MF0012 - TAXATION MANAGEMENT

 

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ASSIGNMENT

DRIVE	SPRING 2019
PROGRAM	MBA
SUBJECT CODE & NAME	MF0012 TAXATION MANAGEMENT
Semester	3/5
BK	B2113
Credit and Max. Marks	4 credits; 60 marks

 

Note: You have to answer all questions . Average score of both assignments scored by you will be considered as your IA score. Kindly note that answers for 10 marks questions should be approximately of 400 words.

Q1.Explain the objectives of tax planning. Discuss the factors to be considered in taxplanning.

Answer : Objectives of Tax Planning

The prime objectives of tax planning are:

Multi-dimensional investment decisions: In a democratic welfare state like India the government requires substantial investment in infrastructure, education and healthcare. The tax laws give attractive benefits to investors in these areas; and by

 

Q2.Explain the categories in Capital assets.

Mr. C acquired a plot of land on 15th June, 2007 for 10,00,000 and sold it on 5th

January, 2016 for 41,00,000. The expenses of transfer were 1,00,000.

Mr. C made the following investments on 4th February, 2016 from the proceeds of theplot.

a) Bonds of Rural Electrification Corporation redeemable after a period of three years,12,00,000

 

Answer- Categories of capital assets

Mr. A acquired a plot of land on 15th June, 2007 for ` 10,00,000 and sold it on 5th January, 2016 for ` 41,00,000. The expenses of

 

 

b) Deposits under Capital Gain Scheme for purchase of a residential house 8,00,000 (hedoes not own any house)

Compute the capital gain chargeable to tax for the AY2016-17.

Solution:

Assessment Year 2016-17

 

 

Q3.Explain major considerations in capital structure planning. Write about the dividend policy and factors affecting dividend decisions.

 

Answer:Major considerations in capital structure planning

Broadly, the following factors would be worth considering, while planning the capital structure.

1. Risk of two kinds, that is, financial risk and business risk: In the context of capital structure planning, financial risk is more relevant.

2. Cost of capital: Cost of capital is an important consideration in capital structure decisions. It is obvious that a business should be at least capable of earning enough revenue to meet its cost of capital and finance its growth.

 

 

 

 

 

SET 2

 

Q1.X Ltd. has Unit C which is not functioning satisfactorily. The following are the details of its fixed assets:

The written down value (WDV) is ` 25 lakh for the machinery, and15 lakh for the plant. The liabilities on this Unit on 31st March, 2016 are35 lakh.

The following are two options as on 31st March, 2016:

Option 1: Slump sale to Y Ltd for a consideration of 85 lakh.

Option 2: Individual sale of assets as follows: Land ` 48 lakh, goodwill ` 20 lakh,machinery 32 lakh, Plant 17 lakh.

The other units derive taxable income and there is no carry forward of loss or depreciation for the company as a whole. Unit C was started on 1st January, 2005.Which option would you choose, and why?

 

Answer : Option 1: Slump sale

 

 

 

Q2.Explain the Service Tax Law in India and concept of negative list. Write about the exemptions and rebates in Service Tax Law.

 

Answer: Service Tax Law in India

Service tax was introduced in India in 1994 by Chapter V of the Finance Act,1994. It was imposed on an initial set of three services in 1994 and the scope of the service tax has since been expanded continuously by subsequent Finance Acts.

The new section 65B introduced in the Finance Act,

 

Q3.What do you understand by customs duty? Explain the taxable events for imported, warehoused and exported goods. List down the types of duties in customs.

An importer imports goods for subsequent sale in India at $10,000 on assessable value basis. Relevant exchange rate and rate of duty are as follows:

Particulars	Date	Exchange Rate Declared by CBE&C	Rate of Basic Customs Duty
Date of submission of bill of entry	18  March 2016	67.45/$	7.5%
Date of entry inwards granted to the vessel	8 April2016	` 67.50/$	7.5%

 

Calculate assessable value and customs duty.

 

Answer : Meaning and explanation of customs duty

Customs duty is the duty imposed on goods imported into the country. In the years before globalization it was difficult to import goods on account of stiff duty rates and procedures, especially for less developed and developing nations like India. A joke used to be that the word ‘customs’ was said to come from Sanskrit ‘kashtam’ meaning difficulty. But

 

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