Tax planning in respect of setting of new business

When a person decided to start a business the number of factors are considered. Tax planning also plays an imp role,

1. TAX PLANNING FOR
NEW BUSINESS
Dr. Laxmikant N. Soni
NET (Commerce), SET (Commerce), NET (Management), SET ( Economics)

2. Tax Planning
TPisdefinedasanarrangementofone’sfinancialandeconomic
affairsbytakingcompletelegitimatebenefitofalldeductions,
exemptions,allowancesandrebatessothattaxliabilityreducesto
minimum.
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Dr. Laxmikant N. Soni

3. SETTING UP OF NEW BUSINESS
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Dr. Laxmikant N. Soni

4. When a person decided to start a business the number of
factors are considered:
Factors are
□Location, Nature & Size of business
□Form of business
□Capital structure
□Setting up and commencement of business
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5. Location , Nature & Size of
business
Tax benefits on the basis of location , nature and size :
⊡Agriincome (sec: 10(1))
⊡Newly established unit in SEZ (sec:10AA)
⊡Infra: Devt: Undertaking (sec: 80IA)
⊡Undertaking engaged in devt: of SEZ(sec: 80IAB)
⊡Certain undertakings in certain special category states (sec: 80IC)
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6. ⊡Hotelsandconventioncentersinspecifiedareas(sec:80ID)
⊡UndertakingsinNorthEasternstates(sec:801E)
⊡Assessesengagedinthecollectionandprocessingofbio-
degradablewaste(sec:80JJA)
Location , Nature & Size of
business
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7. “
Form Of Business
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8. ⊡Individual / Sole Proprietorship
⊡Hindu Undivided Family
⊡Firm
⊡Company
Form Of Business
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9. AnindividualcanpaytaxonTIatprescribed
slabrate.Hedidnotentitledtogetdeductionin
respectofremuneration,interestoncapitalwhile
computingincomefromhisbusiness.
Individual / Sole
Proprietorship
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10. General Deductions to individuals
⊡Sec: 80C -contribution to life insurance premium, PPF, NSC , housing loan etc.
⊡Sec: 80CCC –contribution to Pension Fund.
⊡Sec: 80D –Health Insurance.
⊡Sec: 80DD –medical treatment for handicapped.
⊡Sec: 80DDB –expense on medical treatment of specified deceases.
⊡Sec: 80E–interest on loan for higher studies.
⊡Sec: 80EE –interest on loan for acquisition of residential house.
⊡Sec: 80GG –House Rent
⊡Sec: 80U –Income of Disabled persons
⊡Sec: 80TTA -interest on saving bank account
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11. HUFpaystaxsameaslikeanindividual.The
familycanpayreasonableremunerationtokarta
andotherfamilymembersallowedtodeductingin
computingbusinessincome.Interestoncapital
cannotallowablefordeduction.
Hindu Undivided Family
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12. Deductions to HUF
⊡Deduction entitled from its Gross Total Income u/s
80C, 80D, 80DD, 80DDB, 80TTA.
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13. FIRM
Firmpaytaxattherateof30%.Firmcannoinitial
exemptionsandentireincomewilltaxable.
Theshareofincomeofafirminthehandofpartnerisfully
exemptedu/s10(2A)
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14. Deductions to Firm
⊡Interestoncapitalorloangivenaratementionedin
partnershipdeed,butnotexceeding12%.
⊡RemunerationtoworkingpartnersasmentionedinDeed.
Butlimitsuptoprescribedu/s40(b)
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15. Company
A domestic company is liable to pay tax at the rate of 30%
with surcharge and Education cess.
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16. Deduction to company
⊡Wholeamountofinterestpaidtotheloantakenfor
businesspurposes.
⊡RemunerationpaidtoMD,Directorsandotherstaffs.
⊡Amountofdividendonitssharecapitalisnotdeductible.
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17. THANK YOU !
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Dr. Laxmikant N. Soni