Professional Documents
Culture Documents
BTP Group 2 Basic Concepts
BTP Group 2 Basic Concepts
Group 2: Ankit Shah (114105) Dhwani Shah (114213) Krushang Shah (114227) Piyush Kumar (114239) Rima Shah (114244)
TAX PLANNING
Tax Planning
Tax planning can be defined as an arrangement of ones financial and economic affairs by taking complete legitimate benefits of all deductions, exemptions allowance and rebates so that tax liability reduces to minimum.
TAX MANAGEMENT
Tax Management
The objective of tax management is to comply with the provisions of law. Tax management relates to past, present, future. Tax management has a limited scope. As a result of effective tax management, penalty, penal interest, prosecution, etc can be avoided.
TAX AVOIDANCE
There is nothing sinister in so arranging ones affairs so as to keep taxes as low as possible. It is not bad morality for anybody. It can be done within legal framework even by taking help of loopholes in the Law.
Tax Avoidance
Tax avoidance is the means to reduce the tax liability by using the legal means. To make it simpler to understand, we can say that it is a methodology whereby one regulate the affairs in such a manner that individual or company pays the minimum tax imposed by the Act as opposed to the maximum. Example The example for tax avoidance can be seen in the light that a person forms a company and sell his products and pays 20% tax by virtue of claiming the depreciations and had the same person be selling the goods by himself without forming a company, he would have had been paying 30% as the income tax.
TAX EVASION
Tax Evasion
All methods by which tax liability is illegally avoided is termed as tax evasion. An assesse guilty of tax evasion may be punished under the relevant laws. It may involve stating an untrue statement knowingly, submitting misleading documents, suppression of facts, etc. All such procedures and methods are required by the statute to be abided with but the assesse who dishonestly claims the benefit under the statute before complying with the said abidance by making false statements, would be within the ambit of tax evasion. A person may plan his finance in such manner, strictly within the four corners of the taxing statute that his tax liability is minimized or made nil. If this is done and as observed strictly in accordance with and taking advantage of the provisions contained in the Act.
DEMERGER
Demerger
Demerger in relation to companies means, transfer, pursuant to a scheme of arrangement under section 391 to 394 of the Companies Act, 1956 by a demerged company of its one or more undertakings to the resulting company.
Features of Demerger
All the property of the undertaking, being transferred by the demerged company, becomes property of resulting company. All the liabilities relatable to the understandings being transferred by the demerged company becomes liability of resulting company. The property and liabilities of the undertaking company being transferred by the demerged company are transferred at values appearing in books of account immediately before demerger. The resulting company issues shares to the shareholder of the demerged company on a proportionate basis as a consideration of demerger. The shareholders holding not less than 3/4th in value of shares in the demerged company becomes shareholder of the resulting company. The transfer of the undertaking is on a going concerns basis. The demerger is in accordance to conditions, if any, notified under Section 72(A)5.
Concept of Income
Income is a periodical monetary return with some sort of regularity. It may be recurring in nature. It may be broadly defined as the true increase in the amount of wealth which comes to a person during a fix period of time. Principles which clarify the concept of Income Regular and definite source Different forms of Income Receipt and Accrual Illegal Income Diversion of Income by over riding title Tax Free Income Same Income cannot be tax twice Award received by a sportsman Revenue receipt and capital receipt
TOTAL INCOME
Total income
Total income of an assesse is gross total income as reduced by the amount permissible as deduction under section 80C and 80U.
AGRICULTURAL INCOME
Agricultural Income
Section 10(1) exempts agricultural income from income tax. By virtue of section 2(1A) the expression agricultural income means : Any rent or revenue derived from land which is situated in India and is used for agricultural purpose. Any income derived from such land by agricultural operations including processing of the agricultural produce, raised or received as rent in kind so as to render it fit for the market or sale of such produce. Income attributes to a farm house subject to certain conditions. With effect from the assessment year 2009-10, any income derived from saplings or seeding grown in a nursery shall be deemed to be agricultural income.