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What Is Tax Planning? (Correct answer)

 Tax planning is a process of analyzing one’s financial situation logically with a view to reducing tax liability. International Tax Planning and Fiscal Ethics-Tutorial 1 Short-range planning means planning made annually to fulfill the limited or specific objectives.

What is tax planning?

  • Tax planning is the analysis of a financial situation or plan from a tax perspective. The purpose of tax planning is to ensure tax efficiency.

What is the meaning of tax planning?

Tax planning is the analysis of a financial situation or plan to ensure that all elements work together to allow you to pay the lowest taxes possible. A plan that minimizes how much you pay in taxes is referred to as tax efficient.

What is tax planning in India?

Tax planning is the analysis of one’s financial situation from a tax efficiency point of view so as to plan one’s finances in the most optimized manner. Tax planning allows a taxpayer to make the best use of the various tax exemptions, deductions and benefits to minimize their tax liability over a financial year.

What is importance of tax planning?

Here are the key advantages of tax planning: Tax planning facilitates the smooth functioning of the financial planning process. Compliance regarding tax payment reduces legal hassles. Tax planning helps channelize taxable income to various investment plans. Tax planning helps you save money.

What is tax planning in business?

Tax planning involves conceiving of and implementing various strategies in order to minimize the amount of taxes paid for a given period. For a small business, minimizing the tax liability can provide more money for expenses, investment, or growth. In this way, tax planning can be a source of working capital.

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How do you do tax planning?

7 Most Effective Ways to save Tax

  1. PPF Accounts.
  2. 5 Year Tax Saving Fixed Deposit.
  3. Equity Oriented Mutual Fund.
  4. Pension Plans.
  5. Contribution to Employee Provident Fund.
  6. Life Insurance Policy.
  7. National Savings Certificate (NSC)

What is tax planning and types?

Tax planning: Tax planning is a process of analyzing one’s financial situation logically with a view to reducing tax liability. Tax planning involves applying various advantageous provisions which are legal and entitles the assesse to avail the benefit of deductions, credits, concessions, rebates and exemptions.

Is tax planning illegal?

It is an unlawful attempt to reduce one’s tax burden. Through tax planning one can reduce one’s tax liability. It involves planning one’s income in a legal manner to avail various exemptions and deductions.

What are the factors of tax planning?

Areas of Tax Planning

  • Reducing Taxable Income. – one can use government schemes and programs to reduce his taxable income, it will directly reduce his tax liability.
  • Deduction planning. – there are many deductions provided by a taxation law.
  • Investment in tax planning.
  • Year-end planning strategies.

What is tax planning explain characteristics?

Tax planning refers to the logical analysis of a financial situation with the view of reducing tax liability. The tax plan ensures that all elements of the financial plan work together to pay the lowest tax. Through tax planning, individuals ensure they can attain maximum tax efficiency.

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