Page 255 - DCOM508_CORPORATE_TAX_PLANNING

Corporate Tax Planning

Notes

Case Study Indian IT Companies
he techies in three major cities - Chennai, Bangalore and Hyderabad are not taking
care about financial and tax planning, according to 70 percent of the respondents of

Tthe annual tax survey conducted.
The survey conducted by Right Horizons, an investment advisory firm, among 1,169

salaried individuals also finds that 82 percent of the respondents do not have any medical

insurance and only 13 percent has medical insurance cover provided by their employees,
reported The Times of India. As per the survey, 36 percent of the respondents in Chennai
do not have any life insurance policies. 20 percent of the employees use PF investments as
it is mandatory in many companies.
“Investments under Section 80C earn tax breaks for investors up to a maximum limit of
` 1 lakh. Therefore, it comes as a surprise that more than 75 percent of those surveyed had
not fully utilised the limit and many of them actually went on to pay income-tax which
could have been saved through better financial or tax planning,” the survey said.

The study clearly indicates that traditional investments such as PPF, NSC and life Insurance
are still dominating in the investment profile with 58 percent of the respondents have these

kinds of investments only. The survey also shows that only 35 percent have equity-linked
savings scheme (ELSS) in their tax saving portfolio, while 5 percent respondents had more
than 50 percent exposure to mutual funds as part of the 80C investments.
Questions
1. What do you think is the problem with Indian Tax Planning companies regarding
Tax Planning for its employees?
2. What do you think is the reason for dominance of traditional investment
techniques?
3. What suggestion would you like to provide them in taking advantage of Tax
Planning?
Source: http://www.siliconindia.com/shownews/Indian_IT_employees_careless_about__tax_planning_-nid-51778-cid-3.
html

10.5 Summary

Managerial decision may be defined as a systematic approach to formulate strategies for
positioning the business in relation to its environment to ensure continued success and
offer security from surprises.
The make-or-buy decision is the act of making a strategic choice between producing an
item internally (in-house) or buying it externally (from an outside supplier).
Make-or-buy decision can be strategic or tactical and may involve parts, capital items,
services of every type and a wide range of items supporting industrial operations (e.g.,
castings, tools, spare parts, etc.)

An entity’s non-financial assets can be acquired either through outright purchase or leasing
arrangements.

Export financing is often a key factor in a successful sale.

For employees of large Indian and multinational companies, benefits go beyond salaries to
include lifestyle perks such as company accommodation or club membership.

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