Corporate tax law planning

TAX PLANNING WITH RESPECT TO AMALGAMATION Demerger:  A demerger is a form of Corporate Restructuring whereby one or more business undertakings of a company are transferred, either to a newly formed company or to an existing company, and the remainder of the company's undertaking continues to be vested in that company. As per Section 2(19AA) of Income Tax Act,1961  "Demerger" means the transfer of one or more Undertakings to any Resulting Company in such a manner that: All the property / liability of the undertaking becomes the properties / liabilities of Resulting Company. All the properties / liabilities are transferred at Book Value. The Resulting Company issues shares to the Shareholders of the Demerged Company on a Proportionate basis. The Shareholders holding at least 75% of the value of shares in Demerged Company become Shareholders of the Resulting Company. The transfer of an undertaking is on a Going Concern Basis. The Demerger is in accordance with the condition...

Introduction :  In India, Income-Tax Act, 1961 is the primary legislation dealing with taxability of income arising in the hands of individual or business entity. Corporate restructuring practices like Amalgamation and Mergers are important tools of economic development and they also helps to gain market share and improve operational efficiency of an enterprise. In this regard, the income tax legislation in India is quite development oriented for domestic companies going in for mergers or amalgamations. In simple terms, tax incentives have been granted to the business houses under Income Tax act, 1961 for certain specified restructuring practices which are as follows: Amalgamation of Companies Demergers Slump sale Corporatization of an existing Non-Corporate Business Succession of a Private Company or An Unlisted Company by a Limited Liability Partnership (LLP) : TAX PLANNING WITH RESPECT TO AMALGAMATION OF COMPANIES Amalgamation :  When two or more companies merge into one an...

Deductions from gross total income u/s 80 related to company assessee Section 80G, 80GGA and 80GGB of Income Tax act, 1961 (A.Y. 2019-20) Section 80IA, 80IAB, 80IAC and 80IB of Income Tax act,1961 (A.Y. 2019-20) Section 80IBA, 80IC, 80ID and 80IELof Income Tax act, 1961 (A.Y. 2019-20) 1. Section 80JJA (Profits from processing of bio-degradable wastes) Eligible assessee:  All industrial undertakings in Specified Business . Rate and period of deduction:  100% of the profit for 5 consecutive years, beginning from the year of commencement. Specified Business:  Collection and processing or  treatment of bio-degradable waste for:- Power generation Producing bio-fertilizers or bio-pesticides etc. Producing bio-gas Making pellets or  briquettes for fuel  and Making organic manure. 2. Section 80JJAA (Deduction in respect of Employment of new employees) Eligible assessee:  All assessees (Corporate and Non-Corporate) who are subject to Tax Audit u/s 44AB. Rate a...

Deductions from gross total income u/s 80 related to company assessee Section 80G, 80GGA and 80GGB of Income Tax act, 1961 (A.Y. 2019-20) Section 80IA, 80IAB, 80IAC and 80IB of Income Tax act,1961 (A.Y. 2019-20) 1. Section 80IBA (Profits from developing and building approved housing projects) Eligible assessee:  All assessees (Corporate and Non-Corporate) Deduction limit:  100% of the profit derived from such business. 2. Section 80IC (Deduction for setting up undertakings in special States) This deduction is allowed from profits of certain undertakings or enterprises located in certain special category states. These states are Sikkim, Himachal Pradesh, Uttaranchal and North Eastern States. Rate and period of deduction u/s 80IC:-   Period of commencement   State   Rate   Period of deduction From 23-12-2002 To 31-03-2007 Sikkim 100% For first 10 Assessment years From 07-01-2003 To 31-03-2012 Himachal Pradesh and Uttaranchal 100% 30% For first 5 Assessment ye...

Deductions from gross total income u/s 80 related to company assessee Section 80G, 80GGA and 80GGB of Income Tax act, 1961 (A.Y. 2019-20) 1. Section 80 IA (Profits and Gains from industrial undertaking engaged in Infrastructure development etc.) Rationale:  The existence of infrastructural facilities is very essential for industrial growth and economic development of economy. Recognising the need of establishing and developing infrastructure facilities, Government of India has provided tax incentives for undertakings engaged in the business of Infrastructure development. Eligible assessee:  Industrial undertakings engaged in Eligible business Rate and period of deduction:  A deduction of an amount equal to stated percentage of profits and gains, derived from any eligible business, shall be allowed for stated consecutive assessment years. Eligible Business:  The deduction under this section is available to an assessee whose "Gross Total Income" includes any profi...

Deductions from Gross Total Income (GTI) u/s 80 related to company assessees 1. Section80G ( Donations to charitable Institutions) Eligible assessee:  All assessees ( Individual, HUF, Company etc. ) Deduction limit:  100% or 50% of the donated amount or qualifying limit, allowed donation in cash upto ₹2000              This deduction is available on account of any donation made by the assessee to specified funds or institutions. In some cases, deduction is available after applying the qualifying limit while in others, it is allowed without applying any qualifying limit. The amount paid to the following as donations during the previous year qualify under section 80G:-   (A) No Limit Donations   (B) With Limit Donations  Donations given to:- The National defence fund The Jawaharlal Nehru memorial fund The Prime minister's national relief fund National children fund National sports fund etc.  Donations given to:- The State or...