CMA S VENKANNA Behind Every Successful Business Decision There Is Always A CMA TAX IS A FINE FOR DOING RIGHT A FINE IS A TAX FOR DOING WRONG Exercise carried out by a tax ID: 931716
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Corporate Tax Planning
ByCMA S VENKANNA
Behind Every Successful Business Decision, There Is Always A
CMA
Slide2TAX” IS A “FINE” FOR DOING “RIGHT”
A “FINE” IS A “TAX” FOR DOING “WRONG”.
Slide3Exercise carried out by a tax payer to meet his tax obligations in a proper, systematic and
orderly manner Availing all permissible exemptions, deductions and relief under the statute as may be
applicableNot
taking form of
“
colourable
devices” andHaving no intention to deceit the legal spirit behind the tax law
What is Tax Planning
Slide4Colourable devices cannot be part of tax planning andit is wrong to encourage or entertain the belief that itis honourable to avoid payment of tax by resorting todubious methodsThe intention is to deceit the governmentColourable Device
Slide5Reducing Tax LiabilityAvoid LitigationProductive InvestmentGrowth of EconomyEconomic Stability
Objective of Tax Planning
Slide6Methods used by the tax payers to minimize the tax liabilityTAX PLANNINGTAX AVOIDANCETAX EVASIONTAX MANAGEMENT
Slide7Legal and Permitted Taking maximum benefits.Use all beneficial provisions in tax lawsExample: Exemptions, Deductions, rebates and reliefs.Permissible within the frame work of law.Tax Planning
Slide8Planning to reduce or negating the tax liability Using legally permissible ways and takes into account loopholes of law
It is Tax hedging within frame work of lawIntentional tax planning before actual tax liabilityIt has legal sanction provided there is no intention to cheat the revenue.
The line of demarcation between
tax planning and
tax avoidance
is very thin
and blurred.Tax Avoidance
Slide9Criteria to define tax avoidance (1) use of colorable devices; (2) instances where doctrine of substance is defeated;
(3)defeating the genuine spirit of law; (4)mis-representation or twisting of facts;
(5)taking only strict interpretation of law
and suppressing
the
legislative intention
behind it.Tax Avoidance – How
Slide10Loss of much needed revenue to the countryPiling up of block moneyHidden loss to the communityUse of best brains of (rather it is crooked mind)Tax Advisers (not skillful)LawyersAccountants andTax OfficersLack of ethics
Dodging the payment of taxEvils of Tax Avoidance
Slide11Tax liability is illegally avoidedAttempted with help of unfair means / methods
Tax omissionUnlawfulPunishable under lawIntentional to cheat the RevenueTax Evasion
Slide12Tax planning should not be done with an intent to defraud the revenue; though all transactions entered into by an assessee taken individually could be legally correct, yet on the whole these transactions may
be devised to defraud the revenueThus, planning for tax should be correct both in form and substancePlanning
Slide13Management DecisionsTax ComputationTax ComplianceTax PaymentsTax Planning Areas
Slide14Determination of most tax effective structure.Taking full advantage of tax opportunities and reliefsAchieving the optimum capital or revenue tax
treatmentReducing tax on disposals and maximizing relief on acquisitionsMaking the most of tax opportunities specific to your industry
Meeting the rigorous demands of compliance including corporation tax self assessment
Acting
on your behalf in discussions with the
tax
authoritiesTax Planning Jobs
Slide15Selection of type of industry, location of industry etc.Corporate mergers / amalgamations.Procurement / acquisitions
of Fixed assets.Make or buy,Own or lease,Retain or replace,Export or domestic sales,Shut down or continue,
Expand or contract .
Management Decisions
Slide16Location of BusinessNature of Business – Sectors Form of Organization - OwnershipAdvance rulingCapital StructureOther Areas for Tax Planning
Slide17Claiming appropriate exemptions.Claiming deductions under respective heads of income.Determine - Revenue and CapitalBooking of Expenses in appropriate Head
of Accounts.Capitalization of Assets.Claiming deduction in respect of Depreciation / addl. Depreciation/Development RebateAdvantage of unabsorbed depreciation.Bad
Debts – Tax BenefitsComputation of Income and Tax
Slide18Compliance with the provisions of:u/s 40(a)/ 40(a)(i) / 40(a)(ia) – TDSIncome Tax -40(a)(ii)Compliance with the provisions of:Payment to
Relatives – 40 A(2)Cash Payment – 40 A(3)Provision of Gratuity -40A(7)Compliance with the provisions of:Un paid Liabilities – 43BLegal Provisions to be used
Slide19Computation of Business / Profession Income – Special ProvisionsPlanning for carry forward and setoff of lossesComplying due dates for filing ITRs
Claiming Chapter VI A deductions.
Slide20Disclose all incomesAvoid Concealment of factsAvoid attraction of PenaltyOthers
Slide21Maintenance of AccountsAudits / Tax AuditsObtaining Certifications / Audit certificatesFiling returns / forms promptly.Compliance with
various provisions of TDS/TCS.Filing Quarterly & Annual returns of TDS.Reply to the Tax AuthoritiesTax Compliances
Slide22Payment of Advance Tax as per the stipulated schedule.Availing Tax CreditCarry forward of Tax Credit
Avoidance of InterestAvoidance of penaltyAvoidance of ProsecutionsClaim of Refund of Excess Tax PaidTax Payments
Slide23Thank you
Behind Every Successful Business Decision, There Is Always A
CMA