Tax Planning plays an important role in tax saving. Tax planning is an advance level analysis of tax structure to save tax. Tax planning is an activity undertaken by the taxpayer to reduce the tax liability by claiming allowable allowance and incurring eligible expenses.
So if anyone wants to save tax within the permissible limit of income tax act then tax planning is most appropriate way. An advice of well qualified professional will always helpful in tax planning and will lead to save taxes.
- Reduction of Tax Liability
- Minimisation of Tax Litigation
- Maximum tax relief
- Shifting of tax liability from one year to another year
- Shifting of tax liability from one person to another
- Optimum utilisation of tax holidays
Tax planning is combined result of critical analysis of taxpayer’s income and utilisation of such income in a way that maximum tax can be saved. For better tax planning following ways can be follow:
- Claiming of maximum tax deductions which are available for taxpayers
- Filing of tax returns within due date to carry forward losses
- Investment in certain assets to claim maximum tax depreciation
- Purchase of specified assets to save capital gain tax
- Investment in assets which provides exempt income