What exactly is Corporate Tax Planning?

I have taught Corporate Tax Planning and here we try to find out what the subject is all about. This will be of use to my readers who are interested in the subject.


Corporate tax planning happens to be an important tool of business decision making. In the broader perspective of corporate taxation, corporate tax planning is managerial decision making. Finance students would be able to understand the thin line of difference between income tax, corporate taxation and corporate tax planning. Traditionally income tax happens to be a subject which is more into computation. Right from computation of income under the different and appropriate heads of income up to computation of advance tax for the respective quarter and income tax liability for the assessment year.

But corporate tax planning is not computation. It deals with decisions, business decisions to be precise. Students who have studied income tax at an earlier stage should not have any problem. As they know the basics of computation they need to fine tune their decision making ability. Management students should bear in mind the utility of corporate tax planning in business decisions. Corporate tax planning is a big parameter of corporate decision making. It deals with business decisions after taking into account the various case laws on the matter. Additionally it also looks into the scheme and scope of tax planning as well as tax management. Tax avoidance, tax evasion and their dire consequences are important things to think about before any retrograde step is taken by any decision. Compliance of law, double taxation relief, beneficial circulars and instructions and judicial rulings are some of the other important things which comprise the study of corporate tax planning.

Though a study of all the heads of income is always desirable corporate tax planning encompasses two heads in particular viz., Profits & gains of Business or Profession and Capital Gains. Other important things include deduction of tax at source (TDS), advance tax, filing the return of income, review of unfavourable orders, documentation and maintenance of records, a brief overview of taxation of foreign companies, important case laws on tax planning under Tax evasion, other relevant cases relating to companies, planning of corporate indirect taxes (including customs, excise, modvat, octroi, sales tax, stamp duty etc. tax planning through specific strategic exercises like amalgamation and merger.