Tax Planning | CA in Mumbai | Chartered Accountant | CA Tax Planning

Tax Planning (6)

What is Tax Planning? Understanding what is tax planning is one of the most important aspect of financial planning. It is a practice where one analyzes his financial situation based on tax efficiency point of view so as to invest and utilize the resources optimally. Tax planning means reduction of tax liability by the way of exemptions, deductions and benefits. Tax planning in India allows a taxpayer to make the best use of the various tax exemptions, deductions and benefits to minimize his tax liability every financial year. As responsible citizens of the country, paying Income Tax on time, on your income is mandatory for the country to grow. However, majority amongst us still refrain from paying income tax which in turn curbs country’s growth and put you under direct suspicion of IT official where if found guilty, you are subject to heavy fines and imprisonment. Thus instead of avoiding income tax, one should readily pay tax yet save money by investing in tax saving instruments under different sections of the IT Act, 1962 Objectives of tax planning: Tax planning is a pivotal part of financial planning. Through effective tax planning all elements of the financial plan falls in place in the most efficient manner. This results in channelization of taxable income to different investment avenues thus relieving the individual of tax liability. The investment amount post lock-in can be utilized for fulfilling needs and act as the retirement corpus in most cases. All in all, the objective of tax planning is to reduce tax liability and attain economic stability. Types of Tax Planning: Tax planning is an integral part of every individual’s financial growth story. Since paying taxes is mandatory for every individual falling under the purview of the IT bracket, why not streamline your tax payments in ways that it offers substantial returns over a period of time with minimum risk? In addition, effective planning also reduces your tax liability drastically. The different mindset under which tax planning can be broadly classified are: Purposive tax planning: Planning taxes with a particular objective in mind Permissive tax planning: Tax planning that is under the framework of law Long range and Short range tax planning: Planning done at the start and end of a fiscal year respectively Best tax saving investments to choose from: There are various sections in Income Tax Act, 1961, under which an individual tax payer can claim exemption, deductions and benefits. Some of the common ones for tax planning include Sec 80EE for interest on Housing Loan, Sec 80D for premium paid on mediclaim, Sec 80E for interest paid on Education Loan, etc. Amongst these, Sec 80C is the most popular offering plethora of tax saving investment options. With various tax saving options on offer under Sec 80C, ELSS mutual funds is one which takes the cake as per financial pundits for two major reasons, (i) its equity based and (ii) it has the shortest lock-in period comparatively. Being market linked, ELSS are high on risk parameter however; they have the potential to offer impressive returns. Another important parameter which makes it the most preferred investment option in India is, investments in ELSS can be made in small proportions through SIP instead of paying a heavy sum altogether. Thus an ELSS through SIP route is pragmatic and convenient for an investor who plans to save income tax in India. Keywords CMS Meta: tax planning india, types of tax planning, tax planning pdf, tax planning wikipedia, tax planning ppt, tax planning for individuals, tax planning and management, objectives of tax planning

Tax Planning ideas through your family

Following are the Nine Tax Planning ideas through your family that can help you lower your income tax paid to the Government. If you need any assistance with tax planning in general or for any specific topic below then you may get in touch here…

Capital Gains Tax in Redevelopment

One of my clients recently reached out to me with a unique situation. His inquiry was primarily around Capital Gains Tax in Redevelopment His case details as follows: My father had purchased a pagdi room in the 1968 in Mumbai suburbs. Building went into redevelopment…

HUF for Tax Planning

In this post I will be covering indepth analysis of HUF and how to use HUF for Tax Planning. Stay with through the end of this long article and all your questions would be answered. If you just want to see the steps for HUF…