Tax Planning
CA Ninad J Panchakshari
Mcom. FCA,
Nashik
What is Tax Planning?
Tax planning is an essential part of your financial planning. Efficient tax planning enables you to reduce your tax liability to the minimum. This is done by legitimately taking advantage of all tax exemptions, deductions rebates and allowances while ensuring that your investments are in line with your long-term goals.
However in a broader sense tax planning is not to save the tax for current financial year but also make an effective planning of the sources of your income.
What tax planning is not...
• Tax Planning is NOT tax evasion. • Tax Planning is NOT just putting your money blindly into any 80C investments. • Tax Planning is NOT difficult.
Selecting tax saving investments
You should think about the following criteria, before selecting your tax saving investments for the year:
1. Liquidity 2. Risk and Return 3. Inflation Protection 4. Tax Exemptions
Investment avenues available for Tax Planning:
Normally tax planning means savings the Income Tax or lowering the burden of Income tax by investing the available funds with the instruments recognized by the Income Tax Act.
Tax Planning and relevant sections of Income Tax Act:
Sec 80 Deductions Under Chapter VI A
Sec 22 & 24 Deduction on account of Interest paid on housing Loan
Sec 64 Clubbing Provisions. Read with Sec 56(2) (v)
Individual Tax Planning:
Section 80 and Sec 22 are useful for the purpose of Individual tax planning.
1. Section 80C: Investment in specified instruments and expenses
Section 80C gives every income tax payer up to a maximum of Rs. 1,00,000 tax free income in a year if they invest in or buy the following instruments. Please note that this is a combined total of Rs. 1,00,000 and not an individual figure for every instrument:
2. Section 80D: Health Insurance Premium
3. Section 80E: Interest paid on educational loans
4. Section 80G: Donations to
Mcom. FCA,
Nashik
What is Tax Planning?
Tax planning is an essential part of your financial planning. Efficient tax planning enables you to reduce your tax liability to the minimum. This is done by legitimately taking advantage of all tax exemptions, deductions rebates and allowances while ensuring that your investments are in line with your long-term goals.
However in a broader sense tax planning is not to save the tax for current financial year but also make an effective planning of the sources of your income.
What tax planning is not...
• Tax Planning is NOT tax evasion. • Tax Planning is NOT just putting your money blindly into any 80C investments. • Tax Planning is NOT difficult.
Selecting tax saving investments
You should think about the following criteria, before selecting your tax saving investments for the year:
1. Liquidity 2. Risk and Return 3. Inflation Protection 4. Tax Exemptions
Investment avenues available for Tax Planning:
Normally tax planning means savings the Income Tax or lowering the burden of Income tax by investing the available funds with the instruments recognized by the Income Tax Act.
Tax Planning and relevant sections of Income Tax Act:
Sec 80 Deductions Under Chapter VI A
Sec 22 & 24 Deduction on account of Interest paid on housing Loan
Sec 64 Clubbing Provisions. Read with Sec 56(2) (v)
Individual Tax Planning:
Section 80 and Sec 22 are useful for the purpose of Individual tax planning.
1. Section 80C: Investment in specified instruments and expenses
Section 80C gives every income tax payer up to a maximum of Rs. 1,00,000 tax free income in a year if they invest in or buy the following instruments. Please note that this is a combined total of Rs. 1,00,000 and not an individual figure for every instrument:
2. Section 80D: Health Insurance Premium
3. Section 80E: Interest paid on educational loans
4. Section 80G: Donations to