Tax Incentives and Exemptions Advisory

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Advisory on Tax Incentives and Exemptions

Tax incentives and exemptions are popular throughout the world and are constantly evolving. Lowering liabilities and increasing savings are always desirable. One of the most excellent options is to get a consultation and advisory on Tax incentives and exemptions. Proper consultations will assist you, starting with evaluating your income and other assets and calculating the amount to be paid as taxes. In brief, employing a financial professional with the necessary expertise and training is the ideal answer for tax filing and returns.

What are Tax Incentives?

Tax planning is one method for lowering your tax bill while increasing your revenue. The Income Tax Act allows for tax deductions for various investments, savings, and expenditures made by the taxpayer within a fiscal year. We'll go over some of the ways you can save money on taxes. One important way is tax incentives.

Exclusions, exemptions, or tax deductions from taxes payable to the government are examples of tax incentives. Businesses obtain government tax incentives and exemptions to reinvest in their operations, make environmentally responsible decisions, or promote minority or disadvantaged business owners.

Tax incentives take several forms. Some of them are

Tax exemptions:

A company is exempt from paying certain taxes.

Tax reductions:

The amount of tax that a company must pay is reduced.

Tax refunds and rebates:

These reimburse a portion of a company's taxes after the remainder has been paid.

Tax credits:

Tax credits can be accumulated and used as needed in one tax year or the next.

A business must meet the government's conditions to receive tax incentives. These are some examples

  • Being a part of a particular industry
  • Creating a predetermined amount of jobs
  • Completing a payroll minimum
  • Investing a set amount of money in a project

Tax incentives serve many goals depending on what the government want to attract investment, such as increased private investment, job creation, and research & development. They may particularly target businesses such as information technology, agriculture, or biotechnology that they aim to encourage and grow.

What is a Tax Exemption?

Tax exemptions are specified things that are not taxed. These items are typically allowances or other forms of income. These are effectively tax-free items. As a result, you owe no taxes on such earnings. Some types of income may be partially tax-exempt, while others may be entirely tax-free. The term exemption describes the legal deduction that lowers the amount of income subject to taxes. For certain qualifying reasons, it is a legitimate deduction from income that would otherwise be subject to taxation. Income that is not included in the total amount taxed by the legislation is referred to as an exemption under the income tax law. Similar to this, under GST, exemptions are granted with public good objectives. It excludes some transactions involving goods and services or taxable individuals from the GST’s purview.

Importance of Enterslice Tax Consulting Services in Tax Incentives and Tax Exemptions

Every firm must pay taxes in some way or another. It is always a good idea to stay up to speed on the latest rules and legislation, as well as fully comprehend the regulations and reliefs available. This is critical for maintaining compliance with the country's relevant tax regulations in tax incentives and exemptions. Keeping up with changing tax legislation, tax exemptions, and tax incentives can be difficult, which is why engaging effective Tax advisory and compliance services with Enterslice is beneficial.

Our skilled tax and compliance services can assist you with effective tax planning services and identifying relevant tax savings options in tax incentives and exemption advisory services. The professional assistance that effective tax planning services provide in optimising tax incentives and exemptions for your business is unparalleled and crucial to its growth.

With the country's business environment constantly evolving, tax exemption advisory plans must adapt and change as well. Expert counsel from seasoned and skilled Tax planning services and advisory services can assist your firm in reaping the benefits of these rapid and timely changes in tax rules. Proper tax planning service and compliance services will assist you in facilitating compliance with tax rules and corporate tax rates, which is essential for smooth business operations.

General Benefit of Proper Tax Planning

Tax planning is essential for a variety of reasons. Here are some of the most important reasons for tax planning

To reduce tax liabilities:

Everyone wants to reduce their tax liability and save money for the future. You can reduce your taxable income by structuring your investments to take advantage of the many provisions of the Income Tax Act of 1961. The Act has several tax advantaged investment schemes and tax revenue that can greatly reduce your tax liability.

To cut down on litigation :

The process of addressing tax concerns with municipal, federal, state, or foreign tax authorities is known as litigation. Tax collectors and taxpayers regularly clash because the former attempts to recover the maximum amount possible while the latter seeks to keep their tax payments as low as possible. Limiting lawsuits protects taxpayers from legal liabilities.

Increasing Efficiency :

Tax planning attempts to maximise the use of tax-favoured investment vehicles and procedures such as retirement plans, tax-deferred accounts, and tax-exempt assets.

To maintain economic stability:

Taxpayers' money is spent on improving the country with their tax system. Effective tax planning and administration result in a healthy inflow of white money, which leads to the economy's steady progress. Both citizens and the economy profit from this.

To increase productivity:

One of the primary goals of tax planning is to redirect funds from taxable sources to various income-generating schemes. This guarantees that monies are used efficiently for useful purposes through corporate income tax.

Achieving financial objectives:

Tax planning is an important aspect of financial planning because it helps individuals and organisations achieve their financial goals by lowering taxes and increasing after-tax earnings.

Ensuring Compliance:

Tax planning also includes maintaining compliance with all applicable tax laws and regulations in order to avoid penalties, fines, and other legal implications.

Tax Incentives for Doing Business in India

Businesses can take advantage of numerous advantages depending on their economic activity, industry, location, and size. India provides tax incentives at both the federal and state levels. Additional tax incentives are given to certain sector investors, and India's special economic zones (SEZs) provide comprehensive tax exemption. However, not all tax incentives are mutually exclusive. Below are some of the tax incentives available for businesses in India.

  • Tax holidays
  • Investment Allowances and tax credits are all available.;
  • Corporate tax incentives for qualifying businesses
  • Tax incentives for capital investments in specific businesses
  • Tax incentives in various Indian states
  • Social security treaties
  • Incentive applicable for FY 2024
  • Differences in timing
  • Reduced Tax rates.

Tax Incentives and Exemptions for Eligible Startups in India

Any startup formed before March 31, 2024, is eligible for a 100 per cent tax credit on profits for a total of three years within a ten-year term. The tax rebate is not eligible if the company's annual turnover reaches INR 1 billion; these startups are exempt from long-term capital gains tax. However, this is only relevant if the capital gains invested are a part of the central government-notified fund within a total of six months from the date of the actual transfer of the asset and

If an eligible startup invests, the government will waive the tax on the portion of the investment that exceeds the fair market value. This comprises a variety of investments, including funding secured by local angel investors and funds that are not recognised as venture capital funds. This proposal also exempts investments made by incubators beyond the fair market value.

Other benefits include the ability for businesses in India to convert debt investment into company equity shares for up to ten years, relieving entrepreneurs of the COVID-19 scourge.

Corporate tax incentives for eligible companies

Domestic businesses can choose a CIT rate of 22%, whereas new domestic manufacturing businesses can choose a rate of 15%. Choosing the concessional regime would necessitate achieving specific criteria

Domestic companies

If domestic firms do not make use of certain tax credits or tax deductions, the concessional tax regime is 22%. The effective tax rate for these domestic corporations is around 25.17 per cent, including surcharge and cess.

Companies that choose the concessional corporation tax rate do not have to pay a minimum alternate tax, which is on pace with key Asian investment and industrial hubs such as China, Vietnam, Malaysia, Singapore, and South Korea on average.

New indigenous manufacturing firms

A corporation that is engaged in the manufacturing, production, or research of any article or thing, as well as the distribution of such article or thing, can claim the advantage of section 115BAB.

The eligible corporation may utilise the taxation option under section 115BAB on or before the due date for submitting income tax returns, which is September 30 of the assessment year, unless the deadline is extended.

Tax incentives in various Indian states

Foreign enterprises considering locating in any of India's states should be aware that each region has its unique set of policies and incentive programmes. The application of tax incentives is typically determined by

  • The location of the state
  • The items to be created
  • The investment scale and
  • The generation of jobs

Subsidies could be used as incentives for capital investment. Exemptions from government payments for electricity duty, stamp duty, and external development costs, as well as reimbursement in the form of employment generation subsidies, could be used to alleviate the burden on incurred expenditures. States may additionally grant a GST rebate and an investment promotion subsidy on sales made with a GST refund.

Why do you require Enterslice tax consultancy Service?

Our tax consultant provides services to taxpayers, whether individual or corporate, such as tax planning, filing returns, recommending investment ideas, tax incentives and exemption advisory and so on.

Tax savings

Thorough tax planning can help you achieve significant tax savings. The resulting savings can then be used for several investment choices that not only offer high returns but also assist you in meeting your financial objectives and tax competition. Our tax expert understands the intricacies of tax planning and can help you save significantly. Enterslice tax consultants can assist you in analysing required taxable amounts and steering clear of unnecessary liabilities.

Save timesavings

Filing your tax returns can take a long time, especially for novices. Time management is critical in this situation since taxpayers must adhere to strict deadlines. Our tax expert comes in handy to save you time and ensure that all returns are done on time.

Tax Compliancessavings

There are numerous ways to lower your tax bill, but it is critical to understand the laws and only claim the appropriate tax deductions. Our tax expert will be knowledgeable and up to date on the most recent tax reforms.

Enterslice can provide you with sophisticated tax planning services with our experienced tax advisors in tax incentives and exemptions.

Enterslice support on Tax Incentive and Exemption Advisory

Taxation is a complex and perplexing aspect for many Indian individuals and organisations, but it may be simplified with competent advice. The necessity to pay taxes as an entrepreneur is the first step in comprehending the notion of business taxation. Small business owners and entrepreneurs with startup ideas have the advantage of being able to construct their version of a new status quo even in times of significant uncertainty. It all starts with researching the many small company incentives available to help you get a financial boost. Connect with an expert to learn how tax incentives and exemptions work, identify tax incentives you may be entitled to and claim these valuable tax incentives utilising Enterslice.

Frequently Asked Questions

A tax incentive is a government programme that encourages people to spend or save money by lowering the amount of tax they must pay.

An exemption is a legal deduction that allows you to reduce the amount of your taxable income. If the cause is met, it is a legal deduction from income that would otherwise be taxed.

Yes, in the context of income tax, the phrases deduction and exemption are separate. The income tax deduction is the removal of a certain amount from the total sum of income from different sources of income. In contrast, exemptions mean that the entire income is tax-free.

In India, tax incentives are a significant aspect of doing business. The government of India provides financial incentives to enterprises to boost business. It is essential for businesses because it lowers the tax burden, increases profitability, and supports economic growth by promoting investment and development.

You can save tax on your wages by taking advantage of the Income Tax Act's tax incentives and exemptions. HRA and LTA allowances, as well as the Standard Deduction, are examples of these. Furthermore, Section 80C allows for expenditure and investment deductions of up to Rs 1.5 lakh, with the NPS programme allowing an extra Rs.50,000 deduction. Other tax breaks are available through provisions such as Section 80D for health insurance premiums and Section 80E for education loan interest payments.

The taxpayer must file their ITR paperwork for the current year by March 31. You can access your account by going to the Income Tax Department's official website.

The five taxable sources of income are as follows: Income from Salary, Household income, Capital gains income, Business/professional income and Other sources of income.

Exemptions, deductions, and exclusions can all reduce taxable income, but a tax credit, which is a defined amount of money that a firm can deduct from the total amount of taxes owing, is the most ideal.

Small business tax credits can assist federal, state, and municipal governments in accomplishing their specific strategic goals. Tax incentives serve a variety of goals, as illustrated by the examples below, such as creating job opportunities or providing a boost to specific businesses. While firms who profit from the tax incentive gain financial assistance, tax incentives promote the economy by expanding commerce, jobs, and investments.

It is always a good idea to stay up to speed on the latest rules and legislation, as well as fully understand the regulations and reliefs available. This is critical for maintaining compliance with the country's relevant tax regulations. Keeping up with changing tax legislation, tax exemptions, and tax incentives can be difficult, which is why engaging effective Tax Advisory And Compliance Services with Enterslice is beneficial.

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