Page 201 - DCOM508_CORPORATE_TAX_PLANNING

Corporate Tax Planning Gopika Juneja, Lovely Professional University

Notes Unit 9: Financial Management Decisions

CONTENTS

Objectives
Introduction
9.1 Capital Structure Decisions
9.1.1 Factors Determining Capital Structure
9.1.2 Need for Capital Structure Planning
9.1.3 Guidelines for Capital Structure Planning
9.1.4 Capital Structure Decision and Tax Planning
9.2 Dividend Policy: Meaning and its Distribution
9.2.1 Types of Dividends
9.2.2 Dividend Policy
9.2.3 Determinants of Dividend Policy
9.2.4 Tax Implications on Dividend Policy
9.3 Dividend Distribution Tax (DDT)

9.3.1 Special Provisions Relating to Tax on Distributed Profits of Domestic
Companies
9.3.2 Special Provisions Relating to Tax on Distributed Income
9.4 Issue of Bonus Shares
9.4.1 Conditions for Issue of Bonus Shares
9.4.2 Advantages of Bonus Shares
9.5 Summary

9.6 Keywords
9.7 Review Questions
9.8 Further Readings

Objectives

After studying this unit, you will be able to:

State the meaning and need of capital structure decision
Explain the relationship between taxation and capital structure decision
Discuss the meaning of dividend policy and distribution of dividend
Elucidate the provisions of Dividend Distribution Tax (DDT) in India
Describe the concept of issue of bonus shares and its tax implications

Introduction

Financial management decisions include the decisions relating to planning, organising, directing

and controlling the financial activities such as procurement and utilisation of funds of the

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