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Best Tax Planning & Tax Saving

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BEST TAX PLANNING AND TAX SAVING

Tax planning is the process of understanding a financial plan, which reduce the tax liability of an individual and optimally utilize tax exemptions and tax benefits as more as possible. In simple words you have to understand the financial plan and you have to decrease your tax liability by finding benefits and exemptionsprovided by the law and making investment and savings according to the law where maxixum benefits of exemption can be availed. It must be done in the starting of a financial year or fiscal year.

Tax Planning in India

There are many tax saving option which are available in India for an individual or taxpayer. These option provides the benefit of variety of exclusions of tax and various number of deduction are available which may help for the short term or long term.
The deductions are available for a taxpayer Deduction under Section 80c to 80u and It can be applied after the computation of total income and there are also some deduction which are available to the individual under the same head as under section 16 (ia) etc.
It is totally legal and Government cannot impose penalty or fine as the case may be because you are interpreting only what is written in the law.

Types of Tax planning in India
  • i- Purposive Tax Planning- When a tax planning is done to achieve a particular object. It may be done according to the residential status earning or diversification of business and income asset and may replace also, if is is necessary.
  • ii- Permissive Tax Planning- When it is done under the provision of Country's Taxation laws.
  • iii- Short and long range Tax Planning- When a tax planning is done for a specific year to achieve some objective then it is known as Short range Tax Planning and when a tax planning is done for future to achieve some particular objective then it is known as Long range tax planning.

Some of the example of tax planning are as follows If your total income is Rs 600000 then you can invest excess Rs 100000 in the notified schemes where you get the exemption and of the balance income Rs 500000 you can get the benefit of the rebate u/s 87A. So in this case you have to pay NIL Tax but you have to file return.