Income Tax Expert

Financial statements are prepared in two forms:

Balance Sheet is a position statement as it refers to a particular date. It is also referred to as Statement of Sources and Application of Funds. It informs about the various sources used by the organization which are technically known as liabilities to raise the funds which are referred as assets.

Profitability Statement also known as Profit and Loss Account. It is a period statement as it refers to a particular period.

Initially, there is no impact (income statement); cash goes down, while PP&E goes up (balance sheet), and the purchase of PP&E is a cash outflow (cash flow statement)

Over the life of the asset: depreciation reduces net income (income statement); PP&E goes down by depreciation, while retained earnings go down (balance sheet); and depreciation is added back (because it is a non-cash expense that reduced net income) in the cash from operations section (cash flow statement).

1. Capital gains' means the profit earned from the sale of an asset. When the Capital Asset is being sold or transferred, the profit or gains arising out of it or you can term that as the difference between the actual price at which the asset was acquired and the price at which it is sold or transferred.

2. A long-term capital gain is the profit that arises with the sale of an asset that has been on hold for a definite period. This period ranges from one year to three years across different asset classes.

3. It is different from short term capital gains because short term capitals are kept for short period only that is less than a years.

Deductions that are made under salary head are Entertainment allowance and Professional tax.

Entertainment Allowance- Entertainment allowance received is already included in the income of the employee and then a deduction is made only for government employees. A sum equal to 1/5th of salary (excluding all allowances, benefits and other perquisites) or Rs. 5,000, whichever is less is being deducted.

Professional Tax- Professional Tax is imposed by the government on employment by whatever name called, under Article 80C 276 of the Constitution and shall be allowed as a deduction. [Sec. 16(iii)]

Since our cash flow statement starts with net income, an increase in accounts receivable is an adjustment to net income to reflect the fact that the company never actually received those funds.

When the assets of the company are written off over a number of years for the purpose of their replacement or renewal and not depending on the life of asset is termed as amortization. It is different from depreciation, which is periodic writing off of the asset based on its normal life expectancy.

Impairment can be termed as the fall in the value of the asset due to any physical damage to the asset, obsolescence, or due to technological innovation. Impairments can be written off. Simply you can say that impairment is the difference between the fair value and the carrying value of an asset.

The Streamlined Sales and Use Tax Agreement was introduced in 1999 by the National Governor’s Association (NGA) and the National Conference of State Legislatures (NCSL) in order to simplify the collection of sales tax as sales tax is second largest source of state revenue after personal income taxes. It resulted in decveloping a simpler and business friendly sales tax system.

The Agreement decreases costs and administrative burdens of sales tax collection on retailers, especially those operating in multiple states.

Central Excise duty is an indirect tax levied on those goods which are manufactured in India and are meant for home consumption. The taxable event is 'manufacture' and the liability of central excise duty arises as soon as the goods are manufactured. It is a tax on manufacturing, which is paid by a manufacturer, who passes its incidence on to the customers.

There are five heads under total income. They are

☛ Income from Salaries

☛ Income from house property

☛ Profits and gains of business or profession

☛ Capital gains

☛ Income from other sources

Cost accountancy is the application of costing and cost accounting principles, methods and techniques to the science, art and practice of cost control and the ascertainment of profitability as well as the presentation of information for the purpose of managerial decision making.

Following are the objects of Cost Accountancy

☛ Ascertainment of Cost and Profitability

☛ Determining Selling Price

☛ Facilitating Cost Control

☛ Presentation of information for effective managerial decision

☛ Provide basis for operating policy

☛ Facilitating preparation of financial or other statements

Deferred tax liability is a tax expense amount reported on a company’s income statement that is not actually paid to the IRS in that time period, but is expected to be paid in the future. It arises because when a company actually pays less in taxes to the IRS than they show as an expense on their income statement in a reporting period.

Differences in depreciation expense between book reporting (GAAP) and IRS reporting can lead to differences in income between the two, which ultimately leads to differences in tax expense reported in the financial statements and taxes payable to the IRS.

This is a broad question and you need to focus on the behavioral examples in your educational background which specifically align to the required competencies for the career.

An example: "My education has focused on not only the learning the fundamentals, but also on the practical application of the information learned within those classes. For example, I played a lead role in a class project where we gathered and analyzed best practice data from this industry. Let me tell you more about the results…"

Focus on behavioral examples supporting the key competencies for the career. Then ask if they would like to hear more examples.

An individual who does not fulfill the below mentioned conditions in that previous year will be considered as Non Resident:

1. You have to be in India atleast 182 days in that year, OR

2. You have to atleast be in India for 365 days during 4 years preceding that year and atleast 60 days in that year.