FALL-2017
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Master of
Business Administration - MBA Semester 3
FIN303-Taxation
Management
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 objectives of tax
planning. Discuss the factors to be considered in tax planning.
Answer. Objectives of Tax Planning
a. Reduction
of tax liability by utilizing the benefits available in the tax laws.
b. Informed
and pragmatic financial decisions: A person adds the dimension of tax incidence
in his decision-making on financial matters, and this helps him optimize his
decisions.
c.
Multi-dimensional investment decisions: In a democratic welfare state like
India the government requires substantial investment in infrastructure,
education and healthcare.
Q2. Explain the categories in Capital
assets.
Mr. C acquired a plot of land on 15th
June, 1993 for 10,00,000 and sold it on 5th January, 2010 for 41,00,000. The
expenses of transfer were 1,00,000.
Mr. C made the following investments
on 4th February, 2010 from the proceeds of the plot.
a) Bonds of Rural Electrification
Corporation redeemable after a period of three years, 12,00,000.
b) Deposits under Capital Gain Scheme
for purchase of a residential house 8,00,000 (he does not own any house).
Compute the capital gain chargeable
to tax for the AY2010-11.
Answer. Categories of capital assets
For taxation
purposes, the capital assets have been, divided into
(a)
Short-term capital assets and
(b)
Long-term capital assets.
Q3. Explain major considerations in
capital structure planning. Write about the dividend policy and factors
affecting dividend decisions.
Answer. Major considerations in
capital structure planning
1. Risk of two kinds, that is, financial
risk and business risk: In the context of capital structure planning, financial
risk is more relevant. Financial risk is of two types:
(a) Risk of
cash illiquidity:
(b) Risk of
variation in the earnings to equity shareholders in relation to expectation:
2. Cost of capital: Cost of capital is an important
consideration in capital structure decisions. It is obvious that a business
should be at least capable of earning enough revenue to meet its cost of capital
and finance its growth.
3. Control: Along with cost and risk factors,
the control aspect is also an important consideration in planning the capital
structure. When a company issues fresh equity, for example, it may dilute the
controlling interest of the present owners.
FALL-2017
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assignments at nominal price of Rs.125 each.
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SET-II
Q1. X Ltd. has Unit C which is not
functioning satisfactorily. The following are the details of its fixed assets:
The written down value (WDV) is Rs.
25 lakh for the machinery, and Rs.15 lakh for the plant. The liabilities on
this Unit on 31st March, 2011 are Rs.35 lakh.
The following are two options as on
31st March, 2011:
Option 1: Slump sale to Y Ltd for a
consideration of 85 lakh.
Option 2: Individual sale of assets
as follows: Land Rs.48 lakh, goodwill Rs.20 lakh, machinery Rs.32 lakh, Plant
Rs.17 lakh.
The other units derive taxable income
and there is no carry forward of loss or depreciation for the company as a
whole. Unit C was started on 1st January, 2005. Which option would you choose,
and why?
Answer.
Q2. Explain the Service Tax Law in
India and concept of negative list. Write about the exemptions and rebates in
Service Tax Law.
Ans. Service Tax Law in India
Service tax
was introduced in India in 1994 by Chapter V of the Finance Act, 1994. It was
imposed on an initial set of three services in 1994 and the scope of the
service tax has since been expanded continuously by subsequent Finance Acts.
Q3. What do you understand by customs
duty? Explain the taxable events for imported, warehoused and exported goods.
List down the types of duties in customs. An importer imports goods for
subsequent sale in India at $10,000 on assessable value basis. Relevant
exchange rate and rate of duty are as follows:
Calculate assessable value and
customs duty.
Answer. Customs Duty
Customs duty
is the duty imposed on goods imported into the country. In the years before
globalization it was difficult to import goods on account of stiff duty rates
and procedures, especially for less developed and developing nations like
India. Ajoke used to be that the word ‘customs’ was said to come from Sanskrit
‘kashtam’ meaning difficulty.
Ø Taxable event for
imported goods – The
taxable event with respect to imports is the day of crossing of the ‘customs
barrier’ and not the date on which goods land in India or enter its territorial
waters.
Ø Taxable event for
warehoused goods – The taxable event in case of warehoused goods is when goods are
cleared from customs-bonded warehouse by submitting sub-bill of entry.
FALL-2017
Get solved
assignments at nominal price of Rs.125 each.
Any issues
mail us at: subjects4u@gmail.com or contact at
08894344452, 8219081362
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