Code

1.

Questions

Answers

Define tax planning .

Explain the factors to be
considered in effective
tax planning.

Tax planning is the art and science of evaluating the alternatives and picking
the one that maximizes the income but not necessarily by minimizing tax.
(2 mark)
FACTORS TO BE CONSIDERED IN TAX PLANNING:
1. Residential status and citizenship of the tax payer
2. Heads of income/ assets to be included in computing net income / wealth
3. The tax laws
4. Form v Substance
2 MARKS EACH
1.Medical facility or medical reimbursement
2. Food and beverages provided to employees
3. Recreational facilities 4. Loans to employees
5. Perquisites provided outside India
6. Training of employees
7. Accommodation in a remote area
8. Use of health clubs and sports
9. Leave travel concession subject to limits specified
10. Use of laptops and computers by employees which are provided by the
employer
Points to be considered are
1.income from the transfer to a HUF or conversion into HUF property of a self
occupied asset without adequate consideration shall be continued to be taxed
in the hands of transferor in his individual capacity and not in the hands of HUF
2. income from indivisible estate is taxable in the hands of holder of the estate
and not in the hands of HUF
3. remuneration received by a member of the HUF from a company or a firm as
result of investment from the funds of the HUF shall be treated as income of
HUF, but remuneration earned by a member purely in his personal capacity ,it
shall be treated as his income
4.if remuneration paid to Karta of a HUF under valid bona fide agreement in the
interest of family business it will be allowable as expenditure while computing
the income of HUF
5. If a father does not have a brother as a coparcener , income arising from
ancestral property is taxable as his individual income ( 1 MARK EACH)
Steps for computation income tax of HUF
STEP 1: The Gross Total Income of HUF under four heads of income on the
basis of residential status
STEP2: Section 60 to 63 related to the income of other person included in
assessees total income are applicable but not section 64
STEP3: Setoff of losses is permissible while aggregating the income under
different heads of income
STEP4: Carry forward and setoff losses of past years
STEP5: Exemptions of section 54 ,54D,54EC,54F,54G
( I MARK EACH)
PURPOSE OF TAX AUDIT :
The purpose of tax audit is to ensure that books of accounts have been
maintained in accordance with the provisions of the Income Tax Act,
Accordingly, a proper audit for tax purposes would ensure that proper records
are bong maintained, and the accounts properly reflect the income reported by
the assessee.
A tax audit effectively curbs tax evasion and ensures tax compliance. It also
ensures that the accounts are being presented to the ITO properly when called
for. The precious time of the AOs is saved from routine and ineffective
verification, checking of purchase and sales transactions, etC) ( 1 MARK)
WHO HAS TO GET ACCOUNTS AUDITED?
Audit under section 44AB is applicable to 4 categories of taxpayers
FIRST CATEGORY covers persons carrying on business with a total Sales ,
turnover or gross receipt exceeding Rs.60 lakh
SECOND CATEGORY covers persons carrying on a profession with gross
receipt exceeding Rs.15 lakh
THIRD CATEGORY covers persons whose income is assessed on a

2.

Write a note on tax free

perquisites

3.

Discuss the computation

of total income of HUF.

4.

What is the purpose of

tax audit? Who has to
get accounts audited?

1D16 MF0012

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5.

What
are
components of
tax?

6.

Write a note on customs

duty

1D16 MF0012

the
wealth

presumptive basis under section 44AE,44AB, 44BBB

FOURTH CATEGORYcovers those persons who declares a lower income
than the amount presumed under section 44AD, and if their income exceeds
the basic exemption limit.( 1MARK EACH)
1.House including farm house (2 marks)
2.motor cars (2 marks)
3.jewellery ,bullion, furniture, etc made of precious metal(2 mark)
4.yachts,boat and aircraft (1 mark)
5. urban land (2 mark)
6.cash in hand (1 mark)
Custom duty is the duty imposed on goods imported into India.
The customs act makes it clear that goods imported into or exported out of India
create a taxable event in which customs duty becomes payable.
taxable event for imported goods
taxable event for warehouse goods
taxable event for exported goods (4 marks)
Rate of duty and tariff valuation for imported goods (2 marks)
Types of duties in customs (4 marks)

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