The document discusses tax planning considerations for owning or leasing assets, repairing vs replacing assets, decisions to make or buy products, and tax provisions related to shutting down a business. It provides guidance on comparing the present value of cash outflows for owning vs leasing, when it is preferable to lease vs own, and how to treat the sale of former research assets. It also outlines tax treatments and deductions allowed for repairs, and considerations for shut down like set-off of losses and depreciation.
Unit II Tax Planning and Company PromotionDayanand Huded
The chapter comprises of Meaning of Tax Planning, Tax Avoidance, Tax Evasion and Tax Management; Features and Scope for Tax Planning; Business Location and Tax Planning; Nature of Business and Tax Planning: FTZ, Units in SEZ, 100% EOU and Infrastructure Development.
Tax planning is a focal part of financial planning. It ensures savings on taxes while simultaneously conforming to the legal obligations and requirements of the Income Tax Act, 1961. The primary concept of tax planning is to save money and mitigate one's tax burden.
Tax Planning is the arrangement of financial activities in such a way that maximum tax benefits are enjoyed by making use of all beneficial provisions in the tax laws. It entitles the assessee to avail certain exemptions, deductions, rebates and reliefs, so as to minimise its tax liability.
(i) Reduction of tax liability: One of the supreme objectives of tax planning is the reduction of the tax liability of the payer and the resultant saving of the earnings for a better enjoyment of the fruits of hard labour.
(ii) Minimization of litigation and the tax payer may be saved from the hardships and inconveniences caused by unnecessary litigations.
(iii) Productive investment: Tax planning is a measure of awareness of the taxpayer to the intricacies of the taxation laws and it is the economic consciousness of the income earner to find out the ways and means of productive investment of the earnings which would go a long way to minimize its tax burden.
(iv) Healthy growth of economy: The saving of earnings is the only basement upon which the economic structure of human life is founded.
(v) Economic stability: Productive investment increase contours of the national economy embracing in itself the economic prosperity of not only the tax payers but also of those who earn the income not chargeable to tax. The planning thus creates economic stability of the nation and its people by even distribution of economic resources.
(i) Residential status and citizenship of the assessee: We know that a non-resident in India is not liable to pay income-tax on incomes which accrue or arise and are also received outside India, whereas a resident in India is liable to pay income-tax on such incomes.
(ii) Heads of income/assets to be included in computing net wealth: Before the Tax-planner goes in for his task; he has to have a full picture of the sources of Income of the tax payer and the members of his family
Unit II Tax Planning and Company PromotionDayanand Huded
The chapter comprises of Meaning of Tax Planning, Tax Avoidance, Tax Evasion and Tax Management; Features and Scope for Tax Planning; Business Location and Tax Planning; Nature of Business and Tax Planning: FTZ, Units in SEZ, 100% EOU and Infrastructure Development.
Tax planning is a focal part of financial planning. It ensures savings on taxes while simultaneously conforming to the legal obligations and requirements of the Income Tax Act, 1961. The primary concept of tax planning is to save money and mitigate one's tax burden.
Tax Planning is the arrangement of financial activities in such a way that maximum tax benefits are enjoyed by making use of all beneficial provisions in the tax laws. It entitles the assessee to avail certain exemptions, deductions, rebates and reliefs, so as to minimise its tax liability.
(i) Reduction of tax liability: One of the supreme objectives of tax planning is the reduction of the tax liability of the payer and the resultant saving of the earnings for a better enjoyment of the fruits of hard labour.
(ii) Minimization of litigation and the tax payer may be saved from the hardships and inconveniences caused by unnecessary litigations.
(iii) Productive investment: Tax planning is a measure of awareness of the taxpayer to the intricacies of the taxation laws and it is the economic consciousness of the income earner to find out the ways and means of productive investment of the earnings which would go a long way to minimize its tax burden.
(iv) Healthy growth of economy: The saving of earnings is the only basement upon which the economic structure of human life is founded.
(v) Economic stability: Productive investment increase contours of the national economy embracing in itself the economic prosperity of not only the tax payers but also of those who earn the income not chargeable to tax. The planning thus creates economic stability of the nation and its people by even distribution of economic resources.
(i) Residential status and citizenship of the assessee: We know that a non-resident in India is not liable to pay income-tax on incomes which accrue or arise and are also received outside India, whereas a resident in India is liable to pay income-tax on such incomes.
(ii) Heads of income/assets to be included in computing net wealth: Before the Tax-planner goes in for his task; he has to have a full picture of the sources of Income of the tax payer and the members of his family
Tax Planning with Reference to Managerial Decisions_NC.pdfDayanand Huded
This chapter comprises of Financial Decisions: Capital Structure Decisions; Dividend Policy; Bonus Shares and Capital Gains; Bond Washing Transactions; Own or Lease of an Asset, Installment or Hire Purchase, Make or Buy Decisions, Buying an Asset with Own Fund or Borrowed Fund and Repair, Replace, Renewal or Renovation; Shutdown or Continue: Tax Planning in respect of Amalgamation or De-Merger of Companies, Conversion of a Firm into a Company; Conversion of Sole Proprietorship into Company, Conversion of Company into Limited Liability Partnership.
Cost of Capital and also expenditure incurred in raising of such capital. Expectation of shareholders by way of dividend, growth etc. Expansion need of the business i.e. the rate by which profits of the business shall be again ploughed back in the business.
If the return on investment > rate of interest , maximum debt funds may be used, since is shall increase the rate of return on equity . However, cost of raising debt fund should be kept in mind.
if rate of return on investment < rate of interest, minimum debt funds should be used.
Where assessee enjoys tax holidays under various provisions of Income-Tax in such case minimum debt fund should be used, since the profit arising from business is fully exempt from tax which increase the rate of return of equity capital. But the borrowed funds reduces the profits ( profits less interest) before tax and to the extent exemption is reduce.
bond washing transaction can be defined as a transaction where some securities are sold sometime before the due date of Interest and reacquired after the due date is over. In order to discourage such transactions section 94 was introduced.
Where the owner of any securities (in this sub- section and in subsection (2) referred to as" the owner") sells or transfers those securities, and buys back or reacquires the securities, then, if the result of the transaction is that any interest becoming payable in respect of the securities is receivable otherwise.
Bond washing is the practice of selling a bond just before it pays a coupon payment and then buying it back once the coupon has been paid. Bond washing previously could result in apparently tax-free capital gains because after the coupon has been paid, the bond will often sell for less. However, the practice has been banned in most major jurisdictions.
Portfolio revision, securities, New securities, existing securities, purchases and sales of securities, maximizing the return, minimizing the risk, Transaction cost, Taxes, Statutory stipulations, Intrinsic difficulty, commission and brokerage, push up transaction costs, reducing the gains, constraint, Taxes, capital gains, long-term capital, lower rate, Frequent sales, short-term capital gains, investment companies, constraints, established, objectives, skill, resources and time, substantial adjustments, mispriced, excess returns, heterogeneous expectations, better estimates, generate excess returns, market efficiency, little incentive, predetermined rules, changes in the securities market, Performance measurement, Performance evaluation, superior or inferior, small investors, better performance, prompt liquidity, comparative performance, purchase and sale of securities.
Tax Planning with Reference to Managerial Decisions_NC.pdfDayanand Huded
This chapter comprises of Financial Decisions: Capital Structure Decisions; Dividend Policy; Bonus Shares and Capital Gains; Bond Washing Transactions; Own or Lease of an Asset, Installment or Hire Purchase, Make or Buy Decisions, Buying an Asset with Own Fund or Borrowed Fund and Repair, Replace, Renewal or Renovation; Shutdown or Continue: Tax Planning in respect of Amalgamation or De-Merger of Companies, Conversion of a Firm into a Company; Conversion of Sole Proprietorship into Company, Conversion of Company into Limited Liability Partnership.
Cost of Capital and also expenditure incurred in raising of such capital. Expectation of shareholders by way of dividend, growth etc. Expansion need of the business i.e. the rate by which profits of the business shall be again ploughed back in the business.
If the return on investment > rate of interest , maximum debt funds may be used, since is shall increase the rate of return on equity . However, cost of raising debt fund should be kept in mind.
if rate of return on investment < rate of interest, minimum debt funds should be used.
Where assessee enjoys tax holidays under various provisions of Income-Tax in such case minimum debt fund should be used, since the profit arising from business is fully exempt from tax which increase the rate of return of equity capital. But the borrowed funds reduces the profits ( profits less interest) before tax and to the extent exemption is reduce.
bond washing transaction can be defined as a transaction where some securities are sold sometime before the due date of Interest and reacquired after the due date is over. In order to discourage such transactions section 94 was introduced.
Where the owner of any securities (in this sub- section and in subsection (2) referred to as" the owner") sells or transfers those securities, and buys back or reacquires the securities, then, if the result of the transaction is that any interest becoming payable in respect of the securities is receivable otherwise.
Bond washing is the practice of selling a bond just before it pays a coupon payment and then buying it back once the coupon has been paid. Bond washing previously could result in apparently tax-free capital gains because after the coupon has been paid, the bond will often sell for less. However, the practice has been banned in most major jurisdictions.
Portfolio revision, securities, New securities, existing securities, purchases and sales of securities, maximizing the return, minimizing the risk, Transaction cost, Taxes, Statutory stipulations, Intrinsic difficulty, commission and brokerage, push up transaction costs, reducing the gains, constraint, Taxes, capital gains, long-term capital, lower rate, Frequent sales, short-term capital gains, investment companies, constraints, established, objectives, skill, resources and time, substantial adjustments, mispriced, excess returns, heterogeneous expectations, better estimates, generate excess returns, market efficiency, little incentive, predetermined rules, changes in the securities market, Performance measurement, Performance evaluation, superior or inferior, small investors, better performance, prompt liquidity, comparative performance, purchase and sale of securities.
If any of the above conditions is not satisfied, PPE cannot be recorded.
Above recognition, the principle is to be applied to the ‘Initial’ recognition of PPE and
‘Subsequent’ recognition.
Capital budgeting decisions are much vital than the decisions on management of working capital as these decisions requires careful analysis of the expected costs and benefits to be derived from each capital expenditure on acquisition of land, building, equipments and for permanent additions to working capital associated with the plant expansion.
The level of investments that maximizes the present value of the firm is simultaneously determined by the interaction of supply and demand forces under conditions of uncertainty
PRECEDENT AS A SOURCE OF LAW (SAIF JAVED).pptxOmGod1
Precedent, or stare decisis, is a cornerstone of common law systems where past judicial decisions guide future cases, ensuring consistency and predictability in the legal system. Binding precedents from higher courts must be followed by lower courts, while persuasive precedents may influence but are not obligatory. This principle promotes fairness and efficiency, allowing for the evolution of the law as higher courts can overrule outdated decisions. Despite criticisms of rigidity and complexity, precedent ensures similar cases are treated alike, balancing stability with flexibility in judicial decision-making.
Car Accident Injury Do I Have a Case....Knowyourright
Every year, thousands of Minnesotans are injured in car accidents. These injuries can be severe – even life-changing. Under Minnesota law, you can pursue compensation through a personal injury lawsuit.
RIGHTS OF VICTIM EDITED PRESENTATION(SAIF JAVED).pptxOmGod1
Victims of crime have a range of rights designed to ensure their protection, support, and participation in the justice system. These rights include the right to be treated with dignity and respect, the right to be informed about the progress of their case, and the right to be heard during legal proceedings. Victims are entitled to protection from intimidation and harm, access to support services such as counseling and medical care, and the right to restitution from the offender. Additionally, many jurisdictions provide victims with the right to participate in parole hearings and the right to privacy to protect their personal information from public disclosure. These rights aim to acknowledge the impact of crime on victims and to provide them with the necessary resources and involvement in the judicial process.
DNA Testing in Civil and Criminal Matters.pptxpatrons legal
Get insights into DNA testing and its application in civil and criminal matters. Find out how it contributes to fair and accurate legal proceedings. For more information: https://www.patronslegal.com/criminal-litigation.html
NATURE, ORIGIN AND DEVELOPMENT OF INTERNATIONAL LAW.pptxanvithaav
These slides helps the student of international law to understand what is the nature of international law? and how international law was originated and developed?.
The slides was well structured along with the highlighted points for better understanding .
In 2020, the Ministry of Home Affairs established a committee led by Prof. (Dr.) Ranbir Singh, former Vice Chancellor of National Law University (NLU), Delhi. This committee was tasked with reviewing the three codes of criminal law. The primary objective of the committee was to propose comprehensive reforms to the country’s criminal laws in a manner that is both principled and effective.
The committee’s focus was on ensuring the safety and security of individuals, communities, and the nation as a whole. Throughout its deliberations, the committee aimed to uphold constitutional values such as justice, dignity, and the intrinsic value of each individual. Their goal was to recommend amendments to the criminal laws that align with these values and priorities.
Subsequently, in February, the committee successfully submitted its recommendations regarding amendments to the criminal law. These recommendations are intended to serve as a foundation for enhancing the current legal framework, promoting safety and security, and upholding the constitutional principles of justice, dignity, and the inherent worth of every individual.
Responsibilities of the office bearers while registering multi-state cooperat...Finlaw Consultancy Pvt Ltd
Introduction-
The process of register multi-state cooperative society in India is governed by the Multi-State Co-operative Societies Act, 2002. This process requires the office bearers to undertake several crucial responsibilities to ensure compliance with legal and regulatory frameworks. The key office bearers typically include the President, Secretary, and Treasurer, along with other elected members of the managing committee. Their responsibilities encompass administrative, legal, and financial duties essential for the successful registration and operation of the society.
A "File Trademark" is a legal term referring to the registration of a unique symbol, logo, or name used to identify and distinguish products or services. This process provides legal protection, granting exclusive rights to the trademark owner, and helps prevent unauthorized use by competitors.
Visit Now: https://www.tumblr.com/trademark-quick/751620857551634432/ensure-legal-protection-file-your-trademark-with?source=share
Military Commissions details LtCol Thomas Jasper as Detailed Defense CounselThomas (Tom) Jasper
Military Commissions Trial Judiciary, Guantanamo Bay, Cuba. Notice of the Chief Defense Counsel's detailing of LtCol Thomas F. Jasper, Jr. USMC, as Detailed Defense Counsel for Abd Al Hadi Al-Iraqi on 6 August 2014 in the case of United States v. Hadi al Iraqi (10026)
ALL EYES ON RAFAH BUT WHY Explain more.pdf46adnanshahzad
All eyes on Rafah: But why?. The Rafah border crossing, a crucial point between Egypt and the Gaza Strip, often finds itself at the center of global attention. As we explore the significance of Rafah, we’ll uncover why all eyes are on Rafah and the complexities surrounding this pivotal region.
INTRODUCTION
What makes Rafah so significant that it captures global attention? The phrase ‘All eyes are on Rafah’ resonates not just with those in the region but with people worldwide who recognize its strategic, humanitarian, and political importance. In this guide, we will delve into the factors that make Rafah a focal point for international interest, examining its historical context, humanitarian challenges, and political dimensions.
1. Tax Planning in respect of Own or Lease
• If a business house/ company wants to acquire an asset
(Plant, Machinery, land etc.), following two options are
available
– To own/ purchase the asset
– To take the asset on lease
• Asset purchased: Through own funds or borrowed funds
• Effects of owning/ purchasing
– The buyer becomes the legal owner of the asset
– The buyer has to pay the price either in lumpsum or in installments
together with interest
– Asset can be offered as security
– Depreciation on asset can be claimed
– Asset can be purchased using owned capital or borrowed capital
2. • Asset on Lease: Lease is a contract between the owner of the
asset and the user of the asset whereby the owner gives the
right to use the asset to other party for an agreed period of
time in consideration of regular pre-decided lease rentals.
• Effects of Leasing
– Asset on lease does not provide ownership right to lessee
– Asset can not be offered as security to financial institutions
– Needed fresh arrangements for assets when provided back to the
Leasing company (Lessor)
3. Important Tax considerations in Buy or Lease
• Tax implications in case of buying an asset
– The buyer can claim depreciation at prescribed rats as an expense
while calculating business income for Income Tax purposes
– The buyer can also charge expenses incurred on repairs, maintenance
of the asset
– If asset is purchased on loan then interest on loan can also be claimed
as expense while calculating business income
• Tax implications for lessee
– Lessee can claim lease rentals as expense while calculating business
income for Income Tax purposes
4. Decision Making: Own or Lease
• As Cash Inflows in both the options are same therefore, for
making a decision, the present value of total post-tax cash
outflows in both the options should be compared and the
option having lesser present value of cash outflows should be
preferred.
5. (A) Calculation of present value of cash outflows in case of
owning an asset with borrowing
• Step1: Calculate Cash Outflows
Cash outflow = Loan repayment + Interest on Loan
• Step2: Tax Saving on account of depreciation and interest on loan
Tax Saving = (Interest + Depreciation) X Tax rate applicable to buyer
• Step3: Calculate Post-tax Cash outflow
Post tax Cash outflows = Out-flows in Step1 – Tax saving as per Step2
• Step4: Calculating present value of post-tax cash outflow
PV of Post-tax cash outflow = Post tax cash outflows X Present value of
Rs1 at specified rate
6. (B) Calculation of present value of cash outflows in case of Lease
• Step1: Calculate Cash Outflows
Cash outflow = Annual Lease rent + Other charges to be paid
• Step2: Tax Saving on account of lease rent
Tax Saving =Annual lease rent X Tax rate applicable to lessee
• Step3: Calculate Post-tax Cash outflow
Post tax Cash outflows = Out-flows in Step1 – Tax saving as per Step2
• Step4: Calculating present value of post-tax cash outflow
PV of Post-tax cash outflow = Post tax cash outflows X Present value of
Rs1 at specified rate
7. Tax Planning suggestions in respect of
own or lease decisions
• It is preferable to acquire non-depreciable assets, like land, on lease basis
• In case of assets required for short duration, it is better to acquire the
asset on lease because if any asset has been acquired and sold in the same
financial year then no depreciation can be charged on that asset.
• It is better bargain lease rentals in line with changing profit scenerio.
• Owning the asset is beneficial in so many ways as it brings a sense of pride
and goodwill to business; can be offered as security against a loan; incase
of immovable property value may appreciate as per passage of time;
Depreciation, Interest on loan and expenditure on current repairs can also
be claimed in books of accounts.
8. Sale of Assets of Scientific Research
• It is possible that an asset purchased for scientific research may not
remain useful for scientific research at a later stage. Thus business
house stops using such asset for the above mentioned purpose.
There are two alternatives:
– Alternative I: To dispose off/ sell the asset
– Alternative II: To use the asset for business purpose, later on sale the same
• Alternative I: In such a case, the sale price to the extent it is equal
to the amount of deduction allowed under section 35 (of Income
Tax Act, 1961) is treated as the taxable business income u/s 41(3) of
the previous year in which such asset is sold.
– This provision is applicable even if business is not in existence in the year of
sale of such asset
– Capital gain on sale = Sales Consideration – Cost/ indexed cost of acquisition
9. • Alternative II: If asset of scientific research is put to use for any
other purpose of business, then the said asset will be included in
the relevant block of asset.
– Cost at which asset will be included: section 43(1) provides that cost of
acquisition of asset shall be actual cost of the asset to the assessee as
reduced by the amount of any deduction allowed under section 35(2)
– Thus where the whole amount spent on purchase of asset for scientific
research was claimed as deduction in the year of purchase, the cost of
such asset to be included in block of assets shall be nil. In this case no
benefit of depreciation on such asset is available
– Later on when such asset is sold, section 41(3) shall be applicable and
the said sale will be treated in the similar manner as is done in case of
sale of any depreciable asset out of any block of asset ‘block’ u/s 50.
10. • Therefore, in case of sale of any asset out of block, the value of
block will be reduced by the value of sale proceeds. In case such
sale proceeds exceed the Written Down Value (W.D.V.) of the block
then Block will not exist any more and any excess over and above
the value of block will be treated as STCG.
• If there is no block (belonging to same depreciation rate), then in
case of sale of asset (which was earlier transferred from research to
business), such sale proceeds over and above the WDV of the asset
(if any) will be treated as STCG.
11. Make or Buy Decisions
• This topic deals with problems related to decision making of a business
unit (especially manufacturing unit) in relation to buying a needed product
or to manufacture the same product.
• Such type of problems are more common in case of such manufacturing
units where assembling of parts/ components takes place.
• This decision is generally taken on basis of cost and is also influenced by
many other factors:
– Availability of financial resources
– Investment required in fixed assets
– Availability of skilled and unskilled labour
– Availability of suppliers
– Competition among suppliers
– Existence of idle capacity in organization
– Price at which the product is available in the market
12. • Situation 1: Where Idle capacity exists in the existing undertaking:
a) If no extra fixed cost is required
i. If Variable cost > Price; Decision is to buy the asset
ii. If Variable cost <=Price; Decision is to make the product
b) If some extra fixed cost is required
i. If Variable cost + Fixed Cost > Price; Decision is to buy the asset
ii. If Variable cost + Fixed Cost <= Price; Decision is to make the product
• Situation 2: Where Idle capacity does not exists in the existing
undertaking:
– Besides variable cost an obvious expenditure in form of fixed cost will be needed in
this situation. Moreover if organization wishes to stop producing some other product
or arranges funds; In both the ways some opportunity will be lost, therefore
opportunity cost will also play its role in decision making
i. If Variable cost + Fixed Cost + Opp Cost > Price; Decision is to buy the asset
ii. If Variable cost + Fixed Cost + Opp Cost <= Price; Decision is to buy the asset
13. • In case of situation II as new unit (or expansion) will take place
plenty of other tax planning related provisions may come into
picture. For Ex- Depreciation; Interest on loan; Exemption u/s
10 A (FTZs), 10 AA (SEZs for entrepreneurs), 10 B (EOUs),
Deductions u/s 80 IA (undertaking established in
infrastructure, telecom, power, industrial parks etc.) and 80 IB
(Development of SEZs).
14. Repairs, Replace, Renewal or Renovation
• While calculating income under the head Profits and Gains of Business or
profession many expenses are allowed as deduction u/s 30 to 37.
• Section 30-36 are specific sections whereas Section 37 is general section and
provides for allowability of any revenue expenditure incurred on business or
profession provided it is not covered u/s 30 to 36.
• Section 30: Repairs expenses related to business premises
• Section 31: Repairs expenses related to plant, machinery and furniture
15. • Meaning of Repair: Restoration of an asset to its original and
normal condition by incurring certain expenditure without
increasing the efficiency beyond its original efficiency.
• Allowance of repairs to tenant u/s 30 (a) (i)-
– Cost of repairs is allowed as deduction (not necessarily current repairs)
– Lease agreement/ rent agreement must contain provision regarding
repair expenses to be incurred by tenant or agreement provides
statement like ‘Tenant has to keep the building in the good condition’
– Girdhari Das and Sons Vs. CIT (1976); (Allahabad High Court): “ Repairs
of building in ordinary parlance means making good the wear and tear
and may involve replacement of minor nature. However, any
expenditure incurred in reconstruction or remodeling of a building of a
building or on renovation of refurnishing it, shall be outside the
purview of repairs. The term repair may involve cumulative repairs of
several years.
16. • Allowance of repairs to owner u/s 30 (a) (ii)-
– The amount paid for Current Repairs is allowed as expenditure
– Current Repairs : According to Bombay High Court (New Shorrock
Spinning & Manufacturing Company Ltd. Vs CT, 1956) Expenditure on
building, machinery, plant and furniture which is only for the purpose
of preserving or maintaining an already existing asset, which does not
bring a new asset into existence or does not give the assessee a new
or different advantage and they must be repairs which are attended to
as and when the need for them arises.
– In Modi spinning and Weaving Mills Co Ltd. Vs. CIT (1993), Delhi High
Court stated that “………..If there has been wear and tear on an item
"over a number of years ultimately it is replaced, then such
replacement can not be regarded as current repairs.”
– In other words current repairs means only such repairs as are
necessitated by the day to day wear and tear during the relevant
previous year only.
19. Tax Provisions during discontinuance
• Applicable to all businesses
i. Income of assessment year taxable in the same year.
ii. Income of previous year/ previous years is taxable in the year of
business closure
iii. Notice should be given to the Assessment Officer with in 15 day
time period
iv. Any income after complete closure procedure will be treated as
income of the recipient
v. Similar provisions (as above mentioned) in case of profession
closure
vi. Notice of Assessment as well as Furnishing the return related to
income should be given to Assessment Officer under section 142(1),
if needed by the later
20. • Set-off business losses up to eight years from year of loss
• Set-off unabsorbed depreciation from future profits of the business
• Set-off STCL from present or future STCG or LTCG
• Set-off LTCL from present or future LTCG
• Tax on Sale of assets
– In case of Depreciable assets:
• Written Down Value (WDV) in the books become the basis of STCG or
LTCG
– In case of Non-depreciable assets:
• LTCG = Sale Proceeds-Indexed cost of acquisition
• STCG = Sale Proceeds-Cost of acquisition
• Withdrawals of available incentives
Tax Provisions after Shutdown
21. Tax Planning Suggestions
• Profitable business: Never advisable to shut down
• In case of past losses & unabsorbed depreciation; continue till set-off of
the same against the future profits
• In case of loss generating businesses
– Short term business losses- continue the business
– Heavy business losses & rare possibility of profit-shut down the business as
early as possible
• In case of selling the business as Slump sale
– Capital Gain on slump sale = Sale Proceeds – Net Worth*
(* Net Worth means Aggregate value of assets over liabilities)
• Option to sell the assets individually
22. Tax Provisions related to Companies
• Liquidator should inform to Assessing Officer with in 30 days of
appointment
• AO should inform to the liquidator with in 3 months from the date of his
appointment, about the payable tax (if any)
• After ensuring payment of tax rest of the assets can be used for other
payments
• In case of failure, liquidator will be personally liable for the part of default
made by himself