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DEPARTMENT -Management
M.B.A
TAXATION-BAT 738
Faculty Name : Dr. Shalini Aggarwal
(Associate Professor)
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Course Outcome
CO Title Level
Number
CO1 To make the students know how the tax planning is Remember
done.
• To make the students know how the tax planning is done. To know the tax planning
with respect to various management decisions.
• To make the students understand the various aspects relating to taxation to be
considered before starting any business.
• To help the student understand Tax planning and financial management
decisions regarding capital structure, dividend policy
A “TAX” IS A “FINE” FOR DOING WELL
• Taxpayers generally plan their affairs so as to attract the least incidence of tax.
• Tax planning can be defined as an arrangement of one’s financial and economic affairs
by taking complete legitimate benefit of all
– deductions
– exemptions
– allowances and
– rebates so that tax liability reduces to minimum
• Tax laws are fully complied within its framework.
• Not taking form of colorable devices.
• Having no intention to deceit the legal spirit
Tax Planning
• Tax avoidance is minimizing the incidence of tax by adjusting the affairs in such a
manner that although it is within the four corners of the taxation laws but the
advantage is taken by finding out loopholes in the laws.
• The shortest definition of tax avoidance is that it is the art of dodging tax without
breaking the law.
• Components of tax are made to appear natural and legal requirements are compiled
with artificially.
Tax Avoidance
• In the case of tax avoidance, the tax payer apparently circumvents the law, without
giving rise to a criminal offence, by the use of a scheme, arrangement or device, often
of a complex nature but where the main purpose is to defer, reduce or completely
avoid the tax payable under the law.
[McDowell & Co. Ltd. v. CTO [1985] 154 ITR 148 (Supreme Court)]
• All methods by which tax liability is illegally avoided are termed as tax evasion. Tax
evasion may involve:
• Concealment of income;
• Inflation of expenses to suppress income;
• Falsification of accounts;
• Conscious violation of rules.
• These devices are unethical and have to be condemned. The courts also do not favor
such unethical means. Evasion, once proved, not only attracts heavy penalties but may
also lead to prosecution.
Reasons of Tax Evasion
1. Limited scope.
2. Dynamic laws.
3. Preconditions.
4. Complicated laws.
5. Thorough knowledge required.
6. Time Consuming.
EVERY PERSON IS CHARGEABLE TO TAX
ON THE TOTAL INCOME EARNED IN THE PREVIOUS YEAR
AT RATES APPLICABLE TO THE ASSESSEE
AREAS OF TAX PLANNING IN CONTEXT OF INCOME TAX
ACT, 1961
• The Cost raising owner’s fund is treated as capital expenditure therefore not allowed as
deduction. However if conditions of Sec. 35D is satisfied then specified expenditures can
be amortized.
• The Cost of raising dent fund is treaded as revenue expenditure. It can be claimed as
deduction in computing the total income.
• Where the assesses is entitled to incentives u/s 10A etc. maximum equity fund should
be utilized.
• Where interest on debt fund is payable outside India, tax should be deducted at source
otherwise deduction is not allowed.
Tax Management With Reference To Capital Structure
• Dividend is like a bonus or reward a company or fund house doles out to its shareholders
or investors. It can be given in the form of liquid cash or benefits or even stocks.
•
Tax implication
• Equity
• Mutual funds
• Debt funds
• company
Tax implication for dividend
ELSS Equity Funds Debt Funds Company
Claim up to Rs. 1.5 lakh as Section 10(35) exempts Section 10(35) allows Section 10(34) exempts tax
deduction as allowed under dividend income from SEBI- exemption of dividend income on dividend to individual/HUF
Section 80C approved schemes from SEBI-approved by Indian companies
schemes
Dividend gained and Subject to DDT (Dividend The AMC must pay Dividend Section 115BBDA levies 10%
reinvested in ELSS is exempt Distribution Tax) paid by the Distribution Tax to the tax on dividend income from
from taxation under 80C fund house government before companies that exceeds Rs.
distributing dividends to 10 lakhs
investors
Dividend given, but not 10% LTCG if the capital gains Taxes to be imposed as per Section 115BBD makes
reinvested, is not eligible for exceed Rs.1 lakh in a the tax slab rate dividend income from
80C deduction financial year overseas companies as fully
taxable under “Income from
other sources” as per
individual tax slab rate
3 year lock-in period is Section 115-R imposes 10% Section 115-R mandates Section 115-O levies
applicable – from the time DDT on equity fund house 28.84% DDT on debt funds 17.304% DDT on domestic
you reinvest the dividend and liquid funds. This companies. This includes
includes surcharges and cess 12% surcharge and 3%
education cess
References
• https://cleartax.in/s/dividends
IMPLICATIONS
Students will get the knowledge of Corporation tax, Tax Planning, Tax Evasion, Tax Avoidance,
Tax Management for the corporate houses working inside geographical boundaries of India
To help the student understand Tax planning and financial management decisions
regarding capital structure, dividend policy
FAQ
• Students will apply critical thinking and problem-solving skills related to taxation of entities and
corporations (New and Old). In addition, students will recognize potential opportunities for tax
savings and tax planning which will be related to various management decisions. Students will
demonstrate understanding of and apply consistently the ethical principles and professional
standards related to the profession, including the standards in taking a tax position.
• To help the student understand Tax planning and financial management decisions
regarding capital structure, dividend policy
References
• http://www.charteredclub.com/tax-planning-evasion-avoidance/
• http://www.academia.edu/9487453/TAX_AVOIDANCE_TAX_EVASION_AND_TAX_PLANNING
• http://taxguru.in/income-tax/tax-planning-tax-evasion.html
Applications
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References
• Ahuja, H.L. Macroeconomics, Theory and Policy, S. Chand & Co., New Delhi.
• Chopra, P.N. (2010). Managerial Economics, Kalyani Publishers, New Delhi.
• Karl E. Case / Ray Fair, Principles of Economics Ninth Edition.
• D.M Mithani (2015) ,Managerial Economics
• Keat Paul and Philips Young (2015), Managerial Economics
• http://www.economicsdiscussion.net/demand-forecasting/demand-forecasting-concept-
significance-objectives-and-factors/3557
• https://sites.google.com/site/economicsbasics/demand-forecasting
• International Journal Of economics
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Assessment Pattern
37
THANK YOU
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