Tax Planning Service in Surat
What do we mean by tax planning
Tax planning is the analysis of one’s financial situation from a tax efficiency point of view so as to plan one’s finances in the most optimized manner. Tax planning allows a taxpayer to make the best use of the various tax exemptions, deductions and benefits to minimize their tax liability over a financial year. Tax planning is a legal way of reducing income tax liabilities; however caution has to be maintained to ensure that the taxpayer isn’t knowingly indulging in tax evasion or tax avoidance.
What are the objectives of tax planning
Types of tax planning
Tax planning is an integral part of every individual’s financial growth and tax planning is very subjective matter. It changes person to person according to their financial needs. 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 and saves you from unnecessary hardships and tax burden.
Tax planning can be broadly classified are:
Purposive tax planning:
Planning taxes with a particular purpose in mind such as on or after retirement how to invest money derived on retirement so that maximum tax benefit can be availed.
Permissive tax planning:
Tax planning that is under the framework of law. that is planning your income keeping in mind different tax saving schemes of government so that maximum tax benefit and maximum return on income can be earned.
Long range and Short range tax planning:
An individual may have income which can be classified as short range or long range. such income or investment results in payment of tax. Thus an individual have to invest in combination of short range and long range so that return on investment vis a vis its tax liability can be leveraged. Thus one has to plan now for the near future as well as longer period.
Common Mistakes People Make Regarding Income Tax
Procrastination: This is the root of all follies you will make as a tax planner. This will eventually lead to you paying more taxes, instead of making timely investment leading to optimum planning of taxes.
Investing in insurance products for tax saving: When approaching the last of a financial year, a lot of us receive phone calls from insurance companies that insist that you buy an insurance policy that saves tax. This isn’t one of the wisest things to do.
Power of compounding through tax saving mutual funds: Many people don’t consider the power of compounding despite all supporting factors.
Failing to optimize all available options for tax saving: Don’t be the person who believes that tax planning starts and ends with Section 80C of Income-tax Act, 1961– that only describes investment instruments for saving tax
