Tax Planning & Management

Tax Planning Tax planning is an arrangement of one's affairs in such a way that the burden of t axation on assessee is reduced to the minimum without violating in any way the l egal provisions. It carried out the full enjoyment of Tax Exemptions, Tax Deduct ions & Tax Rebates. It is within the four corners of Law and regarded as fully l egitimate.

Needs and Objectives of Tax Planning Tax planning is done for the reduction of Tax Burden. To avoid any sort of litig ation. To avoid any type of raid and penalty. To avail the benefit of concession s and exemptions given under law. For preparation and maintenance of systematic records. To discharge the responsibility of a good citizen.

Limitations of Tax Planning Limited Scope for Assessee Taxation laws are dynamic Preconditions are needed to be fulfilled for availing benefits Complicated tax Laws Require knowledge of va rious Act like Income Tax Act, FEMA etc Expertise in Accountancy needed Income i ncrease results in higher Tax liability

TAX AVOIDANCE An art of dodging out i.e. actually breaking law. Method of reducing tax inciden ce by finding out loopholes of law. A device which technically satisfies require ment of law but not in legal accordance. It includes attempt to prevent or reduc e tax liability. Examples: Agricultural Income, Section 80G- Donations are tax e xempted

TAX EVASION To reduce tax liability when accounts are interpreted then it is Tax Evasion. It is not only illegal but also immoral and antinational. Under tax laws, tax evad ers are penalized by heavy duty. Examples: Falsification of Accounts, Inflation of expenses, Non-disclose of capital gain or other incomes.

Tax Planning An exercise aimed at reducing tax liability by availing maximum benefits of vari ous exemptions, deductions & rebates Tax Avoidance An exercise aimed at reducing tax liability by exploiting some loopholes of the law Tax Evasion An exercise of reducing tax liability either by showing lesser income than actua l or by hiding the source of any income Completely with in the framework of law Legal Deliberate creation of law for wealth generation through encouraged saving s and investments Shows honest efforts for benefit of himself and economy as a w hole Tries to locate some weaknesses of law Illegal & prohibited Against the basic intent/ soul of legislative provisions Sh ows dishonest nature Willful disobedience of law Illegal & attracts penalties White collar crime Shows dishonest nature and adverse courage to break laws

TAX MANAGEMENT Regular feature of business enterprises and a form of tax planning. Tax Manageme nt refers to compliance of Tax laws It includes maintenance of records in prescr ibed format It includes getting audited the records, filing returns, TDS and pay taxes

MAIN AIMS OF TAX MANAGEMENT Tax Management saves the organization from payment of interest, penalties and pr osecutions and has nothing to do with Tax avoidance and Tax Evasion rather it de als with compliance with tax rules and regulations. For availing tax related ben efits assessee need to fulfill certain preconditions; Tax Management ensures ful fillment of such conditions Needed for Review of departments orders

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