This ppt includes Good tax planning of the company will maximize the wealth of the company

1. Presented by,
Mahadevi
2nd M.com.
G.F.G.C. For Women
Holenaripura
Good tax planning of the
company will maximize the
wealth of the company
Under the guidance of
Sundar B. N.
Asst. Prof. & Course Co-ordinator
GFGCW, PG Studies in Commerce
Holenarasipura

2. Good tax planning of the
company will maximize the
wealth of the company

3. MEANING OF THE TAX PLANNING
Tax planning refers to financial planning for tax efficency. It aims to
reduce one‘s tax liabilities and optimally utilize tax exemptions,
rebates and benefits as much as possible. Tax planning inculdes
making financial and business to minimise the incidence of tax
Tax planning is the process of analysing a financial plan / a
situation from a tax perspective. The objective of tax planning is
to make sure there is tax efficiency.

4. Deduction:
A deduction is an
expense that can be
substracted from a taxpayer’s
gross income in order to reduce
the amont of income that is
subject to taxtion.

5. FOLLOWING ARE THE DEDUCTIONS FOR THE COMPANY
• Section 80G: Donation to certain funds , charitable institutions etc… claimed 100% or 50%.
• Section 80GGE: Indian companies can claim tax deduction under this sectionfor
contribution made to a political party or an eletoral trust registered in India.
They can claimed up 100% tax deduction against the amount donated.
• Claiming a deduction towards deposits made towards site restoration fund under section
33ABA.
• Claiming deduction towards a set off any loss carried forward or unobserved depreciation..
• Claiming additional depreciation under section 32.
• Claiming deduction under section 33AB for tea, coffee and rubber manufacturing companies.
• Claiming a deduction for the capital expenditure incurred by any specified business under
section 35AD.

6. Exemptions:
That mean you do not have to pay any tax
income from that souce.
1. In the case total income of the company of
Rs.250000 , company should not pay tax.
2. Exemptions for income earned in transfer of
capital asstes.
3. Claiming exemption any income earned by
agriculture extension project under section 35CCC.
4. Dividend earned by domestic company fully
exempted.

7. ALLOWANCES
An allowance is a fixed amount of money received by a salaried employee from his employer to meet a
particular type of expenditure over and above salary.
• Dearness allowances
• Entertainment allowances
• Overtime allownce
• Interim allowance.
MINIMUM ALTERNATIVE TAX:
MAT is a provision in Direct tax laws to limit tax exemptions availed by companies , so that they pay
least a minimum amount of corporate tax to the government.

8. EXAMPLE FOR UNDERSTANDING TAX PLANNING
Total income of the company is Rs.50,00,000 and the company paid donation
to NDF Rs 50,000 and company claimed to deduction of Rs.5,000 under
section 87a.
Company earn dividend of Rs. 20000 and MAT credit of Rs.30000
Compute total tax liability of the company.

9. Without deduction
Computation of tax liability of the company
Particulars
Amt
Total income 5000000
• Up to Rs.250000 Nill
(5000000-250000=4750000)
• Rs.250000 to Rs.500000 at 5% (250000*5%) 12500
(4750000-250000=4500000)
• Rs.500000 to 1000000 at 20% (500000*20%) 100000
(4500000-500000=4000000)
• Above 1000000 at 30% (4000000*30%) 1200000
1312500
(+) heakth and education cess at 4%(1312500*4%) 52500
TOTAL TAX LIABILITY 1365000

10. With deduction
Computation of total income of the company
Pariculars Amt(Rs.)
Gross income 5000000
(-)Dividend. 20000
(-) MAT credit 30000
(-) Deduction:
Donation to NDF 50000
Under section 80 GB 5000
TOTAL INCOME 4895000

11. Computation of tax liability of the company
Prticulars Amt (Rs.)
Total income 4895000
• Up to Rs. 250000 Nill
(4895000-250000=4645000)
• Rs.250000 to 500000 at 5% (250000*5%) 12500
(4645000-250000=4395000)
• Rs.500000 to 1000000 at 20% (500000*20%) 100000
(4395000-500000=3895000)
• Above 1000000 at 30% (3895000*30%) 1168500
1281000
(+)Health and education cess at 4% (1168500*4%) 51240
TOTAL TAX LIABILITY 1332240

12. • without deduction tax liability of the company Rs.1365000
• With deduction tax liability of the company Rs.1332240
In this case we use to some deduction to reduce tax liability of the company

13. CONCLUSION
Tax planning has numerous advantages .They should be done
with in applicable limits of laws and clearly distinguished with
tax evasion or tax avoidance, both of which are not allowable
under applicable limits of laws.