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Tax planning is a continuing effort and a management strategy for ensuring the minimization of the tax liability of an individual. It is essential to thoroughly understand the tax deductions and tax credits. For the purpose of tax planning, the consideration of the taxes paid by the individual/ entity is quite crucial, including the federal and state income tax, use tax, payroll tax, sales and capital gains tax.
Budget 2023 has introduced changes in the new tax regime. As per the new tax regime, there is an absence of any taxes on income up to an amount of Rs.3 lakh. On income up to a limit of Rs. 7 lakh, there isn’t any tax liability due to the availability of a rebate under section 87A. Salaried assessees can also opt for tax optimization by claiming a standard deduction of up to an amount of ₹50,000. With a thorough understanding of the tax slabs, maximization of eligible deductions under the new tax regime, restructuring salary, and investment in tax-efficient options, the tax liability of individuals can be optimized.
With effective tax planning, there can be the retention of more of the business’s valuable capital for reinvestment in future business ventures or increasing the take-home pay of business owners and employees. The present article shall discuss Tax Planning and Strategies to Minimize Tax Liability.
Given below are certain tax planning tips which can help to minimize the tax liability of an individual/ entity
There are certain tax planning options and strategies which can help to minimize tax liability; the same is discussed below-
Apart from the 80C deductions, there are various deductions available u/s 80C that can help in saving income tax, thereby facilitating efficient tax planning. Tax benefits on home loan interest and health insurance premiums are a few-
By the implementation of these tax planning strategies, Indian entrepreneurs can minimize their tax liability, thereby improving their financial position. However, it must be noted that tax planning strategies to minimize tax liability should not be made in isolation and should be integrated with the overall business strategy. It is also important to stay updated with the ever-changing tax laws and regulations and adjust the tax planning strategy accordingly. As a responsible business owner, it is his duty to comply with the tax laws followed by contributing to the economic growth of the country.
Read our Article: A Discourse on Tax Planning Strategies
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