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Unit 14: Advance Tax Planning and Tax Relief

Double Taxation: It refers to a situation where the same income becomes taxable in the hands of Notes
the same company or individual (tax-payer) in more than one country. Such a situation arises
due to different rules for taxation of income in different countries.
Income Tax Return: A completed tax form, with details of income and allowances.
Income: The flow of cash or cash-equivalents received from work (wage or salary), capital
(interest or profit), or land (rent).

Provisions: A legal clause or condition contained within a contract that requires or prevents
either one or both parties to perform a particular requirement by some specified time.
Unilateral Relief: This method provides for relief of some kind by the home country even where
no mutual agreement has been entered into by the two countries.

14.7 Review Questions

1. Discuss the concept of Advance Tax Payment with the help of example.
2. Who is liable to Pay Advance Tax? State whether Mr. Verma is liable to pay advance tax
and if yes then what amount should be paid by what date. The income of Mr. X is
` 3,00,000.

3. Elucidate the procedure of computing Advance Tax Payment.
4. How to Deposit Advance Tax?
5. What are the consequences of non-payment of advance tax?
6. Define Double taxation. Highlight the rules due to which double taxation arises.
7. Describe the types of Double taxation relief.
8. Throw some light on the method of giving relief from Double Taxation.

9. Write a short note on Permanent Establishment.
10. Discuss the Double Taxation Relief Provisions in India.
11. An individual resident in India, having income earned outside India in a country with
which no agreement under section 90 exists, asks you to explain whether the credit of the
tax paid on the income in that country will be allowed to him in India.
12. The Income-tax Act, 1961 provides for taxation of a certain income earned by X. The
Double Taxation Avoidance Agreement, which applies to X, excludes the income earned
by X from the purview of tax. Is X liable to pay tax on the income earned by him? Discuss.

Answers: Self Assessment

1. True 2. False

3. True 4. False
5. Income Tax Return 6. Three
7. Individuals 8. Assesses
9. True 10. False
11. False 12. True
13. Evasion or Avoidance 14. DTAAs

15. Higher 16. Non-resident

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