MODULE 1
• TAX- meaning
• ASSESSEE 2(7) -Assessee means a person by whom any tax or any other sum of money is
payable under this Act and includes,
i. every person in respect of whom any proceedings under this Act has been taken
ii. Deemed assessee or representative assessee
iii. Assessee –in- default
• COMPANY: Company means
i. Any Indian Company
ii. Any body corporate incorporated by or under the law of a country outside India
iii. Any institution, association or body which is or was assessed as a company for any AY
under IT Act on or before 1/4/70
iv. Any institution, association or body whether incorporated or not and whether Indian or
non Indian, which is declared by general or special order of the Board to be a Co.
TYPES OF Co.
1. Indian Co
2. Domestic Co-arrangement of declaration & payment of Dividends in India.
3. Public are substantially interested-Govt/RBI> 40%, promotion of art, science, religion etc
4. Closely held Companies
5. Public sector Co./public listed Co
6. Foreign Co.
7. Investment Co.- GTI is mainly from HP, CG & IFOS
8. Nidhi/ mutual benefit society/ Co owned by co-operative societies
CORPORATE TAX- Tax paid by Companies
• Assessed in its own name-not paid on behalf of shareholders
• On total income – no exemption
• Payable as per income computed as per IT law
• @ a flat rate
• If tax payable is <15% of book profits the MAT is payable
• Domestic Co to pay tax on dividend distributed u/s115O (15% & abolished from 20-21)& 115QA (@ 20%)on
distributed income & on buy back of shares.
Residential status of Company
• Indian Companies
Resident • Foreign companies TO being > 50 Cr and
Place of effective management is India
Non resident • Foreign companies whose TO is < 50 Cr
TAX PLANNING
NEED
1. Reduction in tax %
2. Minimisation of litigation
3. Productive investments
4. Reduction in cost
5. Healthy growth of economy
6. Employment generation
LIMITATIONS
7. Exemptions to be taken in advance
8. It cannot be done in isolation
9. Increased profits, increases taxes
TAX MANAGEMENT
Tax planning is bringing down the incidence of tax. It encompasses tax management.
Tax management comprises a wider field like
• compliance with statutory provisions of law,
• prospective planning,
• keeping close watch and monitoring the statutory requirements of other laws,
• claiming the due reliefs from double taxation avoidance etc.
AREAS OF TAX MANAGEMENT:
1. TDS
2. COLLECTION OF TAX AT SOURCE
3. PAYMENT OF TAX
4. MAINTAINANCE OF ACCOUNTS
5. PAYMENT OF CERTAIN SUMS
6. FULFILLMENT OF CONDITIONS TO CLAIM DEDUCTIONS
7. FURNISHING OF RETURNS OF INCOMES
8. DOCUMENTATION AND MAINTAINANCE OF RECORDS
9. REVIEW OF ORDERS
TAX EVASION TAX AVOIDANCE TAX PLANNING
Reduction of total income Reducing tax by availing Arrangement of financial
by making false claims or loopholes in the law. affairs without violating in
withholding information Attempt thru legal means any way the legal
of real income. of reducing tax provisions of the Act.
Illegal, Taking advantage of
anti-social/national exemptions, deductions,
Leads to prosecution & rebates, reliefs etc.
heavy penalty.
CORPORATE TAX PLANNING
Benefits
1. Reduction in tax liability
2. Minimisation of litigations
3. Healthy growth of business
4. A source of working capital
5. Increased distributable profits
6. Face competition
7. Maximising market value
8. others
QUIZ
1. Device that satisfies the requirement of law but not in accordance with the intention of law(evasion, planning ,avoidance,
management)
2. Reducing tax by utilizing deductions, exemptions, reliefs as per law is called _________(evasion, planning ,avoidance,
management)
3. Compliance of the legal requirements in connection with the tax is _________(evasion, planning ,avoidance, management)
4. Availing holiday by a new industrial undertaking in backward area is a case of _________(evasion, planning ,avoidance,
management)
5. -------- refers to hedging of tax(evasion, planning ,avoidance, management)
6. Filling of returns within due date is ----------------(evasion, planning ,avoidance, management)
7. Which among these is not widely used Co.(MF Co.,Pvt Ltd Co., Ltd Co.)
8. Illegally reducing tax burden is _________(evasion, planning ,avoidance, management)
9. Co. making arrangements for declaration and payment of dividends in India is called ------------
10. Substantial interest in the Co. means not less than--------of voting rights(20%, 49%, 50%)