When a person decided to start a business the number of factors are considered. Tax planning also plays an imp role,

1. TAX PLANNING FOR
NEW BUSINESS
Dr. Laxmikant N. Soni
NET (Commerce), SET (Commerce), NET (Management), SET (Economics)

2. Tax Planning
TP is defined as an arrangement of one’s financial and economic
affairs by taking complete legitimate benefit of all deductions,
exemptions, allowances and rebates so that tax liability reduces to
minimum.
2 Dr. Laxmikant N. Soni

3. SETTING UP OF NEW BUSINESS
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Dr. Laxmikant N. Soni

4. When a person decided to start a business the number of
factors are considered:
Factors are
□ Location, Nature & Size of business
□ Form of business
□ Capital structure
□ Setting up and commencement of business
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5. Location , Nature & Size of
business
Tax benefits on the basis of location , nature and size :
⊡ Agri income (sec: 10(1))
⊡ Newly established unit in SEZ (sec:10AA)
⊡ Infra: Devt: Undertaking (sec: 80IA)
⊡ Undertaking engaged in devt: of SEZ(sec: 80IAB)
⊡ Certain undertakings in certain special category states (sec: 80IC)
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6. ⊡ Hotels and convention centers in specified areas (sec: 80 ID)
⊡ Undertakings in North Eastern states (sec: 801E)
⊡ Assesses engaged in the collection and processing of bio-
degradable waste (sec: 80JJA)
Location , Nature & Size of
business
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7. “
Form Of Business
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8. ⊡ Individual / Sole Proprietorship
⊡ Hindu Undivided Family
⊡ Firm
⊡ Company
Form Of Business
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9. An individual can pay tax on TI at prescribed
slab rate. He did not entitled to get deduction in
respect of remuneration , interest on capital while
computing income from his business.
Individual / Sole
Proprietorship
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10. General Deductions to individuals
⊡ Sec: 80C - contribution to life insurance premium, PPF, NSC , housing loan etc.
⊡ Sec: 80CCC – contribution to Pension Fund.
⊡ Sec: 80D – Health Insurance.
⊡ Sec: 80DD – medical treatment for handicapped.
⊡ Sec: 80DDB – expense on medical treatment of specified deceases.
⊡ Sec: 80E – interest on loan for higher studies.
⊡ Sec: 80EE – interest on loan for acquisition of residential house.
⊡ Sec: 80GG – House Rent
⊡ Sec: 80U – Income of Disabled persons
⊡ Sec: 80TTA - interest on saving bank account
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11. HUF pays tax same as like an individual. The
family can pay reasonable remuneration to karta
and other family members allowed to deducting in
computing business income. Interest on capital
cannot allowable for deduction.
Hindu Undivided Family
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12. Deductions to HUF
⊡ Deduction entitled from its Gross Total Income u/s
80C, 80D, 80DD, 80DDB, 80TTA.
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13. FIRM
Firm pay tax at the rate of 30%. Firm can no initial
exemptions and entire income will taxable.
The share of income of a firm in the hand of partner is fully
exempted u/s 10(2A)
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14. Deductions to Firm
⊡ Interest on capital or loan given a rate mentioned in
partnership deed , but not exceeding 12% .
⊡ Remuneration to working partners as mentioned in Deed.
But limits upto prescribed u/s 40(b)
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15. Company
A domestic company is liable to pay tax at the rate of 30%
with surcharge and Education cess.
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16. Deduction to company
⊡ Whole amount of interest paid to the loan taken for
business purposes.
⊡ Remuneration paid to MD, Directors and other staffs.
⊡ Amount of dividend on its share capital is not deductible.
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17. THANK YOU !
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Dr. Laxmikant N. Soni