Fin Quest

Tax Planning:

Tax planning is a legitimate way of reducing the tax liabilities in any given financial year. It helps to utilise the tax exemptions, deductions, and benefits offered by the authorities in the best possible way to minimise the liability. Tax planning allows all elements of the financial plan to function in sync to deliver maximum tax efficiency.

Objectives of Tax Planning:

Reduction of Tax Liability: The tax payer can save the maximum amount of tax, by properly arranging his/her operations as per the requirements of the law, within the framework of the statute.

Minimization of Litigation: The taxpayers and tax collectors want the tax liability to be minimum while the latter attempts to extract the maximum. So, proper tax planning aims at conforming to the provisions of the tax law, in such a way that incidence of litigation is minimized.

Productive Investment: One of the major objectives of tax planning is the channelization of taxable income to different investment plans. It aims at the optimum utilization of resources for productive causes and relieving the assessee from tax liability.

Healthy Growth of Economy: The growth and development of the economy greatly depend on the growth of its citizens. Tax planning measures involve generating white money that flows freely and results in the sound progress of the economy.

Economic Stability: Proper tax planning brings economic stability by various techniques such as mobilizing resources for national projects or availing ways for investments which are productive in nature.

Benefits of Tax Planning:

Tax planning can reduce income tax incidence on an individual. Often, people pay more tax than what they would have paid by not choosing investments smartly. Proper planning will help them to save tax more effectively and maximize investment returns.

The earlier starting up with tax planning, the sooner their investment start earning returns. Also, it eliminates the situation where they may end up not having enough money to spare for a lump sum investment, at one go for 100% tax-saving With a proper tax saving strategy, they will be able to use most of the tax benefits available under the law

An efficient way to plan their taxes is to invest throughout the year in a certain proportion such that by the end of the year they have taken advantage of most of the tax savings plan.

Since tax benefits available varies from time to time and are also subject to many condition prevailing at that point in time, it is important that to start with tax planning early in the year.

Fin Quest

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