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Corporate Tax Planning
Notes
Task Make a list of some people who are involved in tax evasion.
Self Assessment
Fill in the blanks:
10. ………………… is a perfectly legal approach to handling taxes.
11. ……………………… is the levying of tax by two or more jurisdictions on the same declared
income, asset, or fi nancial transaction.
12. With tax………………, people avoid taxes not by scrupulously following the tax code, but
by hiding or moving income, making false claims on a tax return, and utilising other illegal
means to pay less on their taxes.
3.5 Tax Management
Tax management refers to the compliance with the statutory provisions. While tax planning is
optional, tax management is of law. It includes maintenance of accounts, filling of return, payment
of taxes, deduction of tax at source, timely payment of advance tax, etc. Poor tax management
may lead to levy of interest, penalty, prosecution, etc. In some cases it may lead to heavy fi nancial
loss if proper compliance is not made.
Example: If a loss return is not filed in time it will result in a financial loss because such
loss will not be allowed to be carried forward.
Tax Management includes maintenance of records in prescribed format. It also includes getting
audited the records, filing returns and pay taxes. It is a regular feature of business enterprises and
a form of tax planning. Here employees use CBDT (Central Board of Direct Taxes) and employers
can use TDCAN (Tax Deduction and Collection Account Number).
3.5.1 Main Aim of Tax Management
The main aim of tax management is as follows:
(i) Compliance with legal formalities.
(ii) Saving from penalties and prosecution.
(iii) Taking advantage of various tax incentives and deductions.
(iv) Review of department orders.
3.5.2 Areas of Tax Management
The main areas of tax management are as follows:
1. Deduction of tax at source: It can be done with respect of income from salaries, winning
from lottery, horse race etc.
(a) Employer seeks for TDCAN and employee for Pan Card.
(b) TDS should be deposited in government treasury.
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