Money does not grow on trees; one has to work hard to earn it. Judicious application of money can help in wealth creation and so would buckling down on tax planning.
In simple words, tax planning is the art of managing your income and taxes in an efficient manner so that you pay the least amount of tax on your total income
Taxpayer who could be an individual, a business or an organization to reduce the total tax liability by optimally utilizing all the allowances, deductions, rebates, concessions and exclusions available well within the legal framework. Taxpayers think that tax planning is tax saving investment only, but tax planning is a much wider concept.
In India most of taxpayers do their tax planning at the end of the financial year i.e. February /March months but tax planning should be done at beginning and during the financial year.
Objectives of Tax planning:
- Reduction of tax liability
- Long term productive investment
- Healthy growth of economy
Advantages of proper and good tax planning:
- The main objectives of tax planning are minimizing the tax liability.
- To focus on investment in tax saving investment and other long-term investments.
- To live a confident and relaxed life from complex tax laws and rules.
- It helps in reducing the day to day unnecessary expenses.
- Tax planning starting at beginning of the year helps in reinvestment that would reduce tax burden.
- To utilize the latest budget changes and benefits.