Tax Planning: How to Save Tax legally

Tax Planning

Nobody likes to pay tax, but we all know dues have to be paid. However, with a little intelligence, you can save as much tax as you are allowed to. Tax saving is more than just PPF and life insurance. Here, we will discuss some fantastic ways to save tax (Tax Planning). Further, note that we do not encourage tax evasion and we are just trying to provide some ways in which you can save maximum tax.

 Tax Planning

Tax Planning

Here we have discussed  tax saving tricks which can be really helpful if appropriately followed.

Section 44AD (Deemed Income)

Many businesses are unaware of the benefits under this section, and they end up paying higher taxes. Under this section, taxable income is deemed to be 8% of the total turnover provided it does not exceed Rs. 2 crores. We have discussed this with an example below.

FY 2017-18

Particulars

Normal case

Section 44AD

Revenue earned

50,00,000

50,00,000

Expenses incurred

40,00,000

40,00,000

PBT

10,00,000

10,00,000

Taxable Income

10,00,000

4,00,000 (8% of 50,00,000)

Tax on above income

1,28,750

10,300

Thus, you can save total tax of Rs. 1, 18,450. Further, as per this section, even maintaining books of account is not mandatory. However, this section covers only business and not technical consultancy or profession.Tax Planning

 

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