Why is Tax counseling necessary?
For us, tax counseling is not simply a matter of minimizing your tax burden, but of maximizing your income and assets. We are not so much interested in the assessment of issues that have already been drawn to a conclusion; more important to us is the planned counseling of our clients and the shaping of their Business Startup Services needs.
Selecting tax saving investments
You should think about the following criteria, before selecting your tax saving investments for the year:
Liquidity: How quickly will you need the money? Will you need to access the money within the next year or two years or over what duration? None of the above instruments let you withdraw your money quickly, in fact there is a minimum three year lock in for all tax saving investments.
Risk and Return: How much risk do you want to take. There is a trade off between the two, some instruments are very low risk, but as a result they give low returns which are capped.
Inflation protection: The instruments that give you a low return typically are the worst type of investments regarding inflation. This is important because many of the instruments give you a fixed rate of interest, and lock in your money for a long period. This is not a good protection against inflation.
Tax Exemption: All tax saving investments under Section 80C are alike in one respect that they are tax exempt when they are invested. But they differ with respect to the tax on the income you earn from such an investment as well as the tax on the maturity of the investment
The goal of tax planning is to arrange your financial affairs so as to minimize your taxes. There are three basic ways to reduce your taxes, and each basic method might have several variations. You can reduce your income, increase your deductions, and take advantage of tax credits.
Proper tax planning is a basic duty of every person which should be carried out religiously. Basically, there are three steps in tax planning exercise. They are as follows:
- Calculate your taxable income under all heads i.e. Income from Salary, House Property, Business & Profession, Capital Gains and Income from other Sources.
- Calculate tax payable on gross taxable income for whole financial year (i.e. from 1st April to 31st March) using a simple tax rate table, given on next page.
- After you have calculated the amount of your tax liability. You have two options to choose from:
Most people rightly choose Option ‘B’. Here you have to compare the advantages of your age, social liabilities, tax slabs and personal preferences, decide upon a right mix of investments, which shall reduce your tax liability to zero or the minimum possible.
Every citizen has a fundamental right to avail all the tax incentives provided by the Government. Therefore, through prudent tax planning not only income-tax liability is reduced but also a better future is ensured due to compulsory savings in highly safe Government schemes.
Choksi Tax Taxation Services sincerely advise all our readers and clients to plan their investments in such a way, that the post-tax yield is the highest possible keeping in view the basic parameters of safety and liquidity.
Reach us for more information, for resolving your complex queries and easily meet our team of experts by calling on our number +91 79 71727115 or mail us your query at info@choksitax.com.