How to decrease tax liability by planning your income tax.

When it comes to paying income tax, it feels good since it is a sign of success, and it gives the taxpayer the impression that their money is being put to good use. However, when this money is utilised to entice voters by giving away free items, various forms of subsidies, and remuneration solely to meet political obligations, it pinches a lot.

However, income tax is a crucial legal regulation that we must adhere to. However, we should make every attempt, within the limits of the law, to reduce our tax liability by careful preparation. I hope that this article provides our readers with accurate information in this regard.

When tax is not deducted on a monthly basis, it is especially onerous for salaried employees, especially when most of their salaries are withdrawn for Income Tax at the end of the year.

Related Article…

[pt_view id=”baa39696xe”]

As a result, tax planning should begin with the beginning of the fiscal year, and we should inform our employers about our spending and investments in advance, and we should stick to our commitment by producing documentation of such expenses and investments as requested by management.

Apart from salary, if individuals have income from any other source, such as rental income, revenue from a business or profession, capital gain, or other sources of income, the following are the specifics of such income, expenses, and investments:

Part A

Incomes that are not included in total income or are exempt from income tax, with a few details:

Part B

Here are some deductions to make when calculating total income:

Part C

There are a few more deductions that might be taken into account when calculating total income:

tax

Furthermore, in Budget 2020, a new tax system u/s 115BAC was implemented, which bifurcated the income tax slab. The following are both new and old slabs:

The new tax slab system, on the other hand, does not allow for deductions or specific exemptions. Without claiming deductions or exclusions, the tax payable under both the new and old systems is as follows:

How does the SBI tax savings fixed deposit scheme help you save money on taxes?

Before deciding on the regime, the taxpayer should weigh the benefits and drawbacks of both slabs. If he has reached his investment and cost limits, it is preferable to return to the former tax bracket.

There isn’t much room for a salaried worker to save money on taxes. However, for a business owner, there are numerous deductions allowed under sections 30 to 42 of the Income Tax Act. As a result, we say the UdymeBasati Lakshmi (Lakshmi resides in the enterprise).

Disclaimer: Shankar Mishra, a Chartered Accountant with more than 20 years of expertise in the subject of Direct and Indirect Taxes, as well as Company Law, is the author of this essay. (ANI)