TAX LAWS AND PRACTICE - ICSI

1 ISTUDY MATERIALEXECUTIVE PROGRAMMETAX LAWSANDPRACTICEMODULE IPAPER 4 ICSI House, 22, Institutional Area, Lodi Road, New Delhi 110 003tel 011-4534 1000, 4150 4444fax +91-11-2462 6727email THE INSTITUTE OF COMPANY SECRETARIES OF INDIATIMING OF HEADQUARTERSM onday to FridayOffice Timings to Dealing TimingsWithout financial transactions to financial transactions to , Typesetting by AArushi Graphics, Prashant Vihar, New Delhi, andPrinted at M P Printers/5000/March 2014iiiiiEXECUTIVE PROGRAMME TAX LAWS AND PRACTICEThis study material has been published to aid the students in preparing for the Tax Laws and PRACTICE paper of theCS Executive Programme. It is part of the educational kit and takes the students step by step through each phaseof preparation stressing key concepts, pointers and procedures.

2 Company Secretaryship being a professionalcourse, the examination standards are set very high, with emphasis on knowledge of concepts, applications,procedures and case laws, for which sole reliance on the contents of this study material may not be , as per the Company Secretaries Regulations, 1982, students are expected to be conversant with theamendments to the laws made upto six months preceding the date of examination. The material may, therefore, beregarded as the basic material and must be read alongwith the original Bare Acts, Rules, Orders, Case Laws,Student Company Secretary bulletin published and supplied to the students by the Institute every month as well asrecommended readings given with each study subject of Tax Laws is inherently complicated and is subjected to constant refinement through new primarylegislations, rules and regulations made thereunder and court decisions on specific legal issues.

3 It therefore becomesnecessary for every student to constantly update himself with the various changes made as well as judicialpronouncements rendered from time to time by referring to the Institutes journal Chartered Secretary and e-bulletin Student Company Secretary as well as other law/professional journals on tax purpose of this study material is to impart conceptual understanding to the students of the provisions of theDirect Tax Laws (Income Tax and Wealth Tax) and Indirect Tax Laws (Service Tax, value added Tax and CentralSales Tax) covered in the Syllabus. The study material contains all relevant amendments made by Finance Act,2013 and is applicable for the Assessment Year 2014-15 relevant for June 2014 and December 2014 , it may so happen that some developments might have taken place during the printing of the study materialand its supply to the students.

4 The students are therefore, advised to refer to the Student Company Secretarybulletin and other publications for updation of the study students may note that notified sections of the Companies Act, 2013 does not have any impact on the FinanceAct, 2013 which is applicable for December 2014 Examination (Assessment year 2014-15). The Assessment Yearfor June 2014 and December 2014 examination is 2014-15. Besides all other changes made through Notificationsetc. and made effective six months prior to the examination will also be the event of any doubt, students may write to the Directorate of Academics in the Institute at care has been taken in publishing this study material yet the possibility of errors, omissions and/ordiscrepancies cannot be ruled out. This publication is released with an understanding that the Institute should notbe responsible for any errors, omissions and/or discrepancies or any action taken in that there be any discrepancy, error or omission noted in the study material, the Institute shall be obliged if thesame are brought to its notice for issue of corrigendum in the Student Company Secretary study material has been updated upto 31st May, Institute has decided that the examination for this paper under new syllabus will be held from December 2014session in the Optical Mark Recognition (OMR) format, whereby students are required to answer multiple choicequestions on OMR sheet by darkening the appropriate choice by HB pencil.

5 One mark will be awarded for eachcorrect answer. There is NO NEGATIVE mark for incorrect specimen OMR sheet is appended at the end of the study material. There is PRACTICE test paper in the study toacquaint students with the pattern of examination. These are for PRACTICE purpose only, not to be sent to the (I) PAPER 4: TAX LAWS AND PRACTICEL evel of Knowledge: Working KnowledgeObjective:To acquire expert knowledge of practical and procedural aspects relating to Direct Tax Laws, ServiceTax and : INCOME TAXAND WEALTH TAX (70 MARKS) and Definitions Income Tax Act , 1961 Background, Concept and Mechanism of Income Tax Definitions, Concept of Income, Previous Year, Assessment Year, Distinction between Capital and RevenueReceipts and Expenditure, Residential Status Basis of Charge and Scope of Total which do not form part of Total of Total Income under Various HeadsSalaries, Income from House Property, Profit and Gains of Business or Profession, Capital Gains, Incomefrom Other Of Income, Set-off and Carry-Forward of Losses and Deductions from Total IncomeIncome of Other Persons included in Assessee s Total Income; Aggregation of Income and Set Off or CarryForward of Losses; Various Deductions to be made in Computing Total Income, Rebates and Relief s.

6 ApplicableRates of Taxes and Tax of different kinds of personsTaxation of Individuals including Non-Residents, Hindu Undivided Family, Firms, LLP, Association of Persons,Cooperative Societies, Trusts, Charitable and Religious and Tax Incidence on CompaniesComputation of Taxable Income and Assessment of Tax Liability, Dividend Distribution Tax, Minimum AlternateTax and Other Special Provisions Relating to and Recovery of TaxTax Deduction at Source, Tax Collection at Source, Recovery and Refund of Tax; Provisions of Advance for Assessment, Appeals, Revisions, Settlement of Cases and Penalties & OffencesProvisions concerning Procedure for Filing Returns, Signatures, E-Filing, Assessment, Reassessmentand Settlement of Cases, Special Procedure for Assessment of Search Cases, E-Commerce Transactions,Liability in Special Cases, Refunds, Appeals and Revisions; Penalties Imposable, Offences and Planning & Tax ManagementConcept of Tax planning, Tax planning with reference to setting up a New Business; Location; Nature ofvBusiness; Tax Holiday, etc.

7 Tax Planning with regard to Specific Management Decisions such as Mergers andTakeovers; Employees Remuneration; Voluntary Retirement Tax Planning with reference to FinancialManagement Decisions such as Borrowing or Investment Decisions; Reorganization or Restructuring of Tax Act, 1956 Background, Concept and Charge of Wealth Tax Assets, Deemed Assets and Assets Exempt from Tax Valuation of Assets, Computation of Net Wealth Return of Wealth Tax and Provisions concerning Concepts of International TaxationResidency Issues; Source of Income; Tax Havens; Withholding Tax, Unilateral Relief and Double TaxationAvoidance Agreements, Controlled Foreign Corporation, Advance Rulings and Tax Planning, Authority forAdvance Rulings, Pricing Concepts, Meaning of International Transactions Computation of Arm s Length Price & Methods Documentation and Procedural Anti Avoidance Rules (GAAR)PART B - SERVICE TAX & SALES TAX (30 Marks)

8 Overview of Service TaxBackground, Negative List Approach, Taxable Services, Administrative Mechanism, Registration and ProceduralAspects, Rate and Computation of Tax, Levy, Collection and Payment of Service Overview of value added TaxLegislative Background, Concept of VAT, Declared Goods, Administrative Mechanism, Registration andProcedural Aspects, Rate and Computation of Tax, Levy, Collection and Payment of Sales TaxTax on Inter- State Trade and Exports - Registration, Preparation and Filing of E-Returns, Rates of Tax,Assessment and OF RECOMMENDED BOOKSPAPER 4: TAX LAWS AND Tax and Wealth Tax V. K. Singhania:Students Guide to Income-tax including Service Tax/VAT; TaxmannPublications Pvt. Ltd., 59/32, New Rohtak Road, New Delhi 110 005(Edition based on provisions applicable for AY 2014-15) Ahuja and:Systematic Approach to Income-tax, Service Tax and VAT; Bharat LawRavi GuptaHouse, T-1/95, Mangolpuri Industrial Area, Phase I, New Delhi-110 083.

9 (Edition based on provisions applicable for AY 2014-15) B. Lal and N. Vashist:Direct Taxes, Income Tax, Wealth Tax and Tax Planning; DarlingKindersley (India) Pvt. Ltd., 482, FIE, Patparganj, (Editionbased on provisions applicable for AY 2014-15) H. C. Mehrotra and:Direct Taxes (with Tax Planning); Sahitya Bhawan, Agra. (Edition basedDr. Goyalon provisions applicable for AY 2014-15) Ahuja and:Professional Approach to Direct Taxes Law & PRACTICE ; Bharat PublicationsRavi Gupta(Edition based on provisions applicable for AY 2014-15) Mundra:Tax Laws and Practices; Law Point publications, 6C, Mukherjee Road,Kolkata- 700001 (edition based on provisions applicable for AY 2014-15) Tax and value added S. Datey:Service Tax Ready Reckoner; Taxmann Publications, 59/32, New RohtakRoad, New K. Mittal:Law, PRACTICE & Procedure of Service Tax; CCH India, (Walters Kluwer(India) Pvt.)

10 Ltd.), 501-A, Devika Tower, 6 Nehru Place, New Sangal and:All India VAT manual (4 Vols.); Commercial Law Publisheres (India) PvtJagdish Rai GoelLtd., 151, Rajindra Market, Opp. Tis Hazari Courts, Delhi 110 Mundra:Tax Laws and Practices; Law Point publications, 6C Mukherjee Road,Kolkata- 700001 (edition based on provisions applicable for AY 2014-15) Act:Income Tax Act, 1961 & Income Tax Rules, Iyengars:Law of Income Tax, 11th Edition; Bharat Law House Pvt. Ltd., T-1/95,Mangolpuri Industrial Area, Phase I, New Delhi-110 :(i)Students are advised to read the relevant Bare Acts. Student Company Secretary and Chartered Secretary regularly for updating the knowledge.(ii)The latest editions of all the books relevant for the applicable assessment year referred to above should be OF STUDY LESSONSPART and Important of Charge, Scope of Total Income and Residential which do not Form Part of Total of Total Income under Various Heads :Part I Income under head SalariesPart II Income under head House PropertyPart III.