TAX PLANNING

AND
MANAGEMENT
By

LECTURER MINISHA GUPTA

This subject basically deals with

 How tax is calculated

 How tax can be evaded
 How tax can be properly planned.
 How various situations affect the tax planning
and management.
 What all persons or committees are involved
in the management and planning of Tax and
Liability.
 UNIT 1
TAX PLANNING AND
MANAGEMENT
TAX
 A charge or a sum of money levied on person
or property for the benefit of state.
 It is a payment to Government.
 It is a kind or charge imposed by the state
upon the citizens.
 Profit = Revenue – Expenses.
 TYPES OF TAXES
 DIRECT TAXES  INDIREXT TAXES
 Income Tax  Sales/ CST/ VAT
 Wealth Tax  Excise
 Corporate Tax  Customs Duty
 Fringe Benefit Tax  Service Tax
 Dividend Decision Tax  Entertainment Tax
 It is levied on Income and
Assets.
 Tax Payer is tax Bearer.
 Burden of tax cannot be
shifted.
 Slabs are applicable.
 Tax planning avenues are
available.
 Regulated under Income
Tax, Companies Act,
Partnership act.
 It is collected and
monitored by CBDT.
 It is levied upon goods
and services.
 Tax payer is tax Bearer.
 Burden of tax can be
shifted.
 There is no system of
slabs
 No such avenues is
available.
 Regulated under Sales
Tax and Excise Duty.
 It is collected by Board of
Excise and Customs.
 TAX PLANNING
 It is arrangement of one’s financial affairs so
that legal provisions wont violate.
 It carried out the full enjoyment of Tax
Rebates, Tax Exemptions, Tax Deductions.
 It is within the four corners of LAW and
regarded as fully legitimate.
 Needs and Objectives of Tax
 Planning
Tax planning is done for the reduction of Tax Burden.
 To avoid any sort of litigation.
 To avoid any type of raid and penalty.
 To avail the benefit of concessions and exemptions
given under law.
 The tax planning avenues provide a financial cushion
or backup for the use of contingencies in future.
 For preparation and maintenance of systematic
records.
 To discharge the responsibility of a good citizen.
Perquisites of TAX Planning

 To have full usage of tax planning.

 To evaluate fully tax planning avenues.
 To consider all direct and indirect taxes.
 It should be done as guided by Tax Laws.
 TAX
MANAGEMENT
 It includes maintenance of records in prescribed
format.
 It includes getting audited the records, filing
returns and pay taxes. Etc.
 It is a regular feature of business enterprises
and a form of tax planning.
 Employees use CBDT (Central Board of Direct
Taxes).
 Employers use TDCAN (Tax deduction and
collection Account No).
MAIN AIMS OF TAX
MANAGEMENT
 Compliance with legal formalities.

 Saving from penalties and prosecution.

 Taking advantage of various tax incentives
and deductions.
 Review of departments orders.
 AREAS OF TAX
1. MANAGEMENT
Deduction of tax at source-: It can be done with
respect of income from salaries, winning from
lottery, horse race, etc.
1. Employer seek for TDCAN and employee for Pan
card.
2. TDS should be deposited in government treasury.
3. Employer should furnish to the employee a certificate
regarding TDS i.e.. Form 16.
4. Employer should furnish quarterly and annual returns
regarding TDS.
2. Payment of tax-:
1. Advance payment of Tax.
2. Tax on Self Assessment
3. Payment on Demand.
2. Audit of accounts
1. If business income exceeds 40 Lakh.
2. If individual income exceeds 10 Lakh
2. Fulfillment of conditions to claim deductions.
3. Furnishing return of Income.
4. Documentation and maintenance of records.
5. Review of Orders.
 TAX AVOIDANCE
 An art of dodging out i.e. actually breaking law.
 Method of reducing tax incidence by finding out
loopholes of law.
 A device which technically satisfies requirement of
law but not in legal accordance.
 It includes attempt to prevent or reduce tax liability.

TYPE
 S
Agricultural Income.
 Section 80-IB- Tax Holiday for setup of business in
backward areas.
 Section 80G- Donations are tax exempted.
 TAX EVASION
 To reduce tax liability when accounts are interpreted
then it is Tax Evasion.
 It is not only illegal but also immoral and antinational.
 Under tax laws, tax evaders are penalized by heavy
duty.
MEANS OF TAX
 EVASION
Falsification of Accounts.
 Inflation of expenses.
 Cautious violation of rules.
 Excessive payment of salary.
 Non-disclose of capital gain.
Assessment Year-:
The period of time in which the tax
liability is assessed and the payment of
Tax is made upon the income earned in
previous year is known as Assessment
Year
Previous Year-:
It is the year in which income is earned.
Financial Year-:
It is the year in which new tax laws are
prepared in the Finance Act are implemented.
ASSESSEE
A person whose tax liability is
assessed according to the
provision of law.
TYPES OF ASSESSEE
 Sole proprietor
 Hindu Undivided Family.
 Partnership Firm
 Company
 SOLE
 MERITS PROPRIETOR
 Pay tax as per slab defined by Finance Act.
 Deductions that can be claimed by individual.
 Sec 80 CCC-: Contribution to Pension Fund.
 Sec 80 D-: Medical health insurance for family members.
 Sec 80 DD-: Expenditure on Medical Treatment for disable
dependant.
 Sec 80 E-: Interest paid on loan of higher studies.
 Sec 80 G-: Donation to approve funds.
 Sec 80 GGA-: Payments for scientific research.
 Sec 80-: Income of a disable person.
 Sec 80JJA-: Profit from business collecting and processing
biodegradable waistes.
 DEMERITS
 Unlimited liability.
 Don’t get deduction against payment of salaries.
 Cannot raise additional capital by way of shares and
debentures issue.
 No money received as interest on capital.
 May have to liquidate assets for discharging liability
of companies.

HINDU UNDIVIDED
 TAXFAMILY
LIABILITY
 Similar to individual or sole proprietor.
 Allowed as many deductions as allowed to Sole
Proprietor
 Salary of KARTA is fully tax deductible.
 Interest on capital is not allowed.
 PARTNERSHIP
 FIRMunder Partnership Act.
Firm registered
 Limited to 20 person only.
 If limit of person exceed then firm adopt company form

of business organization.
TAX LIABILITY
 Pay tax @30% + 10% surcharge + 3% Education cess.
 Tax deducted under Sec 80G, 80GGA and 80JJA.
 Allowed deduction similar to individuals and HUF.
 Interest o capital is allowed as deduction.
 Probability of raising additional capital can be solved by
admitting a new partner.
 Remuneration paid is allowed as deduction.
DEMEITS
 Tax liability is similar to company form of
organization but cannot raise capital by issue
of share.
 Liability of partners is limited to the extent
capital contributed.
 If Provident Fund wont comply with 184
Section of Income Tax it is treated as AOP
(Association of Persons).
 It comes to closure if lunacy of partners is
found.
 COMPAN
 As per Indian’s Y
Company’s Act 1956.
 An artificial person or entity.
 TAX LIABILITY
 Pay tax @30% + 10% surcharge + 3% Education
cess.
 Maximum amount of tax as no tax slab is available.
 To pay FBT and DDT and Wealth Tax.
 Indirect taxes like custom duty, excise duty, service
tax, VAT.
 Deduction on interest paid on debentures and
borrowings.
 Salary paid is fully deductible.
 Depreciation on assets is fully deductible.
 INCOME TAX EXCEMPTION LIMIT- 2009-10
Basic Slabs for Individuals :-
Excemption limit raised from Rs. 1,50,000 to Rs. 1,60,000
Up to Rs.1,60,000 NIL
Rs. 1,60,000 to Rs.3, 00,000 10 %
Rs. 3,00,001 to Rs. 5,00,000 20 %
Above Rs. 5,00,000 30 %

Basic Slabs for Women under the age of 65 years old :-

Excemption limit raised from Rs. 1,80,000 to 1,90,000

Up to Rs. 1,90,000 NIL

Rs. 1, 90,000 to Rs. 3,00,000 10 %
Rs. 3,00,001 to Rs. 5,00,000 20 %
Above Rs. 5,00,000 30 %
Basic Slabs for Senior Citizen (Over 65 years):-
Excemption
Excemption limit
limit raised
raised from
from Rs.
Rs. 2,25,000 to Rs.
1,50,000 to Rs. 1,60,000
2,40,000
Up to Rs. 2,40,000 NIL
Rs. 2,40,000 to Rs.3,00,000 10 %
Rs. 3,00,001 to Rs. 5,00,000 20%
Above Rs. 5,00,000 30%
Thanks