Direct Tax Laws and International Taxation - Vocabulary Flashcards

Essential vocabulary flashcards derived from the CA/CMA Final Direct Tax Laws & International Taxation concept notes.

Assessee

Any person who is liable to tax, interest, or penalty under the Income Tax Act, 1961, including a deemed assessee or an assessee in default.

Application of Income

Income transferred or applied by an assessee on their own will without legal obligation or for a personal obligation, which remains taxable in the hands of the assessee.

Diversion of Income

Income transferred by an assessee under an overriding obligation created by a deed or law before it reaches the assessee, which is excluded from the taxable income of the assessee.

Equity Oriented Fund

A Mutual Fund where a minimum of $65\text{\\text{\%}}$ of its total proceeds is invested in listed equity shares of domestic companies.

Market Linked Debenture

A security that has a principal component in the form of a debt security and where returns are linked to market returns on other securities.

Slump Sale

The transfer of one or more undertakings as a result of the sale for a lump sum consideration without values being assigned to the individual assets and liabilities.

Speculative Business

A business transaction consisting of the purchase or sale of any commodity, including stocks and shares, settled otherwise than by the actual delivery or transfer of the commodity or scrips.

Unabsorbed Depreciation

The portion of depreciation under Section 32(2) that cannot be absorbed in the current previous year due to insufficient profits, which can be set off against any head of income except salary and carried forward indefinitely.

Deemed Dividend under Section 2(22)(e)

Any payment by a company in which the public is not substantially interested, made by way of loan or advance to a shareholder holding $10\%$ or more voting power (or to a concern in which such shareholder has a substantial interest), to the extent of accumulated profits.

Virtual Digital Asset (VDA)

Any information, code, number, or token generated through cryptographic means or any non-fungible token (NFT) providing a digital representation of value, taxable at $30\%$ u/s 115BBH.

Alternate Minimum Tax (AMT)

A minimum tax under Section 115JC applicable to non-corporate assessees, calculated at $18.5\%$ (or $15\%$ for co-operative societies, $9\%$ in IFSC) of Adjusted Total Income when normal tax is lower.

Minimum Alternate Tax (MAT)

A tax under Section 115JB levied on corporate assessees at $15\%$ (or $9\%$ for IFSC units) of Book Profit when the tax calculated under normal provisions is lower.

Business Trust

A Real Estate Investment Trust (REIT) or Infrastructure Investment Trust (InvIT) registered and regulated by SEBI whose units are listed on a recognized stock exchange.

Base Erosion and Profit Shifting (BEPS)

Tax planning strategies that exploit gaps and mismatches in tax rules to artificially shift profits to locations with no or low taxation where there is little or no economic activity.

Significant Economic Presence (SEP)

A factor constituting a business connection in India for a Non-Resident through digital transactions exceeding $\text{₹ } 2\text{ crores}$ or engaging in interaction with $\ge 3\text{ lacs}$ users in India.

Associate Enterprise (AE)

Two enterprises where one participates directly or indirectly in the management, control, or capital of the other, such as holding $\ge 26\%$ voting power, appointing board members, or providing $\ge 51\%$ of total asset loans.

Arm's Length Price (ALP)

A price applied or proposed to be applied in a transaction between persons other than associated enterprises in uncontrolled conditions.

Secondary Adjustment

An adjustment u/s 92CE requiring excess money resulting from a primary transfer pricing adjustment to be treated as a deemed loan to the Associated Enterprise if not repatriated to India within 90 days.

Impermissible Avoidance Arrangement

An arrangement whose main purpose is to obtain a tax benefit and which satisfies specific criteria such as not being at arm's length, misusing law provisions, lacking commercial substance, or lacking bonafide purpose.

Advance Pricing Agreement (APA)

An agreement between a taxpayer and the Central Board of Direct Taxes (CBDT) determining the Arm's Length Price or specifying the manner of ALP calculation for international transactions.

Dispute Resolution Committee (DRC)

A 3-member committee constituted by the Central Government to resolve tax disputes for specified persons where income variations in an order do not exceed $\text{₹ } 10\text{ lacs}$ and returned total income is up to $\text{₹ } 50\text{ lacs}$.

Undisclosed Foreign Asset

Any asset (including financial interest) located outside India held by a resident for which no explanation of source is offered or the explanation offered is unsatisfactory, taxable @ $30\%$ under the Black Money Act.

Vienna Convention on Law of Treaties (VCLT)

A multilateral agreement ratified by 116 countries providing codification of customary international law and basic rules for the interpretation and application of international agreements.