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Tax Saving

Overview
Tax Computation
Perquisites
Allowances
Exemptions
Deductions
Deductions of Chapter VI A
Rebate
Relief

Tax Computation

Basic flows of income tax are:



Income from


Salary

  • Basic salary

  • Taxable allowance

  • Non Taxable Allowances

  • Value of perquisites taxable

  • Less: Standard Deduction

  • Less: Entertainment Allowance

  • Less: Professional Tax

House property

  • Less: Standard Deductions

  • Less: Deduction for interest on home loans

Business Income


Capital Gain

  • Less: Exemptions

Other Income

  • Less: Deductions

Total Income

  • Adjustment for Set off and carryforwards

Deductions

  • Deductions under Chapter VI A

Taxable Income



Tax

  • Tax on STCG

  • Tax on LTCG

  • Tax on LTCG from equity shares

  • Tax on remaining income + Agricultural Income

Less: Relief for tax on agricultural income


Total tax


Less: Rebate


Net tax

  • Add: Surcharge

  • Add: Cess

Total

  • Less: Relief

Tax liability

  • Add: Interest on tax

  • Less: TDS

  • Less: Advance Tax Paid

Balance Payable

Overview


Business Tax Planning: Due to the complex nature and heterogeneity of business planning differs on a case to case basis. Contact us with your case to plan your tax effectively and efficiently. 

However, tax planning for the salaried or non-business individual can be done within the time frame allowed in income tax. It is pertinent to know about a few terms. 


Tax Evasion: Illegal


Tax Evasion is an illegal way to minimize tax liability through fraudulent techniques like understating the taxable income knowingly or claiming fake investments.  Tax evasion is a criminal offense and shall be punishable under the law. We shall never advise, promote, or support this method of reducing the tax burden. 


Tax Avoidance: Legal but unethical


Tax avoidance is an act of using legal loopholes to reduce the tax burden. To err is human. And people who drafted the laws are also human. In spite of pouring due care, some framing inconsistencies may creep in the laws which were not the intent of the laws. And those inconsistencies can be exploited by the taxpayers. But, we have our ethical responsibility to not promote and support any type of tax avoidance at any cost or benefit. 



Tax Planning: Legal and promoted by the government. 


Tax planning is an act of using the several benefits given under the laws by the government to reduce the tax burden. These methods are completely legal. There are different types of benefits given under the laws. We have tried to enumerate them according to their types. 


  • Allowances: Salary includes various other monetary benefits other than basic salary which are known as salary allowances. Eg House rent allowances, leave travel allowances.  All allowances are not fully taxable. 


  • Deductions: Deductions are the amount which is deducted from total income to reach taxable income.


  • Exemptions: Certain incomes which do not form part of total income at all are exempted incomes. Eg maturity proceeds received from a life insurance company continues to be exempted from tax under section 10(10D) in the new tax regime

  • Rebate: Rebate is the amount which is reduced from tax amount calculated on the taxable income. 


  • Relief: Reliefs are the ways through which certain special cases of genuine hardship are compensated. 

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