Page 309 - DCOM301_INCOME_TAX_LAWS_I

Income Tax Laws – I

Notes 10.6 Keywords

Company: A voluntary association formed and organized to carry on a business.
Limited Liability Partners: He is a kind of partner whose assets will not be lost if the business
goes bankrupt.
Limited Liability Partnership: A limited liability partnership (LLP) is a partnership in which
some or all partners (depending on the jurisdiction) have limited liability.

Ordinary/General Partners: He is a kind of partner who takes an active part in the running of the
business.
Organisation: An organisation is a social entity that has a collective goal and is linked to an
external environment.
Partnerships: A partnership is a strategic alliance or relationship between two or more people.
Sleeping Partners: He is a kind of partner who invests in the business but do not take an active
part in the business.
Sole Proprietors: A business structure in which an individual and his/her company are considered
a single entity for tax and liability purposes.
Tax Liability: The total amount of tax that an entity is legally obligated to pay to an authority as
the result of the occurrence of a taxable event.
Tax Planning: Tax planning is the processes used by people and businesses to pay taxes.

10.7 Review Questions

1. Define Business Organisation.
2. Discuss the various forms of Business Organisations.
3. Highlight the factors involved in selection of organisation.

4. What is sole proprietorship? Elucidate its features.
5. Describe the Tax Aspects of a Proprietorship.
6. Throw some light on the advantages and disadvantages of sole proprietorship.

7. What is the position of firm under the income-tax act?
8. Elucidate the provisions relating to taxation of partnership firms.
9. Discuss the advantages and disadvantages of partnership.
10. “Planning of taxes should be done in an efficient manner so as not to jeopardize the
business goals of expansion, profits and growth.” Explain.

Answers: Self Assessment

1. Long 2. Sole Proprietorship
3. Partnership 4. Company
5. False 6. False

7. True 8. True

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