Page 89 - DCOM301_INCOME_TAX_LAWS_I

Income Tax Laws – I

Notes Tax management refers to the compliance with the statutory provisions and includes
maintenance of records in prescribed format.

3.7 Keywords

Accounting Methods: Accounting methods refer to the basic rules and guidelines under which
businesses keep their financial records and prepare their financial reports.
Corporate Tax: It refers to a tax levied by various jurisdictions on the profits made by companies
or associations.
Double Taxation: It is the levying of tax by two or more jurisdictions on the same declared
income (in the case of income taxes), asset (in the case of capital taxes), or financial transaction
(in the case of sales taxes).
Partnerships: A business organization in which two or more individuals manage and operate
the business.
Sole Proprietorships: A business structure in which an individual and his/her company are
considered a single entity for tax and liability purposes.
Tax Avoidance: It is the legal utilization of the tax regime to one’s own advantage, in order to
reduce the amount of tax that is payable by means that are within the law.

Tax Evasion: It is the general term for efforts by individuals, firms, trusts and other entities to
evade taxes by illegal means.
Tax Management: It refers to the compliance with the statutory provisions.

Tax Planning: Tax planning is a broad term that is used to describe the processes utilized by
individuals and businesses to pay the taxes due to local, state, and federal tax agencies.
Tax Rebates: A tax rebate may be a partial sum of money refunded to people from paid taxes, or
it may be an amount by which you reduce your taxes before you pay them.
Tax Savings: The deduction a taxpayer can take on their tax form for interest paid on a home
mortgage.

3.8 Review Questions

1. Define Tax Planning. List out the general areas of tax planning.
2. “Tax planning is an essential part of your financial planning. “Elucidate.
3. Write short notes on the following:

(a) C corporations
(b) Sole Proprietorships and Partnerships
(c) Case for Levy of Corporate Tax
(d) Double taxation
4. Describe some of the planning tips that can assist salaried people to reduce their tax
accountability.
5. What is Corporate Tax Planning?
6. Discuss the causes of Tax evasion.

84 LOVELY PROFESSIONAL UNIVERSITY