Tax Planning is the analysis of the financial position concerning the payable tax liability. Tax Planning is an important component of Financial Planning and enables the entity to reduce tax liability legally.
Tax planning help you in rationalizing your tax liabilities!
Income tax lies under the category of direct taxes. An individual having an annual income of more than Rs. 2.50 lakh per year is required to pay the tax. Tax is levied at various tax slabs basing on the income.
GST lies under the category of Indirect Taxes and was introduced in place of Sales Tax. It is charged on all Goods and Services produced.
CGT is paid on the profit made on the sale of Fixed Assets, Shares or Stocks. It is divided into long-term and short term capital gain, which attracts a different tax rate.
Property tax is levied by the Local authorities Like Municipal corporations etc on the residential and commercial properties.
Corporate tax is a direct tax imposed by a government on the income or capital of corporations or other legal entities. It can either be at the national level, and may be imposed at state or local levels based on size and function of companies.
Excise duty refers to the taxes levied on the manufacture of goods within the country, as opposed to custom duty that is levied on goods coming from outside the country. For example, It is charged on food items, petrol and liquors.
Equity Linked Savings Scheme of Mutual Funds through monthly SIP or contribution to the PPF schemes.
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Tax liability need to be assessed regularly based on the income.
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Pay within the stipulated time to avoid interest for the delayed period.
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You should file Income Tax Return at the end of the year within time to avoid any penalty.
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It is advisable to maintain track of all financial records year-wise in a safe place.
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The total income for the year to be estimated in advance. Based on the total income and taxable income also to be estimated. This will help in proper tax planning for the ensuing financial year.
Once expected total income for the year is known. The expenses and the amount available for investment can be estimated. Investment in tax savings schemes may be started at the beginning of the year. We may start investing in Equity Linked Savings Scheme of Mutual Funds through monthly SIP or start contributing to the PPF scheme. This will reduce the pressure at the fag end of the financial year.
During the year tax liability is to be assessed regularly based on the income. This will help in keeping the tab on tax liability so that there will be no panic at the end of the year..
As per the forecast of the tax liability, if advance tax is to be paid we must pay the same within the stipulated time to avoid interest for the delayed period.
We must file our Income Tax Return at the end of the year within time to avoid any penalty.
All the documents viz. Details of investments, Transactions, Bank statements, etc are to be kept safely in one place. It is advisable to maintain the same financial year wise.
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Social Security Planning
It mainly includes Insurance planning, Both Life and Health insurance. Life Insurance is obtained to save the family from the hardships in the unfortunate death of the family’s bread earner. Similarly, medical treatments have become very costly nowadays. Health insurance covers the unforeseen expenses of health problems.