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7/30/2019 Evaluation of Various Tax Saving Alternatives of
Individuals
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synopsis
Sameer K Burli Page 1
Evaluation of various tax saving alternatives ofindividuals
Sameer Krishna burli
11yacm5043
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7/30/2019 Evaluation of Various Tax Saving Alternatives of
Individuals
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synopsis
Sameer K Burli Page 2
Introduction:
Tax planning is the legal process of arranging your affairs to
minimise a tax liability.
There are more than 200 such provisions specifically written
into tax law.
Examples range from simply choosing a year-end date early in the
tax year to maximise the
period from earning profit to paying tax, to arrangements to
shelter an appreciating asset from
inheritance tax.
Tax evasion is different, it is illegally reducing your tax,
such as falsifying figures or not
disclosing income. This carries serious penalties which can
include a criminal prosecution.
A problem arises when the law is unclear, so it is not obvious
whether a tax planning scheme
is within the law or not. For this reason, there have been three
significant developments.
1. We have seen an ongoing approach to artificial tax avoidance
which stands between
avoidance and evasion. This was probably most accurately defined
by a previous Paymaster
General who said that: "Artificial avoidance schemes are those
where they create economic
distortions, provide commercial advantages over compliant
taxpayers, redistribute tax
revenues in an unfair or arbitrary manner, or represent an abuse
that conflicts with or defeats
the will of Parliament".
These must be disclosed and are closely examined to see if they
are legal. Even if they are, it
is likely they will be closed in the next Finance Act, sometimes
with retrospective effect.
From April 2013 a General Anti Abuse Rule (GAAR) was enacted
which enables HM
Revenue & Customs to take action to counter any abusive
avoidance activities withoutmaking specific legislation to close
the schemes down individually. Where HM Revenue &
Customs wish to challenge an arrangement under the GAAR the
detail will be considered by
a GAAR panel of tax professionals to advise whether the
arrangements are abusive or not.
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:
1. Calculate your taxable income under all heads i.e. Income
from Salary, HouseProperty, Business & Profession, Capital
Gains and Income from other Sources.
2.
Calculate tax payable on gross taxable income for whole
financial year (i.e. from 1stApril to 31st March) using a simple
tax rate table.
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7/30/2019 Evaluation of Various Tax Saving Alternatives of
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3. After you have calculated the amount of your tax liability.
You have two options tochoose from:
A)Pay your taxes.
B) Minimize the amount of tax you pay with prudent tax
planning.
Most people rightly choose Option 'B'. Here you have to compare
the advantages of severaltax saving schemes and depending upon 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. We 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
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7/30/2019 Evaluation of Various Tax Saving Alternatives of
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Statement of problem:
To formulate a technique of usage of funds earned by working
class people in
order to reduce the tax burden to a considerable extent. For
example an employee, may he bea govt. Employee or a private sector
one, who is earning approx. 8,00,000 INR per annum,
has to pay tax of 20% which amounts to INR 1,60,000.on top of it
a surcharge of 3% is
payable on the tax, so the total tax amounts to INR 1,64,800.
This could be substantially
reduced by tax planning.
Objectives:
1. Reduction of Tax liability.
2. Minimisation of litigation .
3. Productive investment .
4. Healthy growth of economy.
5. Economic stability.
However objective of every individual may vary according to
their own
requirement.
Research methodology:
For any project, planning the research is the most important
thing. For this
purpose a step wise process is to be formulated. This helps in
saving time and other resourses.
Establish facts
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Identify issues Evaluate facts Formulate a solution Develop
conclusions Communicate results.
Sampling technique:
In this research work the samples will be specifically selected.
The various
samples selected in this project for the purpose of tax planning
are:
Salary statement of a-
1. Government employee.2. IT professional.3. Bank employee.4.
Business man.
Plan of analysis:
The salary statements that will be used in this research work
will be analysedand payable tax will be evaluated before tax
planning and later compared to the tax payable
after tax planning. An before and after tax comparison table
will be prepared to analyse and
provide conclusions.
