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IMPRESSIVE FACTS ABOUT THE PERSON WHO HAS RE-DESIGN TAX REFORMS IN INDIA

TAX PLANNING PERFORMED BY RELIANCE INDUSTRIES UNDER THE LEADERSHIP OF DHIRUBHAI AMBANI

IMPRESSIVE FACTS ABOUT THE PERSON WHO HAS RE-DESIGN TAX REFORMS IN INDIA 


 This man is not a former Finance Minister nor he has anything to be done with any house of parliament. Then, how can he be the reason for so many amendments and addition to the taxation laws of India? He is none other than Dhiru Bhai Ambani, the greatest entrepreneur, the man with a kind vision, who has taught us that hard work can make you a king out of racks. The way he escaped lawfully from the various tax applicability none can do that way. 


People say that till then he was alive Reliance Industries had never paid a single tax, it was always calculated as NIL.


 FOR THREE DECADES IT WAS A ZERO-TAX COMPANY IN INDIA 

 Yes, you read that right. Once a literate person shared his views quoting that in India poor cannot pay tax and these big fishes do not pay tax and the one who is paying is the middle-class man. He was right with his words and was specifically pointing out at Reliance Industries. Today these words are providing us the facts that only middle-man is suffering and thinking about taxation. How to do tax saving is their thought when the end of July is nearby. 



 AFTER INTRODUCTION OF MAT THEY MADE PROVISION FOR CORPORATE INCOME TAX 

 Minimum Alternate Tax was introduced to bring Reliance Industries under the ambit of taxation as they were the one escaping it but all lawfully so they could not raise their voice against them or point out finger on them. Can a single person do that? No, he had a big team which included experts but it was him who had a face to all of them as after all he was the one taking prime decisions of the company with the acceptance of Board. 



 THE TRICK WAS UNABSORBED DEPRECIATION FOR WHICH INDEFINITE CARRY FORWARD IS ALLOWED IN INCOME TAX



 Many industries chose interest as revenue expenditure but Dhiru Bhai Ambani chose to consider it as actual cost. Reliance industry is capital intense industry, therefore, an initial period there were huge loses. As per income tax provision, losses can be carried forward for just 8 years. Considering interest as revenue expenditure will only increase the losses which can be set off only for 8 years whereas considering it as cost, unabsorbed depreciation on such assets can be claimed for an indefinite period. This tax planning no one understood during that period, after 10 to 12 years income tax department understood the tax planning and amended the income tax act. Even now Reliance Industries has so much unabsorbed depreciation that it can show a loss for 25 years. 





 The Indian Reform shaped this way as far as taxation was concerned all because of this great man and his intelligence. As soon as the finance bill of the year 1996 was announced it created a havoc as for the financial year 1996-97 Reliance Industries had to pay MAT, it was at that time the record got a break and they became a taxpayer in actual.
You can refer to many articles which mention such facts about him in Chartered Club.    
IMPRESSIVE
FACTS
ABOUT
THE
PERSON
WHO
RE-DESIGNED
INDIAN
TAX
REFORM
TAX PLANNING
ANAMIKA KHATRI
CONTENT WRITER
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