Tax planning is a legal way of planning your tax liabilities in a year based on various tax exemptions, deductions, and benefits in the best possible way. Tax planning should not be confused with tax avoidance and all the planning should be done within the framework of law. Proper tax planning reduces direct tax and indirect tax burden at the time of Inflation. Objective of Tax planning can be reduce tax liability as per law, Economic Stability, Productive Investment and Growth of Economy.
A good tax planning is a result out of:
- Disclosing correct information to relevant IT departments.
- Not being ignorant of applicable tax laws as well as court judgments regarding the same.
- Legal tax planning done within the purview of law.
- Planning done with business objectives in mind and should be flexible enough to incorporate possible changes in the future.