Question

Taxation

Reflect how the knowledge of taxation course will be useful in future endeavour especially in career and daily life so as to fulfill the responsibility as a taxpayer.

Include explanation on tax planning with scenario (i.e. how to minimise your tax liability by utilising the tax incentives as well as expenditures that entitled for reliefs and rebates)

Answer 1

As an honest citizen of the country, it is your duty to pay your taxes. However, every investor is looking to save as much tax as possible. This can be done through tax-saving investments. The need for tax planning is absolutely necessary to save a significant amount of money on your finances. Because taxes can make up a large chunk of your total investment income each year. So, with proper tax planning, you can create a strategy that allows you to reduce your tax liability every year.

Tax planning is the process of analyzing and evaluating a person's financial profile. The purpose of this activity is to reduce the taxes you pay on your personal income. In short, using government-issued means to save taxes is a perfectly legal way to reduce your annual tax liability. There are many tax saving investments in India which are useful for saving money.

There are three main characteristics of tax planning tax Investment in tax reduction; Plan your finances in a way that attracts the lowest tax and tax filing process. As a result, tax planning affects every aspect of your money.

Tax-saving opportunities are available to all

There is a whole range of income tax categories that allow you to legally benefit from tax profits. However, there are many other categories that offer you great tax benefits.Not many people know about all the tax-saving options available to them.

Making tax efficient decisions

There is more tax than investment. It affects all areas of your life - from salaries and sources of income to financial decisions. This is an important aspect of tax planning your It helps you make decisions that reduce your tax burden.

Tax Audit and Filing

The last major impression of tax planning is the actual tax filing. This is when you take into account all aspects of your finances - income, expenses, liabilities and investments and the tax liability. Includes all paperwork and documentation on paying your taxes and filing tax returns

Goals of tax planning

• Minimal litigation: There is always conflict between the collector and the taxpayer. In such a case, it is important       to ensure compliance and proper use of tax credits, so conflict is minimal.

• Productivity: One of the most important goals of tax planning is to deliver taxable income to various investment projects.

Reducing Tax Liability: As a taxpayer, using the right arrangement of your enterprise that complies with the required rules can save you the maximum amount of tax payable.

• Healthy Growth of the Economy: The growth of an economy depends mainly on the growth of its citizens. Tax planning calculates the production of white money in free flow.

Financial Stability: Stability is a supplement when the tax planning behind a business is correct.

Types of tax planning

· Short-range and long-range tax planning: A short-range tax planning is a yearly tax plan to achieve specific goals. Meanwhile, long-term tax planning does not include any immediate payment.

· Allowable tax planning: Here the planning complies with the legal provisions of the tax.

· Intentional Tax Planning: This is a tax planning method based on loopholes in the law.

Tax planning is a term that refers to the calculated application of tax laws to effectively manage an individual's tax control. The law led to the gaining of tax benefits and in the interest of the country and the people.

A good tax planning results from the following

o All you have to do to claim benefits is invest in qualified equipment.

o Providing proper information to IT relevant IT authorities.

o Be familiar with applicable tax laws and court decisions.

o Planning Tax planning must be completely covered by law.

o Planning must take into account business objectives and the flexibility to incorporate future changes.

The common man is reluctant to deal with taxes because the income tax clauses seem too complicated.This is the arrangement of the taxpayer's business or financial transactions; The amount of tax is so low that the full tax benefit can be availed of through legitimate means