selected in our company, would you sit in the campus?

Mention that you would not sit in the campus if you receive a good opportunity from their company
(mention this if the company is reputable; otherwise, refer to the point in Q27).

29. After campus shortlisting – Where were you shortlisted in the campus?

I got shortlisted by some small companies. Mention the names of one or two small companies only.

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Ind AS Related Questions:

Basic:

1. What is the formula for Net Worth Calculation?

Total Assets – Total Liabilities

2. What are the carve-outs in Ind AS from IFRS?

5 carve outs- please prepare from CA Final Books

3. Ind AS, once applicable, is applicable forever (SME listed companies are not required to follow Ind
AS).
4. 3 basic assumptions of accounting – a. Going concern b. Accrual c. Consistency.
5. What is the definition of Current Assets/Current Liabilities?

Current Assets

According to Ind AS 1 "Presentation of Financial Statements," an asset shall be classified as current

when it satisfies any of the following criteria:

1. It is expected to be realized, or is intended to be sold or consumed, in the entity’s normal

operating cycle.
2. It is held primarily for the purpose of trading.
3. It is expected to be realized within twelve months after the reporting period.
4. It is cash or a cash equivalent unless it is restricted from being exchanged or used to settle a
liability for at least twelve months after the reporting period.

Current Liabilities

According to Ind AS 1 "Presentation of Financial Statements," a liability shall be classified as current

when it satisfies any of the following criteria:

1. It is expected to be settled in the entity’s normal operating cycle.

2. It is held primarily for the purpose of trading.
3. It is due to be settled within twelve months after the reporting period.
4. The entity does not have an unconditional right to defer settlement of the liability for at least
twelve months after the reporting period.

Ind AS 2 (Inventories):

1. Definition of Inventories? Inventories are measured on an item-by-item basis.

Under Ind AS 2 "Inventories," inventories are defined as assets that are:

1. Held for sale in the ordinary course of business,

2. In the process of production for such sale, or
3. In the form of materials or supplies to be consumed in the production process or in the
rendering of services.

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2. Items not included in the cost of inventories: Abnormal loss, storage cost (unless necessary), admin
cost, selling cost, cash discount, interest cost (other than allowed by Ind AS 23).
3. Weighted average cost formula: (opening cost + purchase cost) / (opening units + purchase units).

Ind AS 7 (Cash Flow):

1. Difference between operating, investing, and financing cash flows.

o Operating Cash Flows: Relate to the day-to-day operations and core business activities.
o Investing Cash Flows: Relate to the acquisition and disposal of long-term assets and
investments.
o Financing Cash Flows: Relate to changes in the equity and borrowings of the entity.
2. Identify which cash flow:
o Fire insurance claim received (Operating)
o Dividend received (Investing)
o Income tax paid on above dividend (Investing)
o Dividend/Interest Paid (Financing).

Accounting Policies:

1. Ind AS does not allow the LIFO method for inventory valuation.
2. Valuation of PPE and Intangible Assets - Cost or revaluation method (both are allowed).
3. Change in accounting estimate is accounted for prospectively, while a change in policy is accounted
for retrospectively. Learn its examples.

Change in Policy: Change in method of inventory valuation, Adoption of new accounting standard,
Change in depreciation method.

Change in Estimate: Change in useful life of an asset, change in allowance for doubtful debts,
Revision of warranty obligations.

Ind AS 12 (Income Taxes):

1. Learn when DTA/DTL is created (Concept of deductible and taxable temporary differences * Tax
rate).

A DTL arises when taxable temporary differences exist. These differences will result in taxable
amounts in the future when the carrying amount of the asset or liability is recovered or settled.

A DTA arises when deductible temporary differences exist. These differences will result in deductible
amounts in the future when the carrying amount of the asset or liability is recovered or settled.

2. On ROU Asset - DTA/DTL on Net of ROU and Lease Liability.

Ind AS 16 (Property, Plant, and Equipment):

1. PPE definition. Treatment of Land and Building as PPE and Investment Property.

Under Ind AS 16 "Property, Plant and Equipment," Property, Plant, and Equipment (PPE) are defined
as tangible items that:

1. Are held for use in the production or supply of goods or services, for rental to others, or for
administrative purposes.
2. Are expected to be used during more than one period

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Land and buildings are classified as PPE under Ind AS 16 "Property, Plant and Equipment" when they
are:

1. Held for Use: In the production or supply of goods or services, for rental to others (as part of
the entity’s ordinary activities), or for administrative purposes.
2. Expected to Be Used: During more than one period.

Land and buildings are classified as Investment Property under Ind AS 40 "Investment Property"
when they are:

1. Held to Earn Rentals: Primarily for earning rentals.

2. Held for Capital Appreciation: Primarily for capital appreciation.
3. Not Used in Production or Supply: Not used in the production or supply of goods or
services or for administrative purposes.

2. Items not included in the cost of PPE. Treatment of Income from incidental activities at the time
of construction of PPE.

Not included in cost of PPE:

General administrative overheads.

Cost of abnormal waste.
Initial estimates of dismantling and removal costs (if not recognized as a provision).
Cost of introducing new products or services.
Costs of opening a new facility.
Costs of obtaining permits.
Costs of fitting out or altering premises.
Repairs and maintenance costs.

Income from incidental activities (e.g., rental income from leasing out part of the property during
construction or proceeds from the sale of scrap) should be deducted from the cost of the PPE being
constructed.

3. Concept of component accounting.

Component accounting ensures that the cost and depreciation of each significant part of an asset are
accounted for separately, which provides a more accurate reflection of the asset's consumption and
financial performance over time.

Ind AS 21 (The Effect of Changes in Forex Rates):

1. Definition and examples of Monetary and Non-monetary items and their treatment as on the
Balance Sheet date.

Monetary Items

Definition: Monetary items are assets or liabilities that have a fixed or determinable amount of
money. Their value in terms of currency does not change over time due to changes in price levels.
These items are receivable or payable in cash and include elements where the amount is known and
stated in specific monetary terms.

Examples: Cash and Cash Equivalents, Accounts Receivable, Loans and Advances, Accounts
Payable

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Treatment as of the Balance Sheet Date: Monetary items are generally reported at their current
value (i.e., face value) on the balance sheet. For foreign currency monetary items, they are revalued
based on the exchange rate on the balance sheet date. Any resulting gains or losses are recognized in
the income statement.

Non-Monetary Items

Definition: Non-monetary items are assets and liabilities that do not have a fixed or determinable
amount of money. Their value may change over time due to fluctuations in market conditions,
inflation, or deflation. These items are not directly related to cash flows in terms of their
measurement.

Examples: Property, Plant, and Equipment (PPE), Inventory, Intangible Assets, Prepaid Expenses,
Equity Investments

Treatment as of the Balance Sheet Date: Non-monetary items are generally measured at historical
cost, fair value, or carrying amount, depending on the nature of the item and applicable accounting
standards.

2. In CFS, exchange gain/loss on intra-group transactions will not be eliminated as the group has
real exposure to foreign currency.

Ind AS 23 (Borrowing Cost):

 When can the borrowing cost be capitalized?

According to this standard, borrowing costs that are directly attributable to the acquisition,
construction, or production of a qualifying asset are to be capitalized as part of the cost of that asset. A
qualifying asset is one that necessarily takes a substantial period of time to get ready for its intended
use or sale.

Ind AS 24 (Related Party):

1. Two disclosures: Name and Relationship, Transactions.

Ind AS 33 (EPS):

1. OCI profit is not considered as part of EPS.

Ind AS 36 (Impairment of Assets):

1. Applicable to PPE, Intangible Assets, Investment Property, and Goodwill acquired in Business
Combinations.
2. An asset is said to be impaired when its Carrying Amount > Recoverable Amount (the difference is a
loss).
3. When does impairment testing need to be done?
1. Intangible Assets not amortised (Goodwill acquired in business combination) – Annual.
2. Others – If there are indicators that assets are impaired.
4. Calculation of Recoverable Amount

Higher of :

1. Fair Value less Cost to Sell (price to be receive on sell – selling cost)
2. Value in Use (PV of future cash flows expected to derive from CGU).
5. What is a cash-generating unit? Explain with an example for a large client in your CV.
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CGU is the smallest identifiable group of assets that generates cash inflows from continuing use that
are largely independent of the cash inflows from other assets or groups of assets.

Example- Retail Chain:

Each retail store in the chain is a CGU if:

o It generates its own cash inflows.

o The store’s performance is monitored independently.
o Closing or selling one store does not affect the cash inflows of other stores.

6. Check how impairment testing is done for the clients and sectors mentioned in your CV.

Ind AS 37 (Provisions, Contingent Liabilities, and Contingent Assets):

1. Definition of liability, provisions, and contingent liability with examples.

1. Liability: A liability is a present obligation of the entity arising from past events, the settlement of
which is expected to result in an outflow of resources embodying economic benefits (such as cash,
goods, or services).

Examples: Trade Payables, Loans Payable, Accrued Expenses.

2. Provisions: A provision is a liability of uncertain timing or amount. Provisions are recognized

when:

 An entity has a present obligation (legal or constructive) as a result of a past event.

 It is probable (more likely than not) that an outflow of resources embodying economic
benefits will be required to settle the obligation.
 A reliable estimate can be made of the amount of the obligation.

Examples: Warranty Provisions, Restructuring Provisions, Environmental Provisions

3. Contingent Liability: A contingent liability is a possible obligation that arises from past events
and whose existence will be confirmed only by the occurrence or non-occurrence of one or more
uncertain future events not wholly within the control of the entity. Alternatively, it can be a present
obligation that arises from past events but is not recognized because:

 It is not probable that an outflow of resources embodying economic benefits will be required
to settle the obligation.
 The amount of the obligation cannot be measured with sufficient reliability.

Examples: Legal Disputes, Guarantees.

2. At the closing period, is a TDS liability provision also made along with the expenses provisions?

Yes, because TDS represents obligation to remit withheld taxes to the government.

Ind AS 38 (Intangible Assets):

1. Internally generated intangible assets: When does capitalization start (concept of research phase
and development phase)?

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Costs incurred during the research phase are expensed immediately due to the uncertainty of future
economic benefits.

In contrast, costs incurred during the development phase can be capitalized as intangible assets,
provided that the entity can demonstrate the feasibility, intention, and ability to complete and use
or sell the asset, the asset's potential to generate future economic benefits, the availability of
resources, and reliable measurement of costs.

2. Methods of charging depreciation on this – 1. SLM 2. WDV 3. Unit of Production Method.

Ind AS 40 (Investment Property):

1. Its definition.

Investment Property is defined under Ind AS 40 - Investment Property as property (land or a

building—or part of a building—or both) held (by the owner or by the lessee under a finance lease) to
earn rentals or for capital appreciation, or both, rather than for:

1. Use in the production or supply of goods or services or for administrative purposes; or

2. Sale in the ordinary course of business.

2. Its subsequent recognition is at the cost model only.

Ind AS 110 (Consolidation):

1. <20% - Normal Investment, >=20% and up to 50% - Associate, >50% - Subsidiary.

2. On Balance Sheet date, goodwill is taken at (cost - Impairment loss).

Ind AS 32, 107, 109:

1. Meaning of Financial Instrument, Financial Asset, Financial Liability, and Equity Instrument along
with examples.

1. Financial Instrument

Definition: A financial instrument is any contract that gives rise to a financial asset of one entity and
a financial liability or equity instrument of another entity.

2. Financial Asset

Definition: A financial asset is any asset that is:

1. Cash
2. An equity instrument of another entity
3. A contractual right:
o To receive cash or another financial asset from another entity
o To exchange financial assets or financial liabilities with another entity under
conditions that are potentially favorable to the entity
4. A contract that will or may be settled in the entity’s own equity instruments and is:
o A non-derivative for which the entity is or may be obliged to receive a variable
number of the entity’s own equity instruments
o A derivative that will or may be settled other than by the exchange of a fixed amount
of cash or another financial asset for a fixed number of the entity’s own equity
instruments

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Examples: Cash, Trade receivables, Loans receivable, Investments in equity instruments of another
entity (e.g., shares of stock)

3. Financial Liability

Definition: A financial liability is any liability that is:

1. A contractual obligation:
o To deliver cash or another financial asset to another entity
o To exchange financial assets or financial liabilities with another entity under
conditions that are potentially unfavorable to the entity
2. A contract that will or may be settled in the entity’s own equity instruments and is:
o A non-derivative for which the entity is or may be obliged to deliver a variable
number of the entity’s own equity instruments
o A derivative that will or may be settled other than by the exchange of a fixed amount
of cash or another financial asset for a fixed number of the entity’s own equity
instruments

Examples: Trade payables, Loans payable, Bonds issued, Derivative liabilities (e.g., options, forward
contracts), Lease liabilities (under finance leases)

4. Equity Instrument

Definition: An equity instrument is any contract that evidences a residual interest in the assets of an
entity after deducting all of its liabilities.

Examples: Ordinary shares (common stock), Preference shares (preference stock) if they are not
redeemable or if they are redeemable only at the issuer's option, Warrants or options to acquire a fixed
number of the entity’s own equity instruments in exchange for a fixed amount of any currency.

2. Methods of Recognition of Financial Asset and Liability along with examples.

 Initial Recognition:

 Financial assets and liabilities are recognized when the entity becomes a party to the
contractual provisions.

 Initial Measurement:

 Financial Assets: At fair value plus transaction costs, unless at FVTPL.

 Financial Liabilities: At fair value minus transaction costs, unless at FVTPL.

 Subsequent Measurement of Financial Assets:

 Amortized Cost: For assets held to collect contractual cash flows (e.g., trade receivables).
 FVTOCI: For assets held to collect cash flows and sell (e.g., certain debt instruments).
 FVTPL: For assets not meeting criteria for amortized cost or FVTOCI (e.g., equity
investments held for trading).

 Subsequent Measurement of Financial Liabilities:

 Amortized Cost: For most financial liabilities (e.g., trade payables, bank loans).
 FVTPL: For liabilities held for trading or designated as FVTPL (e.g., derivative liabilities).

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3. Method of impairment calculation on financial assets.

Measurement of Expected Credit Losses (ECL)

ECL is measured using one of the following approaches depending on the classification of the
financial asset:

 General Approach: Applied to most financial assets.

 Simplified Approach: Applied to trade receivables, contract assets, and lease receivables
without tracking changes in credit risk.

a. General Approach

Stage 1:

 12-month ECL: If the credit risk has not increased significantly since initial recognition,
ECL is based on the probability of default (PD) within the next 12 months.

Stage 2:

 Lifetime ECL: If the credit risk has increased significantly but is not credit-impaired, ECL is
based on the probability of default over the remaining life of the asset.

Stage 3:

 Lifetime ECL: If the asset is credit-impaired, ECL is based on the probability of default over
the remaining life of the asset, and interest revenue is calculated on the net carrying amount
(i.e., gross carrying amount less ECL allowance).

b. Simplified Approach

 Lifetime ECL: For trade receivables, contract assets, and lease receivables, a lifetime ECL is
recognized without tracking changes in credit risk.

4. For IB firms' interviews: Treatment of Derivative Financial Assets/Liabilities, Hedge Accounting, and
Embedded Derivative portion

From CA Ajay Agarwal notes.

Ind AS 111:

Difference between Joint Venture and Joint Operation.

Summary of Differences:

Aspect Joint Venture Joint Operation

Legal Structure Typically involves a separate legal entity Often does not involve a separate legal entity
Rights and Rights to the net assets of the arrangement Rights to assets and obligations for liabilities
Obligations
Accounting Method Equity method (Ind AS 28) Proportionate consolidation
Examples Formation of a new company for a specific Jointly operating a resource without a new
project entity

Ind AS 113 (Fair Value Measurement):

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1. Level 1 – Quoted Market Price of asset/liability
2. Level 2 – Market Price of similar asset/liability with adjustment.
3. Level 3 – Present Value of forecasted future cash flows.

Ind AS 115 (Revenue from Contracts with Customers):

1. Revenue 5-step model (with practical examples).

Ind AS 115 - Revenue from Contracts with Customers provides a comprehensive framework for
recognizing revenue. The standard introduces a 5-step model for revenue recognition:

1. Identify the Contract with the Customer

2. Identify the Performance Obligations in the Contract
3. Determine the Transaction Price
4. Allocate the Transaction Price to the Performance Obligations
5. Recognize Revenue When (or As) the Entity Satisfies a Performance Obligation

Example – Take any example from CA Final FR

2. Determination of Transaction Price (Fixed and Variable Consideration – its 2 methods – along with
examples).

Determination of Transaction Price

The transaction price is the amount of consideration an entity expects to be entitled to in exchange for
transferring promised goods or services to a customer. It includes both fixed and variable consideration.

Fixed Consideration

Definition: Fixed consideration is the part of the transaction price that is specified in the contract and is not
subject to change.

Example: A company enters into a contract to sell 100 units of a product at ₹500 per unit. The total fixed
consideration is ₹50,000 (100 units * ₹500).

Variable Consideration

Definition: Variable consideration is the part of the transaction price that depends on the outcome of future
events. Variable consideration can arise due to discounts, rebates, refunds, credits, price concessions,
incentives, performance bonuses, penalties, and other similar items.

Methods for Estimating Variable Consideration:

1. Expected Value Method - The expected value method estimates the transaction price based on the
sum of probability-weighted amounts in a range of possible outcomes. This method is suitable when
there are a large number of similar contracts.
2. Most Likely Amount Method - The most likely amount method estimates the transaction price based
on the single most likely amount in a range of possible outcomes. This method is suitable when there
are only two possible outcomes.

3. Revenue recognition in case the customer has made advance payment (concept of significant financing
component).

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 When a customer makes an advance payment, the entity recognizes a liability for the amount received.
This liability is typically called a "contract liability" or "deferred revenue."
 Revenue is recognized when the entity fulfills its performance obligations by transferring goods or
services to the customer.
 A significant financing component exists if the timing of payments agreed upon by the parties provides
the customer or the entity with a significant benefit of financing the transfer of goods or services. This can
occur if the timing of payments differs significantly from the timing of the transfer of goods or services.

4. Cases where a significant financing component is not adjusted from the transaction price.

Cases Where Significant Financing Component is Not Adjusted

1. Payment Made for Reasons Other Than Financing:

o If the timing of the payment is for reasons other than providing financing to either the
customer or the entity, such as to secure a performance obligation or to cover unexpected
risks, a significant financing component is not adjusted.
2. Short Time Period Between Transfer and Payment:
o If the time period between the transfer of goods or services and the payment is one year or
less, the entity does not need to adjust for a significant financing component.
3. Payment Terms Are at the Discretion of the Customer:
o If the customer can choose when to pay, and this choice does not result in a significant
financing benefit to the customer or the entity, no adjustment is necessary.
4. Non-cash Consideration:
o If the consideration is in the form of non-cash assets, such as barter transactions, and there is
no significant financing component involved, an adjustment is not required.
5. Advance Payments with Immaterial Financing Component:
o If the effect of the time value of money is immaterial, the entity does not need to adjust for
the financing component. This often applies to advance payments where the period between
the payment and the transfer of goods or services is short.

5. Revenue recognition principle followed by the entity (for which you are giving interview)

2 things:

1. Various types of revenue and its accounting

2. Whether revenue is recognized at a point in time or over a period of time.
6. Methods to measure progress of revenue in case revenue is recognized over a period of time – (Input
and Output method).

Input Method

The Input Method measures progress based on the entity's efforts or inputs towards fulfilling the performance
obligation relative to the total expected inputs needed to satisfy the performance obligation. This method
considers resources consumed, labor hours expended, costs incurred, time elapsed, or machine hours used.

Output Method

The Output Method measures progress based on direct measurements of the value transferred to the customer
to date relative to the remaining goods or services promised under the contract. This method considers
milestones reached, units produced or delivered, appraisals of results achieved, or surveys of work performed.

7. Accounting in case of sale with the right to return (2 entries) and warranties.

Please do it from your CA Final Books

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Ind AS 116 (Leases):

1. Concept of Inception of Lease and Commencement of Lease.

Inception of Lease

The inception of a lease is the earlier of the date of the lease agreement and the date of commitment by the
parties to the principal terms and conditions of the lease.

Key Points:

 The inception of the lease marks the point when the parties agree on the fundamental terms and
conditions.
 At this point, the lease classification (operating or finance lease) and the initial measurement of
lease liabilities and right-of-use assets are determined.

Commencement of Lease

Definition: The commencement of a lease is the date on which the lessor makes an underlying asset
available for use by the lessee.

Key Points:

 The commencement date is when the lessee starts to recognize lease liabilities and right-of-use
assets on the balance sheet.
 Lease payments begin from this date.
 The lease term starts on this date, impacting the calculation of lease liabilities and right-of-use
assets.

2. Purpose of lease accounting. What is the overall impact?

Purpose of lease accounting - Lease accounting serves a critical role in ensuring that financial statements
accurately and transparently reflect the economic impact of leasing activities. By recognizing lease-related
assets and liabilities, enhancing comparability, ensuring regulatory compliance, and aiding in decision-
making, lease accounting supports the broader goals of financial reporting and business management.

Overall Impact - (Total lease rentals over the lease term = Total depreciation expense + Total interest
expense), (these may differ during the lease term, but are the same over the total lease term).

3. Finance Lease accounting from the Lessor and Lessee perspective.

Please do it from CA Final study material.

4. If you want any asset not to be considered a lease, then tell me the options (2 exceptions of lease
recognition).
a. Short term leases (Term of 12 months or less)
b. Lease of low value assets. (There is no specific monetary threshold defined in the standard).
5. Meaning of lease term. Which discount rate is used for lease accounting?

Lease Term: The lease term is defined as the non-cancellable period for which a lessee has the right to use an
underlying asset, together with both:

1. Periods covered by an option to extend the lease if the lessee is reasonably certain to exercise that
option; and

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2. Periods covered by an option to terminate the lease if the lessee is reasonably certain not to
exercise that option.

Discount Rate Used for Lease Accounting

The discount rate is used to calculate the present value of lease payments and to measure lease liabilities
and right-of-use assets. The discount rate can be determined using the following methods:

1. Interest Rate Implicit in the Lease: (Fair value of LP + UGRV = FV of asset + Any initial
direct cost by lessor).
2. Lessee’s Incremental Borrowing Rate: (The rate of interest that a lessee would have to pay to
borrow over a similar term, and with similar security, the funds necessary to obtain an asset of
similar value to the right-of-use asset in a similar economic environment.)

6. Types of leases as per Ind AS 116 –

1. Finance lease.
2. Operating lease (2 exceptions – directly charge to P&L).

General:

1. Characteristics of Good Financial Statements

True and Fair view, Relevance, Understandability, Consistency, etc.

2. What do you think can be the role of AI in our organization for optimizing processes? (company-
specific questions).

General answer + Link with the company

3. Tell me about some cases in which you have optimized any processes.

Tell processes from your perspective (also covered in basic questions)

4. Tell me your major audit findings and how you found and dealt with them.

Tell processes from your perspective (also covered in basic questions)

5. What do you think should be considered for measuring the performance of an entity?

Tell both financial and non-financial factors (Financials + ESG)

6. Tell me about some new changes that can be brought in the applicability of Ind AS.

Ind AS can be prescribed for banks & insurance companies

7. Tell me about instances when you have received appreciation from your principal.

Tell from your perspective

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Other than Case Study Questions (Answers to be given based on your CV and Articleship exposure):

1. Read the examples of matters reportable under key audit matters in the audit report.

a. Revenue Recognition:

The complexity and subjectivity involved in recognizing revenue for long-term contracts or projects,
especially when involving significant estimates or judgments about completion and cost to complete.

b. Valuation of Financial Instruments:

The complexity and judgment involved in the fair valuation of financial instruments, particularly for those
not traded in active markets and those involving significant assumptions and inputs.

c. Impairment of Goodwill and Intangible Assets:

The significant judgments and estimates involved in testing goodwill and intangible assets for impairment,
including assumptions about future cash flows, discount rates, and growth rates.

d. Provisions and Contingent Liabilities:

The estimation uncertainty and judgment involved in determining provisions and assessing contingent
liabilities, such as legal disputes or environmental obligations.

e. Valuation of Inventories:

The complexity and judgment involved in assessing the net realizable value of inventories, especially for
slow-moving or obsolete stock and the assumptions used in determining these values.

f. Taxation:

The judgment involved in accounting for uncertain tax positions and the estimation of provisions for tax
liabilities, including transfer pricing issues and the recognition of deferred tax assets.

2. Name any AI software you have used during the audit and what are your key learnings from that.

Name any software which you have used and key learnings can be as follows:

a. Enhanced Data Analysis:

AI software significantly improves the ability to analyze large volumes of data quickly and accurately. It
can process transactions and identify unusual patterns or outliers that might indicate potential risks or
errors.

b. Risk Assessment:

The AI software helps in better risk assessment by analyzing historical data and identifying trends or
anomalies. This allows for a more targeted and efficient audit approach, focusing on high-risk areas.

c. Improved Efficiency:

Using AI tools reduces the time required for manual data analysis, allowing auditors to focus more on
strategic and judgmental aspects of the audit. This increases overall audit efficiency and effectiveness.

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d. Accuracy and Consistency:

AI algorithms provide consistent analysis and reduce the risk of human error in data interpretation. This
leads to more accurate audit outcomes and reliable financial reporting.

e. Real-Time Insights:

AI software can provide real-time insights and continuous monitoring of financial data. This helps in
identifying issues promptly and allows for timely interventions and corrections.

3. Mention any 2 key observations identified by you during your audit, and how you dealt with them.

Mention your own key audit observation, and if you don’t have any make the same with help of your friends.

4. What do you think is the biggest achievement you have achieved during your articleship and how were
you rewarded for it?

My biggest achievement during my articleship is being the speaker of various YouTube classes and taking
active participation in the same. I have been awarded with the Bag as award.

5. Mention any 2 areas under which you have consulted the client for any value addition in their work and
what was its impact on that entity.
a. I have consulted the client for GST on sale made with E-Commerce Operator.
b. I have consulted the client on the methods of measuring the financial instruments.
6. What sectors have you audited? Mention KPIs for measuring performance in those sectors.

You can search KPIs for the sectors you have audited on Google or Chatgpt.

7. Tell me about any major decision of your client (any one) that took their business to great heights.

One of my client was cloth sale via its own stores only. But its major decision regarding selling products
through display and sell its goods in other brand stores (having a tie up with them) and selling goods via its
own website have doubled its revenue during the year.

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Case Study Based Questions:

1. Audit Planning and Team Assignment:

Suppose you are the head of an audit for a company with a team of 10 people. What would be your
approach to the work? How would you start the audit, assign the team to various areas, and what
would those areas be? (You need to complete the audit in 20 days).

As the head of an audit for a company with a team of 10 people, my approach would involve meticulous
planning, clear communication, and efficient resource allocation. Here's a structured approach:

1. Pre-Audit Planning

 Understand the Scope and Objectives: Meet with senior management to understand the audit's
scope, objectives, and any specific concerns.
 Gather Background Information: Review previous audit reports, financial statements, internal
control documentation, and industry standards.
 Risk Assessment: Identify high-risk areas through analytical procedures and discussions with key
stakeholders.

2. Audit Strategy and Planning

 Develop Audit Plan: Outline the audit objectives, scope, timelines, and resources required. This plan
will be the blueprint for the audit.
 Team Meeting: Hold an initial team meeting to discuss the audit plan, assign roles, and set
expectations.

3. Team Assignment

 Risk and Materiality Assessment: Assign team members to high-risk and material areas based on
their experience and expertise.
 Areas of Assignment: Typical areas and corresponding assignments might include:
o Cash and Bank Reconciliations: 1-2 auditors
o Accounts Receivable and Revenue: 1-2 auditors
o Inventory and Cost of Goods Sold: 2 auditors
o Fixed Assets: 1 auditor
o Accounts Payable and Expenses: 1-2 auditors
o Payroll: 1 auditor
o Financial Reporting and Compliance: 1-2 auditors
 Resource Allocation: Ensure a balance between workload and audit complexity.

4. Execution of the Audit

 Kick-off Meeting: Conduct a meeting with the auditee to explain the audit process, timeline, and
requirements.
 Fieldwork: Team members execute their assigned tasks, gather evidence, and document findings.
Regular check-ins ensure alignment and address any issues promptly.
 Review: Conduct ongoing reviews of team members' work to ensure quality and consistency.

5. Communication

 Status Updates: Regularly update senior management and the auditee on progress, findings, and any
emerging issues.
 Team Debriefs: Hold daily or weekly debriefs with the audit team to discuss progress, challenges,
and insights.
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6. Issue Identification and Resolution

 Identify Issues: Team members document findings, discrepancies, and control weaknesses.
 Discuss with Management: Engage with the auditee’s management to discuss findings and obtain
their perspective.
 Develop Recommendations: Formulate practical and actionable recommendations to address
identified issues.

7. Reporting

 Draft Report: Compile a draft audit report summarizing the findings, recommendations, and
management’s responses.
 Review and Finalize: Review the draft report with senior management and the audit team to ensure
accuracy and completeness.
 Exit Meeting: Conduct an exit meeting with the auditee to discuss the final report and agree on action
plans.

8. Follow-Up

 Action Plan Monitoring: Follow up on the implementation of audit recommendations to ensure

corrective actions are taken.
 Continuous Improvement: Reflect on the audit process, gather feedback from the team and the
auditee, and identify areas for improvement for future audits.

2. Fraud Discovery and Managerial Denial:

Suppose while auditing a company, you discover a fraud, but your manager denies informing the
partner. What would be your course of action in this matter?

Discovering fraud during an audit is a serious matter that requires careful handling, especially if your
immediate superior is reluctant to inform higher authorities. Here’s how I would approach the situation:

1. Document the Findings

 Detailed Documentation: Record all evidence related to the fraud meticulously, including dates,
times, involved parties, and the nature of the fraudulent activities.
 Preserve Evidence: Ensure all physical and digital evidence is securely stored to prevent tampering
or loss.

2. Understand the Professional and Legal Obligations

 Review Standards: Familiarize myself with relevant auditing standards, ethical guidelines, and legal
requirements regarding fraud reporting (e.g., International Standards on Auditing, local laws, and the
company's policies).
 Consult the Code of Ethics: Refer to the professional code of ethics for Chartered Accountants,
which typically emphasizes the duty to act in the public interest and report fraudulent activities.

3. Internal Escalation

 Discuss with Manager: Initially, try to understand the manager's reasons for not wanting to inform
the partner and reiterate the importance of reporting the fraud for legal and ethical compliance.
 Escalate Internally: If the manager remains uncooperative, escalate the issue to a higher level within
the audit firm, such as the partner or the firm's ethics committee. Follow the firm's internal escalation
procedures.

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4. Seek External Guidance

 Consult with Professional Body: Seek advice from the professional accounting body or legal
counsel to understand further steps and protect myself from any potential repercussions.
 Confidentiality Concerns: Ensure that any external consultation does not breach client
confidentiality unless explicitly required by law.

5. Whistleblowing

 Use Whistleblowing Channels: If internal escalation does not lead to action, utilize the
whistleblowing channels available within the organization or externally. Most firms have procedures
to protect whistleblowers and ensure anonymity.

6. Legal Obligations

 Compliance with Laws: Ensure that all actions comply with legal obligations related to fraud
reporting. In some jurisdictions, auditors may be legally required to report fraud to regulatory
authorities.

7. Protect Yourself

 Document Actions: Keep a detailed record of all actions taken, conversations held, and advice
received during the process to protect myself from potential backlash.
 Seek Legal Protection: If necessary, seek legal protection to safeguard my career and personal well-
being.

3. Disagreement on Accounting Treatment:

Suppose you are employed in our organization, and you realize that a previously accepted accounting
treatment is wrong. However, your manager disagrees with you despite the evidence. What would you do in
this situation?

Similar as above Q2 Answer

4. Analyzing High Valuation Despite Negative Profits:

Suppose you are analyzing the financial statements of a company with long-term negative profits but a
very high valuation. What is the first point that comes to your mind? (Hint: It might be a startup
company).

When analyzing the financial statements of a company with long-term negative profits but a very high
valuation, the first point that comes to my mind is the potential disconnect between the company's financial
performance and market expectations. This situation raises several key considerations:

1. Growth Potential and Future Profitability

 Market Expectations: The high valuation suggests that investors have strong expectations for future
growth and profitability. They may believe that the company has significant potential to generate
substantial revenue and profits in the future, despite current losses.
 Business Model Viability: Examine the company's business model to assess whether it has the
potential to become profitable. Look for evidence of scalability, market dominance, or unique
competitive advantages.

2. Revenue Growth and Market Share

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 Revenue Trends: Analyze the company’s revenue growth trends. Rapidly increasing revenues could
justify a high valuation if the market believes the company will eventually achieve profitability.
 Market Position: Consider the company's market share and competitive position. Companies that
dominate their markets or have strong brand recognition might command high valuations despite
current losses.

3. Cash Flow and Financial Health

 Cash Flow Analysis: Evaluate the company's cash flow from operations. Positive cash flow, even in
the absence of profits, can indicate a healthy underlying business.
 Burn Rate: Assess the company’s burn rate (rate at which it spends cash) and compare it to its cash
reserves and financing ability. High cash burn with limited reserves could be a red flag.

4. Intangible Assets and Intellectual Property

 Intangible Assets: Consider the value of intangible assets such as patents, technology, brand value,
and customer base. These assets can contribute significantly to the company’s valuation.
 R&D and Innovation: Look at the company's investment in research and development (R&D) and its
innovation pipeline. Companies with strong innovation capabilities may be valued highly for their
future potential.

5. Strategic Investments and Partnerships

 Strategic Alliances: Evaluate any strategic partnerships, alliances, or investments that could drive
future growth and profitability.
 Acquisitions: Consider the impact of any recent or planned acquisitions that might enhance the
company’s market position and financial performance.

6. Industry Trends and External Factors

 Industry Dynamics: Assess the overall industry trends and external factors that might influence the
company's valuation. For example, emerging technologies, regulatory changes, or shifts in consumer
behavior could play a significant role.
 Peer Comparison: Compare the company's valuation and performance metrics with those of its
peers. This can provide context for whether the high valuation is industry-wide or specific to the
company.

7. Management and Governance

 Leadership Quality: Analyze the quality and track record of the company’s management team.
Strong, visionary leadership can instill confidence in investors.
 Corporate Governance: Consider the company’s governance practices and board composition, as
these factors can impact investor trust and valuation.

5. Negative Operating Cash Flows Despite Good Profits:

Suppose a company is earning good profits, yet its operating cash flows are negative. In your opinion,
what could be the possible reasons for this? (Hint: It might not be able to realize cash flows from its debtors
or it has made significant advance payments to suppliers).

Negative operating cash flows despite good profits can be attributed to:

 Delayed collections or high accounts receivable.

 Significant advance payments to suppliers or prepayments.
 Increased inventory levels or inventory build-up.
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 Early or faster payments to suppliers compared to customer collections.
 High non-cash expenses or capital expenditures classified under operating activities.
 Timing differences in revenue recognition and actual cash receipt.
 Changes in working capital components.

6. Identifying Fraudulent Financial Reporting:

Suppose you have the financials of an entity in PDF form and suspect fraudulent financial reporting.
You can ask for reasons regarding any 5 line items from the entity. What would be those line items to
identify the fraud?

i) List of items capitalized during the year in the financial statements (chance that revenue items are
capitalized).
ii) List of CWIP and additions in PPE.
iii) If the entity has huge investments as financial assets (if unquoted), request the calculation of their fair
value at year-end and check whether any impairment loss needs to be booked.
iv) List of non-moving trade receivables along with the date they have been standing in the books, with
management’s assessment of their recoverability (including confirmation).
v) Method of revenue recognition and any changes during the year.
vi) Status and aging of inventory along with reasons for non-moving inventories and the physical verification
report.
vii) Documents related to contingent liability as disclosed in the books.
viii) Variance analysis statement prepared by the entity to check the reasons for cost variances compared to
previous years.

7. Indicators of Fraud in Reporting:

What factors indicate chances of fraud in the reporting by the entity?

i) Changes in the accounting policies year on year.

ii) Adverse ratios or very high fluctuations in the same.
iii) Sudden fall/rise in profit of the company without any major event in the company or any change in the
industry or competitor landscape.
iv) Adverse points in previous or current year CARO reporting. e. Non-filing of timely returns with the
statutory bodies.

8. Actions Upon Discovering Material Errors Post-Publication:

Suppose you come across a situation where you have submitted financial figures that have been
published, but before the AGM, you discover some material errors. What would be your key actions at
that time?

Upon discovering material errors in published financial figures before the AGM, the key actions include:

v) Immediate Notification: Inform senior management and relevant teams.

vi) Assess the Materiality and Impact: Evaluate the errors' significance.
vii) Documentation and Evidence Collection: Gather supporting documentation.
viii) Plan for Corrections: Prepare and audit revised financial statements.
ix) Communicate with Stakeholders: Develop and execute a communication plan.
x) Regulatory Compliance: Ensure compliance with regulatory requirements.
xi) Hold a Board Meeting: Inform and seek approval from the board of directors.
xii) Prepare for the AGM: Update and prepare AGM materials.
xiii) Implement Preventive Measures: Review and enhance internal controls.

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9. Interpreting Cash Flow Patterns:

If cash flow from operating and investing activities is negative, while cash flow from financing activities is
positive, what does it depict?

It might indicate a startup company running at a loss but expanding by raising funds.

Negative cash flow from operating and investing activities combined with positive cash flow from financing
activities typically depicts a company that:

 Is heavily investing in its growth and future prospects.

 Is relying on external funding to support these investments and its operations.
 Might face sustainability challenges if operational cash flows do not improve.
 Needs to carefully manage its debt and equity financing to avoid financial strain.

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Case Study Questions from Top Companies (for Checking Your Visionary Mind):

1. Future Vision of the Company:

Where do you see our company after 10 years? (Read from the vision statement and Board report –
Key performance targets, goals, and objectives of the company).

To answer from Reliance Industries' perspective, I'll summarize based on their vision statement and key
performance targets, goals, and objectives outlined in their board reports and public communications.

Vision Statement: Reliance Industries envisions becoming a leading global company that fosters sustainable
growth across its diverse portfolio, spanning energy, petrochemicals, retail, and digital services.

Key Performance Targets, Goals, and Objectives:

1. Sustainability and Environmental Goals:

o Achieve net-zero carbon emissions by 2035.
o Invest in renewable energy sources like solar, wind, and hydrogen.
o Enhance energy efficiency and reduce waste in operations.
2. Digital Transformation:
o Expand Jio's digital ecosystem to encompass a wide range of services including
telecommunications, e-commerce, entertainment, and financial services.
o Drive innovation in 5G technology, AI, and IoT to revolutionize the digital landscape in India
and globally.
3. Retail Expansion:
o Strengthen Reliance Retail's position as the largest and most profitable retail business in
India.
o Expand physical and digital retail footprints to reach more customers, especially in rural and
semi-urban areas.
o Integrate technology to enhance customer experience and streamline operations.
4. Oil to Chemicals (O2C) Transition:
o Transition from traditional oil and gas operations to a more diversified chemicals and
materials business.
o Develop high-value specialty products and sustainable chemicals.
o Increase recycling and circular economy initiatives to reduce environmental impact.
5. Global Expansion:
o Increase international presence through strategic partnerships, joint ventures, and acquisitions.
o Focus on high-growth markets in Asia, Africa, and other emerging regions.
6. Financial Objectives:
o Maintain a strong balance sheet with prudent financial management.
o Achieve consistent revenue growth and profitability across all business segments.
o Enhance shareholder value through dividends, buybacks, and strategic investments.
7. Community and Social Impact:
o Strengthen initiatives in healthcare, education, and rural development.
o Promote inclusive growth and upliftment of underprivileged communities.
o Foster innovation and entrepreneurship through incubators and accelerators.

Conclusion: In the next 10 years, Reliance Industries aims to solidify its leadership in energy, digital services,
and retail, while driving sustainability and innovation. The company envisions a diversified, globally
integrated portfolio that contributes to economic development and environmental stewardship, aligning with
its mission to improve the quality of life for millions of people.

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2. Desire to Join the Company:

Why do you want to join our company? (Answer from the vision statement, employee turnover, and
any employee-wise ranking taken by the company. Also, speak about its concern for the environment
and its focus on making the organization carbon neutral).

Answer can be from the points mentioned in Q.3

3. Admiration for the Company:

What do you like the most about our company? (Can speak points from above and also add prevailing
information about the products of the company, if you are using them or have seen their practical use).

From Reliance Industries perspective –

a. Innovative spirit (success of Jio).

b. Sustainable Commitment (Net-zero carbon emission by 2035).
c. Diverse portfolio (energy, petrochemical, retail and digital services).
d. Customer centric approach
e. Global Ambitions.
f. Commitment to social responsibility.
g. Financial strength (strong revenue growth, profitability).
4. Merger/Demerger Information:

Tell me about the merger/demerger info about the company. (Read about this info from the annual
report or news).

This question was asked in the ITC interview, in which news about demerger of its Hotel business needed to
explain. Similar to that check this information about every company you are giving interviews.

5. KPIs of the Industry:

What do you think are the KPIs of our industry, and what is our performance on the same?

Key Performance Indicators (KPIs) of ITC:

1. Revenue Growth:
o KPI: Year-over-year revenue growth percentage.
o Performance: ITC has shown consistent revenue growth driven by its diversified portfolio.
The FMCG segment, particularly branded packaged foods, personal care products, and
cigarettes, has been a significant contributor.
2. Profitability:
o KPI: Net profit margin, EBITDA margin.
o Performance: ITC has maintained healthy profitability margins. The cigarette business has
been a major profit driver due to its high margins. However, the FMCG non-cigarette
business has also seen improving profitability.
3. Market Share:
o KPI: Market share in key segments (e.g., cigarettes, FMCG products).
o Performance: ITC holds a dominant market share in the cigarette segment in India. In the
FMCG sector, it has been expanding its market share in various categories like packaged
foods, personal care, and stationery.
4. Return on Equity (ROE):
o KPI: ROE percentage.
o Performance: ITC has maintained a strong ROE, reflecting efficient management and
profitability.
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5. Sustainability and ESG (Environmental, Social, and Governance):
o KPI: ESG ratings, reduction in carbon footprint, water conservation efforts, waste
management.
o Performance: ITC has made significant strides in sustainability. It has achieved carbon
positive status for over 15 years, water positive status for over 18 years, and solid waste
recycling positive status for over 13 years.
6. Innovation and New Product Launches:
o KPI: Number of new products launched, revenue from new products.
o Performance: ITC has been proactive in launching new products across its FMCG portfolio,
which has contributed to revenue growth and market expansion.
7. Operational Efficiency:
o KPI: Cost-to-income ratio, supply chain efficiency metrics.
o Performance: ITC has been focusing on improving operational efficiencies through cost
management and supply chain optimization, which has positively impacted its margins.

6. Impact of Global Market Changes:

How would you define the impact of changing global markets and increasing wars among various countries
on the products and market share of our company? (Go through the market share and geographical markets of
the products of the company and prepare an opinion from the annual report).

Impact on ITC’s Products and Market Share:

1. FMCG Products:
o Supply Chain Disruptions:

Geopolitical tensions and wars can disrupt global supply chains, leading to shortages of raw
materials and increased costs. ITC’s FMCG products, which rely on a stable supply of
agricultural and packaging materials, may face price volatility and supply chain disruptions.

o Export Challenges:

Global market changes and trade barriers can impact ITC’s ability to export its FMCG
products. Increased tariffs, sanctions, or export restrictions can reduce market access and
affect revenue from international markets.

o Consumer Demand:

Economic instability caused by global conflicts can reduce consumer purchasing power,
impacting demand for non-essential FMCG products. However, essential goods like packaged
foods may remain resilient.

2. Agri-Business:
o Commodity Price Fluctuations:

Geopolitical instability often leads to fluctuations in commodity prices. As ITC is involved in

agri-business, changes in prices of agricultural commodities like wheat, rice, and tobacco can
directly impact its cost structure and profitability.

o Market Access:

Wars and geopolitical shifts can alter trade routes and market access for agricultural exports.
This can affect ITC’s ability to sell its agri-products in global markets, impacting revenue and
market share.

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3. Paperboards, Paper, and Packaging:
o Raw Material Supply:

The availability and cost of raw materials like pulp and chemicals used in paper
manufacturing can be affected by geopolitical tensions. Supply chain disruptions can lead to
increased costs and production delays.

o Environmental Regulations:

Changing global policies and regulations on sustainability and environmental impact may
require ITC to adopt new practices or technologies, affecting production costs and market
competitiveness.

4. Hotels:
o Tourism and Travel:

Global conflicts and geopolitical instability can significantly impact international travel and
tourism. ITC’s hospitality segment may see reduced occupancy rates and lower revenue from
international tourists.

o Operational Costs:

Increased security measures and insurance costs in conflict-prone regions can raise
operational expenses for ITC’s hotels, impacting profitability.

7. Managing Plant Performance:

Suppose you have been made the factory head of one of our plants. How would you manage the team's
performance at the plant?

Managing a plant's performance as the factory head involves several key strategies to ensure efficiency,
safety, and overall productivity. Here’s how I would approach it:

1. Understand the Plant’s Operations

 Familiarize with Processes: Spend time on the floor to understand the plant’s processes, machinery,
and workflows.
 Analyze Data: Review historical performance data, identify bottlenecks, and analyze current KPIs.

2. Set Clear Goals and Objectives

 Define KPIs: Establish clear, measurable KPIs for production, quality, safety, and efficiency.
 Communicate Expectations: Ensure that every team member understands their roles and the
expectations from them.

3. Develop a Strong Team

 Hire and Train: Ensure that the plant is staffed with skilled personnel. Provide ongoing training and
development programs.
 Empower Leaders: Identify and empower shift supervisors and team leaders to foster accountability
and leadership at all levels.

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4. Implement Efficient Processes

 Lean Manufacturing: Apply lean manufacturing principles to reduce waste and improve efficiency.
 Continuous Improvement: Encourage a culture of continuous improvement through regular team
meetings, feedback sessions, and brainstorming for innovative solutions.

5. Monitor and Improve Performance

 Regular Reviews: Conduct regular performance reviews and audits to ensure adherence to standards
and identify areas for improvement.
 Use Technology: Leverage technology and automation where possible to enhance productivity and
accuracy.

6. Foster a Positive Work Environment

 Safety First: Prioritize safety to prevent accidents and ensure a secure working environment.
 Employee Engagement: Promote open communication, recognize achievements, and address
concerns promptly to maintain high morale and motivation.

7. Optimize Supply Chain and Inventory

 Just-in-Time (JIT): Implement JIT inventory systems to reduce holding costs and ensure materials
are available when needed.
 Vendor Management: Build strong relationships with suppliers for reliable and cost-effective
sourcing.

8. Ensure Quality Control

 Standards and Inspections: Maintain strict quality control standards and conduct regular inspections
to ensure products meet specifications.
 Root Cause Analysis: Address defects or issues through root cause analysis and implement
corrective actions.

9. Budget and Cost Management

 Control Costs: Monitor and control costs through efficient resource management and waste
reduction.
 Budget Adherence: Ensure the plant operates within the allocated budget while striving to meet or
exceed financial targets.

10. Sustainability and Compliance

 Environmental Practices: Implement sustainable practices to reduce the plant’s environmental

footprint.
 Regulatory Compliance: Ensure compliance with all relevant laws, regulations, and industry
standards.

By focusing on these areas, I would aim to drive the plant towards operational excellence, high performance,
and a positive work environment.

8. Handling Major Labour Strikes:

Suppose a major labour strike happened in the said factory. How would you handle the matter?

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Handling a major labor strike requires a balanced approach that addresses the concerns of the workers while
ensuring the plant's operations can resume smoothly. Here’s how I would manage the situation:

1. Immediate Response

 Ensure Safety: Ensure the safety of all employees, both those participating in the strike and those
who are not. Prevent any potential escalation by maintaining a calm and secure environment.
 Communicate Calmly: Release a statement acknowledging the strike, expressing the intention to
address the workers’ concerns, and urging all parties to remain peaceful and respectful.

2. Understand the Root Causes

 Identify Issues: Meet with union representatives or worker leaders to understand their grievances and
demands. Gather detailed information on the issues causing the strike.
 Review Documentation: Examine any prior communication, agreements, or negotiations related to
the workers' concerns to fully understand the context.

3. Open Lines of Communication

 Facilitate Dialogue: Set up a meeting with union representatives, worker leaders, and key
management personnel. Ensure an open and respectful dialogue to discuss the issues at hand.
 Transparency: Be transparent about the company’s position, constraints, and willingness to find a
mutually acceptable resolution.

4. Negotiate in Good Faith

 Listen Actively: Give workers a chance to voice their concerns and listen actively. Validate their
feelings and show empathy.
 Explore Solutions: Work collaboratively to explore possible solutions. This could include better
working conditions, fair wages, benefits, or addressing specific grievances.
 Seek Mediation: If necessary, involve a neutral third-party mediator to help facilitate negotiations
and reach a fair settlement.

5. Develop a Resolution Plan

 Agree on Terms: Aim to reach an agreement that addresses key issues raised by the workers. Ensure
the terms are fair and feasible for both parties.
 Document the Agreement: Clearly document the agreed terms and conditions, and ensure that both
management and worker representatives sign off on the agreement.

6. Communicate the Resolution

 Inform All Employees: Communicate the resolution to all employees, explaining the agreed terms
and how the company plans to address their concerns moving forward.
 Show Commitment: Demonstrate the company’s commitment to implementing the agreed-upon
changes and improving overall working conditions.

7. Resume Operations

 Phased Return: Plan a phased return to work to ensure operations can resume smoothly without
overwhelming the system.
 Monitor and Support: Provide support to employees as they return to work and monitor the
implementation of the agreed changes to ensure compliance and effectiveness.

8. Long-Term Measures
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 Improve Relations: Invest in improving labor-management relations by setting up regular meetings
with worker representatives to discuss concerns and improvements.
 Proactive Engagement: Establish a proactive approach to employee engagement and satisfaction to
prevent future conflicts.
 Continuous Improvement: Regularly review and improve policies related to wages, benefits,
working conditions, and overall employee well-being.

By addressing the root causes of the strike and working collaboratively to find a fair resolution, it is possible
to restore trust, improve employee relations, and ensure the smooth operation of the plant.

9. Setting Market Price and Key Market Segment:

Suppose you have to set the market price and key market segment for a product. What are the key inputs you
would require to set the same?

Key Inputs for Setting Market Price:

1. Cost Analysis:
o Production Costs: Raw materials, manufacturing, packaging, and labor costs.
o Distribution Costs: Transportation, warehousing, and logistics costs.
o Marketing Costs: Advertising, promotions, and salesforce expenses.
o Overhead Costs: Administrative expenses, utilities, and other fixed costs.
2. Market Research:
o Competitor Pricing: Analysis of prices for similar soap products offered by competitors.
o Market Trends: Current trends in the soap industry, including consumer preferences for
organic, natural, or specialty soaps.
o Customer Willingness to Pay: Surveys and focus groups to understand how much customers
are willing to pay for different soap attributes (e.g., fragrance, ingredients, brand).
3. Value Proposition:
o Unique Selling Points (USPs): Features that differentiate the soap from competitors (e.g.,
natural ingredients, hypoallergenic, eco-friendly packaging).
o Perceived Value: How customers perceive the value of the soap based on its benefits and
features.
4. Target Margin:
o Profit Margin Goals: Desired profit margins based on company objectives and financial
goals.
o Break-even Analysis: Determining the price point at which the product will break even and
start generating profit.
5. Regulatory and Tax Considerations:
o Taxes and Duties: Applicable taxes, import duties, and other regulatory costs.
o Compliance Costs: Costs associated with meeting regulatory standards and certifications.

Key Inputs for Identifying Key Market Segment:

1. Demographic Analysis:
o Age: Target age group(s) for the soap (e.g., teens, adults, elderly).
o Gender: Whether the product is gender-specific or unisex.
o Income Level: Income bracket of the target customers (e.g., budget, mid-range, premium).
2. Psychographic Analysis:
o Lifestyle: Consumer lifestyles and how the soap fits into their daily routines.
o Values and Beliefs: Preferences for natural, organic, cruelty-free, or eco-friendly products.
o Personality Traits: Traits that align with the brand image (e.g., adventurous, health-
conscious).
3. Behavioral Analysis:
o Usage Frequency: How often the target market uses soap (e.g., daily, multiple times a day).

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oBenefits Sought: Specific benefits consumers look for (e.g., moisturizing, antibacterial,
fragrance-free).
o Brand Loyalty: Tendencies towards brand loyalty or switching behavior.
4. Geographic Analysis:
o Location: Target geographic regions (e.g., urban vs. rural, specific countries or regions).
o Climate: Climate conditions that may influence soap usage (e.g., moisturizing soaps in dry
climates).
5. Market Size and Potential:
o Market Demand: Size of the target market and potential demand for the product.
o Growth Potential: Future growth prospects of the market segment.

10. Dealing with Government Raid:

Suppose you are heading a department and a sudden raid occurs in your department by a government agency.
They ask for a bribe to leave. What would be your key actions at that time?

Immediate Actions:

 Stay calm and composed.

 Verify identification of officials.
 Follow legal protocols.
 Document everything.

Handling the Bribe Demand:

 Refuse the bribe.

 Contact legal counsel.
 Inform higher authorities.

Post-Raid Actions:

 File a formal complaint.

 Conduct an internal review.
 Enhance security measures.
 Support employees.

Long-term Actions:

 Promote ethical culture.

 Implement whistleblower policies.

11. Company's Products and Market Segments:

What are our company’s products, and what are the major market segments?

Make answer from the company’s annual report for which you are being interviewed.

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Statutory Audit Related Questions (Book Related):

1. What is the materiality level, and how would you set it for a particular benchmark?
(Generally, materiality levels are calculated based on assets (for the Balance Sheet) or profit (for the Profit
and Loss statement).)

Steps to Set Materiality:

a. Determine the Appropriate Benchmark:

o Total Revenue or Sales: Often used for profit-oriented entities.

o Total Assets: Suitable for asset-intensive businesses.
o Net Profit Before Tax: Common for profit-driven entities.
o Equity or Net Assets: Useful for entities where equity is important, such as financial institutions.
o Total Expenses: Relevant for not-for-profit organizations or government entities.

b. Determine a Percentage to Apply to the Benchmark: 0.5% to 1% of Total Revenue or Sales, 1% to 2%

of Total Assets etc.

c. Consider Qualitative Factors:

o The nature of the entity and its operations.

o The presence of unusual transactions or significant events.
o The expectations of users of the financial statements.
o Legal and regulatory requirements.

d. Set Performance Materiality:

Performance materiality is set at a lower threshold than overall materiality. This is to reduce the risk
that the aggregate of uncorrected and undetected misstatements exceeds materiality for the financial
statements as a whole. Typically, performance materiality is set at 50% to 75% of overall materiality.

2. Describe the process for auditing the following line items:

o Sales
o Purchases
o Creditors
o Fixed Assets
o Inventory
o Investments
o Payroll
o Legal Fees
o Cash
o Bank
o Debtors

Auditing Process for Various Line Items

Sales

1. Verification of Sales Invoices:

o Check the authenticity and accuracy of sales invoices.
o Match sales invoices with delivery notes and customer orders.
2. Revenue Recognition:
o Ensure revenue is recognized in accordance with applicable accounting standards.
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o Check cut-off procedures to ensure sales are recorded in the correct accounting period.
3. Customer Confirmations:
o Send confirmation letters to customers to verify outstanding receivables.
4. Analytical Procedures:
o Compare sales trends with previous periods and budgeted figures.
o Analyze key performance indicators (KPIs) related to sales.

Purchases

1. Verification of Purchase Orders:

o Check purchase orders for authorization and accuracy.
o Match purchase orders with goods received notes and supplier invoices.
2. Cut-off Procedures:
o Ensure purchases are recorded in the correct accounting period.
3. Supplier Confirmations:
o Send confirmation letters to suppliers to verify outstanding payables.
4. Analytical Procedures:
o Compare purchase trends with previous periods and budgeted figures.

Creditors

1. Reconciliation:
o Reconcile creditors' ledger balances with supplier statements.
2. Ageing Analysis:
o Perform an ageing analysis of creditors to identify overdue amounts.
3. Review of Payments:
o Verify payments made to creditors and ensure they are recorded correctly.
4. Analytical Procedures:
o Compare creditors' balances with previous periods and budgeted figures.

Fixed Assets

1. Verification of Asset Register:

o Check the asset register for accuracy and completeness.
o Verify physical existence of fixed assets.
2. Depreciation:
o Ensure depreciation is calculated correctly and consistently applied.
3. Additions and Disposals:
o Verify additions and disposals of fixed assets during the period.
4. Valuation:
o Ensure fixed assets are valued correctly as per accounting standards.

Inventory

1. Physical Verification:
o Conduct physical verification of inventory.
o Reconcile physical counts with inventory records.
2. Valuation:
o Ensure inventory is valued correctly (e.g., FIFO, LIFO, weighted average).
3. Cut-off Procedures:
o Check cut-off procedures to ensure inventory transactions are recorded in the correct period.
4. Obsolescence:
o Review inventory for obsolete or slow-moving items and ensure appropriate provisions are
made.

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Investments

1. Verification of Investment Records:

o Check investment records for accuracy and completeness.
o Verify the existence of investments through confirmations.
2. Valuation:
o Ensure investments are valued correctly as per accounting standards.
3. Income from Investments:
o Verify the accuracy of income earned from investments (e.g., dividends, interest).
4. Disclosure:
o Ensure proper disclosure of investments in the financial statements.

Payroll

1. Verification of Payroll Records:

o Check payroll records for accuracy and completeness.
o Verify calculations of salaries, wages, and deductions.
2. Employee Records:
o Ensure employee records are up-to-date and accurate.
3. Compliance:
o Ensure compliance with statutory requirements (e.g., provident fund, income tax).
4. Analytical Procedures:
o Compare payroll expenses with previous periods and budgeted figures.

Legal Fees

1. Verification of Legal Invoices:

o Check legal invoices for accuracy and authorization.
o Ensure legal fees are recorded in the correct accounting period.
2. Review of Legal Matters:
o Review significant legal matters and ensure appropriate provisions are made.
3. Analytical Procedures:
o Compare legal fees with previous periods and budgeted figures.

Cash

1. Cash Count:
o Perform a physical count of cash on hand.
o Reconcile the cash count with cash book balances.
2. Verification of Cash Transactions:
o Check cash receipts and payments for accuracy and authorization.
3. Analytical Procedures:
o Compare cash balances with previous periods and budgeted figures.

Bank

1. Bank Reconciliation:
o Perform bank reconciliation for all bank accounts.
o Ensure all reconciling items are properly accounted for.
2. Verification of Bank Transactions:
o Check bank receipts and payments for accuracy and authorization.
3. Bank Confirmations:
o Obtain bank confirmations for all bank balances.

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Debtors

1. Verification of Debtors’ Ledger:

o Check debtors’ ledger for accuracy and completeness.
o Send confirmation letters to debtors to verify outstanding balances.
2. Ageing Analysis:
o Perform an ageing analysis of debtors to identify overdue amounts.
3. Provision for Doubtful Debts:
o Review the adequacy of provisions for doubtful debts.
4. Analytical Procedures:
o Compare debtors' balances with previous periods and budgeted figures.

3. If an organization incurs significant temporary labor costs, what audit procedures would you use to
check and verify these costs?

Audit Procedures:

Procedure Description
Understand the Nature and Gain an understanding of the use of temporary labor and the context in which costs
Context are incurred.
Assess Internal Controls Evaluate internal controls over hiring, recording, and payment of temporary labor.
Reconcile with General Ledger Reconcile recorded costs with supporting documentation.
Test Payroll and Invoices Verify authorization, rates, hours worked, and mathematical accuracy.
Substantive Analytical Compare costs against budgets, prior periods, or benchmarks.
Procedures
Review Contracts and Ensure terms are in line with recorded expenses and contractual requirements are
Agreements met.
Inspect Supporting Review invoices, contracts, timesheets, and payment proofs.
Documentation
Confirm with Third Parties Send confirmations to verify accuracy of billed amounts and services provided.
Test Cut-off Verify costs are recorded in the correct accounting period.
Verify Allocations Ensure allocation of costs to projects/departments is reasonable and consistent.
Investigate Unusual Look into any unusual or significant transactions.
Transactions

4. How would you check the following based on assertions?

o For Asset/Liability-related Questions: Completeness, Existence, Rights and Obligations, Valuation
o For Profit and Loss (P&L) Items: Completeness, Accuracy, Occurrence, Classification, Cut-off
o For Disclosures: Completeness, Accuracy, Occurrence, Classification
5. What is the difference between Internal Controls over Financial Reporting (ICFR) and Internal
Financial Controls (IFC)? How are IFCs checked and reported by the auditor in the audit report?

Differences and Reporting:

Aspect ICFR IFC

Scope Focuses on financial reporting accuracy and Broader, includes operational and
reliability. compliance controls.
Objective Ensure financial statements are free from material Ensure operational efficiency, compliance,
misstatements. and risk management.
Components Control environment, risk assessment, control Same as ICFR but with an expanded focus.
activities, information and communication,
monitoring.
Audit Opinion on effectiveness of ICFR in the financial Opinion on overall IFC, including financial,
Reporting statements audit report. operational, and compliance controls.

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6. What is Integrated Reporting? Describe the 6Cs of Integrated Reporting. What is Business
Sustainability, and what are its 9 principles?

Summary

Aspect Integrated Reporting (IR) Business Sustainability

Definition A holistic reporting approach that The ability to operate in a manner that ensures long-term
integrates financial and non-financial viability while balancing economic, social, and environmental
information to show value creation. considerations.
Purpose Provide a comprehensive picture of Ensure long-term economic performance, reduce
overall performance and value creation. environmental impact, and enhance social responsibility.
6Cs of IR Capitals, Content Elements, -
Connectivity, Consistency and
Comparability, Conciseness,
Credibility.
9 - Ethics, Governance, Innovation and Technology, Financial
Principles Return, Employee Engagement, Community Involvement,
Environmental Management, Stakeholder Relationships,
Transparency.

7. Explain Environmental, Social, and Governance (ESG) Norms along with examples of disclosure
requirements:
o Environmental: Climate change, natural resources, pollution and waste, environmental opportunities
o Social: Human capital, product liability, stakeholder opposition, social opportunities
o Governance: Corporate governance, corporate behavior
8. Data Analytics Techniques in Audit: ACL, Power BI, CaseWare.

Schedule III:

9. Rounding off provisions. (decimals are not compulsory)

a. Total Income < 100 Crores: Figures can be rounded to nearest hundreds, thousands, lakhs, or millions.

b. Total Income ≥ 100 Crores: Figures should be rounded to nearest lakhs, millions, or crores.

10. Review Schedule III – Division II. (Presentation of items in the Financial Statements).
11. Examples of OCI items not to be reclassified to P&L and items to be reclassified to P&L.

Category Example Items

Not to be - Revaluation surplus on property, plant, and equipment- Actuarial gains and losses on defined
Reclassified to benefit plans- Fair value changes of equity instruments designated at FVOCI- Changes in own
P&L credit risk of financial liabilities
To be Reclassified - Foreign currency translation reserve- Effective portion of cash flow hedges- Gains or losses on
to P&L available-for-sale financial assets (prior to IFRS 9)- Fair value changes of debt instruments
measured at FVOCI

CARO (Companies Auditor's Report Order) Related Questions:

1. Which classes of companies are not subject to CARO?

CARO not applicable on-

Exempt Companies Criteria/Definition

One Person A company with only one person as its member.

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Company (OPC)
Small Company Paid-up capital ≤ ₹2 crore and turnover ≤ ₹20 crore.
Banking Company As defined under the Banking Regulation Act, 1949.
Insurance Company As defined under the Insurance Act, 1938.
Section 8 Company Non-profit companies formed for promoting various useful objectives.
Private Limited Not a subsidiary/holding of a public company, paid-up capital and reserves and surplus ≤ ₹1
Company crore, total borrowings ≤ ₹1 crore, total revenue ≤ ₹10 crore.

2. Review all points of CARO. For each situation described, determine how to check the matter in the
annual report within the Financial Statements.
o Identify the relevant CARO clause (e.g., “We can check this matter from Clause __ of CARO, 2020”).
3. Example CARO-related Question: If there is non-payment of debt by the company, where in the financial
statements can details of such non-payment be found?
o Details of such non-payment can be found from CARO, 2020 (Clause iii).

Tax Audit Related Questions (Asked in Statutory Audit/Industry):

1. Depreciation Calculation:
a. Describe how depreciation is calculated according to Income Tax Books.

As per WDV methods. For power units, it is SLM method

Step Description
1. Identify the block of assets.
2. Determine the opening WDV of the block.
3. Add any additions to the block and deduct sales.
4. Calculate depreciation using the applicable rate on the WDV.
5. Apply special conditions (full or half depreciation).

b. Compare this calculation with the depreciation in the normal books.

Aspect Income Tax Books Normal (Accounting) Books

Primary Method Written Down Value (WDV) Straight Line Method (SLM) and
WDV
Depreciation Rates Specified by Income Tax Rules Determined by management, based on
useful life
Additions and Sales Adjusted within the block of Depreciation calculated individually
assets for each asset
Full/Half Depreciation Based on asset usage (< or > 180 Not typically applied
days)
Regulation Governed by Income Tax Act Governed by Accounting Standards
(Ind AS/IFRS)
Residual Value Not typically considered Considered in SLM calculation
Consideration
Additional Depreciation Applicable to certain assets in Not typically applied
manufacturing

2. Disclosure as per Clause 26:

a. According to Clause 26, which amounts debited in the Profit & Loss (P&L) account need to be
disclosed?

This includes capital expenses, personal expenses, advertisement expenses, club expenses, and
penalties or fines for violations of law.
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3. Expenses Under Section 43B:
a. Expenses under Section 43B are deductible only if paid before the due date of filing the Return of
Income (ROI).

Examples include taxes, duties, cess, fees, bonuses, commissions, railway fares, interest on loans from
banks/financial institutions, leave encashment, railway dues, and gratuity payments.

b. Note that for sums payable to MSMEs, deductions are not allowed if payments are made beyond the
time limit specified under Section 15 of the MSMED Act (i.e., written agreement or 45 days).
4. Deadlines for Tax Audit and Income Tax Returns:

Key Dates

 31st July: ITR filing for individuals, HUFs, and non-audit cases.
 30th September: Tax audit reports submission.
 31st October: ITR filing for entities requiring audit.
 30th November: ITR filing for assessees requiring transfer pricing audit.

5. Definition of MSME Under the MSMED Act:

Enterprise Type Investment Limit (₹) Annual Turnover Limit (₹)

Micro Up to ₹1 crore Up to ₹5 crore
Small > ₹1 crore ≤ ₹10 crore > ₹5 crore ≤ ₹50 crore
Medium > ₹10 crore ≤ ₹50 crore > ₹50 crore ≤ ₹250 crore

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Internal Audit Related Questions:

1. Explain the Processes and SAP Integration:

o Procure to Pay (Purchase Process):
 Process: Involves the steps from requisition of goods/services to payment of invoices. Key
steps include purchase requisition, purchase order (PO) creation, goods receipt, invoice
verification, and payment.
 SAP Integration: In SAP, this process is managed through modules like SAP MM (Materials
Management) for purchasing and SAP FI (Financial Accounting) for payments. The system
automates and integrates these steps, ensuring real-time data updates and streamlined
workflow.
o Order to Cash (Sales Process):
 Process: Covers order management from customer order to cash receipt. Key steps include
order entry, order fulfillment, shipping, invoicing, and receipt of payment.
 SAP Integration: Managed through SAP SD (Sales and Distribution) for order processing
and SAP FI for receivables management. SAP automates order processing, billing, and
accounts receivable functions, integrating with inventory and financial modules.
o Hire to Retire (HR Process):
 Process: Involves the employee lifecycle from recruitment to retirement. Key steps include
hiring, onboarding, payroll processing, performance management, and retirement.
 SAP Integration: Handled by SAP HCM (Human Capital Management) or SAP
SuccessFactors. The module supports employee data management, payroll processing, and
HR reporting, integrating with other modules for seamless HR operations.
2. Risk Control Matrix (RCM):
o What is RCM?
 A Risk Control Matrix (RCM) is a tool used to identify, assess, and manage risks within an
organization. It maps out the risks associated with various business processes and the controls
in place to mitigate these risks. It typically includes:
 Risk description
 Control activities
 Control effectiveness
 Responsible parties
o Experience: If applicable, describe your experience in preparing or working with RCMs, highlighting
your role in identifying risks and implementing controls.
3. Possible Risks and Controls in Purchase Processes:
o Purchase from Foreign/Indian Vendor Risks:
 Risks: Exchange rate fluctuations, compliance with import regulations, vendor reliability,
quality of goods.
 Controls: Vendor due diligence, import compliance checks, quality assurance processes,
currency risk management.
o Issue of PR/PO Risks:
 Risks: Unauthorized PR/PO creation, duplicate POs, POs exceeding limits.
 Controls: Segregation of duties, authorization limits, automated system checks, periodic
audits.
o Multiple POs Entered in System:
 Risks: Potential for fraud, inventory mismanagement.
 Controls: PO approval workflows, automated alerts for duplicate entries, periodic
reconciliation.
o Unauthorized PO Created and Issued:
 Risks: Unapproved spending, fraud.
 Controls: Access controls, PO approval hierarchy, regular audits.
o PO Created for More Than Limit:
 Risks: Budget overruns, unauthorized expenditure.
 Controls: System limits on PO amounts, approval requirements for higher amounts.
4. Initial Steps as an Internal Auditor:
o First Actions:

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 Identification of Entity: Understand the organization’s structure, operations, and key
processes.
 Processes Review: Document and review key business processes.
 Risk Control Matrix (RCM): Obtain and evaluate the existing RCM to understand risk areas
and control mechanisms.
5. Risks in Advances Given by Banks:
o Possible Risks:
 Credit risk (borrower default)
 Compliance risk (non-adherence to lending norms)
 Operational risk (fraud or mismanagement)
o Controls: Credit assessment procedures, compliance checks, regular monitoring and reporting.
6. SAP Controls for PO Authorization:
o Control Implementation:
 Authorization Limits: Set up system parameters to restrict PO authorization limits.
 Split POs: Implement controls to prevent splitting of POs to bypass authorization limits.
 Monitoring: Use audit trails and exception reports to monitor and review PO authorizations.
7. Drafting SOP for a Process:
o Steps to Draft an SOP:
 Identify the Process: Define the scope and objectives of the process.
 Document Steps: Outline each step in the process, including roles and responsibilities.
 Define Controls: Specify controls and checkpoints.
 Review and Update: Ensure the SOP is reviewed and updated regularly.
8. Motivation for Internal Audit Profile:
o Answer: Describe your interest in internal audit, emphasizing skills such as analytical thinking, risk
management, and the opportunity to contribute to organizational improvement and governance.
9. Preference for Industry Internal Audit vs. Big4:
o Answer: Discuss your interest in industry-specific internal audit roles, such as familiarity with
particular business processes, long-term career growth within an organization, and the desire for a
more integrated role in business operations.
10. Value Addition by Internal Auditors:
o Value Addition:
 Risk Management: Identify and mitigate risks.
 Efficiency Improvement: Enhance process efficiencies and controls.
 Compliance Assurance: Ensure adherence to laws and regulations.
 Fraud Prevention: Detect and prevent fraudulent activities.
11. Provisions of Internal Audit:
o When Provisions Apply:
 Internal audit provisions apply to organizations required to maintain internal controls, adhere
to corporate governance standards, and comply with regulatory requirements.
12. Sarbanes-Oxley Act (SOX):
o Explanation:
 Purpose: SOX aims to enhance corporate transparency, accuracy, and accountability.
 Benefits: Improved financial reporting accuracy, strengthened internal controls, and increased
investor confidence.

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Finance Questions - Part 1 – (CA INTER FM QUESTIONS) -

1. Long-Term Finance Function Decisions: Investment Decisions, Financing Decisions, Dividend Decisions

2. Cost of Debenture vs. Cost of Equity:

 Cost of Debenture: Typically, lower than the cost of equity due to the tax-deductibility of interest expenses
on debentures. Interest payments reduce taxable income, which lowers the effective cost of debt.
 Cost of Equity: Higher because equity holders take on more risk than debt holders and there is no tax shield
on dividends or retained earnings. Equity investors expect higher returns for the additional risk.

3. Financial Ratios:

 Debtor Turnover Ratio: = Net Credit Sales /Average Debtors.

 Creditor Turnover Ratio: = Net Credit Purchases/ Average Creditors.
 Capital Gearing Ratio: Long-term Debt/Equity
 Inventory Turnover Ratio: Cost of Goods Sold/Average Inventory

4. Cost of Debentures: Irredeemable Debentures, Redeemable Debentures

5. Cost of Equity Share Capital:

 Dividend Discount Model (DDM): = (DPS/Current Share Price) +Growth Rate

 Earnings Per Share (EPS) Model: Not typically used for calculating cost of equity, more for valuation.
 Gordon Growth Model: (D1/P0) + g
 CAPM (Capital Asset Pricing Model): Risk-free Rate+ Beta× (Market Return−Risk-free Rate)
 WACC (Weighted Average Cost of Capital): =EV×Re+DV×Rd×(1−Tax Rate)

6. Calculation of Firm Value:

 Net Income (NI) Approach: =Net Income/Cost of Equity

 Net Operating Income (NOI) Approach: =NOI/Cost of Capital

7. Profitability Statement: Read profitability statement steps. Example- (Sales−Variable Costs= Contribution……)

8. Leverage Formulas:

 Operating Leverage: Measures the sensitivity of operating income to changes in sales. Formula:
Percentage Change in EBIT/ Percentage Change in Sales
 Financial Leverage: Measures the sensitivity of net income to changes in EBIT. Formula:
Percentage Percentage Change in EPS/ Change in EBIT
 Combined Leverage: Measures the sensitivity of EPS to changes in sales. Formula:
Degree of Operating Leverage ×Degree of Financial Leverage

9. Capital Budgeting Decision Formulas:

 Payback Period: = Initial Investment/ Annual Cash Inflows

 Accounting Rate of Return (ARR): =Average Annual Profit/ Initial Investment
 Net Present Value (NPV): NPV= (∑ (Cash Flows / (1+Discount Rate) t)) − Initial Investment
 Profitability Index (PI): = (NPV+ Initial Investment)/Initial Investment
 Internal Rate of Return (IRR): The discount rate that makes NPV = 0.
 Modified Internal Rate of Return (MIRR): Adjusts IRR by accounting for differences in the reinvestment
rate. = (Terminal Value of Positive Cash Flows/ Present Value of Negative Cash Flows ) 1/n−1

10. Standard Deviation and Coefficient of Variation:

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 Standard Deviation: Measures the dispersion of a set of data from its mean.

=square root of ∑(xi−μ)2/N,

 Coefficient of Variation (CV): Standard deviation expressed as a percentage of the mean. = σ/ μ×100

11. Market Value of Equity Shares and Dividend Size:

 Explanation: The market value of equity shares is generally influenced by the company's overall
performance, growth prospects, and market conditions, rather than the size of dividends alone. However, large
or irregular dividends may impact investor perception and stock price.

12. Share Price Calculation Using Walter and Gordon Models. (Do your own)

13. Economic Value Added (EVA): = NOPAT− (Capital ×Cost of Capital)

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90%-100% of your Interview questions)
Finance Questions – Part –II (also asked in IB roles):

1. What is meaning of Budgeting and Forecasting and what are the key differences between them?

Budgeting is the process of creating a detailed financial plan for a specific period, usually a year. It
outlines expected revenues, expenses, and allocations for various activities.

Forecasting is the process of estimating future financial outcomes based on historical data, current trends,
and assumptions about future conditions.

Key Differences

 Purpose: Budgeting is about setting a financial plan, while forecasting is about predicting future
financial performance.
 Flexibility: Budgets are usually fixed, while forecasts are updated regularly.
 Detail: Budgets are more detailed, whereas forecasts are broader and focus on trends.
 Time Frame: Budgets cover a fixed period (usually a year), while forecasts can vary in length and are
updated as needed.
 Use in Management: Budgets are used for setting goals and limits, while forecasts are used for
making adjustments based on current and projected conditions.

2. What is Value at Risk (VaR)?

Value at Risk (VaR) is a statistical measure used to assess the potential loss in value of a portfolio over a
specified time period for a given confidence interval. It estimates the maximum potential loss with a certain
level of probability.

3. What is the Expected Rate of Return? What If the Overall Cost of Capital (Ke) and Cost of Debt
(Kd) Are Considered?

The expected rate of return is the anticipated return on an investment based on probabilities of various
outcomes. It is calculated by weighing each possible return by its probability. When considering the overall
cost of capital (Ke) and cost of debt (Kd), the expected rate of return should be compared against these costs
to assess the investment’s profitability and risk.

4. What is a Risk Premium? In Discounting Cash Flows, Which Rate of Return Do We Use?

A risk premium is the additional return over the risk-free rate required by investors to compensate for the risk
associated with an investment. For discounting cash flows:

i. Real Cash Flows: Use the risk-adjusted real rate of return.

ii. Nominal Cash Flows: Use the risk-adjusted nominal rate of return.
5. If You Have Purchased Goods from Abroad and Need to Pay Next Month, Would You Take a Call
Option or a Put Option to Hedge?

To hedge against the risk of currency appreciation (if you need to pay in foreign currency), you would take a
call option on the foreign currency. This allows you to lock in the exchange rate and avoid higher costs.

6. Suppose You Have Bought a Call Option with a Strike Price (X) of 1500 at Rs. 120 and a Put
Option with a Strike Price (X) of 1500 at Rs. 60. What Would Be Your Maximum Loss in This
Case?

The maximum loss would be the total premium paid for both options. Here, it would be Rs. 120 (call option)
+ Rs. 60 (put option) = Rs. 180.

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7. What is the Difference Between a Futures Contract and a Forward Contract?

Futures Contract: A standardized contract traded on an exchange to buy or sell an asset at a future date for a
predetermined price. It is subject to daily settlement and margin requirements.

Forward Contract: A customized contract traded over-the-counter (OTC) between two parties to buy or sell
an asset at a future date for a price agreed upon today. It is not subject to daily settlement.

8. Suppose Interest Rates in a Country Have Increased to 8%. What Would Be the Impact on Bond
Prices Issued at a 6% Interest Rate?

Bond prices would decrease. As interest rates rise, the fixed coupon payments of existing bonds become less
attractive compared to new bonds issued at the higher rate, leading to a drop in bond prices.

9. What is the Impact of Changes in Inflation on Forex Rates?

Generally, higher inflation in a country relative to others tends to depreciate its currency. This is because
higher inflation erodes purchasing power and can lead to lower interest rates, reducing the currency's
attractiveness to investors.

10. What is the Impact of a Rights Issue on the Valuation of a Company?

A rights issue dilutes existing shareholders' equity if they do not participate, potentially reducing the per-share
value. However, it can raise new capital for the company, which might improve its overall valuation if used
effectively for growth or debt reduction.

11. What is the Impact of a Bonus Issue on the Valuation of a Company?

A bonus issue increases the number of shares outstanding but does not affect the company's total equity or its
market value. It often reflects positively on the company's financial health but dilutes earnings per share (EPS)
proportionately.

12. What is a Currency Swap?

A currency swap is a financial contract where two parties exchange principal and interest payments in
different currencies. It is used to hedge against currency risk or obtain favorable financing conditions.

13. Tell Me About Some Methods of Valuing a Company. Which One Would Be Best for Valuing a
Start-Up Company?

Common methods include:

i. Discounted Cash Flow (DCF) Analysis

ii. Comparable Company Analysis
iii. Asset-Based Valuation
iv. Earnings Multiples approach
v. Market Capitalization approach
vi. Revenue based valuation

For a start-up company, Revenue based valuation method may be used as most startups have negative cash
flows and earnings.

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90%-100% of your Interview questions)
SCMPE Questions (Including Questions Related to Pricing Domain):

1. Learn Cost Sheet

Particulars Amount
Direct Materials Rs 50,000
Direct Labor Rs 20,000
Direct Expenses Rs 5,000
Total Prime Cost Rs 75,000
Factory Overheads Rs 15,000
Total Factory Cost Rs 90,000
Opening Work-in-Progress Rs 10,000
Closing Work-in-Progress Rs 8,000
Total Cost of Production Rs 92,000
Opening Finished Goods Rs 12,000
Closing Finished Goods Rs 9,000
Total Cost of Goods Sold Rs 95,000
Administrative Overheads Rs 10,000
Total Cost Rs 105,000
Selling and Distribution Overheads Rs 7,000
Total Cost of Sales Rs 112,000

2. What is Target Costing?

Target costing is a pricing strategy in which a company sets a target cost for a product by determining the
desired profit margin and the competitive market price. The objective is to ensure that the product can be
produced at a cost that allows the company to achieve its desired profit margin while staying competitive in
the market. It involves designing and engineering the product and its manufacturing process to meet this cost
goal.

3. What cost factors we require to price a new product?

Please answer based on cost sheet

4. How Can We Price an Existing Product in the Market?

Assess pricing strategies for existing products based on factors such as cost structures, market conditions,
competitive landscape, and customer value perception.

5. What is Activity-Based Costing (ABC)? And How Can It Be Applied to Our Organization (FMCG
Co.)?

Activity-Based Costing (ABC) is a costing method that assigns overhead costs based on activities that drive
costs rather than simply allocating them.

In an FMCG company, ABC can help identify cost drivers and improve cost management by linking costs to
specific activities and products.

6. What is Economic Value?

Economic value is the perceived worth of a product or service based on the benefits it provides to customers,
compared to its cost and the alternatives available in the market.

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7. Learn Formulas for Material Cost, Volume, and Profit Variance:

Material Cost Variance (MCV)

Material Cost Variance measures the difference between the actual cost of materials used and the standard
cost of the materials that should have been used for the actual production volume.

Formula: MCV= (Actual Quantity×Actual Price)−(Standard Quantity×Standard Price)

Material Price Variance (MPV)

Material Price Variance measures the difference between the actual price paid for materials and the standard
price, multiplied by the actual quantity of materials used.

Formula: MPV= (Actual Price−Standard Price)×Actual Quantity

Material Usage Variance (MUV)

Material Usage Variance measures the difference between the actual quantity of materials used and the
standard quantity expected to be used, multiplied by the standard price.

Formula: MUV= (Actual Quantity−Standard Quantity)×Standard Price

Sales Volume Variance (SVV)

Sales Volume Variance measures the impact on profit due to the difference between the actual sales volume
and the budgeted sales volume.

Formula: SVV= (Actual Sales Volume−Budgeted Sales Volume)×Standard Profit Per Unit

Sales Price Variance (SPV)

Sales Price Variance measures the impact on revenue due to the difference between the actual selling price
and the budgeted selling price.

Formula: SPV= (Actual Selling Price−Budgeted Selling Price)×Actual Sales Volume

Profit Variance

Profit Variance measures the difference between the actual profit and the budgeted profit.

Formula: Profit Variance = Actual Profit−Budgeted Profit

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90%-100% of your Interview questions)
Law Related Questions:

1. Annual audited financial results must be submitted to SEBI within 60 days from the end of the financial year.
2. If we have taken a lease from a related party and want to classify it as an operating lease, what are the
legal requirements?

To qualify the lease as an operating lease under Ind AS 116, we must ensure it meets the criteria for the two
exceptions from finance leases. Additionally, legal compliance requires obtaining board approval before
entering into transactions with related parties.

3. What are the Doctrine of Indoor Management and the Doctrine of Constructive Notice? What does
"lifting of the corporate veil" mean?

 Doctrine of Indoor Management: Protects third parties by allowing them to assume internal
company procedures are followed.
 Doctrine of Constructive Notice: Assumes third parties are aware of a company's public documents
and cannot plead ignorance.
 Lifting of the Corporate Veil: Courts hold individuals liable for company actions in cases of fraud,
evasion of obligations, or statutory violations.

4. Provisions related to related parties under Sections 134, 177, and 144 of the Companies Act, 2013.

 Section 134: Ensures that the Board’s Report includes detailed disclosures of related party transactions.
 Section 177: Requires Audit Committee approval for related party transactions and imposes a
responsibility on the committee to oversee such transactions.
 Section 144: Maintains auditor independence by prohibiting auditors from providing certain non-audit
services.
 Section 188: Specifies the nature of related party transactions requiring Board or shareholders' approval
and mandates disclosures and justifications in the Board’s Report.

5. Explain the procedure for filing of application under the IBC and the circumstances under which it can
be filed.

 Financial Creditors can file under Section 7 when there is a default in financial debt.
 Operational Creditors can file under Section 9 after serving a demand notice and not receiving
payment or a valid dispute response.
 Corporate Debtors can file under Section 10 to seek resolution for their own defaults.

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90%-100% of your Interview questions)
Direct Tax-Related Questions-

Domestic

1. Learn Sections 269SS, 269ST, and 269T of the IT Act, 1961.

Section 269SS

 Prohibition on taking or accepting certain loans and deposits otherwise than by account payee cheque
or account payee bank draft or use of electronic clearing system through a bank account.
 Applicability: This section applies to any loan or deposit or specified sum, which is Rs. 20,000 or
more.
 Mode of acceptance: Such loans or deposits must be taken through an account payee cheque, account
payee bank draft, or electronic clearing system via a bank account.
 Penalty for contravention: An amount equal to the loan or deposit taken in violation of the section.

Section 269ST

 Mode of undertaking transactions.

 Prohibition: No person shall receive an amount of Rs. 2,00,000 or more:
1. In aggregate from a person in a day.
2. In respect of a single transaction.
3. In respect of transactions relating to one event or occasion from a person.
 Mode of acceptance: Such receipts must be through an account payee cheque, account payee bank
draft, or electronic clearing system via a bank account.
 Penalty for contravention: An amount equal to the amount received in violation of the section.

Section 269T

 Prohibition on repayment of certain loans or deposits otherwise than by account payee cheque or
account payee bank draft or use of electronic clearing system through a bank account.
 Applicability: This section applies to the repayment of any loan or deposit or specified advance,
which is Rs. 20,000 or more.
 Mode of repayment: Such repayments must be made through an account payee cheque, account
payee bank draft, or electronic clearing system via a bank account.
 Penalty for contravention: An amount equal to the loan or deposit repaid in violation of the section.

2. Understand Section 79 of the IT Act, 1961.

Section 79 deals with restrictions on carrying forward and setting off losses in cases where there is a change in
the shareholding of certain companies. The objective is to prevent companies from avoiding taxes by
acquiring loss-making companies solely to set off their losses against the profits of the acquiring company.

A company shall not be allowed to carry forward and set off its losses against future profits if there is a
change in shareholding, where beneficial ownership of shares carrying 51% or more of the voting power
changes hands as compared to the last day of the previous year in which the loss was incurred.

3. Taxes and TDS on VDA.

a. Taxation of VDAs:

 Tax Rate: Gains from the transfer of VDAs are taxed at a flat rate of 30%.
 Deduction of Expenses: No deduction in respect of any expenditure (other than the cost of
acquisition) or allowance or set off of any loss shall be allowed while computing the income from
the transfer of VDAs.
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 Losses:
o Losses from the transfer of VDAs cannot be set off against any other income.
o Losses from one VDA cannot be set off against gains from another VDA.
o Losses cannot be carried forward to subsequent years.

2. Tax Deducted at Source (TDS) on VDAs: (Section 194S of the Income Tax Act, 1961)

 Rate of TDS: TDS is to be deducted at the rate of 1% of the consideration paid for the transfer of
VDAs.
 Threshold Limit:
o No TDS is required if the aggregate value of the consideration does not exceed:
 Rs. 50,000 in a financial year, in the case of a specified person (individual or HUF
whose total sales/gross receipts/turnover from business does not exceed Rs. 1 crore or
from the profession does not exceed Rs. 50 lakhs during the financial year
immediately preceding the financial year in which the VDA is transferred).
 Rs. 10,000 in a financial year, in the case of any other person.
 Liability to Deduct TDS:
o The person responsible for paying the consideration (buyer) is liable to deduct TDS.
 Special Cases:
o In cases where the transfer is done through an exchange, the exchange might be responsible
for deducting TDS.
o If the payment is partly or fully in kind or in exchange for another VDA, ensuring TDS
compliance becomes critical, and the transaction cannot be completed until the tax has been
paid.

4. Important Deadlines: Know the last date for tax audit, filing income tax returns, and TDS returns.

 Tax Audit Report: September 30th

 ITR for Individuals and HUFs: July 31st
 ITR for Audited Businesses: October 31st
 ITR for International Transactions: November 30th
 TDS Returns:
o Q1: July 31st
o Q2: October 31st
o Q3: January 31st
o Q4: May 31st

5. TDS Sections: Focus on Sections 194C, 194J, 192, 194I, 194H, 194R, etc.

Section 194C - TDS on Payment to Contractors/Sub-contractors

 Applicability: Payments to contractors/sub-contractors for work, including supply of labor.

 Threshold: Rs. 30,000 for a single contract or Rs. 1,00,000 in aggregate during a financial year.
 Rate of TDS:
o 1% for payments to individuals/HUFs.
o 2% for payments to others (e.g., companies, firms).

Section 194J - TDS on Fees for Professional or Technical Services

 Applicability: Payments for professional services, technical services, royalty, non-compete fees, etc.
 Threshold: Rs. 30,000 in aggregate during a financial year.
 Rate of TDS:
o 10% for professional/technical services.
o 2% for fees for technical services (effective from FY 2020-21).

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Section 192 - TDS on Salary

 Applicability: Salary payments by employers to employees.

 Rate of TDS: As per the applicable income tax slab rates for individuals.

Section 194I - TDS on Rent

 Applicability: Payments for rent of land, building, plant, machinery, equipment, etc.
 Threshold: Rs. 2,40,000 in aggregate during a financial year.
 Rate of TDS:
o 2% for the use of plant, machinery, or equipment.
o 10% for the use of land, building, furniture, or fittings.

Section 194H - TDS on Commission or Brokerage

 Applicability: Payments for commission or brokerage services.

 Threshold: Rs. 15,000 in aggregate during a financial year.
 Rate of TDS: 5%.

Section 194R - TDS on Benefits or Perquisites (it can be answered as perquisite related amendment).

 Applicability: Any benefit or perquisite arising from business or profession.

 Threshold: Rs. 20,000 in aggregate during a financial year.
 Rate of TDS: 10%.

6. Tell me about the MAT provisions. Explain how to calculate MAT profit, including five line items to be
added or subtracted to arrive at MAT profit from the normal book profit.

Key Features of MAT

 Applicability: MAT is applicable to all companies, including foreign companies, except those in
certain sectors like infrastructure and power (subject to conditions).
 Section: Section 115JB of the Income Tax Act, 1961.
 Tax Rate: Currently, MAT is levied at 15% (plus surcharge and cess as applicable) of the "book
profit."

Calculation of MAT

1. Determine Book Profit: The book profit is derived from the net profit as shown in the company's
profit and loss account for the relevant financial year, prepared as per the Companies Act.
2. Adjustments to Book Profit: The net profit is adjusted by certain additions and subtractions
specified under Section 115JB. Here are five key line items:

Additions to Book Profit:

1. Income Tax Paid/Payable and Provision: Any amount of income tax paid or payable, and the
provision for income tax, if debited to the profit and loss account.
2. Provisions for Unascertained Liabilities: Any provision made for unascertained liabilities, which is
not actually incurred.
3. Deferred Tax and Provision: Any amount or amounts set aside as provision for deferred tax and the
provision for the diminution in the value of any asset.
4. Dividends Paid/Proposed: If dividends paid or proposed have been debited to the profit and loss
account.

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5. Expenditure Related to Exempt Income: Expenditures relatable to income exempt under sections
10, 11, and 12 (except section 10(38)).

Subtractions from Book Profit:

1. Income Exempt under Sections 10, 11, and 12: Income that is exempt under sections 10 (excluding
section 10(38)), 11, and 12.
2. Amounts Withdrawn from Reserves: Any amount withdrawn from reserves or provisions, if such
amount is credited to the profit and loss account.
3. Depreciation: The amount of depreciation debited to the profit and loss account, excluding the
depreciation on revaluation of assets.
4. Brought Forward Business Losses or Unabsorbed Depreciation: Brought forward business losses
or unabsorbed depreciation, whichever is less as per the books of accounts.
5. Deferred Tax Credit: Any amount credited to the profit and loss account on account of deferred tax,
if any such amount is credited to the profit and loss account.

7. Explain Section 115BAB of the Income Tax Act, 1961.

Section 115BAB

Section 115BAB provides for a concessional tax rate for newly incorporated manufacturing companies.

1. Applicability: This section applies to domestic companies that:

o Are incorporated on or after October 1, 2019.
o Commence manufacturing or production by March 31, 2024.
o Do not avail any other specified tax benefits.
2. Tax Rate: Such companies are liable to pay income tax at the rate of 15% (plus applicable surcharge
and cess).
3. Conditions:
o The company should be engaged in the business of manufacturing or production of any article
or thing.
o The business should not be formed by splitting up, reconstruction of a business already in
existence, or using previously used plant and machinery (some exceptions apply).
o The company should not be engaged in any business other than manufacturing or production.
o The company should not avail any specified incentives or exemptions, such as those under
Section 10AA, accelerated depreciation under Section 32, etc.
4. MAT Exemption: Companies opting for this section are exempt from the Minimum Alternate Tax
(MAT) under Section 115JB.

Section 115BAC

Section 115BAC provides an alternative personal tax regime for individual and HUF taxpayers.

1. Applicability: This section applies to individuals and Hindu Undivided Families (HUFs).
2. Tax Rate: The section provides for concessional tax rates as follows:

Total Income (₹) Tax Rate (%)

Up to 2,50,000 Nil
2,50,001 to 5,00,000 5
5,00,001 to 7,50,000 10
7,50,001 to 10,00,000 15
10,00,001 to 12,50,000 20
12,50,001 to 15,00,000 25
Above 15,00,000 30

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3. Conditions:
o Taxpayers opting for this scheme will have to forego certain exemptions and deductions
available under the regular tax regime. This includes deductions under Sections 80C, 80D,
80G, etc., and exemptions such as house rent allowance, leave travel allowance, etc.
o The option to pay tax under this regime can be exercised on a yearly basis for those without
business income. For those with business income, once the option is exercised, it can only be
withdrawn once.
4. Filing Requirements: Taxpayers opting for the concessional rates under this section must file their
returns accordingly, and the option must be exercised before the due date of filing returns under
Section 139(1).

8. Budget related amendment. – Please must cover budget related amendments which will be covered in next
to next class.

International Tax

9. Learn transfer pricing provisions as per the Income Tax Act, 1961: Understand the various methods of
transfer pricing, when these provisions are applicable to the entity, and the penalties for non-
compliance.

Transfer Pricing Provisions in the Income Tax Act, 1961

Transfer pricing provisions ensure that transactions between related entities (associated enterprises) are
conducted at arm's length prices, preventing profit shifting and tax base erosion.

Applicability

1. Associated Enterprises (AEs):

o Transfer pricing regulations apply to transactions between two or more associated enterprises,
either domestic or international.
o Associated enterprises are defined under Section 92A, which includes situations where one
enterprise holds significant control over the other, shares common management, or
participates in the capital or control of the other.
2. Specified Domestic Transactions (SDTs):
o Certain domestic transactions exceeding ₹20 crore (as amended) are also covered under
transfer pricing provisions.

Transfer Pricing Methods

The Income Tax Act prescribes the following methods to determine the arm's length price (ALP):

1. Comparable Uncontrolled Price (CUP) Method:

o Compares the price charged for goods/services in a controlled transaction with the price
charged in a comparable uncontrolled transaction.
2. Resale Price Method (RPM):
o Used when goods/services purchased from an AE are resold to an unrelated party. The resale
price is reduced by a gross margin to arrive at the ALP.
3. Cost Plus Method (CPM):
o Based on the costs incurred by the supplier of goods/services, plus an appropriate markup to
determine the ALP.
4. Profit Split Method (PSM):
o The combined net profit of associated enterprises from controlled transactions is split based
on the relative value of their contributions.
5. Transactional Net Margin Method (TNMM):

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o Compares the net profit margin of a controlled transaction to the net profit margin of
comparable uncontrolled transactions.
6. Other Method:
o Any other method prescribed by the board considering the facts and circumstances of the case
to determine the ALP.

Compliance Requirements

1. Documentation:
o Taxpayers must maintain detailed documentation of their transfer pricing analysis and
policies.
o Documentation should include details of the associated enterprises, nature and terms of
international/domestic transactions, method used to determine ALP, and comparability
analysis.
2. Accountant’s Report:
o Taxpayers must obtain a report from a chartered accountant in Form 3CEB and submit it by
the due date of filing the income tax return.
3. Advance Pricing Agreement (APA):
o Taxpayers can enter into an APA with the tax authorities to agree in advance on the transfer
pricing methodology for specified transactions.

Penalties for Non-Compliance

1. Failure to Maintain Documentation:

o A penalty of 2% of the value of each international/domestic transaction.
2. Failure to Report Transactions:
o A penalty of 2% of the value of each international/domestic transaction.
3. Incorrect Maintenance of Documentation:
o A penalty of ₹500,000.
4. Transfer Pricing Adjustments:
o If transfer pricing adjustments result in an increase in taxable income, interest and penalties
on under-reported income may apply.
5. Secondary Adjustments:
o Secondary adjustments are mandated where there are primary adjustments exceeding ₹1
crore, requiring the excess amount to be repatriated to India within a specified time.

10. What are Forms 15CA and 15CB? Understand when these forms need to be filed.

Form 15CA

1. Purpose:
o Form 15CA is a declaration of the remitter (the person making the payment) that the payment
being made to a non-resident is subject to the provisions of the Income Tax Act, 1961, and the
applicable DTAA.
o It serves as a tool for the Income Tax Department to track foreign remittances and ensure that
taxes are deducted at the appropriate rates.
2. When to File:
o Form 15CA is required to be filed before making any remittance to a non-resident, if such
remittance is taxable under the provisions of the Income Tax Act, 1961.

Form 15CB

1. Purpose:
o Form 15CB is a certificate issued by a Chartered Accountant (CA) to ensure that the tax
implications of the remittance have been properly examined.
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o The CA certifies the details of the remittance, including the nature of the remittance, the
applicable tax rate, the DTAA provisions, and whether the tax has been correctly deducted at
source.
2. When to File:
o Form 15CB is required when the remittance or the aggregate of such remittance exceeds ₹5
lakh in a financial year and the remittance is taxable.

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Indirect Tax-Related Questions –

GST

1. Sections 12, 13, and 31 of the CGST Act, 2017.

Section 12: Time of Supply of Goods

Section 12 of the CGST Act, 2017, defines the time of supply of goods. The time of supply determines the
point in time when the liability to pay tax arises.

1. General Rule:
o The time of supply of goods shall be the earlier of the following dates:
 The date of issue of the invoice by the supplier or the last date on which he is
required to issue the invoice under Section 31.
 The date on which the supplier receives the payment with respect to the supply.
2. Special Cases:
o In cases where the supply involves the movement of goods, the date of delivery shall be
considered the time of supply if it is earlier than the invoice or payment date.
o For goods sent on approval for sale or return, the time of supply is earlier of the time when it
is known that the supply has taken place or six months from the date of removal.

Section 13: Time of Supply of Services

Section 13 of the CGST Act, 2017, defines the time of supply of services.

1. General Rule:
o The time of supply of services shall be the earlier of the following dates:
 The date of issue of the invoice by the supplier, if the invoice is issued within the
prescribed period under Section 31, or the date of receipt of payment, whichever is
earlier.
 The date of provision of the service, if the invoice is not issued within the prescribed
period under Section 31, or the date of receipt of payment, whichever is earlier.
2. Special Cases:
o If the above provisions are not applicable, the time of supply shall be the date on which the
recipient shows the receipt of services in his books of account.
o In cases of continuous supply of services where due dates for payment are ascertainable, the
time of supply shall be the due date of payment.
o In cases where due dates for payment are not ascertainable, the time of supply shall be the
date on which the supplier receives the payment.
o In cases where payment is linked to the completion of an event, the time of supply shall be the
date of completion of that event.

Section 31: Tax Invoice

Section 31 of the CGST Act, 2017, prescribes the manner and time for issuance of a tax invoice, credit note,
and debit note.

1. Tax Invoice for Supply of Goods:

o A registered person supplying taxable goods must issue a tax invoice before or at the time of:
 Removal of goods for supply to the recipient, where the supply involves the
movement of goods.
 Delivery of goods or making them available to the recipient, in other cases.
2. Tax Invoice for Supply of Services:

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o A registered person supplying taxable services must issue a tax invoice before or after the
provision of services but within a prescribed period.
3. Continuous Supply:
o For continuous supply of goods, where successive statements of accounts or successive
payments are involved, the invoice should be issued before or at the time of each such
statement is issued or each such payment is received.
o For continuous supply of services, where due dates are ascertainable from the contract, the
invoice should be issued before or after the payment due date, but within the prescribed
period.
o Where due dates are not ascertainable from the contract, the invoice should be issued before
or after the recipient shows the receipt of services in his books of account, but within the
prescribed period.
o Where payment is linked to the completion of an event, the invoice should be issued before or
after the date of completion of that event, but within the prescribed period.
4. Revised Invoice:
o A registered person may issue a revised invoice for supplies made between the effective date
of registration and the issuance of the registration certificate.
5. Credit and Debit Notes:
o A registered person may issue a credit note or debit note in cases of discrepancies in the value
of goods or services supplied, including returns, discounts, or adjustments.

2. Section 16 of the CGST Act, 2017: Understand the conditions for taking Input Tax Credit (ITC).

Section 16 of the Central Goods and Services Tax (CGST) Act, 2017, outlines the eligibility and conditions
for availing Input Tax Credit (ITC). Here is a summary of the key provisions:

Eligibility for ITC (Section 16(1)):

1. Registered Person: ITC is available to a registered person under the CGST Act.
2. Goods or Services Used in Business: The goods or services must be used or intended to be used in
the course or furtherance of business.

Conditions for Availing ITC (Section 16(2)):

A registered person can claim ITC if the following conditions are met:

1. Possession of Tax Invoice or Debit Note:

o The person must have a tax invoice or debit note issued by a registered supplier or other
prescribed documents.
2. Receipt of Goods or Services:
o The person must have received the goods or services.
o If the goods are received in lots or installments, ITC can be claimed upon receipt of the last
lot or installment.
3. Tax Payment to Government:
o The tax charged on the supply must have been actually paid to the government by the
supplier, either in cash or through the utilization of ITC.
4. Filing of Return:
o The registered person must have furnished the returns as required under Section 39.

Time Limit for Availing ITC (Section 16(4)):

ITC must be claimed within:

 30th of November following the end of the financial year to which the invoice or debit note pertains,
or

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 The date of furnishing the relevant annual return, whichever is earlier.

Additional Provisions:

 Restriction in Case of Non-Payment to Supplier:

o If the recipient fails to pay the supplier within 180 days from the date of issue of invoice, the
ITC claimed will be added to the recipient's output tax liability along with interest.
 Credit on Depreciation:
o If depreciation has been claimed on the tax component of the cost of capital goods under the
Income Tax Act, ITC on the said tax component is not allowed.

Restrictions and Exceptions:

 Blocked Credits (Section 17(5)):

o ITC is not available in certain cases, such as for motor vehicles, outdoor catering, and certain
other specified services, except under specific circumstances.
 Use for Exempt Supplies:
o ITC is not available for goods or services used for making exempt supplies or for non-
business purposes.

Documentation and Records:

 Proper records and documentation must be maintained to substantiate the ITC claims.

Compliance Requirements:

 Matching, Reversal, and Reclaim:

o The ITC claim is subject to matching, reversal, and reclaim procedures as prescribed under
the CGST Rules.

3. Section 17(5) of the CGST Act, 2017: Learn about the Reverse Charge Mechanism (RCM) provisions.

Summary of Section 17(5) of the CGST Act, 2017

Category Details
Personal Use Goods ITC not allowed on goods or services used for personal consumption.
Motor Vehicles ITC blocked unless used for:
- Further supply of such vehicles.
- Transportation of passengers or goods.
- Leasing, renting, or hiring of motor vehicles.
Food and Beverages ITC blocked on:
- Cost of food and beverages, outdoor catering, and health services.
- Exceptions apply when used for providing output services or incurred in the
course of business.
Construction and Works ITC blocked on:
Contract
- Construction services (including works contracts) for construction of immovable
property (other than for further supply).
- Renovation and repair services of immovable property (unless used for further
supply).
Club Membership and ITC blocked on:
Professional Services
- Membership fees of clubs, associations, or organizations.
- Legal, accounting, or consultancy services unless used for making taxable
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supplies.
Employee Costs ITC blocked on salaries and wages paid to employees.
Goods Lost, Destroyed, or ITC blocked on goods that are lost, destroyed, or written off.
Written Off
Not Covered under Section ITC allowed on goods and services used for business purposes, including those
17(5) directly related to taxable supplies.
Exceptions ITC may be claimed for specific exceptions outlined in the Act, provided proper
documentation and use for business purposes.

Reverse Charge Mechanism (RCM) under CGST Act, 2017

Section 9(3): Reverse Charge on Specified Goods and Services Under this section, the government
specifies categories of goods and services on which the tax shall be paid on a reverse charge basis by the
recipient of such goods or services. The supplier of these goods or services is not required to collect the tax.
Instead, the recipient is responsible for paying the GST directly to the government.

Key Points:

1. Specified Goods and Services:

o The government issues notifications specifying the goods and services that fall under this
provision.
o Examples include services provided by an advocate, goods transport agency services, and
certain imports of goods and services.
2. Tax Liability:
o The recipient is liable to pay the tax on such supplies.
o The recipient must issue a payment voucher at the time of making payment to the supplier.

Section 9(4): Reverse Charge on Inward Supplies from Unregistered Persons Initially, this section
required registered persons to pay tax on a reverse charge basis on any supply of goods or services received
from an unregistered supplier. However, this provision was later amended to apply only in specific cases as
notified by the government.

Key Points:

1. Supplies from Unregistered Persons:

o Applies to supplies received from persons who are not registered under GST.
o The registered recipient is liable to pay GST on such supplies.
2. Current Status:
o As of recent amendments, the applicability of this provision has been restricted and is subject
to government notification.

Conditions and Compliance for RCM:

1. Self-Invoicing:
o The recipient of goods or services under RCM must issue an invoice on behalf of the supplier
if the supplier is not registered.
2. Payment Voucher:
o The recipient must issue a payment voucher at the time of making payment to the supplier
under RCM.
3. Input Tax Credit:
o The tax paid under RCM can be claimed as ITC by the recipient, subject to conditions.
4. Reporting in Returns:
o The tax payable under RCM must be reported in the GSTR-3B return of the recipient.

Documentation and Record-Keeping:

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 Maintain Invoices and Payment Vouchers:
o Proper records of invoices and payment vouchers issued under RCM must be maintained.
 Compliance with Notifications:
o Stay updated with government notifications specifying goods and services covered under
RCM.

4. Job Work Provisions: Understand Section 19.

Job Work Provisions under Section 19 of CGST Act, 2017

Section 19(1): Input Tax Credit on Goods Sent for Job Work

 The principal can send inputs or capital goods to a job worker for further processing, testing, repair, or
any other purpose.
 The principal is entitled to take input tax credit (ITC) on the inputs or capital goods sent to the job
worker.

Section 19(2): Conditions for ITC on Inputs

 The principal can avail ITC on inputs sent to a job worker if the inputs are received back within one
year from the date they were sent out.
 If the inputs are not received back within one year, the ITC taken will be reversed.

Section 19(3): Conditions for ITC on Capital Goods

 The principal can avail ITC on capital goods sent to a job worker if the capital goods are received
back within three years from the date they were sent out.
 If the capital goods are not received back within three years, the ITC taken will be reversed.

Section 19(4): Supply of Goods from Job Worker’s Premises

 The principal can supply goods directly from the job worker’s premises on payment of tax within
India or for export.
 The job worker's premises will be considered as the place of business of the principal for this purpose.

Section 19(5): Treatment of Waste and Scrap

 Waste and scrap generated during the job work can be supplied by the job worker directly from his
premises on payment of tax, if such job worker is registered.
 If the job worker is not registered, the principal is liable to pay tax on such waste and scrap.

Section 19(6): Deemed Supply

 If the inputs or capital goods are not returned to the principal within the specified period (one year for
inputs and three years for capital goods), they will be deemed to be supplied by the principal to the
job worker on the day they were sent out.

5. Input Service Distributor Provisions.

Key Provisions and Conditions:

1. Eligibility to Act as an ISD:

o Only offices engaged in distributing credit on input services can act as an ISD.

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o ISD must be a registered entity under GST and must obtain a separate registration as an ISD,
even if it is already registered for other purposes.
2. Distribution of Credit:
o ISD can distribute the credit of Central GST (CGST), State GST (SGST), Union Territory
GST (UTGST), and Integrated GST (IGST) to its recipient units.
o The distribution of credit is done through an ISD invoice or a credit note.
3. Conditions for Distribution of Credit:
o Credit of CGST and SGST/UTGST: These credits can be distributed to recipient units
located within the same state as the ISD.
o Credit of IGST: This credit can be distributed to any recipient unit, regardless of its location.
o The amount of credit distributed should not exceed the credit available for distribution.
4. Manner of Distribution:
o Pro Rata Basis: Credit is to be distributed proportionately to all recipient units based on the
turnover of each unit in the relevant period. The turnover considered can be of the previous
financial year or the last quarter if the previous year’s turnover is not available.
o Separate Distribution: Credits pertaining to different recipient units should be distributed
separately to each unit.
5. Treatment of Excess Credit:
o If excess credit is distributed to any recipient unit, the excess amount is added to the output
tax liability of the recipient unit along with interest.
6. Documentation and Compliance:
o ISD must issue an ISD invoice or credit note when distributing credit.
o Details of the credit distributed by the ISD should be reported in the GST returns.
o ISD is required to file GSTR-6 on a monthly basis, detailing the distribution of credit.
7. Restrictions:
o ISD cannot distribute credit on inputs or capital goods; it is limited to the credit on input
services only.
o ISD cannot utilize the credit for its own purposes; it can only distribute the credit to the
recipient units.

6. Rules 42 and 43: Understand the apportionment of credit.

Rule 42: Apportionment of ITC on Inputs and Input Services

Scope:

 Rule 42 applies to inputs and input services that are used partly for:
o Business purposes and partly for non-business purposes.
o Making taxable supplies (including zero-rated supplies) and partly for exempt supplies.

Steps for Apportionment:

1. Total ITC (T):

o Determine the total ITC available on inputs and input services for a tax period.
2. ITC for Non-Business Purposes (T1):
o Calculate the ITC attributable to inputs and input services used for non-business purposes.
This portion is ineligible for credit.
3. ITC for Exempt Supplies (T2):
o Calculate the ITC attributable to inputs and input services used exclusively for making
exempt supplies. This portion is also ineligible for credit.
4. Net ITC (C1):
o Subtract T1 and T2 from the total ITC (T).
o C1 = T - (T1 + T2)
5. Common Credit (C2):
o Identify the ITC on inputs and input services used commonly for both taxable and exempt
supplies, as well as for business and non-business purposes.
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o C2 = C1 - ITC on inputs and input services used exclusively for taxable supplies.
6. Exempt Turnover Ratio (E/F):
o Calculate the ratio of exempt turnover (E) to the total turnover (F) of the tax period. This ratio
will be used to apportion the common credit.
7. ITC Attributable to Exempt Supplies (D1):
o Apportion the common credit to exempt supplies using the exempt turnover ratio.
o D1 = C2 × (E/F)
8. ITC Attributable to Non-Business Purposes (D2):
o A fixed percentage (5%) of the common credit is attributed to non-business purposes.
o D2 = 5% of C2
9. Eligible ITC (C3):
o The final eligible ITC that can be claimed is:
o C3 = C2 - (D1 + D2)

Monthly Reversal and Year-End Adjustment:

 The ineligible ITC (D1 and D2) is reversed monthly.

 At the end of the financial year, the final adjustment is made based on the actual turnover figures, and
any additional ITC reversal or reclaim is accounted for.

Rule 43: Apportionment of ITC on Capital Goods

Scope:

 Rule 43 deals with the apportionment of ITC on capital goods used partly for business and non-
business purposes, or for making taxable and exempt supplies.

Steps for Apportionment:

1. Initial ITC on Capital Goods (Tc):

o Determine the total ITC on capital goods when they are procured.
2. Use for Exempt Supplies:
o If capital goods are used exclusively for exempt supplies, the ITC is not available.
3. Use for Taxable Supplies:
o If capital goods are used exclusively for taxable supplies, the ITC is fully available.
4. Common Capital Goods (Tr):
o For capital goods used for both taxable and exempt supplies, the ITC is apportioned over a
useful life of five years (60 months).
o Monthly ITC on common capital goods is Tr/60.
5. Monthly Apportionment:
o The common credit for each month (Tm) is determined, and the portion attributable to exempt
supplies (Te) is calculated using the exempt turnover ratio (E/F) similar to Rule 42.
6. Ineligible ITC (Tm × E/F):
o The ITC attributable to exempt supplies is ineligible and must be reversed every month.
7. Final Adjustment:
o At the end of the financial year, a final adjustment is made based on actual turnover to correct
any discrepancies in ITC claimed.

7. Section 50: Learn about the refund provisions.

Refund Provisions under Section 54 of the CGST Act, 2017

Section 54 outlines the procedure and conditions under which a registered person can claim a refund of tax,
interest, or any other amount paid under the GST regime. Here's a detailed breakdown:

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1. Eligibility for Refund:

Refunds under GST can be claimed in various situations, including:

 Excess payment of tax due to an error or mistake.

 Export of goods or services (including zero-rated supplies) without payment of IGST (refund of
accumulated ITC).
 Supply of goods or services to SEZ units/developers without payment of IGST.
 Refund of unutilized ITC in case of inverted duty structure, where the rate of tax on inputs is higher
than the rate on output supplies.
 Finalization of provisional assessment, leading to a refund.
 Deemed exports where supplies are made to certain notified entities or for specified projects.
 Refund of tax paid on a transaction considered as an inter-state supply but later determined to be
intra-state or vice versa.
 Refund on account of issuance of refund vouchers for taxes paid on advances against which no
supply was made.
 Refunds in case of advance rulings, appeals, or judgments, where the tax paid becomes
refundable.

2. Time Limit for Claiming Refund:

 The application for a refund must be filed within two years from the "relevant date," which varies
depending on the situation:
o Exports: The relevant date is the date of shipping bill or when the goods pass the customs
frontier.
o Excess payment of tax: The relevant date is the date of payment of tax.
o Unutilized ITC: The relevant date is the end of the financial year in which the claim for
refund arises.

3. Procedure for Claiming Refund:

1. Filing Application:
o The refund application must be filed electronically in Form GST RFD-01.
o The application should include all necessary documents, such as invoices, shipping bills, and
other relevant records.
2. Verification by Tax Authorities:
o The refund claim is verified by the tax authorities.
o If the claim is found to be in order, the refund is sanctioned within 60 days from the date of
receipt of the application.
3. Provisional Refund:
o In cases of export of goods or services, 90% of the claimed refund may be granted
provisionally within 7 days of the acknowledgment of the claim. The remaining 10% is
subject to further verification.

4. Interest on Delayed Refund:

 If the refund is not sanctioned within 60 days from the date of application, interest is payable to the
claimant. The interest rate is 6% per annum, calculated from the expiry of the 60-day period until the
date of refund.

5. Situations Where Refund is Not Allowed:

 Refund of ITC on inputs/input services used for making exempt supplies.

 Refund claims below Rs. 1,000 (for all tax heads together—CGST, SGST/UTGST, IGST, and cess).

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6. Adjustment Against Outstanding Demand:

 If the claimant has any outstanding demand under the GST Act, the refund due can be adjusted
against such demand.

7. Refund to Unregistered Persons:

 Unregistered persons can also claim refunds (e.g., in case of cancellation of contracts or where tax
was mistakenly paid) by filing Form GST RFD-01.

8. Relevant Date:

The relevant date for refund varies depending on the nature of the refund claim:

 For goods exported by sea or air: Date on which the ship or aircraft leaves India.
 For goods exported by land: Date on which goods pass the frontier.
 For services exported: Date of receipt of payment in convertible foreign exchange or in Indian
rupees wherever permitted by the Reserve Bank of India.
 For supplies to SEZ unit or SEZ developer: Date of receipt of goods/services by the SEZ
unit/developer.
 Inverted duty structure: End of the financial year in which such claim arises.

9. Documentation for Refund Claims:

 Supporting documents are required for different types of refunds, such as:
o Export documents: Shipping bill, bill of export, etc.
o Invoices: Tax invoices, refund vouchers, etc.
o Bank Statements: For refunds related to export of services or deemed exports.
o Statements and Declarations: Specific to certain refund claims like SEZ supplies.

8. Monthly Returns: Learn the names and due dates of monthly returns.

Return Purpose Due Date

Name
GSTR-1 Details of outward supplies (sales) 11th of the following month (monthly); 13th of the
following month for IFF under QRMP scheme
GSTR-3B Summary return for outward and inward 20th of the following month
supplies, tax payment
GSTR-5 Return for non-resident foreign taxpayers 20th of the following month or within 7 days after expiry
of registration
GSTR-5A Return for non-resident OIDAR service 20th of the following month
providers
GSTR-6 Return for Input Service Distributors (ISD) 13th of the following month
GSTR-7 Return for TDS deductors 10th of the following month
GSTR-8 Return for e-commerce operators 10th of the following month
collecting TCS
CMP-08 Quarterly statement-cum-challan for 18th of the month following the quarter
Composition Scheme taxpayers
GSTR-9 Annual return summarizing all returns of 31st December of the following financial year
the financial year

9. Provisions Related to Place of Supply.

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The concept of "Place of Supply" is crucial under the GST regime as it determines the type of GST—CGST,
SGST/UTGST, or IGST—that will be levied on a transaction. The provisions related to the place of supply are
primarily outlined in Sections 10 to 13 of the IGST Act, 2017. These provisions vary based on the nature of
the supply—whether it involves goods or services—and whether the transaction is domestic (within India) or
involves an import/export.

Place of Supply Provisions:

1. Place of Supply for Goods

A. Domestic Transactions (Within India):

 Section 10:
o Where the supply involves the movement of goods: The place of supply is the location
where the goods are delivered to the recipient.
o Where the supply does not involve the movement of goods: The place of supply is the
location of the goods at the time of delivery to the recipient.
o Goods supplied on board a conveyance: The place of supply is the location where the goods
are taken on board.
o Where goods are assembled or installed at site: The place of supply is the location where
the goods are assembled or installed.

B. International Transactions:

 Section 11:
o Imports: The place of supply is the location of the importer.
o Exports: The place of supply is the location outside India.

2. Place of Supply for Services

A. Domestic Transactions (Within India):

 Section 12:
o General Rule: The place of supply is the location of the recipient if the recipient is a
registered person; if not, it is the location of the supplier.
o Specific Situations:
 Immovable Property: The place of supply is the location of the immovable property.
 Restaurant and Catering Services: The place of supply is where the services are
actually performed.
 Training and Performance Appraisal: The place of supply is the location of the
recipient if they are a registered person; otherwise, it is the location where the
services are performed.
 Admission to an Event: The place of supply is where the event is actually held.
 Transportation of Goods: The place of supply is the location of the recipient if they
are a registered person; otherwise, it is where the goods are handed over for
transportation.
 Passenger Transportation: The place of supply is where the passenger embarks on
the conveyance for a continuous journey.
 Banking, Financial, and Stockbroking Services: The place of supply is the location
of the supplier of services.
 Insurance Services: The place of supply is the location of the recipient if they are a
registered person; otherwise, it is the location of the recipient as per the records of the
supplier.

B. International Transactions:
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 Section 13:
o General Rule: The place of supply is the location of the recipient of services.
o Specific Situations:
 Performance-Based Services: If the services are required to be performed at a
specific location, the place of supply is the location where the services are actually
performed.
 Services related to Immovable Property: The place of supply is where the
immovable property is located.
 Passenger and Goods Transportation: The place of supply is where the
transportation begins.
 Services provided on board a conveyance: The place of supply is where the goods
are taken on board.

Importance of Place of Supply:

 Determination of Tax Type: The place of supply determines whether a transaction will attract CGST
& SGST/UTGST (intra-state supply) or IGST (inter-state supply).
 Compliance: Proper determination of the place of supply ensures correct tax reporting and helps
avoid disputes with tax authorities.
 Impact on ITC: The correct determination of the place of supply affects the input tax credit (ITC)
eligibility and compliance.

Examples:

1. Goods Moving Between States:

o A manufacturer in Maharashtra sells goods to a dealer in Karnataka. The place of supply is
Karnataka (the location where goods are delivered). IGST will be applicable.
2. Service Provided for an Event in a Different State:
o A marketing agency in Delhi provides services for an event held in Mumbai. The place of
supply is Mumbai (the location of the event). Since it’s an intra-state transaction, CGST and
SGST will apply.
3. International Services:
o A consulting firm in India provides services to a client in the USA. The place of supply is the
USA (location of the recipient), making the supply an export, and thus eligible for zero-rated
supply under IGST.

10. E-Invoicing Provisions.

Aspect Details
Applicability Required for businesses with an annual turnover exceeding ₹5 crores (as of now).
Exemptions include SEZ units, insurers, banks, financial institutions, GTAs, passenger
transport services, and multiplexes.
Invoice Reference Generated by the Invoice Registration Portal (IRP) upon submission of invoice data. IRN
Number (IRN) is a unique identifier for each e-invoice.
QR Code A QR code is generated by the IRP, containing key invoice details, and must be printed on
the invoice.
Auto-Population Invoice data is auto-populated in GSTR-1, reducing errors during GST return filing.
E-Way Bill E-invoicing can be linked with the e-way bill system, simplifying the generation of e-way
Integration bills for transportation of goods.
Standard Format E-invoices follow a standardized format with mandatory fields, ensuring uniformity
across businesses.
Amendments and Invoices cannot be amended on the IRP; changes must be made via debit/credit notes or
Cancellations GST returns. Invoices can be canceled within 24 hours of generation.
Compliance and Non-compliance results in penalties (₹10,000 per invoice for not generating an e-invoice,
Penalties ₹25,000 per invoice for incorrect invoices). Non-compliant invoices are deemed invalid.

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90%-100% of your Interview questions)
Benefits Reduces errors, improves compliance, enables faster ITC claims, and integrates
seamlessly with GST and e-way bill systems.
Implementation Rolled out in phases, currently applicable to businesses with turnover above ₹5 crores.

11. Applicable GST: Understand the GST on output and input for your client's products.

Do it yourself

12. GST Rate on Hotel Services: Learn the GST rate on hotel rooms and restaurant services if your client is
a hotel, and understand the TDS provisions (whether under Section 194C or 194I).

1. GST Rates:
o Hotel Rooms:
 Up to ₹1,000: Exempt.
 ₹1,001 - ₹7,500: 12%.
 Above ₹7,500: 18%.
o Restaurant Services:
 Hotel (₹7,500+ room tariff): 18%.
 Standalone Restaurants:
 AC: 12%.
 Non-AC: 5% (no ITC).
2. TDS Provisions:
o Section 194C: 1% or 2% TDS on payments to contractors.
o Section 194I: 10% TDS on rent for immovable property and professional/technical services; 2%
TDS on rent for movable property.

13. Value of Supply: Understand the provisions related to the value of supply (Rules 28 to 31).

Key Provisions Related to the Value of Supply (Rules 28 to 31):

1. Rule 28: Value of Supply Between Distinct or Related Persons

 Applicability: This rule applies when the supply is made between distinct persons (like different
branches of the same business) or related persons.
 Determination:
o Open Market Value (OMV): The value of the supply is generally taken as the open market
value.
o Consideration Received: If the OMV is not available, the value is based on the consideration
actually received.
o Equivalent Goods or Services: If neither OMV nor actual consideration is available, the
value can be based on the value of goods or services of a like kind and quality.
o Input Tax Credit (ITC): If the recipient is eligible for full ITC, the value declared in the
invoice is deemed to be the value of the supply.

2. Rule 29: Value of Supply of Goods Made or Received Through an Agent

 Applicability: This rule applies when goods are supplied through an agent.
 Determination:
o Open Market Value: The value of the supply is taken as the open market value.
o 90% of the Price Charged: Alternatively, the value can be 90% of the price charged by the
recipient to unrelated customers, for goods of like kind and quality.

3. Rule 30: Value of Supply Based on Cost

 Applicability: When the value cannot be determined using the above rules.
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 Determination:
o Cost Plus 10%: The value is determined by taking 110% of the cost of production or
manufacture, or the cost of acquisition or provision of such services.

4. Rule 31: Residual Method for Determining Value of Supply

 Applicability: When the value of supply cannot be determined using Rules 27 to 30.
 Determination:
o Reasonable Means: The value is determined using reasonable means consistent with the
principles and general provisions of Section 15 of the CGST Act.
o Rule 31A (Specific Cases): In specific cases like lottery, betting, and gambling, the value is
determined under Rule 31A, which provides specific methods based on the transaction type.

14. Tell me about the turnover and output tax reconciliation as per monthly returns and the annual return
(GSTR 9). What are the reasons for differences between them?

Reconciliation Process:

1. Turnover Reconciliation:
o GSTR-1 vs. GSTR-9:
 Total turnover in GSTR-1 should match the turnover in GSTR-9.
 Differences can arise due to unreported invoices, missed supplies, or errors in
recording sales.
o GSTR-3B vs. GSTR-9:
 Turnover in GSTR-3B should align with GSTR-9.
 Discrepancies may be due to incorrectly reported turnover or exclusion/inclusion of
non-taxable supplies.
2. Output Tax Reconciliation:
o GSTR-3B vs. GSTR-9:
 Output tax in GSTR-3B should reconcile with the output tax in GSTR-9.
 Differences may occur due to reporting mistakes, inaccurate tax rates, or unreflected
adjustments.
o GSTR-1 vs. GSTR-9:
 Output tax in GSTR-1 should match the corresponding output tax in GSTR-9.

Reasons for Differences:

1. Inaccurate Reporting:
o Errors in recording or reporting transactions in GSTR-1 or GSTR-3B, such as incorrect
amounts or misclassified supplies.
2. Timing Differences:
o Invoices or transactions reported in GSTR-1 might not be included in GSTR-3B or vice versa
due to timing differences in reporting or filing.
3. Amendments and Corrections:
o Adjustments or amendments to invoices or returns not reflected in the monthly returns or
annual return.
4. Data Entry Errors:
o Mistakes in data entry or computation while filling out the returns.
5. Unreported Transactions:
o Transactions missed or not reported in the monthly returns but included in the annual return.
6. ITC Adjustments:
o Differences in ITC claimed in monthly returns and reported in the annual return can affect
output tax reconciliation.
7. Calculation Errors:
o Errors in calculating tax liability, ITC, or turnover.

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 Interview Questions – By CA Jatin Agarwal (Coverage-
90%-100% of your Interview questions)
15. What is Form GSTR-9C? When are its provisions applicable to an entity?

Form GSTR-9C is a reconciliation statement that is filed by taxpayers registered under the Goods and
Services Tax (GST) regime. It is part of the annual compliance process and serves as an audit report that
compares the annual return (GSTR-9) with the audited annual financial statements of the taxpayer.

Key Features of Form GSTR-9C:

1. Purpose:
o GSTR-9C is designed to reconcile the data provided in GSTR-9 with the taxpayer’s audited
financial statements.
o It includes a certification by a Chartered Accountant (CA) or Cost Accountant.
2. Components:
o Part A: Reconciliation Statement
 This part reconciles the turnover declared in the audited financial statements with the
turnover declared in GSTR-9.
 It includes reconciliation of taxable value, tax paid, and input tax credit (ITC)
claimed.
o Part B: Certification
 This part includes a certification by the auditor regarding the accuracy and
completeness of the reconciliation statement and other particulars mentioned in
GSTR-9C.

Applicability of GSTR-9C:

1. Turnover Threshold:
o GSTR-9C is applicable to taxpayers whose aggregate turnover exceeds ₹5 crores during the
financial year.
2. Filing Requirements:
o It must be filed along with GSTR-9, the annual return.
o The reconciliation statement needs to be audited by a Chartered Accountant or Cost
Accountant, and their certification must be included.
3. Due Date:
o The due date for filing GSTR-9C is generally the same as that for GSTR-9, which is
December 31st of the year following the relevant financial year. However, this date may be
extended by the government.

16. What is GSTR 2B? What are the major reasons for differences in input tax credit as per GSTR 2B and
the books?

GSTR-2B is an auto-drafted Input Tax Credit (ITC) statement generated for every recipient/taxpayer on the
basis of the information furnished by their suppliers in their GSTR-1, GSTR-5 (for non-resident taxable
persons), and GSTR-6 (for input service distributors). It is a static statement and remains constant for a
particular period.

Key Features of GSTR-2B:

1. Auto-Generated:
o GSTR-2B is auto-drafted based on the information provided by suppliers in their GSTR-1,
GSTR-5, and GSTR-6 returns.
o It is available for each month on the GST portal.
2. Static ITC Statement:
o Unlike GSTR-2A, which is dynamic and changes as suppliers upload their invoices, GSTR-
2B is static for a particular tax period. This helps in reconciling ITC without frequent
changes.

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3. Data Coverage:
o It includes details of all inward supplies including imports, credit notes, and debit notes.
4. Availability:
o GSTR-2B is generated on the 14th of the following month. For example, the statement for
July will be available on August 14th.

Major Reasons for Differences in ITC as per GSTR-2B and Books:

1. Timing Differences:
o Invoices Not Uploaded: Suppliers might have not uploaded invoices or might have uploaded
them after the cut-off date, leading to discrepancies in the ITC claimed.
o Amendments: Amendments made by suppliers in subsequent months may not reflect
immediately in the recipient's books.
2. Data Entry Errors:
o Incorrect Invoice Details: Mistakes in entering invoice details such as GSTIN, invoice
number, or tax amounts can lead to mismatches.
o Duplications or Omissions: Duplicate entries or omissions of invoices in the books of
accounts can cause differences.
3. Mismatch in Invoice Dates:
o Different Periods: Invoices pertaining to one period might be reported by the supplier in a
different period, causing a timing mismatch.
4. Credit Notes and Debit Notes:
o Not Accounted: Credit notes and debit notes issued by suppliers might not be accounted for
correctly in the books, affecting ITC reconciliation.
5. Ineligible ITC:
o Blocked Credits: Certain ITC might be ineligible as per GST laws (e.g., ITC on personal
expenses, blocked credits under Section 17(5) of the CGST Act).
o Incorrect Classification: Misclassification of eligible and ineligible ITC in the books.
6. Reversal of ITC:
o Rule 37 Compliance: Reversal of ITC on non-payment of consideration within 180 days as
per Rule 37 might not be properly accounted for in the books.
o Other Reversals: Other reasons for ITC reversals, such as capital goods usage, exempt
supplies, etc.
7. Import of Goods:
o Customs Data: ITC on imports might not match if there are discrepancies or delays in
updating the data from the customs department.
8. Differences in Reporting:
o GSTR-3B vs. GSTR-2B: Differences between the ITC claimed in GSTR-3B and auto-
populated details in GSTR-2B due to timing or reporting issues.

17. What is the difference between GSTR 2A and GSTR 2B?

GSTR-2A vs. GSTR-2B

Feature GSTR-2A GSTR-2B

Nature Dynamic Statement Static Statement
Purpose Provides a real-time summary of inward supplies Provides a fixed summary of ITC
as and when the suppliers file their GSTR-1, available for a specific period.
GSTR-5, and GSTR-6.
Generation Continuously updated as suppliers upload Generated monthly on the 12th of the
invoices. following month and remains unchanged
for that period.
Data Source Data from GSTR-1, GSTR-5, GSTR-6, and Data from GSTR-1, GSTR-5, and GSTR-
GSTR-7 of suppliers. 6 of suppliers, along with amendments.
Availability Real-time basis; updates whenever a supplier files Available on the 12th of the following

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90%-100% of your Interview questions)
their returns. month for a specific tax period.
Amendments Reflects real-time amendments made by suppliers
Includes amendments up to the date of
in their returns. generation (12th of the following month).
Usage Useful for regular ITC reconciliation and tracking
Used for accurate ITC claim for a
supplier compliance. particular tax period and aids in finalizing
monthly returns.
Adjustment for Shows ITC for the current period and previous Does not include past period ITC;
Previous Periods periods if amendments are made. focuses only on the specified month.
Certainty Less certainty due to continuous updates. Provides certainty as it is a fixed
statement for the period.

18. Can GST returns be amended? If yes, what is the time limit for doing so? What is Form GSTR-1A and what is
its time limit for filing?

GST returns, once filed, cannot be amended directly. However, certain corrections or amendments can be
made through subsequent returns:

1. GSTR-1:
o Amendments Allowed: Corrections to details of outward supplies can be made in subsequent
GSTR-1 returns.
th
o Time Limit: Amendments can be made up to 30 of November following the end of the
financial year or the actual date of filing of the annual return, whichever is earlier.
2. GSTR-3B:
o Amendments Allowed: Errors in GSTR-3B, such as incorrect tax payments or input tax
credit claims, can be adjusted in subsequent GSTR-3B returns.
th
o Time Limit: Amendments can be made up to 30 of November following the end of the
financial year or the actual date of filing of the annual return, whichever is earlier.

GSTR-1A:

o Recently GST Council had recommended providing a new optional facility by way of form
GSTR-1A to facilitate the taxpayers to amend the details in form GSTR-1 for a tax period
and/ or to declare additional details
o GSTR-1A will, however, have to be filed before filing of return in GSTR-3B for the said tax
period.

Customs

14. Various Types of Custom Duties: Understand basic custom duty, anti-dumping duty, protective duties,
countervailing duties, anti-circumvention measures, and the social welfare surcharge.

Type of Duty Definition Purpose Rate/Duration

Basic Customs A standard tax on imported To protect domestic Varies by goods classification
Duty (BCD) goods under the Customs Act, industries by making under the Customs Tariff Act.
1962. imports more expensive.
Anti-Dumping A duty on goods sold in the To protect domestic Imposed for 5 years, subject to
Duty domestic market below their industries from unfair review.
normal value. competition due to
dumping.
Protective Duty A duty to protect specific To safeguard vulnerable Based on recommendations
domestic industries from domestic industries, from the Tariff Commission.
foreign competition. especially in early stages.
Countervailing A duty to counterbalance To neutralize the advantage Equivalent to the subsidy
Duty (CVD) subsidies provided to goods in of foreign subsidies and amount provided by the
their country of origin. protect local industries. foreign government.
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Anti- A duty to prevent avoidance of To ensure existing duties Applied when circumvention
Circumvention anti-dumping or countervailing are not undermined by is detected.
Duty duties. trade pattern changes.
Social Welfare A surcharge on total customs To fund social welfare Typically 10% of total
Surcharge duties (excluding IGST and programs and initiatives. customs duties.
GST compensation cess).

15. Government Measures to Protect Domestic Producers: Learn about safeguard measures.

Aspect Details
Legal Framework Governed by the Customs Tariff (Identification and Assessment of Safeguard Duty) Rules,
1997 and the Customs Act, 1962. Complies with WTO Agreement on Safeguards.
Purpose Protects domestic industries from serious injury due to a surge in imports; provides relief
and time to adjust.
Conditions for Requires proof of serious injury or threat, a causal link between imports and injury, and
Imposition public interest.
Types of Measures Safeguard Duty (additional duty) and Quantitative Restrictions (import limits).
Duration Initially for up to 200 days; can extend up to 4 years, with a possible total of 8 years.
Process Investigation by DGTR, public notice, recommendations, and government decision.
Review and Sunset Measures reviewed periodically; automatically terminated after the specified duration
Clause unless extended.
Exceptions/Exemptions Typically does not apply to imports from developing countries with less than 3% market
share; possible exemptions under trade agreements.

16. Read the duty u/s 3(9) of Custom Tarrif Act, what similar charge is there for domestic producers?

GST on output supply.

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 UNION
BUDGET
2024

BUDGET SPEECH- CA FRESHER MUST SEE

THESE POINTS
Helping your way from Stipend to Salary
By – CA Jatin Agarwal
Facts
GDP growth rate for F.Y. 23-24 - 8.2%

Inflation to move towards 4% target.

Fiscal deficit estimated to be 4.9% and its ratio to GDP is proposed to decrease from F.Y. 26-27
onwards.

Andhra Pradesh Reorganization Act – Rs. 15000 cr. will be arranged this Fiscal yr.

MSME guarantee cover, CGTMSE, TReDS t/o limit and Mudra limit increased (protection to
MSME).

Govt. to set up Integrated framework to monitor IBC.

Fund allocated to revamp Nalanda University in Bihar.

NPS Vatsalya - Contribution by parents and guardians for minors will be started.
9 Focus Areas of Budget
(i) Productivity and resilience in Agriculture

(ii) Employment & Skilling

(iii) Inclusive Human Resource Development and Social Justice

(iv) Manufacturing & Services

(v) Urban Development

(vi) Energy Security

(vii) Infrastructure

(viii) Innovation, Research & Development

(ix) Next Generation Reforms

Budget Estimates
Total receipts (other than borrowings) – Rs. 32.07 lakh crore.

Total Expenditure – Rs. 48.21 lakh crore

Net tax receipts are estimated at Rs. 25.83 lakh crore.

Fiscal deficit is estimated at 4.9 per cent of GDP.

Gross and net market borrowings – Rs. 14.01 lakh crore and Rs. 11.63
lakh crore
Measures for promotion of Manufacturing
& Services - Internship in Top Companies –

Govt. to launch a scheme to provide internship

opportunities in 500 top companies to 1cr youth in 5 yrs.

They will gain exposure for 12 months in real- business

environment.

Stipend – Rs. 5000 p.m. + One time assistance Rs. 6000.

Companies can bear training cost + 10% of internship cost

from their CSR funds.
Indirect Taxes - Custom
Basic Custom Duty on Gold, silver and platinum decrease
from 10% to 5%.

Some more category of Medicines have been exempted

from BCD.

BCD on Mobile equipment to be reduced to 15%.

On agri goods (Shea Nuts) – to be reduced to 15% from

30%.
Indirect Taxes - GST
Extra Neutral Alcohol used for m/f alcoholic liquor is excluded from CGST and IGST.

Time limit to avail ITC u/s 16(4) of CGST Act- For F.Y. 17-18, 18-19, 19-20, 20-21, for Invoice/Debit
note ITC could be taken in any return u/s 39, filed upto 30th Nov. 21.

In case return filed after revocation, if return filed in 30 days after revocation, the said time limit
is extended by that difference time.

U/s 34A of CGST Act, common time limit for demand notices and orders in demand for FY 25
onwards. Also, reduced penalty provision applicable if paid in 30 days of notice (instead of 60
days earlier).

Apportionment of co-insurance premiums by the lead insurer to the co-insurers in the co-
insurance agreement will not be considered as Supply.

ITC can’t be taken for Input tax paid u/s 74.

Direct Tax – Corporate and Litigation
Tax rate on ECO to be reduced from 1% to 0.1%.

Credit of TCS is proposed to be given on TDS deducted on salary.

Amendments in Reassessment provisions have been made.

STCG increased from 15% to 20%.

LTCG increased from 10% to 12.5%.

Limit of exemption of capital gain increased to Rs. 1.25 lacs.

Unlisted Financial assets to be held for atleast 2 yrs to classify it as long term.

For resolution of Income tax disputes, “Vivad Se Vishwas Scheme, 2024” has been introduced.

Increased monetary limit for filing appeals of Direct tax, Excise and service tax– Tax Tribunals – 60 lacs, Excise – 2Cr, Service tax 5 Cr.

Propsed to abolish angel tax for all class of investors.

Corporate tax on foreign companies reduce from 40% to 35%.

STT on F&O proposed to increase to 0.02% & 0.1% respectively.

Exemption of employer cont. to NPS proposed to increase from 10% to 14% of salary.

Withdrawal of equalization levy of 2%.

Immunity from penalty and prosecution to benamidar on full and true disclosure.
Direct tax- Individual
Dedn on family
Std. dedn to be pension for
New tax regime increase from Rs. pensioners to be
50,000 to 75,000. increased from Rs.
15000 to 25000.

Revised
Individual tax
structure (New
Scheme)–
Slab (in lakhs) Tax Rate
0-3 Nil
3–7 5%
7 – 10 10%
10 – 12 15%
12 – 15 20%
More than 15 30%
 Interview Questions – By CA Jatin Agarwal (Coverage-
90%-100% of your Interview questions)
Current Market Topics to Read About and other budget amendments:

1. Budget Provisions and Amendments:

o Taxability of LTCG – 12.5% without Indexation.

Exception - Property purchased before 23.07.2024, the LTCG tax rate if 12.5% without indexation or
20% with indexation, whichever is beneficial for the assesse.

o Rental Income Classification: All rental income from residential or part of the house must be
classified as income from house property.
o Proposed TDS Rate Changes:
 2% TDS under sections ( Section 194D: TDS on Insurance Commission,  Section
194DA: TDS on Payment in respect of Life Insurance Policy,  Section 194G: TDS
on Commission, etc., on the Sale of Lottery Tickets,  Section 194H: TDS on
Commission or Brokerage,  Section 194-IB: TDS on Rent by Individual or HUF
(other than those covered under Section 194-I),  Section 194M: TDS on Payments
to Resident Contractors and Professionals by Individuals or HUF (not required to
deduct TDS under Section 194C, 194H, or 194J)
 0.1% TDS under section 194 O.
o New Section 194T: Introduces TDS at 10% on payments to partners by firms/LLPs in the nature of
salary, remuneration, interest, bonus, or commission exceeding Rs. 20,000 in a financial year,
effective from April 1, 2025.
o TCS Scope Extension: Under section 206C(1F), TCS is extended to any other goods specified by the
Central Government.
o Definition of Transferor: Under section 194IA, "transferor" now includes all transferors in a contract
for calculating the Rs. 50 lakh limit for TDS deduction.
o TCS Exclusion: Section 206C now excludes TCS on persons not liable to pay tax.
o TDS on Salary and Other Income: Under section 192B, TDS/TCS on other income must be
considered for TDS.
o Change in Holding Period for Long-Term Classification:
 Listed Shares: 12 months (unchanged)
 Unlisted Shares & Immovable Property: 24 months (unchanged)
 Bonds/Debentures/Gold: Reduced from 36 to 24 months
 Listed Units of Business Trusts: Reduced from 36 to 12 months
o Share Buyback Income: Taxable in the hands of the recipient, deemed income under section
2(22)(f), with TDS deductible by the company at 10% under section 194.
o Optional Reading: The government has proposed three employment-linked incentive schemes to
create jobs in manufacturing and other sectors.
o New Education Loan Provisions: Annual interest subvention vouchers at 3% of the loan amount for
loans up to Rs. 10 lakh for higher education in domestic institutions.
2. Views on the Indian Economy: What are the prospects for future growth in the Indian economy?
3. Role of AI in the Current Market: How is AI influencing the market? What are the implications of the view
that "AI will destroy employment in the future"?
4. Present Stock Market Scenario: What is the current state of the stock market, and how is it performing?
5. Upcoming Top IPOs: Information on some of the most anticipated initial public offerings (IPOs).
6. Recent Corporate Mergers in Banking: Details on recent high-profile mergers, such as HDFC Bank and
HDFC, and their impact on the banking industry.
7. Google Maps vs. Ola Maps: Comparison of the features, market presence, and strategic directions of Google
Maps and Ola Maps.

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