Question 1

Who needs to file an Income Tax Return (ITR) in India?

Accepted Answer

Anyone whose gross total income exceeds the basic exemption limit, or who meets specific conditions (foreign travel above ₹2 lakh, deposits above ₹1 crore in a current account, high electricity bills, etc.) must file an ITR, even if tax liability is nil.

Question 2

What is the due date for income tax return filing in India for FY 2025-26?

Accepted Answer

For individuals and entities not requiring an audit, the due date is typically 31st July following the end of the financial year. For businesses requiring a tax audit, it's usually 31st October. Confirm the current year's date, as CBDT can extend deadlines.

Question 3

What happens if I miss the income tax return filing deadline?

Accepted Answer

A belated return can still be filed under Section 139(4), but it attracts late fees under Section 234F (up to ₹5,000), interest under Section 234A, and forfeiture of certain benefits like carrying forward losses.

Question 4

How is income tax calculated for salaried employees in India?

Accepted Answer

Tax is calculated on total taxable income after allowable deductions (Section 80C, 80D, HRA exemption, standard deduction) under either the old or new tax regime, whichever is more beneficial.

Question 5

What is the difference between the old and new tax regime?

Accepted Answer

The old regime allows deductions and exemptions (80C, HRA, LTA, home loan interest) but has higher slab rates. The new regime offers lower rates but removes most deductions.

Question 6

Do I need a CA to file my income tax return?

Accepted Answer

Simple salaried returns can often be filed independently, but a CA is recommended if you have business income, capital gains, multiple income sources, foreign assets, or want proactive tax planning.

Question 7

What is an income tax notice and how should I respond to it?

Accepted Answer

Common notices include Section 143(1) (intimation), Section 139(9) (defective return), and Section 148 (reassessment). Timely, professional response through a CA helps avoid penalties or escalation.

Question 8

How can I save tax legally in India?

Accepted Answer

Legal tax-saving options include Section 80C investments (PPF, ELSS, life insurance), Section 80D health insurance, home loan interest deductions, NPS under 80CCD(1B), and HRA/LTA exemptions.

Question 9

What is advance tax and who needs to pay it?

Accepted Answer

Advance tax is income tax paid in installments during the year rather than as a lump sum. It applies to anyone with estimated tax liability exceeding ₹10,000, including freelancers and businesses.

Question 10

Can capital gains from property or shares be reduced through tax planning?

Accepted Answer

Yes, through exemptions under Sections 54, 54F, and 54EC (reinvestment in property or capital gains bonds), and by planning the holding period for long-term capital gains rates.

Question 11

What is Form 16 and why is it important?

Accepted Answer

Form 16 is a TDS certificate issued by employers detailing salary paid and tax deducted during the year. It's essential for accurately filing your ITR and cross-verifying figures with Form 26AS.

Question 12

What is Form 26AS and how do I check it?

Accepted Answer

Form 26AS is a consolidated tax statement showing TDS, TCS, advance tax, and self-assessment tax linked to your PAN. It can be downloaded from the Income Tax e-filing portal or via net banking.

Question 13

What is the Annual Information Statement (AIS) and how is it different from Form 26AS?

Accepted Answer

AIS is a more comprehensive statement covering interest, dividends, securities transactions, foreign remittances, and more, in addition to what Form 26AS shows. Reconciling both before filing helps avoid mismatch notices.

Question 14

How are freelancers and consultants taxed in India?

Accepted Answer

Freelance and consulting income is taxed as "Profits and Gains from Business or Profession." Freelancers can opt for presumptive taxation under Section 44ADA if gross receipts are within the prescribed limit, simplifying compliance.

Question 15

What is presumptive taxation under Section 44AD and 44ADA?

Accepted Answer

These sections let eligible small businesses and professionals declare income at a prescribed percentage of turnover/receipts (8%/6% under 44AD, 50% under 44ADA) without maintaining detailed books, subject to turnover limits.

Question 16

How is rental income from property taxed in India?

Accepted Answer

Rental income is taxed under "Income from House Property" after deducting municipal taxes and a standard 30% deduction, plus home loan interest if applicable, regardless of actual maintenance expenses.

Question 17

What is TDS and how does it affect my tax filing?

Accepted Answer

Tax Deducted at Source is tax withheld by the payer (employer, bank, tenant, etc.) before making a payment. TDS credit reflects in Form 26AS and is adjusted against your final tax liability when filing your return.

Question 18

How do I claim a TDS refund?

Accepted Answer

If TDS deducted exceeds your actual tax liability, filing your ITR triggers a refund, processed directly to your bank account after e-verification, typically within a few weeks to a couple of months.

Question 19

What is the penalty for not linking PAN with Aadhaar?

Accepted Answer

An unlinked PAN becomes inoperative, leading to higher TDS/TCS deduction, inability to file returns, and processing delays — linking (with applicable late fee, if any) resolves this.

Question 20

How are NRIs taxed on Indian income?

Accepted Answer

NRIs are taxed only on income earned or accrued in India (salary, rental income, capital gains, interest on NRO accounts), often with different slab rates, TDS rates, and applicable DTAA benefits.

Question 21

What is a DTAA and how does it help NRIs avoid double taxation?

Accepted Answer

A Double Taxation Avoidance Agreement between India and another country ensures income isn't taxed twice, either through exemption or a tax credit method, and requires forms like 10F and a Tax Residency Certificate.

Question 22

What is a tax audit and when does it apply to individual professionals?

Accepted Answer

A tax audit under Section 44AB applies to professionals whose gross receipts exceed the prescribed threshold, requiring a CA to verify books of accounts and certify compliance before ITR filing.

Question 23

How is cryptocurrency and virtual digital asset income taxed in India?

Accepted Answer

Gains from crypto and other virtual digital assets are taxed at a flat 30% rate with no deduction for expenses (except cost of acquisition), plus 1% TDS on transactions above specified thresholds under Section 194S.

Question 24

What deductions can salaried employees claim under the new tax regime?

Accepted Answer

The new regime allows limited deductions, primarily the standard deduction, employer's NPS contribution under Section 80CCD(2), and a few others, but excludes most exemptions available under the old regime.

Question 25

How do I revise an already-filed income tax return?

Accepted Answer

A revised return can be filed under Section 139(5) before the end of the relevant assessment year (or completion of assessment, whichever is earlier) to correct errors or omissions in the original filing.

Question 26

What is the process for income tax scrutiny assessment?

Accepted Answer

Scrutiny assessment under Section 143(3) involves detailed examination of the return by the Assessing Officer, requiring supporting documents and explanations — professional representation by a CA is highly advisable.

Question 27

How is gratuity and leave encashment taxed on retirement?

Accepted Answer

Gratuity received is exempt up to specified limits under Section 10(10), and leave encashment is similarly exempt up to prescribed limits for non-government employees, with any excess taxable as salary income.

Question 28

What are the tax implications of gifts received from relatives or friends?

Accepted Answer

Gifts from specified relatives are fully exempt regardless of value. Gifts from non-relatives exceeding ₹50,000 in aggregate during a year are taxable as "Income from Other Sources," with certain exceptions like wedding gifts.

Question 29

How can senior citizens save tax in India?

Accepted Answer

Senior citizens enjoy a higher basic exemption limit, higher deduction limits under Section 80D for health insurance, and a higher interest income exemption under Section 80TTB compared to non-senior taxpayers.

Question 30

What is the penalty for under-reporting or misreporting income?

Accepted Answer

Under Section 270A, penalties range from 50% of tax on under-reported income to 200% of tax on misreported income, in addition to the tax and interest payable, making accurate disclosure essential.

Question 31

Who is required to register for GST in India?

Accepted Answer

Businesses with annual turnover exceeding ₹40 lakh (₹20 lakh for services, lower for special category states) must register. Registration is also mandatory for e-commerce sellers, inter-state suppliers, and reverse-charge cases regardless of turnover.

Question 32

How long does GST registration take?

Accepted Answer

GST registration typically takes 7–10 working days from application, provided documents are complete and no queries are raised by the officer.

Question 33

What documents are required for GST registration?

Accepted Answer

Commonly required: PAN card, Aadhaar card, business address proof, bank account details, a photograph, and business constitution proof (partnership deed, incorporation certificate, or shop establishment license).

Question 34

What is the GST return filing due date for small businesses?

Accepted Answer

Regular taxpayers file GSTR-1 monthly (by the 11th) and GSTR-3B monthly (by the 20th); QRMP scheme taxpayers file quarterly with monthly tax payment; composition dealers file GSTR-4 annually.

Question 35

What is the Composition Scheme under GST and who can opt for it?

Accepted Answer

It allows small businesses with turnover up to ₹1.5 crore (₹75 lakh for special category states) to pay tax at a fixed lower rate with simplified quarterly compliance, but without input tax credit or inter-state sales.

Question 36

What happens if I don't file GST returns on time?

Accepted Answer

Late filing attracts a per-day late fee plus 18% annual interest on outstanding tax. Continued non-filing can lead to registration cancellation and blocked e-way bill generation.

Question 37

Can I claim Input Tax Credit (ITC) on all business purchases?

Accepted Answer

ITC can be claimed on goods/services used for business, subject to a valid tax invoice, the supplier having filed their returns, and exclusions under blocked credit categories (Section 17(5)).

Question 38

How do I cancel or surrender my GST registration?

Accepted Answer

File Form GST REG-16 when a business closes, changes constitution, or falls below the threshold, followed by a final return (GSTR-10).

Question 39

What is an e-way bill and when is it required?

Accepted Answer

An e-way bill is required for movement of goods worth more than ₹50,000, generated electronically on the GST portal for inter-state and (in most states) intra-state transport.

Question 40

Is GST applicable on professional and consulting services?

Accepted Answer

Yes, professional services including CA, legal, and consulting are generally taxed at 18% once turnover crosses the registration threshold.

Question 41

What is the difference between CGST, SGST, and IGST?

Accepted Answer

CGST and SGST are levied on intra-state supplies (split between central and state governments), while IGST is levied on inter-state supplies and imports, collected by the central government and apportioned to states.

Question 42

What is a GST HSN/SAC code and why does it matter?

Accepted Answer

HSN codes classify goods and SAC codes classify services for GST purposes. Correct classification determines the applicable tax rate and is mandatory on invoices above prescribed turnover thresholds.

Question 43

What is GSTR-9 and who needs to file it?

Accepted Answer

GSTR-9 is the annual GST return summarizing all monthly/quarterly returns filed during the year, mandatory for regular taxpayers above a specified turnover threshold, with GSTR-9C (reconciliation statement) required for larger businesses.

Question 44

What is reverse charge mechanism (RCM) under GST?

Accepted Answer

Under RCM, the recipient of goods/services (rather than the supplier) is liable to pay GST directly to the government — applicable to specified goods, services, and purchases from unregistered dealers in certain cases.

Question 45

Can I register for GST voluntarily even if my turnover is below the threshold?

Accepted Answer

Yes, voluntary GST registration is allowed and can be beneficial for claiming input tax credit, working with GST-registered clients, or building business credibility, though it brings full compliance obligations.

Question 46

What is a GST audit and when is it applicable?

Accepted Answer

GST audit requirements have evolved with self-certified reconciliation (GSTR-9C) for taxpayers above the prescribed turnover threshold, replacing the earlier mandatory CA-certified audit for most businesses.

Question 47

How do I correct errors in a filed GST return?

Accepted Answer

Errors in GSTR-1 or GSTR-3B can generally be corrected in the return of a subsequent period through amendments, since GST does not allow revising an already-filed return directly.

Question 48

What is the penalty for not registering under GST despite being liable?

Accepted Answer

Penalty is 10% of the tax due (minimum ₹10,000), or 100% of the tax due in cases of deliberate evasion, along with the liability to pay tax with interest from the date registration was required.

Question 49

How does GST apply to e-commerce sellers and online businesses?

Accepted Answer

E-commerce sellers must register for GST regardless of turnover, and e-commerce operators are required to collect TCS (Tax Collected at Source) on sales made through their platform.

Question 50

What is the QRMP scheme under GST?

Accepted Answer

The Quarterly Return Monthly Payment scheme allows taxpayers with turnover up to ₹5 crore to file GSTR-1 and GSTR-3B quarterly while paying tax monthly, reducing compliance frequency.

Question 51

Is GST registration required for a shop or retail store in Pune?

Accepted Answer

Yes, if annual turnover exceeds the applicable threshold (₹40 lakh for goods), a retail store must register for GST regardless of location, though local municipal/shop licenses are a separate requirement.

Question 52

What is a GST composition scheme for restaurants?

Accepted Answer

Restaurants (not serving alcohol) can opt for the composition scheme at a concessional rate on turnover, though they forgo input tax credit and cannot make inter-state outward supplies.

Question 53

Can GST registration be transferred if I sell my business?

Accepted Answer

GST registration is PAN-based and non-transferable; the new owner must obtain a fresh registration, while the transferor cancels their existing registration after settling final compliance.

Question 54

What is GST on export of goods and services?

Accepted Answer

Exports are treated as zero-rated supplies under GST — exporters can either export under a Letter of Undertaking (LUT) without paying tax, or pay IGST and claim a refund.

Question 55

How do I apply for a GST refund?

Accepted Answer

GST refunds (for exports, inverted duty structure, excess cash ledger balance, etc.) are filed online via Form RFD-01 with supporting documents, and are typically processed within 60 days if in order.

Question 56

What is the GST rate applicable on real estate transactions?

Accepted Answer

Under-construction residential property attracts GST (typically 5% for non-affordable and 1% for affordable housing without ITC), while completed/ready-to-move properties are generally outside GST scope.

Question 57

What is a Letter of Undertaking (LUT) in GST and who needs it?

Accepted Answer

An LUT allows exporters to supply goods or services without paying IGST upfront, subject to annual renewal on the GST portal — a practical alternative to paying tax and claiming a refund later.

Question 58

How does GST apply to freelancers and consultants providing services to clients abroad?

Accepted Answer

Export of services to foreign clients (with payment in convertible foreign exchange and other conditions met) qualifies as zero-rated supply, though GST registration may still be mandatory depending on turnover and RCM applicability.

Question 59

How long does it take to register a Private Limited Company in India?

Accepted Answer

Through the SPICe+ integrated form, incorporation typically takes 7–15 working days, provided DSC, name approval, and documentation are completed without resubmission.

Question 60

What are the documents required for company registration?

Accepted Answer

PAN and Aadhaar of all directors, address proof, photographs, registered office proof (utility bill and NOC/rent agreement), and Digital Signature Certificates (DSC) for proposed directors.

Question 61

What is the minimum capital required to start a Private Limited Company?

Accepted Answer

There is no minimum paid-up capital requirement under the Companies Act, 2013 — incorporation is possible with a nominal capital, though practical business needs usually dictate more.

Question 62

What is the difference between a Private Limited Company, LLP, and OPC?

Accepted Answer

A Private Limited Company suits businesses planning to raise funding and scale. An LLP suits professional/service businesses wanting limited liability with lower compliance. An OPC suits solo founders wanting a corporate structure without a co-founder.

Question 63

How many directors are required to incorporate a company in India?

Accepted Answer

A Private Limited Company requires a minimum of 2 directors and 2 shareholders (can be the same individuals); a Public Limited Company requires a minimum of 3 directors.

Question 64

What compliances are mandatory after company incorporation?

Accepted Answer

Opening a bank account, appointing a statutory auditor within 30 days, filing Commencement of Business (Form INC-20A) within 180 days, and maintaining statutory registers and annual filings.

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