PROFESSIONAL PROGRAMME STUDY MATERIAL …

1 PROFESSIONAL PROGRAMME . STUDY MATERIAL . advanced TAX. LAWS AND. PRACTICE. MODULE III - PAPER 6. ICSI House, 22, Institutional Area, Lodi Road, New delhi 110 003. tel 011-4534 1000, 4150 4444 fax +91-11-2462 6727. email website THE INSTITUTE OF COMPANY SECRETARIES OF INDIA. TIMING OF HEADQUARTERS. Monday to Friday Office timings to Public dealing timings Without financial transactions to With financial transactions to Phones: 41504444, 45341000. Grams: COMPSEC. Fax: 011-24626727. Website: E-mail: Laser Typesetting by delhi Computer Services, Dwarka, New delhi , and Printed at Printers, NOIDA/. PROFESSIONAL PROGRAMME . advanced TAX LAWS AND PRACTICE. This STUDY MATERIAL is designed for the benefit of the students preparing for the above subject under the PROFESSIONAL PROGRAMME and written in lucid and simple language for the benefit of the students.

2 The course MATERIAL is unique in its treatment of various provisions of the relevant Acts. Income Tax, Central Excise and Customs pose the peculiar problem of being subjected to frequent changes either by legislative amendments or by issue of notifications, orders, trade notices etc. Every effort has been made to give the latest information, wherever possible including changes made by the Finance Act, 2010. While writing the STUDY MATERIAL an attempt has been made to present the MATERIAL in a unified and cohesive manner, giving the blend of provisions of tax laws and tax practices. All the important areas of tax planning connected with the foresight of tax management included in the various STUDY lessons, call for analytical application by the students and require thorough knowledge of the provisions of tax and case laws.

3 Further, the incidence of tax planning is so crucial to the managerial decision-making process that it becomes important to keep oneself abreast of the innovations/developments taking place in these areas. Therefore, students are expected to regularly update themselves by a systematic and regular reading of the current literature on the subject, like leading journals and financial dailies in addition to various circulars and notifications, etc. issued from time to time by the CBDT and CBEC. This paper comprises three parts. The first part (Part A) deals with Direct taxation' the second part (Part B) deals with the Indirect taxation'. and the third part (Part C) deals with the International Taxation'. The Direct Taxation' part includes, general framework of direct taxation in India, corporate taxation, tax planning and tax management.

4 Corporate tax issues are adequately covered with emphasis on tax planning and other relevant issues. Tax management is not merely a legal exercise attempted in isolation, but a method of integrating all areas of management. Almost every financial decision in the company has tax implications. The corporate bodies are expected to maintain integrity of the industry by adopting the line of tax planning which is permissible within the framework of tax laws, thus bringing in its fold the healthy practices of tax morality in the national interest and in their own interest. The Indirect taxation' (Part B of STUDY MATERIAL ) includes, Central Excise laws, Custom laws, Promissory Estoppel in Fiscal laws and tax planning and management.

5 Indirect Taxes on the other hand have assumed enormous significance now. Speaking of excise duties, it has a wide coverage involving every manufacturing activity attracts excise duty levy whether the activity is carried on in small scale, medium scale or large scale. It has assumed the role of a line function mainly in the (iv). corporate sector, in view of not only cash flow implications but also profit planning. But, a sound knowledge of procedural and substantive provisions of these indirect tax laws is a sine quo non for a proper direction to overall corporate planning. International Taxation' aspect of the STUDY MATERIAL (Part C) is a thorough self contained work covering entire gamut of this dynamic concept.

6 Much stress and emphasis given to the modern practices followed abroad and interplay with domestic statutory laws. The International Taxation' part includes basic concepts governing international taxation, Advance Rulings, taxation of inbound transactions and taxation of outbound transactions. International taxation is new induction in the STUDY MATERIAL for taxation. The STUDY MATERIAL incorporated relevant information and issues relating to International Taxation but there is avenue for further improvement. Since the topic is new and dynamic, emerging developments has been given due credence. Students, however, should endeavour to refer to the suggested readings in each STUDY lesson to keep themselves up-to-date.

7 In the event of any doubt, students may write to the Directorate of Academics and PROFESSIONAL Development in the Institute for clarification. Students are also advised to meticulously go through Student Company Secretary' and Chartered Secretary' journals of the Institute. The Company Secretary being well trained in interpreting statutes and ensuring compliance with procedural requirements is best suited to handle indirect taxation matters, particularly when there is no positive evidence of other professionals having made any serious and consistent efforts to enter this area. Besides, indirect taxes have a tremendous scope for a fulfilling practice, for a Practising Company Secretary. Each STUDY lesson has been devised with a view to making it a self- contained note on the topic covering the substantive as well as procedural aspects.

8 The size of each STUDY lesson is such as to conduce to a graduated approach to understanding indirect taxes. In view of the comparatively complex nature of the paper, the division of STUDY lessons has been made in such a way as to facilitate easy understanding. Although care has been taken in publishing this STUDY MATERIAL yet the possibility of errors, omissions and/or discrepancies cannot be ruled out. This publication is released with an understanding that the Institute shall not be responsible for any errors, omissions and/or discrepancies or any action taken in that behalf. Should there be any discrepancy, error or omission noted in the STUDY MATERIAL , the Institute shall be obliged if the same are brought to its notice for issue of corrigendum in the Student Company Secretary.

9 The students may note that this STUDY MATERIAL is updated upto the Finance Act, 2011 and will be applicable for June 2012 and December 2012 examination. (v). PROFESSIONAL PROGRAMME . SYLLABUS. FOR. advanced TAX LAWS AND PRACTICE. Level of knowledge : Expert knowledge Objectives : To provide . (i) knowledge of framework of taxation system in India. (ii) knowledge of various concepts and their application relating to tax laws with a view to integrating the relevance of these laws with financial planning and management decisions. (iii) an overview of international taxation. Detailed contents : PART-A : DIRECT TAXATION - LAW AND PRACTICE (30 MARKS). 1. General Framework of Direct Taxation in India Different direct tax laws and their inter-relationship; importance of Income Tax Act and Annual Finance Act and related Constitutional provisions; harmonisation of tax regime.

10 2. Companies under Income-tax Laws Classification and tax incidence; corporation tax as per Article 366; computation of taxable income and assessment of tax liability considering special provisions relating to companies. 3. Tax Planning Concept of tax planning; Tax planning with reference to setting up a new business; locational aspects; nature of business; tax holiday, etc. Tax planning with regard to specific management decisions such as mergers and takeovers; location of undertaking; introduction of voluntary retirement; tax planning with reference to financial management decisions such as borrowing or investment decisions; reorganisation or restructuring of capital decisions. Tax planning with respect to corporate reorganization; tax planning with reference to employees' remuneration.