METHODS OF TAX PLANNING

·         METHODS OF TAX PLANNING

·         CORPORATE TAX PLANNING

·         MEANING OF TAX PLANNING

1.     TAX PLANNING IS AN EXERCISE AIMED AT REDUCING TAX LIABILITY BY AVAILING MAXIMUM BENEFITS OF VARIOUS DEDUCTIONS,EXEMPTIONS,REBATES,RELIEFS,ETC PROVIDED UNDER TAX LAWS.

2.     GENERALLY IT IS PROVIDED UNDER EXEMPTIONS U/S 10,DEDUCTIONS UNDER 80 C TO 80 U AND REBATES AND RELIEFS.

3.     EXEMPTIONS UNDER 10A,10B AND 10 BA

4.     RESIDENTIAL STATUS OF THE PERSON

5.     CHOICE OF ORGANIZATION

6.     FOR AVAILING BENEFIT ONE SHOULD ADOPT  BONAFIDE MEANS TO COMPLY WITH THE PROVISIONS.

·         CORPORATE TAX PLANNING

1.     IS TO IDENTIFY THE MAIN FACTORS IN THE ORGANISATION STRUCTURE THAT PROVIDES MANY OPPORTUNITIES FOR TAX PLANNING. CORPORATE TAX PLANNING AIMS TO STRUCTURE A BUSINESS IN SUCH A WAY TO MINIMIZE BOTH THE CURRENT AND FUTURE INCOME TAX LIABILITIES.

·         AREA OF TAX PLANNING

·         AREA

·         TAX PLANNING

·         WHY??????

1.     REDUCTION OF TAX LIABILITY

2.     MAXIMISE THE CASH FLOWS

3.     MINIMIZE THE CASH OUTFLOW

·         TOOLS OF TAXPLANNING

1.     BEFORE THE ACCRUAL OF INCOME

2.     SHOULD BE RESORTED AT SOURCE OF INCOME

3.     THE CHOICE OF ORGANIZATION

4.     THE CHOICE OF LOCATION

5.     RESIDENTIAL STATUS

6.     CHOICE TO BUY OR LEASE

7.     CAPITAL STRUCTURE DECISIONS

·         METHODS OF TAX PLANNING

·         SHORT TERM TAX PLANNING

·         MEANS THE PLANNING THOUGHT OF AND EXECUTED AT THE END OF THE INCOME YEAR TO REDUCE TAXABLE INCOME IN A LEGAL WAY.

·         LONG TERM PLANNING

·         LONG RANGE TAX PLANNING MEANS A PLANNING MADE AT THE BEGINNING OF THE YEAR TO BE FOLOWED AROUND YEAR.

·         PERMISSIVE TAX PLANNING

·         TAKING BENEFITS UNDER VARIOUS SECTIONS AND COMPLIANCE WITH THE PROVISIONS.

·         PURPOSIVE TAX PLANNING

·         MAKING PLAN WITH SPECIFIC PURPOSE TO ENSURE THE AVAILABILITY OF MAXIMUM BENEFIT BY TAKING THE CORRECT SELECTION OF INVESTMENT,RESIDENTIAL STATUS /LOCATION ETC

·         TAX MGMT

·         IS PART OF TAX PLANNING. DEALS WITH THE RELATIONSHIP OF PERSON WITH THE TAX AUTHORITIES

1. PAST: FILING OF VARIOUS RETURNS,ISSUING CERTIFICATES,PAYMENT OF TAX
2. PRESENT:-PAYMENT OF TAX AT APPROPRIATE TIME
3. FUTURE:- RECTIFICATION OF ANY MISTAKE,FILING APPEAL ETC

·         REQUISITES OF SUCCESSFUL TAX PLANNING

1. DEEP KNOWLEDGE OF PRESENT LAW
2. KNOWLEDGE OF RETROSPECTIVE AMENDMENTS
3. KNOWLEDGE OF ALLIED OTHER LAWS
4. KNOWLEDGE OF METHODS OF TAX PLANNING:-
5. DETERMINATION OF RESIDENTIAL STATUS
6. SELECTION OF SUITABLE FORM OF ORGANIZATION
7. CAPITAL STRUCTURE DECISIONS