4.16 Tax
Planning
Unit I:
Meaning concept of tax planning and tax management- distinction between tax
planning, tax evasion and tax avoidance with illustrations. Tax planning
through selection of suitable form of business organization, selection of type
of business and industry and location; diversion of income and application of
income.
Unit II:
Tax planning through the provisions of section 10 of the Income Tax Act.
Relating to 'tax free incomes' - tax planning in regard to salary income of an
individual; deductions and exemptions allowed in computing income nom salaries
and income from house property. Tax planning in regard to setting up and dates
of commencement of business, make or buy decision; valuation of stock and
export and domestic sales decision.
Unit III:
Capital assets in the context of capital gains and assets outside the purview
of capital gains taxation of long term and short term capital gains and
exemptions thereof for tax planning purposes.
Unit IV:
Tax planning in regard to residuary and non-residuary headings of income from
other sources; taxability of interest on government securities and
dividend-from Indian companies- Tax planning and clubbing of incomes under
section64 of the IT Act. Important factors to be considered in regard to tax
planning in case of an individual with reference to splitting of income and
investment of surplus funds in selected securities. Tax planning and tax
deducted. At source and advance payment of tax by an individual assesses.
Unit V:
Tax planning by a partnership firm assessed as such and as association of
persons. Tax planning by company through the timing of payment of statutory
dues, joint ventures abroad and foreign collaboration and transfer from holding
company to subsidiary. Function of the tax planning department of a company
Fringe benefit tax,
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