BS-307: TAX PLANNING AND MANAGEMENT Objectives: The objective is to provide the student the knowledge about Income

Tax Planning and Management. Course Contents: Introduction: Law relating to Income Tax, Principles Underlying certain Concepts as regards to Determination of Taxable Income, Concept and Definition of Income, Receipts which are not Income, Exemption from charge of Income Tax, Capital and revenue Gains and Expenditures. Provisions of Income Tax: Provision of Income tax Law relating to Various heads of Income with Special Emphasis on Profits and gains from Business and Profession, Capital gains, Income from other sources, Deductions, Techniques of calculation of Income Tax. Tax Planning: concept of Tax Planning, Tax planning with reference to setting up of new Business locational aspects, nature of business, planning for tax holiday benefits. tax planning with Reference to Specific Management Decisions, Tax planning with reference to Financial management Decisions, Tax planning and Cash Management. Problems of Tax Planning: Administrative, Legislative and Organizational Problems. Suggested Readings: 1. Bhagwati Prasad: Direct Taxes 2. Dr. V. K. Singhania: Students Guide to Direct Taxes 3. Income Tax Law - Taxmans Publication 4. Bare Act

Income of non-resident from shipping. 42. It includes: . (sec174A) 4.000/. However in certain cases the income is taxed in the year in which it is earned. Income earned by XYZ Ltd in the year 2007-2008 will be taxed in the year 2008-2009. What would be the taxable income of X for the AY 05-06. Property income: Rs. E. Business income: Rs 10.e. 06-07. The exceptions to the rule are as under: 1.000/.Ch.(sec176) ³Person ³sec 2(31): The term persons include: a) an individual b) a Hindu undivided family c) a company d) a firm e) an association of persons and a body of individuals whether incorporated or not f) a local authority g)Every artificial jurisdictional person not falling under any of the preceding category. (sec 175) 5. The same would be taxable irrespective of the accounting year followed by the assessee.Income of bodies formed for short duration. The aforesaid is an inclusive list and the last category covers all those that do not fall in any of the preceding classification Assessee [sec2 (7)]: Assessee means a person by whom any tax or any other sum of money (i. income of discontinued business. 2.56000/-for the period ending 31 march 2007.:1. On March 10. Income of persons leaving India either permanently or for long period of time (sec174) 3. 2006 he starts a new business of computer hardware.for the period ending 31 March 2006 and Rs.g.Income of persons trying to alienate his assets with view to avoiding payment of his tax.1 BASIC CONCEPTS Financial Year: The year starting from April 1 and ending on March 31 of the next year is known as a financial year. Therefore a year is an assessment year and previous year simultaneously. penalty or interest is payable under the act. (sec172) 2.every year. The income of X comprises of only property income till March 10. From the date given below. In the aforesaid the year 2007-08 is the previous year and the year 2008-09 is the assessment year. Assessment Year: AY is a financial year in which the income earned during the previous year istaxed. 07-08? Income earned during the previous year is taxed during the assessment year. 2006. Previous Year (sec 3): The year in which the income is earned is called the previous year. find out the taxable income of X or the assessment years 2005-06 to 2007-08.

winning from lottery 14. Award receipt by sports man 19.Receipt on account of dhrmada. income should be real and not fictional 17. voluntary payment 21. revenue receipts v/s capital receipts 20. 12. 2. Diversion of income by over riding title v/s application of income 8. Dividend: dividend declared by domestic company is taxable in the hands of company and not shareholders 3. Insurance profit 12. 41 and 59 10. any person who is deemed to be an assessee.Surplus from mutual activity not an income. Disputed title 6.Benefit or perquisites to a representative assessee 9. profits and gains 2. Basic concept of Income: 1. anassessee in default ( advance tax and TDS not deducted) Overview of tax on income: Income Tax is an annual Tax charged at the tax rates applicable for the assessment year.000 by way of gift . amount exceeding 50. Capital gains 11.City compensatory allowance 7. prize of winning Extended meaning of income sec 2(24): 1. Receipt v/s accrual 4. Any special allowance and benefits 6. 9. 4. Illegal income 5. devaluation of currency 13. 14.(representative assessee) 3. employees contribution towards provided fund 15. Temporary or permanent income 10. Perquisites in the hands of employee 5.Appropriation of payment between capital and interest.Income includes loss. which are fixed by the annual finance act.1. Different form of income (cash/kind) 3. tax free income 11. Relief or reimbursement of expense is not income 7. Voluntary contribution received by trust. charge on person 18. banking income of a cooperative society 13. gaushalaetc is not an income. 15. Regular and definite source 2.Benefits or perquisites of director 8.Every person in respect of whom any proceeding under the act has been taken for the assessment of his income or loss or the amount of refund due to him.amt received under keyman insurance policy 16. Any sum chargeable u/s 28. same income cannot be taxed twice 16.

. the income is computed under five heads : Rounding off total Income: The total income is to be rounded off to the nearest multiple of ten rupees.Gross total income As per section 14.

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