Mastering Indirect Tax: A Step-by-Step Guide On Interview Preparation
Introduction
Preparing for Indirect Tax Interviews requires a blend of technical knowledge, analytical skills, and an understanding of practical scenarios. This guide provides a step-by-step roadmap to mastering indirect tax concepts, decoding interview expectations, and presenting yourself as a well-rounded candidate.
With the right preparation, you can showcase your theoretical understanding and ability to apply tax concepts effectively—positioning yourself as a standout candidate in the competitive world of Indirect Taxation.
What is Indirect Tax?
Indirect Tax in India is an ancient tax practice that has shaped the Indian economy for centuries. Even though time has changed, the format has remained the same. Every time you buy a cup of coffee, buy your favourite clothes or book a flight, you pay an indirect tax without even noticing it. Examples of Indirect Tax include Goods and Services Tax (GST), Value-Added Tax, Customs Duty and more. Now, let’s look at the formal definition of Indirect Tax (IDT).
Definition
Indirect Tax is collected by one entity in the supply chain, such as a manufacturer or retailer, and paid to the government. However, the tax is passed onto the consumer by the manufacturer or retailer as part of the purchase price of a good or service. The consumer ultimately pays the tax by paying more for the product.
What Legislation is Covered Under Indirect Tax?
Goods and Service Tax (GST): GST is an indirect tax levied on various goods and services. One significant benefit of GST is that it eliminates the tax-on-tax or cascading effect of the previous tax regime.
Custom Duty: Customs duty refers to the tax imposed on goods when they are transported across international borders. In simple terms, it is the tax that is levied on the import and export of goods.
Foreign Trade Policy (FTP): FTP is a set of guidelines set by the Directorate General of Foreign Trade that governs the import and export of goods in India. Through FTP exporters can expect several benefits to save customs costs. It’s reviewed every five years. FTP 2023 includes several schemes such as Duty Drawbacks, Export Promotion Capital Goods (EPCG) scheme, Advance Authorisation and Towns of Export Excellence (TEE) scheme.
SEZ: SEZ refers to the Special Economic Zone where business laws are different from the rest of the country. In this zone, indirect tax-related benefits are available.
Old Levies: CST, state-specific tax, VAT, and tax-related pending cases will come under this category.
Types of Activities Covered in Indirect Tax
Here are some key activities you must deal with as an IDT professional. Let’s take a look.
- Compliances: GST, SEZ, State Industry-related activities, and customs fall under this category.
- Transaction advisory: It includes day-to-day advisory on tax implications arising from new transactions or business activities. Analysing those transactions and activities, you will have to advise the applicability of schemes, tax zones, and eligibility of those schemes in any particular zone and how the exemption can be claimed in that zone.
- Litigation: It refers to the legal process of resolving disputes between taxpayers and tax authorities.
- Strategy and structuring: It’s an extended part of transaction advisory. When tax implications or tax cost optimisations are required in any transactions or business activities, you need to provide a strategy and a detailed structure of the execution as a tax professional.
Key Responsibilities in Indirect Tax
Here we will discuss some key responsibilities of Indirect Tax professionals.
- As an Indirect Tax professional, you will have to manage GST-related engagement and other indirect tax laws, tax restructuring, advisory and many more.
- Acting as a subject matter expert across the group and implementation support to clients on GST projects
- Analysing and interpreting the Central Excise Act, Customs Act, and other indirect tax compliances i.e. VAT, service tax and so on.
- Provide input to the group’s tax strategy.
Join Big 4 or Mid-sized Firms: Which is Better for Your Career?
One of the biggest concerns CA freshers have is whether should they work at the Big 4 or Mid-sized firms at the top of the industry. Here, we have a few insights on the pros and cons of working for a Big 4 company or a mid-sized firm.
Features | Big 4 Firms | Mid-Sized Firms |
Work Exposure | Widely known for their global exposure and vast external and internal network of clients. | Known for diverse sector coverage. You will get the opportunity to work in various sectors. Consequently, it will help you pick a specific domain to specialise in. |
Competition | The opportunities and progressions in Big 4s are limitless. However, being part of a larger team of other ambitious indirect tax professionals increases competition for higher positions. | You will face less competition for promotions compared to the Big 4. |
Learning Opportunities | You’ll work alongside some of the brightest minds in the industry. It means you’ll have the chance to work on high-profile projects and complex transactions. | Learning opportunities are diverse in mid-sized firms. While you may not have access to structured training programs like those in the Big 4, mid-sized firms offer employees the chance to learn on the go. |
Leadership Opportunities | With so many employees, standing out and advancing your career can be difficult. Apart from that, the larger the company, the more structures and processes are in place. | If becoming a partner has always been your priority then mid-seized firms are the right option. |
Salary | A competitive salary is another reason to consider the Big 4 over other firms. | When it comes to salary, mid-sized firms can not match the Big 4’s package. So, the salary package is comparatively leaner here. |
Work-Life Balance | The expectations and delivery targets may leave very little time for personal life. | Work-life balance in mid-sized firms is comparatively better than Big 4. |
Key Takeaways: Both offer some unique perks and benefits. Big 4 firms provide global exposure and a prestigious network, while mid-sized firms offer diverse experience and more room for leadership growth. As a fresher, starting in a Big 4 for exposure before transitioning to a mid-sized firm can be a clever career move.
Process for Indirect Tax Interviews
Generally, Indirect Tax Interviews have 3 rounds. It starts with the HR Round. Then comes the Manager Round or Technical Round. In this round, you will have to face technical questions. The next and final round is the Partner/Director Round. It will be a generic discussion round where your skill sets and process knowledge will be tested so that you can contribute to the company’s objective. We will present a detailed breakdown of the process below:
HR Round
It’s the screening round. It checks your soft skills and personal background. You can expect some generic questions like:
- Introduce yourself.
- Why did you apply for a job at our company?
- Can you share what you know about Indirect Tax? (these questions are generally to understand the mindset and understanding of the candidate towards the job description)
Manager Round
This is a technical round where they will grill you about your technical knowledge. Some common questions you can expect in this round are:
- The difference between an audit by tax authorities and a special audit.
- What are your views on simplifications in indirect taxation through the implementation of GST?
- The procedure of carrying forward ITC in case of succession, transfer, merger, and acquisition of a business.
- Mixed supply and composite supply.
- What are the recent changes made in GST?
- Explain rule 36(4)
- Please explain the provision of E-invoicing. What are the additional benefits of E-invoicing over an E-way bill?
- Please explain the benefits of the SEIS Scheme.
- What are your views on GSTR 2A and 2B?
- Did the implementation of GSTR 2B simplify the reconciliation or complicate it?
- Budget-related questions (focus on general changes, not specific changes)
Various questions have been asked about the following topics:
- Time of Supply
- Place of Supply
- Value of Supply
- Input tax credit – blocked credit u/s 17(5)
- ITC Calculation rules
- Provision related to refunds
- SEZ
- Custom
- FTP
Director Round
The firms’ partners will interview you in this round. Some basic behavioural questions can be asked. They will ask you questions about your experience, skills and personal goals. Some interviews may also ask you to describe your articleship experiences and how that will help you in your career path.
How to Prepare for Indirect Tax Interviews?
- Develop reading habits: Regulations and compliance requirements change every 4 to 5 years. To cope with that you will have to develop a reading habit. It will keep you up-to-date with current business trends.
- Stay updated on GST: Focus on GST-related questions because everybody does not have experience in customs, international trade and practices. So, they don’t ask questions about those topics unless you have something about it on your CV. GST is a common field that everyone knows about. So. it’s important for you to keep yourself updated with the recent changes.
- Solve practical projects: During the interview, you might be given time to analyse problems and give your thoughts on a project, so being well-prepared is essential.
- Mock-Interview: Don’t forget to practice with mock interviews before your final day.
Read Also: Indirect Taxation Interview Preparation for Big 4 Firms
Conclusion
Remember, every interview is an opportunity to showcase your skills, passion, and dedication to the field of indirect taxation. With the right mindset and preparation, you can leave a lasting impression and take a significant step toward achieving your professional goals.
Join our Getting Interview Ready Workshop now to learn more on interview prep.
Are you a Nov 24 Qualified CA?
Join the exclusive WhatsApp group to learn, network, and win together!