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Fall-2013
Master of
Business Administration- MBA Semester 4
MF0012–Taxation
Management-4 Credits
(Book ID:
1760)
Assignment
(60 Marks)
Note: Answers
for 10 marks questions should be approximately of 400 words. Each question is
followed by evaluation scheme. Each Question carries 10 marks 6 X 10=60.
Q1. Explain the concept of tax
planning and the factors to be considered in tax planning. Give the difference
between tax planning and tax evasion.
Answer. Objectives of tax planning
Ø Reduction of tax liability by
utilizing the benefits available in the tax laws.
Ø Informed and pragmatic financial
decision: A person adds the dimension of tax incidence in his decision making
on financial matters and it helps him to optimize his decisions.
Ø Discharging a citizen's duty: when it
comes to pay tax it is breathtaking situation for every person, they tries to
hide earned income and skip paying income tax but these are very illegal
methods of reducing tax liability and increasing the black money. Tax planning
provides the
Q2. Explain the process of tax
payment.
Answer. Payment of tax liability by a person
before the end of financial year is called Advance
tax. This is applicable only in case of Income tax of an individual or a
business entity. A simple question arises as why somebody would like to pay
taxes in advance.
Tax payment through Individuals:
Tax
constitutes a major form of revenue for most of the Governments across the
world. Taxes are levied and spent by the government for the development of the
country like infrastructure, healthcare, defence etc.
Q3. Write short notes on:
1. Capital gain
2. Cost of acquisition
3. Cost of improvement
4. Expenditure on transfer
5. Transfer
Answer. 1. Capital gain
A capital gain is a profit that results from a
disposition of a capital asset, such as stock, bond or real estate, where the
amount realized on the disposition exceeds the purchase price. The gain is the
difference between a higher selling price and a lower purchase price.[1]
Conversely, a capital loss arises if the proceeds from the sale of a capital
asset are less than the purchase price.
Capital gains
may refer to "investment income" that arises in relation to real
assets, such as property; financial assets, such as shares/
Q4. Explain the computations of Tax
in two aspects given below:
1. Tax provision for Computation of
Total income of firms.
2. Computation of partnership firms’
book profit.
Answer. 1. Tax provision for
Computation of Total income of firms
Steps for
Computation of taxable income of a firm:-
1. Find out
the firms income under the different heads of income, ignoring the prescribed
exemptions. The heads of income are:-
Ø Income from House Property
Ø Profits and Gains of
Q5. Explain the service tax law in
India. Give the concept of negative list.
Answer. Service Tax is a tax levied on the transaction
of certain specified services by the Central Government under the Finance Act,
1994. It is an indirect tax, which means that normally the service provider
pays the tax and recovers the amount from the recipient of taxable service. In
certain cases Government may shift the liability of payment of service tax to
the receiver of service as a measure of
Q6. Identify and explain the major
considerations in capital structure planning. Explain two approaches in
dividend policy and factors affecting dividend decisions.
Answer. There are three major considerations
in capital structure planning, i.e. risk, cost of capital and control, which
help the finance manager in determining the proportion in which he can raise
funds from various sources.
Risk- Risk is of two kinds, i.e. financial
risk and business risk. Here we are concerned primarily with the financial
risk. Financial risk is also of two types:
1.
Risk of Cash Insolvency: As a firm raises more debt, its risk
of cash insolvency increases. This is due to two reasons. Firstly, higher
proportion of debt in the Capital Structure increases the commitments of the
company with
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