Tax planning and structuring


Tax planning and management:

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. For financial plan, tax planning is an essential part. Reduction of tax liability and maximizing the ability to contribute to retirement plans are crucial for success. By proper tax planning, one not only reduces tax liability but also end up saving towards the various goals one has set at different life stages.

Tax Planning Objectives:

Its required generally by all those who needs to file their returns. Every tax payers knows the toll that paying taxes puts on their financial income. To minimise tax impact, tax planning is essential and needs to be done wisely. It helps to invest smartly in savings instruments, thereby offering combined benefits of investment growth as well as reduction in the amount of taxes paid to the Government.

Tax Planning Importance:

Tax planning playing important role and benefit for both large and small businesses:

  1. Lowering the amount of taxable income.
  2. The tax rate is reduced.
  3. When taxes get paid, allowing greater control.
  4. Maximising tax relief / tax credits available.

Tax Planning for New Businesses:

For both small and large businesses, tax planning is important because it helps to achieve their business goals. As the owner of a business, when you have to tax plan, you can lower the amount of taxable income, gain more control of when taxes are paid and also reduce the rate of tax. For example: if you have international business, you can manage the timing of tax bills and can avoid double taxation.

Tax planning for individual:

Tax planning is not only required for Individuals. Individuals can also retain their wealth through careful tax planning . Following include in Individual tax strategies:

  1. Income tax
  2. Gifting Children
  3. Gifting family members
  4. Property
  5. Pensions

Tax Planning Methods:

  1. Short term Tax planning
  2. Long term Tax planning
  3. Permissive Tax Planning
  4. Purposive Tax Planning

Tax Planning and tax evasion:

Tax evasion is an illegal way to minimize tax liability through fraudulent techniques like thoughtful understatement of taxable income or inflating expenses. Tax evasion is a crime for which the assessee could be punished under the law.

Tax planning is process of analysing one’s financial situation in the most efficient manner. Tax Planning is an honest approach of applying the provisions which comes within the framework of taxation law.

Tax structure In India:

The tax structure is India is divided into direct and indirect taxes. The Central Government and the state Government levies taxes in India.

Direct taxes are levied on taxable income earned by individuals and corporate entities, the burden to deposits taxes is on the assessees themselves. Indirect taxes are levied on the sale and provision of goods and services respectively and the burden to collect and deposit taxes is on the sellers instead of the assessee directly.

Tax structure of GST in India :

Goods and services Tax is an indirect tax imposed in India on the supply of goods and services. For collection of tax goods and services are divided into 5 different tax slabs – 0%, 5%, 12% ,18% and 28%. GST is meant to replace a slide of indirect taxes with a federated tax and is therefore expected to reshape the country’s economy.