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What is tax planning explain characteristics?

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What is tax planning explain characteristics?

Tax planning refers to the logical analysis of a financial situation with the view of reducing tax liability. The tax plan ensures that all elements of the financial plan work together to pay the lowest tax. Through tax planning, individuals ensure they can attain maximum tax efficiency.

What is tax planning and types?

Types of Tax Planning: Purposive tax planning: Planning taxes with a particular objective in mind. Permissive tax planning: Tax planning that is under the framework of law. Long range and Short range tax planning: Planning done at the start and end of a fiscal year respectively.

What is tax planning explain the importance of tax planning?

Tax planning is a focal part of financial planning. It ensures savings on taxes while simultaneously conforming to the legal obligations and requirements of the Income Tax Act, 1961. The primary concept of tax planning is to save money and mitigate one’s tax burden. However, this is not its sole objective.

How do you do tax planning?

7 Most Effective Ways to save Tax

  1. PPF Accounts.
  2. 5 Year Tax Saving Fixed Deposit.
  3. Equity Oriented Mutual Fund.
  4. Pension Plans.
  5. Contribution to Employee Provident Fund.
  6. Life Insurance Policy.
  7. National Savings Certificate (NSC)

What are the factors of tax planning?

Areas of Tax Planning

  • Reducing Taxable Income . – one can use government schemes and programs to reduce his taxable income, it will directly reduce his tax liability.
  • Deduction planning. – there are many deductions provided by a taxation law.
  • Investment in tax planning.
  • Year-end planning strategies.

What are the important methods of tax planning?

To achieve this objective taxpayer may resort to following Three Methods : Tax Planning. Tax Avoidance. Tax Evasion.

What are the steps in tax planning?

A little tax planning can be a big help at tax time each year.

  1. If you want to pay the least amount of income tax each year, then it may be helpful to start doing some tax planning.
  2. Step 1: Start a filing system.
  3. Step 2: Understand tax deduction requirements.
  4. Step 3: Evaluate the tax credits offered.
  5. Step 4: Use an IRA.

What is tax planning and state its objectives?

The objective behind tax planning is insurance of tax efficiency. Tax planning allows all elements of the financial plan to function in sync to deliver maximum tax efficiency. Tax planning is critical for budgetary efficiency. A reduced tax liability and maximized the ability of retirement plans.

What are areas of tax planning?

Tax planning can be classified into the following: Permissive tax planning: Tax planning which falls under the framework of the law. Purposive tax planning: Tax planning with a specific objective. Long-range/short-range tax planning: Planning executed at the beginning and towards the end of the fiscal year.

What are examples of tax planning?

Individuals

  • Tax Credits.
  • Income Shifting.
  • Additional Rate of Income Tax.
  • Personal Allowance.
  • Exempt Transfers for Inheritance Tax (IHT) purposes.
  • Tax Efficient Investments.
  • Main Residence Election.
  • Jointly Owned Property for Married Couples.

What are the major areas of tax planning?

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