PES Institute of Technology Bangalore South Campus Dept.

Of MBA
Lesson Plan Semester IV
Subject Code: 10MBAFM428 Subject Title: Tax Management Faculty Name: Suresh A.S No of Hours / Week: 4 hrs. Table -1 Session Plan Mo d No 1 Session. No. 1 Contents Introduction : Basic concepts Assessment year Previous year Person Assesse Income Charges on income Gross total income Capital and revenue receipts Pedagogical Tools 2 hr. lecture Presentation & Student activity A brief introduction about why taxes are levied on persons? Will be discussed. Is it necessary to pay tax on our income? Discussion Student Assignments Learning / additional Evaluation work Technique Class Discussion Cumulative Coverage 4% Total no of Lectures: 56 IA Marks: 50 Exam Hours: 3 HOURS Exam Marks: 100

Residential status

1 hr. lecture 1 hr solving problems 1.5 hr. lecture & solving problems .5 hr. solving problems related to previous years question papers

Refer table 2 (Presentation 1) Refer table 2 (Presentation 2)

Refer Table Class Discussion 3 Assignments Refer Table Class Discussion 3 Assignments

8%

Receipts and accrual of income, Connotation of income deemed to accrue or arise in India, Incidence of tax, Tax planning, Tax evasion, Tax management Explanation under various heads of income: Income from Salary (Basic problems)

12%

1.5 hr. lecture .5 hr. student activity

How salary is calculated? What all items are involved in finding salary? Discussion Discussion about various types of salaries & what are the different allowances involved in calculating salary income.

Refer Table Class Discussion 3 Test Assignments

16%

Income from Salary (Basic problems)

1.5 hr. lecture .5 hr. student activity

Refer Table Class Discussion 3 Assignments

20%

Refer table 2 (presentation 3) 6 Income from Salary (Basic problems) 1.5 hr. lecture .5 hr. student activity What are perks? Is it earned free of cost? Detailed discussion about various types of perks Refer table 2 (presentation 4) 7 Income from Salary (Basic problems) 1.5 hr. lecture .5 hr. student activity What is the use of Provident fund? Should the employees contribute some part of their salary income to provident fund? Critical discussion. Refer table 2 (presentation 5) Refer Table Class Discussion 3 Assignment 28% Refer Table Class discussion 3 Case presentation Assignment 24%

Income from other sources (theory)

1.5 hr. lecture .5 hr. student activity

What are the incomes which fall under other sources of income? Students are allowed to find out different categories of income which fall under this criterion. Refer table 2 (presentation 6)

Refer Table Class Discussion 3 Case presentation Assignment

32%

Income under capital gain: Basis of charge, Transfer of capital assets, Inclusion & exclusion from capital asset, capital gain

2 hr lecture

Refer Table Class Discussion 3 Assignments

36%

10

Computation, theory & problems

1.5 hr lecture & solving problems .5 hr discussion

Here students have to find out items which fall under short-term & long-term capital gains.

Refer Table Class Discussion 3 Assignments

40%

Refer table 2 (presentation 7) 11 Computation, theory & problems 2 hr solving problems Refer table 2 (presentation 8) Refer Table Class Discussion 3 Assignments Test Refer Table Class Discussion 3 Assignments 44%

12

Slump sale .5 hr lecture Exemptions 1.5 hr solving Capital gain in special cases, problem Securities transaction tax (88E) Income under the head profit and gains of business or professions and its computation: Basis, method of accounting 2 hr lecture Here students are asked to find out the difference between business income & professional income.

48%

13

Refer Table Class Discussion 3 Test Assignments

52%

14

Method of accounting .5 hr lecture Scheme of business 1.5 hr solving deductions problems Allowance Deemed profits Maintenance of books Depreciation (Both Theory & .5 hr lecture Refer table 2 1.5 hr solving (presentation 9) problems with different adjustment

Refer Table Class Discussion 3 Assignments

56%

15

Refer Table Class discussion 3 Assignment Test

60%

problems) 16 Special provisions relating to 44AD 44AE 44AF 1 hr lecture 1 hr solving problems Refer table 2 (presentation 10) Refer Table Class Discussions 3 Test Assignments Refer Table Class Discussions 3 Test Case presentation Assignments 64%

17

Problems on computation of .5 hr lecture income from 1 hr solving business/profession problems .5 hr case analysis

Students are asked to find out different methods to find out the difference between business & profession income Refer table 2 (presentation 11)

68%

18

Setoff and carry forward of losses Permissible deductions Under ch.VI-A 80C, 80CCC, 80D

1 hr lecture 1 hr solving problems

Refer table 2 (presentation 12)

Refer Table Class Discussions 3 Assignments

72%

19

80DD, 80DDB, 80E, 80U, .5 hr lecture Sec10A, 10B, 10BA. 1.5 hr solving problems

Quiz conducted to know students ability to differentiate

Refer Table Class Discussions 3 Case presentation Assignments

76%

between different permissible deductions and also to find out what deduction fall under which sec of deduction. Refer table 2 (presentation 13) 20 Problems on above deductions 1.5 hr theory and solving problems .5 hr. presentation 1 hr lecture 1 hr solving problems Refer table 2 (presentation 14) (presentation 15) (presentation 16) Refer Table 3 Class Discussions Case presentation Assignments Class Discussion Assignments
80%

21

Computation of taxable income of a firm and partners Computation of taxable income of a company with special reference to MAT

84%

22

Corporate dividend tax, Fringe benefit tax

2 hr lecture

Discussions on whether corporate dividend tax should be paid by company on behalf of shareholders or

Refer Table Class Discussion 3 Assignments

88%

let shareholders themselves pay the tax. 7 23 Central sales tax: Objects & provisions in brief (theory) Inter state Intra state 24 Deemed exports registration VAT (only basic concepts) 1.5 hr lecture .5 hr case analysis Refer Case study 1.5 lecture .5 hr discussion Refer Table Class Discussion 3 Test Assignments 92%

Refer Table Class Discussion 3 Test Case presentation Assignments Refer Table Class Discussion 3 Case presentation Assignments

96%

25

Central excise and custom acts: Objects and provisions of the act in brief (theory) Goods, excisable, marketable

1.5 hr lecture .5 hr case presentations

98%

26

Concept of CenVat, customs, basic definition, charge Review of critical questions

2 hr lecture

Refer Table Class Discussion 3 Assignments

100%

27

2 hr lecture

Class Discussion Assignments

28

Review of previous year question papers

2 hr

Class Discussion Case presentation Assignments

Table 2 Presentation Topics

Mod No S.No.

Presentation Topic

1 1 2 2 2 2 3 3 4 4 4 5 5 5 5 5

1
2

3 4 5 6 7 8 9 10 11 12 13 14 15 16

Assesse and a person Capital receipts & Revenue receipts Fully taxable & partly taxable Allowances Fully taxable and not taxable Perquisites Provident fund & specified employee Income from other sources Capital assets & types of capital assets Assets not considered as capital assets or exemptions Depreciation & types of depreciation Computation of professional income Computation of business income Permissible deductions under section 80C to 80U Permissible deductions U/S 80C, 80CC & 80CCC Permissible deductions U/S 80D Permissible deductions U/S 80DD Permissible deductions U/S 80DDB

Table 3 Assignments & Additional Work

Mod No

S.No.

Assignment Topics

1 2 3 4 5 6 7 8 1-8

Questions from module 1 Questions from module 2 Questions from module 3 Questions from module 4 Questions from module 5 Questions from module 6 Questions from module 7 Questions from module 8 Each student have to submit three questions from question bank 1 question for 3 marks 1 question for 7 marks 1 question for 10 marks

Table 4 Case Study Topics

Case study will be given to the students for

presentation based on previous year question papers problems

Mod N o

Particulars

1 to 8

Question Paper, VTU, December/ January 2011 Question Paper, VTU, July 2010 Question Paper, VTU, December/ January 2010 Question Paper, VTU, July 2009 Question Paper, VTU, December/ January 2009 Question Paper, VTU, June / July 2008 Question Paper, VTU, December 2007 / January 2008 Question Paper, VTU, July 2007 Question Paper, VTU, December 2006 / January 2007 Question Paper, VTU, July 2006 Question Paper, VTU, December 2005 / January 2006 Question Paper, VTU, June / July 2005 Question Paper, VTU, January / February 2005

Table 5 References & Additional Readings

S.No. 1 2 3 4 5 6 7 Particulars Diret tax Lal & Vashisht pearson edition Vinod Singhania, Students Guide to Income Tax Taxman publications. V S Datey, Indirect taxes - Taxman publications. Mahesh Chandra & Shukla, Income tax Law & Practice Pragathi Publications. Dr. Pillai, VAT Jaico Publications, 2004 Vinod Singhania, Direct Taxes, Taxman publications T N Manohaoran Direct Taxes sahitya bhavan

Table 6 (IA Pattern) Test Marks 60% Presentations 20% Assignments 20%

For Internal Evaluation T1 marks and the best out of remaining two tests will be considered. 1st Test is mandatory. Question Bank:-

 3 Marks Questions: 1. What is meant by Indian company? 2. Explain the concept of Business as per the IT Act. 3. What is meant by Working Partner and his responsibilities? 4. Explain the words Assessee and Assessee in default as per IT Act. 5. What is an assessment year? 6. What is a previous year? 7. Who are included in Person? 8. Who is regarded as assesee? 9. Who is regarded as an assessee? How assessment year is differentiated from previous year by firm? 10. What is gross total income? 11. Define capital and revenue receipts. 12. Connotation of accrual of income How is it computed? 13. What do you understand by expression Salary? 14. What is basis of charge of salary income? 15. What is basis of charge under the head Capital gains? 16. What is transfer of capital asset? 17. What is basis of charge under head profits and gains of business or profession 18. What are the basic principles for arriving at business income? 19. Method of accounting How for relevant for computing business income?

20. What are the deemed profits and how they are charged to tax. 21. What is the mode of set off and carry forward? 22. Inter-source adjustment How made. 23. Inter-head adjustment How made. 24. Mention the steps involved in the process of setting off of losses and their carry forward. 25. Carry forward of loss How to set off. 26. Deduction in respect of pension fund when available? (Sec.80 ccc) 27. What is partnership? 28. How to find out income of firm? 29. How to find out tax liability of firm? 30. Define minimum alternate tax (MAT). 31. Who is Manufacturer under the Central Excise Act? 32. What are the provisions of CST Act in brief? 33. What are sources of procedures under CST Act? 34. What is tax liability on inter-state sales? 35. What is VAT? 36. What is need for VAT 37. Define concept of CenVAT. 38. Define the object of central excise and customs act. 39. What is Fringe Benefit Tax (FBT)? Who pays it? 40. What is slump sale?

41. Mr. Pratap Chowdari, a resident of Ajmer, receives Rs.1,92,000/- per annum as basic salary during the previous year 2009-10. In addition he gets Rs.19,200/- as dearness allowance forming part of basic salary, 7 per cent commission on sales made by him (sale made during the relevant previous year is Rs.86,000/-) and Rs.24,000/- per annum as house rent allowances. He however pays Rs.21,500/- per annum as house rent. Determine the quantum of house rent allowance exempt from tax. 42. XYZ Ltd., a company registered in India furnishes the following information for the year ending March 31, 2010. a. Business income Rs.32,79,000/- (Before deducting depreciation but after debiting salary to sales manager Rs.1,00,000/-; Perquisites to sales manager Rs.14,000/-; Fringe benefit tax of Rs.1000/-; Interest of Rs.20,000/paid on public deposit and reserve for bad debts Rs.15,000/-). b. Dividends from a domestic private limited company Rs.20,000/- (declared & received on September 5, 2008 & September 20, 2008 respectively). c. Interest from UTI Rs.80,000/- (received on July 10, 2008). On January 3, 2008 the company purchases a computer for Rs.2,60,000/- (depreciation rate; 60%). Besides, the company is also entitled for depreciation allowance of Rs.36,000/- on other assets. Determine the net income of the company for the assessment year 20010-11. The company declares 2 per cent dividend which comes to Rs.78,600/-

 7 Marks Questions: 1. How to charge tax on Income? 2. What is total income and how is it computed? 3. What one must know for deciding residential status? 4. Connotation of receipts of income How is it understood? 5. What are permissible deductions from salary income? 6. What is tax treatment of Provident Fund? 7. Winning from lotteries, crossword puzzles, horse races and card games etc How to compute. 8. What is regarded as dividend and how is charged to tax? 9. What is the scheme of business deductions/allowances? 10. When maintenance of books of account becomes compulsory.

11. What are the special provisions for computing income on estimated basis under sec.44AD, 44AE and 44AF? 12. Deduction in respect of medical insurance premia when and to what extent available? (Sec.80D) 13. Deduction in respect of medical treatment, etc to what extent available? (Sec.80DDB) 14. Deduction in case of a person with disability to what extent available? (Sec.80U) 15. Special provisions in respect of newly established hundred per cent export-oriented undertakings. (Sec.10B) 16. How to avail deduction in respect of export of artistic hand-made wooden articles (Sec.10BA) 17. How to find out taxable income of partners of a firm? 18. What are different kinds of companies and their relevant definitions? 19. Discuss in detail about fringe benefit tax? 20. What are the objects of the central sales tax act? 21. Which are the assets not treated as capital assets for computation of capital gain? 22. What do you understand by Tax evasion Tax avoidance and Tax planning? 23. When and how tax is to be deducted at source from salary u/s. 192 of Income Tax Act? 24. Explain any five incomes chargeable under the head income from other sources. 25. M/s XYZ Ltd., is engaged in the business of carriage of goods. On April 01, 2008 it owns 10 trucks (6 of which are heavy goods vehicle). On May 06, 2007 one of the heavy goods vehicles is sold by the company, to purchase a light goods vehicle on a May 10, 2008, which is put to use only from June 17, 2008. Find out the net income of XYZ Ltd., for the assessment year 2010-11 taking into consideration the following data: Freight collected Less: Rs.8,90,000

Operational expenses Depreciation as per section 32 Other office expenses Net profit Other business / non-business income

Rs.6,40,000 Rs.1,90,000 Rs. 15,000 45,000 Rs. 70,000

[Note: estimated income: HGV: Rs.3,500/- pm LGV: Rs.3150/-pm] 26. Mrs. Anitha S Kulkarni aged 26 years receives the following emoluments during the previous year 2008-09: Basic pay: Rs.86,000, Commission (50% of basic pay); Rs.43,000/- Entertainment allowance: Rs.10,000/-. She contributes Rs.10,720/- towards provident fund, Rs.2400/- has been deducted as professional tax, contributes Rs.10,000/- towards mediclaim policy. Determine the taxable income assuming she is a Government employee and has statutory provident fund. 27. X submits the following information relevant for the previous year ending March 31, 2008, for determining net income for the assessment year 2009-10, assuming him as Non-resident in India: Profit of Business A carried on in India Loss of Business B carried on in India Profits of Business C carried on in Canada (income is earned and received in Canada and controlled from Canada) Loss of Business D carried on in Canada Rs.70,000 Rs.80,000 (-) Rs.30,000 Rs.40,000

(Though profits not received in India and Business controlled from New Delhi ) Unabsorbed depreciation of Business D Income from property situated in India Income from property situated in Canada (rent received in Canada) Determine the net income. Rs.52,000 Rs.12,000 Rs.17,000

10 Marks Questions : 1. What is regarded as Income under the Income tax act? 2. How to determine residential status of an individual? 3. What is the relationship between residential status and incidence of tax? 4. Connotation of income deemed to accrue or arise in India How is it understood 5. Different forms of salary How taxed? 6. Different forms of allowances How taxed? 7. Problems on computation of salary income. 8. What is basis of charge under the head Income from other sources. 9. What is regarded as interest on securities?

10. Problems on computation of income from business/profession. 11. Problems on set off and carry forward of losses 12. Deduction in respect of life insurance premium, deferred annuity, contributions to PF, subscription to certain equity shares or debenture etc (Sec.80C) 13. Deduction in respect of maintenance including medical treatment of dependent being a person with disability When and to what extent available (Sec.80DD) 14. Deduction in respect of repayment of loan taken fro higher education When and to what extent available? (Sec.80E) 15. Special provisions in respect of newly-established undertakings in free trade zone, etc. (Sec.10A) 16. Problems on computation of taxable income of firm and partners. 17. Tax on distributed income to unit holders Discuss. 18. Critically analyze the three variants of VAT. 19. What is a sale under CST Act? State objects and provisions of CST. 20. Explain five heads, which attracts value of fringe benefit at concessional rate. 21. Mr. Manish H Vora, an individual, sells a residential house at Madras on June 10, 2008 for Rs.32,00,000/- [cost of the land acquired in 1985-86 is Rs.50,000/- and cost of construction in 1985-86 is Rs.3,50,000/-]. To claim exemption u/s 54, he makes an investment of Rs.4,86,000/- on a residential flat at New Delhi and Rs.9,70,000/deposits in bank account for utilizing for purchase of house. Calculate the capital gain to be added to his income. [Note: indexation for 1985-86 is 133 and 2007-08 is 551]

22. ABC Ltd, a manufacturing Company owns the following assets as on April 01, 2008. Asset s Plant A Plant B Plant C Plant D It has purchased the following assets on 10.3.2009 Rate of Depreciation WDV on 01.04.08 Assets Plant E Plant F 30% 15% Rs.8,00,000 Rs.2,00,000 It has sold the following plants during previous year 2009-10: Asset Rate of Depreciation Sale Expenses on transfer Rate of Depreciation 30% 15% 15% 30% Cost Price Rs.2,00,000 Rs.4,06,000 Rs.14,70,000 Rs.20,000

s Plant C Plant A

15% 30%

consideration Rs.20,00,000 Rs.8,00,000

Rs.20,000 Rs.2,000

Determine the amount of depreciation and capital gain for the assessment year 2010-11. The company is not eligible for additional depreciation. 23. Mr. Satish aged 32 years, posted at Mumbai, receives a salary of Rs.18,000 per month during 2008-09 from A Ltd. His employer contributes Rs.26,500/- towards provident fund. His other allowances are: Special allowance: Rs.1,14,000 and medical allowance: Rs.11,100 and 0.5 per cent commission on sales achieved by him. During the year, turnover achieved by him is Rs.4,80,000. Employer provides a Maruti-800 car with a chauffeur for his private and official purpose with effect from November 10, 2008. The amount of interest credited to provident fund on May 10, 2008 at 11% comes to Rs.12,830. Income from other sources is Rs.7,54,000. Payment/Contributions Insurance premium paid on own life (S.A.Rs.22,500) Insurance premium paid on the life of mother Insurance premium paid on the life of father Insurance premium paid on the life of major son (40,000) 5,00 3,100 6,500 3,800

Insurance premium paid on the life of spouse (S.A.Rs.1,00,000) 4,000

Contribution towards public provident fund Insurance premium due before 31/03/08, paid on 4/4/08 Contribution towards public provident fund Contribution made for participating in ULIP Repayment of loan taken from LIC for purchase of house Tuition fee of his son Investments in units of notified mutual fund for financing Infrastructure facility

50,000 1,000 1,000 2,000 22,000 12,500 2,000

Determine the tax liability on the assumption that provident fund is statutory provident fund. 24. Profit and Loss account of A company [a firm of chartered accountants which satisfies all conditions of section 184 and 40(b) for year ending March 31, 2008 is as follows: Expenses Depreciation Remuneration to partners 88,000 32,000 75,000 Receipts from clients for tax advice Audit fees Net loss 60,000 72,000 2,00,000

Interest on capital to partners 5,000 Other information:

a) Out of expenses Rs.88,000, Rs.17,250 is not deductible u/s 36 and 37 b) Depreciation as per section 32, is Rs.33,100/c) Interest on capital to partners, not deductible u/s 40 (b) is Rs.700/-

Compute the income of the firm as well as remuneration deductible u/s 37 (1) read with section 40(b). 25. Mr. Mahesh Bhat, an Indian citizen, leaves India for the first time on September 20, 2006 for the purpose of employment. He comes to India for a visit of 146 days on April 10, 2007. He comes back on May 16, 2008. Find out his residential status for the assessment year 2010-11. b) Dr. Jofin Patricks is a foreign citizen (not being a person of Indian origin). Since 1981, he visits India every year in the month of April for 100 days. Find out his residential status for the assessment year 2010-11.